Inheriting an Insolvent Succession: What Are the Consequences?

Someone close to you died and you may inherit their property? Be careful and ask questions before you decide whether to accept. If the succession is insolvent, you may be stuck paying off the debts of the deceased with your own money.

Accepting or refusing a succession

When you have the option to inherit someone’s succession, you can accept it or refuse it. A person’s succession includes all their property and debts at the time of their death. It’s often called the “estate.”

If you accept the succession, you must pay off the debts of the deceased. If you refuse the succession, you don’t need to pay off their debts, but you won’t inherit any property either.

Be careful! You could accept the succession without meaning to by doing certain things. This could happen even if you do something casual that seems harmless. Don’t be impulsive. Ask about the financial situation of the deceased before doing anything.

How to know if a succession is insolvent

A succession is insolvent if a person had more debts than money and property when they died. Figuring out if a succession is insolvent is not easy.

To get a general idea of the financial situation of the deceased, you can go through their paperwork: financial documents, insurance policies, bank statements, bank accounts, credit card statements, etc. However, you won’t have a complete picture of their debts just by looking at these documents. For example, there could be other debts and financial obligations in these situations:

• If the deceased was married, their spouse may have the right to half the family property.
• A family member may have the right to ask for financial support after the death.
• Someone the deceased knew may have given them an informal loan that needs to be repaid.

The liquidator of the succession does an inventory of the debts and property of the deceased. You can ask them questions about the inventory before you accept or refuse the succession.

Are you responsible for all the debts of the succession?

When you inherit from someone, you obviously inherit their property, but you also inherit their debts. The money to pay off the debts must come from somewhere: if the total value of the deceased’s property isn’t enough to cover all the debts, you may have to use your own money to pay the difference.

However, the law protects you if you follow the rules for settling a succession. If the value of the property in the succession isn’t enough to pay all its debts, you won’t have to pay more than the value of what you inherited. You do not get this protection if you do not follow the rules. In Quebec law, settling a succession is called liquidating a succession. 

Accepting a succession

You have three options to accept a succession:

• You can formally declare that you accept the succession.
• You can do something that shows you accept the succession, like taking over and using the car of the deceased.
• You can let time go by.

Letting time go by

You generally have six months from the date on which a person died to accept or refuse the succession. If you don’t decide before this deadline, the law considers that you have accepted. If the liquidator hasn’t finished doing the property inventory within those six months, the deadline can be extended by 60 days.

This extension gives you more time to get all the details before accepting or refusing the succession. If the extra 60 days isn’t enough, you can ask a court to extend the deadline.

Actions that show you accept the succession

If you use the property of the deceased before all the steps to settle their succession are done, it may automatically mean you accepted the succession. If that happens, you could be responsible for paying all the debts of the deceased. So be careful!

There are things you can do that do not automatically mean you’ve accepted the succession:

• You can take measures to protect the property of the deceased, such as renew the fire-protection insurance policy on their house.
• You can hand over the deceased’s clothes, personal papers, awards and diplomas, as well as family heirlooms, to their family members and loved ones.
• You can pay for funeral expenses.
• You can move valuable belongings of the deceased out of their home for storage.

Revenu Quebec’s website has more examples of things you can do that don’t automatically result in accepting the succession.