In this section
Adding a loan to an estate
In this section, include all of the deceased's outstanding loans, indicating the principal amount, currency, loan type, ownership type (and percentage if applicable), annual interest rate, and due date (or term).
If the loan is secured (e.g., a mortgage or hypothec that gives the bank a right on the deceased's home), select this option to link the loan to the appropriate asset. That asset must have already been added to the Assets section of the Inventory.
The succession is responsible for assuming the deceased's outstanding loans, such as mortgages (hypothecs in Quebec), personal loans, or lines of credit.
Before distributing assets to the heirs, the succession should pay off the deceased's loans, or ensure it will have enough cash to do so. As a rule, heirs cannot be responsible for the deceased's debt beyond what they inherit. However, if they have already accepted assets from the succession before finalizing the inventory and paying creditors (or if the legal liquidation rules were not followed), the heirs become responsible for debts even beyond what they have inherited.
If the succession does not have enough cash to pay the deceased's debts, it can sell assets to raise additional cash, which will require the heirs' approval if the liquidator does not have the power to sell.
If there are not enough assets to raise the cash needed to pay creditors, the succession is considered insolvent. It will need to negotiate with creditors and get the court's approval to begin liquidating assets and paying creditors.
Note that items with sentimental value, but little monetary value, can be passed on to heirs even when the succession is insolvent. Additionally, heirs can always buy assets from the succession, provided they pay fair market value.