How do debts & liabilities work?

Any liabilities or debts you leave behind after you pass away will be paid from your estate. These liabilities and debts should be paid prior to estate funds being transferred to your beneficiaries.

If there are more liabilities in the estate than assets, then the estate is likely to be insolvent.

In this situation, the estate would be declared bankrupt and the remaining assets used by the trustee in bankruptcy to pay out the liabilities.