Debts do not end with death in Singapore.
Is Debt Inherited in Singapore?
You may be curious if debts will be inherited by the family members/ next-of-kin of someone who passed away. Some common debts include:
- Credit card debts.
- Loans (including mortgages)
- Taxes to be paid to the government
In Singapore, family members/ next-of-kin of the deceased are not personally responsible for the debts incurred by the deceased while he/ she is alive. However, in the event that the deceased has a joint mortgage/ personal loan with a family member/ next-of-kin, the surviving family member/ next-of-kin will be liable for the payments as a sole debtor.
How will Other Debts of the Deceased be Paid Off?
Since no debt will be inherited, how will debts of the deceased be paid off? After the passing of the deceased, the executor/ administrator will apply to Court for a grant of probate/ letters of administration. This will allow the executor/ administrator to administer the assets of the deceased.
Generally, debts will be paid out of the deceased’s estate. The executor/ administrator needs to settle the debts before giving out the remaining assets to the beneficiaries. He/ she may need to sell off some of the assets to generate proceeds for the payment of the debts. After the settlement of the debts, the executor/ administrator will then be able to distribute the remaining assets to the listed beneficiaries in the deceased’s Will or in accordance to the Intestate Succession Act if the deceased does not have a Will.
Under Section 57 of the Probate and Administration Act, if the estate of the deceased is solvent (i.e. his/ her assets are more than his/ her liabilities), his estate shall be used towards the payment of his “funeral, testamentary and administration expenses” and “debts and liabilities”. For instance, under Section 58 of the Income Tax Act, the deceased’s person income tax liabilities will need to be paid from his estate.
In the event that the estate of the deceased is insolvent (i.e. his/ her liabilities/ debts are more than his/ her assets), the “funeral, testamentary and administration expenses” will take priority. This will be followed by the repayment of debts following the order in the Bankruptcy Act. Some of the debts may be written off, given that the estate of the deceased is insolvent. Debts will not be inherited.
Potential Complications
While family members/ next-of-kin will not inherit debts, the executor/ administrator will need to pay off the debts out of the estate. Hence, the family members/ next-of-kin will still suffer a “loss” out of the assets which are available. Furthermore, in the event there are joint loans/ mortgages, the family members/ next-of-kin of the deceased will need to pay off these loans/ mortgages.
In the event there are illegal debts from illegal moneylenders, family members may face constant threats and harassment. They should inform the relevant authorities to resolve the situation and not resort to paying off the debts to resolve the situation.