What should be done if a debt of the estate is discovered after the division of assets?

The discovery of a debt after the division of the estate does not automatically mean that the heirs must pay it in full from their personal assets. It is first necessary to verify the validity of the claim, the circumstances of the estate settlement, and the rules applicable to the liability of the heirs.

When a debt is discovered after the division of assets, it is necessary to verify, in particular:

• if the debt is actually owed by the estate and if it is still payable;
• if the creditor was known or could reasonably be identified during the liquidation;
• if the debt had been taken into account in the estate inventory or in the final account of the liquidator;
• if the rules of the Civil Code of Quebec relating to the preparation of the estate inventory and liquidation have been respected;
• if the payments made during the liquidation complied with the applicable rules;
• the value of the assets received by each of the heirs;
• if any sums or assets of the estate remain available;
• if an heir has assumed specific obligations regarding the payment of debts;
• if the limitation periods and other conditions allowing the creditor to exercise a remedy are respected.

Depending on the circumstances, heirs may be required to contribute to the payment of debts remaining unpaid after the estate has been settled. The Civil Code of Québec sets out the rules applicable to this obligation and to the distribution of debts among the heirs.

In principle, heirs are only liable for the debts of the estate up to the value of the assets they inherit, provided that the rules of the Civil Code of Québec relating to the inventory of the estate and the liquidation of the estate have been respected, subject to the exceptions provided by law. When there are several heirs, each generally contributes to the payment of the debts in proportion to their share of the estate, subject to testamentary provisions and any applicable specific rules.

Failure to comply with certain obligations under the Civil Code of Québec , particularly those concerning the preparation of an estate inventory, can result in heirs being held liable for more than the value of the assets they inherited. It is therefore important to verify whether the inventory was prepared in accordance with legal requirements or whether an exemption from preparing an estate inventory was granted, as well as the legal consequences of such an exemption.

Special provisions also apply to creditors whose identities remain unknown and who submit their claims after payments have been duly made. Their right of recourse may depend, in particular, on the reasons why they were unable to come forward in a timely manner and on the time limits prescribed by law.

The Civil Code of Quebec provides, in particular, that a creditor who has remained unknown may lose certain remedies when he comes forward after the expiry of a period of three years following the discharge of the liquidator, according to the conditions provided for by law.

In certain situations, an heir may be liable for debts exceeding the value of the inherited assets. However, if the heir is acting in good faith and new facts, such as the discovery of a previously unknown creditor, substantially alter the extent of their obligation, they may, under the conditions set out in the Civil Code of Québec , ask the court to reduce this obligation or limit their liability.

When a significant debt is discovered after the division of assets, it is therefore essential to check whether the rules relating to inventory and liquidation have been respected, as well as the rights of the creditor, the respective obligations of the heirs and the remedies available before making any payment.