Equity Release

dianadors

I don't know if this is the correct place for this, but here goes. My Father recently died and I knew he had released equity on his home in the past. His home is worth approx £125K and it appears he originally released £10K using a solicitor about 7 years ago. The original paperwork shows that this would have left a split on the property 55% to the release company and 45% to me. The company he did the equity release with went into administration and was bought by another company, and then another company! About 2 years ago, my father went back for another £7.5K (without consulting a solicitor)and from the paperwork this seems to entitle the company to 90% of the house sale and me 10%. The original solicitor won't speak to me about the document as his client is deceased. I don't want to instruct a solicitor if possible as I don't want to spend the money if it is going to be a waste. I really just need enough to cover his funeral costs but it seems a bit of a rip off if he only released £17.5K on a house that he worked all his life to pay for. Does anyone have any experience of equity release as the company is not very forthcoming with information. It appears I am eligible for all the bills etc until the house is sold, yet I have to hand over the keys to allow them to control the sale. Also who pays the selling costs? Any advise will be greatly received. Thanks

Thrugelmir

Your late fathers estate is responsible for all the costs.

Who are the appointed executors of your late fathers estate?

dianadors

I am the executor. I am an only child with no remaining parents. I have been told by the equity release company that the property belongs to them to sell but I am worried that my 10% will be swallowed up by any costs leaving me out of pocket for the funeral costs. I am also alarmed that out of £125K he only took £17K and they seem to have made a vast profit.

holly_hobby

Ok .... firstly I am so sorry for your loss, a difficult time made more painful by the situation you now find yourself in.

It sounds as though Dad had entered into whats called a home reversion scheme - whereby the firm will effectively provide a capital sum in exchange for a % of the property, as oppossed to provide a capital sum and charge a defined rate of interest.

It also appears that this advice and arrangement was initially facilitated via his solicitor, whereby he effectively "sold" 55% of equity to the firm in exchange for 10k.

Sometime later, he re-approached them for a further advance - whereby, the firm provided capital equal to a further 35% (ie total 90% ownership to the provider).

Whether, this can be legally challenged will all be down to the mge docs, so you need to get a hold of them to determine what the terms of the loan are.

It is in fact quite normal for the firm in circs such as this, to take control of the sale (but you may want to defer handing over keys, until you know exactly what is owing, and that any arrangement was correctly executed).

Any on going estate costs whilst probate is on going, which you incur should be reimbursed from Dads estate before any bequests are executed by the administrator(s)/executor (or you can see if the accounts can be rolled up and then discharged directly by the administrators/executor).

Equity release isn't necessarily the mother of all evils, but as you can see, its important to discuss it with family members, especially children, as the financial fall out to family/beneficiaries from the deceased having entering into such an arrangement, can be devestating and upsetting at a time which will already be so difficult for all.

Hope this helps

Holly

dianadors

Thanks. Will the Equity release company pay for estate agents / solicitors etc connected with the sale of the house, or will that come out of my 10%?

holly_hobby

Ity comes from the estate - which of course will encompass the 10% equity that is reverting back to it.

If your q is, if they sell and receive the full amount, can they just forward the residual of the free 10% (after deduction of fees), that would be discussed in the t&cs of the arrangment Dad entered - you need to see the docs, ask them for clarification of the process.

Hope this helps

Holly

Fire_Fox

Your father's estate is responsible for the bills, not you personally. The equity release company will probably sell the house, subtract the costs from the profit and forward you as executor 10% of the remainder (less than 10% of the market value). That plus any other savings or personal belongings, minus any other debts and bills is his remaining estate, out of that you pay for the funeral. If there is no money you can apply for a pauper's funeral which will be organised by the council or the hospital he died at.

It doesn't sound like you will inherit anything, sorry. Sounds like your father was quite desperate for money to agree to such as bad deal. Try to separate you role as executor with your role as beneficiary.

dianadors

Many thanks to all who helped here. We found the paperwork that my father had signed - all of which clearly stated that he should discuss the Equity Release with his family - but he chose not to. I'm not angry that he did the Equity Release as he enjoyed his latter years very much - I just don't think he got value for money, and I seem to be left with a lot of hassle and worry until the house is sold - for nothing at the end of it. It would have been better for me for him to have signed the whole thing over to the ER company. On a positive note, it has made me realise how short of cash you can get when you are on a pension - and that it is not worth doing Equity Release just so that you can live in your "home", when your home ends up far too big for your needs, costly to maintain and heat and rooms you don't use stuffed with things that you don't need - that end up in a skip once you die.

holly_hobby

dianadors wrote: »

On a positive note, it has made me realise how short of cash you can get when you are on a pension - and that it is not worth doing Equity Release just so that you can live in your "home", when your home ends up far too big for your needs, costly to maintain and heat and rooms you don't use stuffed with things that you don't need - that end up in a skip once you die.

Your Dad obviously felt secure there along with his memories and I guess didn't want to worry you with any financial issues he felt he had ... don't be too hard on him for not leaving any monies behind, as I'm sure he'd rather have been able to leave you with a nest egg if he could x

Hope the finalising of everything else runs smoothly ...

Holly x