When someone close to you dies, sorting out their finances might be the last thing you want to think about. But it is important - and we've put together a short guide to make it a bit simpler.

Are you liable for the debt?

'Liable' just means you're responsible for paying it.

If a debt (like a personal loan, or a credit card) is just in the name of the deceased, you won't have to pay it out of your income. You won't be automatically liable for it simply because you were married, for example, or in a civil partnership.

If they haven't left anything behind, the lender will probably just have to write off the debt when the family members send them a copy of the death certificate.

However, if someone leaves behind assets when they die, their lenders may be able to make a claim against their 'estate' to recover the money they're owed (see What does 'estate' mean? below).

Are you 'jointly and severally liable'?

If a debt was taken out in both your names, it's different. If you've both signed a joint loan agreement and you're 'jointly and severally liable', that means you'll take responsibility for the entire debt if the other person doesn't - if they die, for example.

What does 'estate' mean?

'Estate' just means everything that someone owns - both property and money.

If someone's estate is worth £5,000 or more and/or there's property involved, it'll have to 'go to probate' (the probate office lays down rules that say how the assets should be divided up).

The person responsible for sorting out someone's estate after their death is known as the 'executor'. They'll have to get a clear picture of what the person owned and what they owed.

They'll then need to use any available funds to cover funeral expenses, money owed to HM Revenue & Customs, outstanding mortgage debt and outstanding unsecured debt before anyone can actually inherit anything (if there's anything left).

What about property?

When someone dies and they were the sole owner of property, that property is automatically part of their estate.

If two people own a property between them, what happens to it after a death can be confusing. It depends on whether you have 'Beneficial joint tenancy' or 'Tenancy in common'.

What if I'm a guarantor for a debt?

If you agree to be a guarantor for someone's debt, you can be liable for it if they don't repay (not just if they die).

So it's very important you read the agreement carefully before you sign it. In fact, you should also go through it with an expert, since the legal phrases can be almost impossible for most people to understand.

Should I look into life insurance?

If you have any dependants (people who rely on you), getting some life insurance could make things a lot easier for them if the worst should happen to you. It can help them pay off the mortgage, settle any other debts, and generally keep a decent standard of living after you've gone.

Find out more about life insurance here .