Inherited debt

mintab

My Mum died this month and I have inherited her debt. I lived with my family in my own home and Mum moved in with us 5 years ago. Alhtough I pay all the bills including the mortgage and endowment policies Mum asked if we would put he rname on the deeds. We said - of course. Mum had an addictive problem many years ago which we thought she had got the better of but since her passing we find she has between 70 and 100 thousand pounds debt. She also ran up £11.000 on the credit card I gave her (my name) for emergencies. I have written to all the credit card companies, banks etc. and await a response. I don't understand why so many companies gave a pensioner who had numerous debts so much money. She even lied on one of the applications about her income. Any suggestions as I am at my wits end and am sure I will lose my home.

Debt_Free_Chick

You can't inherit debt. If any debt was in your mother's name, then just write to the lender and tell them that she has died and that she had no assets. Do not let them trick you into thinking that it's now your responsibility - if it was in HER name, it's nothing to do with you.

Unfortunately, you will be responsible for any debt in your name e.g. if your mother was an additional cardholder on your credit card, then that's your debt.

If this is simple credit card debt & personal (unsecured) loans then your house is not at risk.

I suggest you call the National Debtline

0808 808 4000

https://www.nationaldebtline.co.uk

They are a charity who give free advice about anything to do with debt.

On a more personal note ... losing one's mum is a terrible experience. I do hope you have a partner or someone close to you to share the burden. My thoughts & condolences to you.

Take care now.

johnllew

If any debt was in your mother's name, then just write to the lender and tell them that she has died and that she had no assets.

mintab has said that their mother's name was put on the deeds to the family home, which means that an interest in the property may well have to be included in their mother's estate. Telling lenders that there are no assets when there may well be, is not the right thing to do.

I suggest you take legal advice on this; all is not clear cut.

Debt_Free_Chick

mintab has said that their mother's name was put on the deeds to the family home, which means that an interest in the property may well have to be included in their mother's estate. Telling lenders that there are no assets when there may well be, is not the right thing to do.

I suggest you take legal advice on this; all is not clear cut.

If it is a joint tenancy, then the mother's share passes to the other tenants (joint owners) on death.

Now, it could have been a tenancy in common agreement, where each tenant owns their own share and then has to pass it on to anyone they like in their will. It would be most unusual for a family to make arrangements like this. The "default" would have been joint tenancy although the option to have a tenancy in common would have been offered, had Mintab used a solicitor.

Hopefully Mintab is fully aware of the agreement created. If Joint Tenancy, then my original comment still stands.

HTH

MarkyMarkD

I don't think that you are right, DFC.

It used to be the case that if you owned property as "Joint Tenants" then the property would pass automatically to the surviving owner. This meant the property could not be sold to pay off debts. From April 2001 the rules have been changed. It is now possible for creditors to apply for an "Insolvency Administration Order" within 5 years of the person dying, which effectively splits the property down the middle as if it were a "Tenancy in Common".
The surviving owner could be ordered to pay the outstanding debts or risk having the house sold. Half of the sale proceeds, after any mortgages were cleared, could be used to pay creditors unless the court agrees there are exceptional circumstances. This makes it very important that a surviving owner negotiates with any creditors to make arrangements to pay the debts back and avoid this procedure being used.

from http://www.clear-your-debt.co.uk/debt-death.htm

The only positive thing is that the value of a part share in a property, which is occupied by surviving part owners, is likely to be quite low for probate purposes. But that's probably no help if the creditors could force you to sell up to meet the debt from her share.

I know it's easy to say this in hindsight, but adding your mother to your deeds was a very foolish and pointless thing to do.  I can't see why you did so.  I also have to wonder whether she did so so that she could run up debt, on the basis of being a property owner.

You say she ran up £11k of debt on a card in your name.  Why didn't you notice?

Debt_Free_Chick

Marky

Thanks for that .. I hadn't realised that change!

I'll repeat my original suggestion

Phone the National Debtline

0808 808 4000

deemy2004

My Mum died this month and I have inherited her debt.  I lived with my family in my own home and Mum moved in with us 5 years ago. Alhtough I pay all the bills including the mortgage and endowment policies Mum asked if we would put he rname on the deeds.  We said - of course.  Mum had an addictive problem many years ago which we thought she had got the better of but since her passing we find she has between 70 and 100 thousand pounds debt.  She also ran up £11.000 on the credit card I gave her (my name)  for emergencies.  I have written to all the credit card companies, banks etc. and await a response. I don't understand why so many companies gave a pensioner who had numerous debts so much money.  She even lied on one of the applications about her income.  Any suggestions as I am at my wits end and am sure I will lose my home.

If the credit cards in your name then your liable, as it was your responsibilty to check the statements

As others have said some how part of the property value will be calculated as being owned by your mother.

The amount of debt i.e. 70-100k for a pensioner is amazingly large ! How could you not have known about it as your mum lived with your ?

Its a bit late in the day.....

Worst case is
You will need to buy your mums share out and that will go towards paying off a part of the debt, and you will need to pay back the £11k on the credit card as it is in your name and she had permission to use the card.

ffs

If you put a relative's name on the deeds to a house you own, does that mean that you are giving them a share, if so, is there no CGT implication if a house is worth several hundered thousand pounds? Wouldn't a solicitor point this out?

deemy2004

Not if you sold them a share of the property for say a £1.

MarkyMarkD

If you put a relative's name on the deeds to a house you own, does that mean that you are giving them a share, if so, is there no CGT implication if a house is worth several hundered thousand pounds? Wouldn't a solicitor point this out?

There's no CGT implication in any case, if you sell a share in a property you live in to another person who lives in it. As it's the principal private residence for both parties, they are both exempt from CGT on gains on that property.

It is VERY silly from an IHT point of view to give a share to an older relative (especially a parent) unless there's no chance that they will be over their IHT exemption. In this case, though, it appears that chance would be a fine thing.

ffs

I wasn't thinking so much about the CGT due to any rise in value of the property, but rather the tax implications of the gift itself. I thought that unless the gift was to a spouse there would be tax payable on anything above about £7k. Have I misunderstood?