Yet Another Inheritance Question - or How Unlucky am I!?

SivEd

Hi there,

I owe the tax man about 35,000 and they are, I think, about to try and force bankruptcy on me. This wouldn't have got them very far as house is in negative equity and had very little else of worth...

Until, that is, my mum died after a long illness. Not unexpected.

Now, after a few weeks, I can estimate my inheritance as about... You guessed it £35,000!

It's not that simple, of course, there's a restriction on the will allowing my brother to reside at the house as long as he wants to and he and the executors must agree before a sale can take place.

Another complication is that one of my sisters was written out of the will (family argument) and we all want her written back in. We can do this through a "beneficiary agreement" and we would like to do this.

I am trying to assess my best course of action for the future. Remember that if I am forced into bankruptcy, my house will go and I can see a light at the end of the tunnel in the form of this £35,000 as a deposit. I am not trying to evade my debt, indeed, my favourite option is to pay, but I am worried that (and this is the tax man we're talking about) when they find out that I have an inheritance coming, they'll do everything they can to hurry through bankruptcy! Depriving me of both my home and my inheritance/deposit.

What other possible options do I have - I am thinking specifically of...

Not selling the house until I am discharged, or is it 3 years after that we could sell? I think the terms of the will allowing my brother to stay indefinitely means that the OR can't force sale?

Or wording the beneficiary agreement so that a.n.other gets my inheritance. I know that I can't do this just before bankruptcy, but can I delay bankruptcy somehow in order to prevent having to declare the inheritance. Is there an actual time limit? Any clarification on this issue?

All suggestions welcome at this time! I will not break the law, but what can I do legally to keep some or all of this money.

In terms of how I got into this position, I won't blame anyone else but myself, but my complete, utter and abject fear of the tax man played an important role!

I have spent the last three years (with the help of the CAB) restoring all of my other debts to normality and am pretty much back to evens (except HMRC and Barclays). So it's an utter pity to my mind to fall at this last hurdle and end up bankrupt!

Cheers
SivEd
P.S. First post, please be gentle!

Feelingfoolish_3

Hi there

I owe the tax man about 35,000 and they are, I think, about to try and force bankruptcy on me. This wouldn't have got them very far as house is in negative equity and had very little else of worth... if your house is in negative equity then the OR wouldn't be interested therefore you could stay providing your mortgage isn't too high. You would also need someone to buy out the BI to protect future increase if possible

Until, that is, my mum died after a long illness. Not unexpected. So sorry

Now, after a few weeks, I can estimate my inheritance as about... You guessed it £35,000!

It's not that simple, of course, there's a restriction on the will allowing my brother to reside at the house as long as he wants to and he and the executors must agree before a sale can take place.

Another complication is that one of my sisters was written out of the will (family argument) and we all want her written back in. We can do this through a "beneficiary agreement" and we would like to do this. Not sure if OR will allow - someone else may be more knowledgable in this area

I am trying to assess my best course of action for the future. Remember that if I am forced into bankruptcy, my house will go and I can see a light at the end of the tunnel in the form of this £35,000 as a deposit. I am not trying to evade my debt, indeed, my favourite option is to pay, but I am worried that (and this is the tax man we're talking about) when they find out that I have an inheritance coming, they'll do everything they can to hurry through bankruptcy! Depriving me of both my home and my inheritance/deposit.

What other possible options do I have - I am thinking specifically of...

Not selling the house until I am discharged, or is it 3 years after that we could sell? I think the terms of the will allowing my brother to stay indefinitely means that the OR can't force sale? You could sell after discharge as far as I know, not sure if OR could force sale

Or wording the beneficiary agreement so that a.n.other gets my inheritance. I know that I can't do this just before bankruptcy, but can I delay bankruptcy somehow in order to prevent having to declare the inheritance. Is there an actual time limit? Any clarification on this issue? This would be classed as fraud but the timescale the OR would look at is 5 years, so if you signed over the interest now you potentially couldnt go bankrupt for 5 years to protect it

All suggestions welcome at this time! I will not break the law, but what can I do legally to keep some or all of this money.

In terms of how I got into this position, I won't blame anyone else but myself, but my complete, utter and abject fear of the tax man played an important role!

I have spent the last three years (with the help of the CAB) restoring all of my other debts to normality and am pretty much back to evens (except HMRC and Barclays). So it's an utter pity to my mind to fall at this last hurdle and end up bankrupt! Well done on repaying your debts


Hiya, didn't want to pass by without answering the bits I could, there are some really knowledgable people on here who could help more I'm sure. Unfortunately the taxman pulls no punches and if he petitions for your bankruptcy there would be little you could do other than paying the debt. Have you spoken with them? There is a tax confidential helpline who may be able to give you some advice. You don't have to disclose your name unless you require a letter from them. You could also speak with Tax Aid who are a charity that provide advice regarding tax.

nicky_s_2

I'm afraid I can't be of help here, but would like to pass on my condolences to you. Worrying about your debts is the last thing you need.

JCS1

It would be an asset not realised as at BR date, and as such would be an asset the OR would realise, there would be no way of avoiding this. If you didn't put it on your court forms, and the OR told find it wouldn't be pleasant. Not sure if OR could force sale, but with £35k asset they might be prepared to wait a while. It's not when you receive the money that is important, but that you are entitled to it when becoming bankrupt.

Please take some professional advice - is there any way you would use your inheritance as a full and final settlement of your debts? Not sure how receptive HMRC would be to this idea.

Also - am sorry to hear about your mother, it's never easy to lose someone close to you.

SivEd

OK, thanks for all the advice and esp the sympathies. This problem has been going on for a number of years and if I could clear the debt without bankruptcy, it would be a massive load off my mind.

My new question is, as I said I'd like to just pay up. Is there a way of avoiding bankruptcy on the promise of the will going through probate? I.e. if I go to the judge at the bankruptcy hearing and advise them that I have this inheritance coming in - probably within the year and certainly not much more than that, would that be enough to foil any plans the tax man may have to force bankruptcy? I would be happy to sign an agreement to guarantee hmrc get their pound of flesh before my holiday in the sun

I'm worried that the year wait would be too long for a Judge or hmrc to be happy with. Could I offer staged payments now until the inheritance came in? Any other accepted process?

It all seems like a massive gamble - if the judge makes me bankrupt I can't protect my sisters share of the estate. I wish there were some certain way of dealing with it, like "do X and you'll avoid bankruptcy" kind of thing.

I have yet to speak to hmrc, it'll be the last thing I do as it'll mean they know about the inheritance at that point. Before that I'm not committed to anything. The idea of an anonymous call to hmrc is interesting! It may help to sound out their attitude to an impending inheritance.

I'll get in touch with the agencies you advised too.

Many thanks,
SivEd

maxmycardagain

It's not that simple, of course, there's a restriction on the will allowing my brother to reside at the house as long as he wants to and he and the executors must agree before a sale can take place.

i can see that taking quite a while, cant you?

SivEd

No actually, my brother wants to sell. So it won't be a show stopper. Though if he did decide to live there, I understand that the OR couldn't force the sale of the house. But for how long would he have to stay there before we could sell up and keep the dosh?

You would also need someone to buy out the BI to protect future increase if possible
I think the tax man can make you sign something to force sale if the value of the house increases sufficiently to pay their debt. But if that didn't belong to me, then that may help. Could it be my wife (mortagage is in my name only)? Can I sell it for e.g. one pound?

I am trying to find ways to steer them away from bankruptcy and towards the wait for the inheritance to come through.

Also mortgage is £900 per month, it would be possible to rent here for about £700.