Q: If a sole trader dies owing money, what happens to these debts?
Apr 19 2007
Answered by: Clive Lewis Ask a question
The debts of the business of a sole trader who dies will be regarded as an unsecured debt for their estate. The personal representative of the deceased (an Executor if they left a will or the administrator if they died intestate) should be contacted and the creditor will be asked to prove the debt.
It then depends whether the business is sold or transferred as a going concern in which case the new owners might accept the liability, dependent upon the terms of the agreement between the personal representative and the buyer. If not the creditor will have to wait for the personal representative to realise the estate’s assets (including the business) before they pay off the deceased debts (assuming the disposal of the assets realises sufficient money to pay the unsecured creditors).
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