Advice on managing deceased's debts

ewliin

I am seeking some advice about how to manage the debts left by my father after he sadly passed away this weekend. He left his financial paperwork in a bit of a mess, and frankly wasn't the best at managing his money. My Mum is the sole benefiary of his will. He was 65 and she is 59. My brother is the executor, although I am helping him with it hence this post.

So far, based upon the paperwork we have found (we still have a lot to sort through), this is where we stand:

- Mortgage / Loans secured on the family house in England. The latest statement we have found so far puts the owed balance at ~£100k. We reckon the house is probably worth £250k. This is a joint mortgage with my mother, and she jointly owns the property.
- At least 6 credit cards, debt totalling ~£25k
- Some overdraft, I think probably around ~£2k

+ Shares valued about ~£9k
+ Premium bonds. We haven't found the certificate, but we speculate it's probably around ~£5k
+ He owns a flat in Scotland (Worth maybe ~£110k with no debts secured against it (we hope!)). My auntie (his sister) paid for half of it, but it is fully in his name.
+ He owns two cars. They are nothing special, and total value is probably no more than £3k.

My understanding is (setting aside things like funeral costs, etc, which to be honest we and the rest of the family will probably just pay for):
My Dad's estate:
- Does NOT include the mortgage or house in England, as these go to my mother who was joint holder.
- The creditors will seek to clear the credit card debts & overdraft. This means that the entirety of the shares, bonds, his cars (or money from) will go to them. The remaining £10k would come out of his property in Scotland (how would that work? sell up and give them the cash?)
- This leaves £90k. We would pay half of the value of the Scotland flat to his sister (despite it only being in his name and she is not on his will, she paid for half of it and we would therefore do this out of good faith). This leaves ~£40k from the estate.


My mother:
- Will, through survivorship, "inherit" the house in England and the remaining loans & mortgage secured on it (so ~£100k debt secured on a £250k property)
- Will get ~£40k from my Dad's estate (minus £1k he left to the local church)
- Will get ~£40k lump sum (maybe less as he took partial retirement) from his pension.
- Assuming she'd want to pay off the mortgage straight away, this would leave her owing £20k with a £250k property.

So, as far as I can tell, she can sell up the house buy somewhere at least £20k cheaper (well I guess £30k cheaper to cover the costs associated with moving) and end up being debt free with ~£200k worth of assets to her name. Then she would live off the pension payments and with support from me and my siblings (all of us are in decently paid full time employment and will be there to help with everything she needs)

Have I missed something or does this just about cover it? We will obviously be seeking professional legal advice ASAP, but I just want to see if I can get my head around it. This will also help me to re-assure my Mum who, for a time, basically thought she would be inheriting a negative amount and be living in debt for the rest of her life.

shop-to-drop

Sorry for your loss.

Are you sure he doesn't have any life insurance either seperately or attached to a pension?

daska

Sorry for your loss.

She can't inherit a negative amount! If your father's estate doesn't cover his debts then they die with him. Having said that, the mortgage is a joint debt so that remains hers so please check that there was no insurance taken out on the mortgage before paying it off - might mean digging out the original loan agreement etc. (It's no longer the norm but when I bought in the late 80's it was compulsory and it was quite comforting to know that in the event of a death the property would be owned outright.)

whitewing

Why the flat put solely in your father's name? Is his sister older? Are you certain that it wasn't his money (e.g. for an inheritance paid via the sister)?

I'm only thinking that if you subsequently find that it was his money all along and you've paid it to your aunt, it 'belongs' to your mother.

ewliin

shop-to-drop wrote: »

Sorry for your loss.

Are you sure he doesn't have any life insurance either seperately or attached to a pension?

We don't think he had life insurance. We have found a policy that ended in 2007, but have as yet found no paperwork to suggest he had an outstanding policy.

He was a career civil servant, so his pension should be decent. However, 5 years ago he took partial retirement, so was already drawing from his pension. My mother will get a lump sum, and then her pension payments will be 50% of what he was already getting, plus 50% of what he would have got upon full retirement.

ewliin

daska wrote: »

Sorry for your loss.

She can't inherit a negative amount! If your father's estate doesn't cover his debts then they die with him. Having said that, the mortgage is a joint debt so that remains hers so please check that there was no insurance taken out on the mortgage before paying it off - might mean digging out the original loan agreement etc. (It's no longer the norm but when I bought in the late 80's it was compulsory and it was quite comforting to know that in the event of a death the property would be owned outright.)

I am a bit confused by this post. I don't think I've written anything to suggest that I think anyone is inheriting a negative amount.

His estate will be worth +£90k after his individual debts are cleared (minus the money we will pay to his sister). Maybe you read my "~" (meaning approx.) as a negative sign?
The house and mortgage will be separate from his estate, and will go to my mother as the joint holder. But it is net positive (£100k owed on a £250k property).

ewliin

whitewing wrote: »

Why the flat put solely in your father's name? Is his sister older? Are you certain that it wasn't his money (e.g. for an inheritance paid via the sister)?

I'm only thinking that if you subsequently find that it was his money all along and you've paid it to your aunt, it 'belongs' to your mother.

His mother (still alive) owned a house in Scotland. This was sold and the money used to buy two flats: One flat his mother lives in now. The other flat (bought in his name and thus owned by him) was used by him and his sister as a place to stay when visiting his mother (which they did regularly as she is over 90 years old). When he got diagnosed with cancer last year, they made the decision to sign half of the flat over to his sister (joint owndership I assume). However, they never got round to it. But, we are a family, and we consider half of the flat to be hers, even if that isn't the case in the eyes of the law.

daska

No you didn't, but you did say your mother was worried she would inherit a negative amount. A lot of people read these threads and it's possible someone might have thought it meant you could inherit a debt - which isn't generally the case. Sorry for the misunderstanding.

whitewing

Please don't think I am being picky. What happens to your grandmother's flat when she passes? I assume that she did not expect to outlive her son (parents generally don't expect to). Does you signing half the other flat to her daughter (father's sister) change anything there?

ewliin

whitewing wrote: »

Please don't think I am being picky. What happens to your grandmother's flat when she passes? I assume that she did not expect to outlive her son (parents generally don't expect to). Does you signing half the other flat to her daughter (father's sister) change anything there?

I'll be honest - we (local family) are not quite sure of the details of her will at the moment. I am currently assuming that her flat , which is in a home for the elderly, would be sold and half would go to my Dad (well now my Mum), and half to his sister (plus same split of any other savings, etc). Or maybe my Dad's half divided up between him, and me and my siblings (e.g. 20% to my Dad, 10% to each of me, my brother and sister, and 50% to my childless Aunt). I don't think it changes anything, really, other than helping to give my Mum a bit more financial breathing space.

I am sure we will sort out these details in the near future, but they're not really top priority at the moment.

There is a small chance (and something I can get an easy answer to tomorrow) that his mother's flat is also in his name (given that it was bought out of the same funds and at the same time as his one). If this is the case, it would become part of his estate, and we would need to make sure that any debt is paid for out of HIS one, not out of hers as she doesn't need any more stress in her life.

whitewing

Sorry, I just realised from your first post that your father only passed away this weekend.

I think your dad dying before your grandmother does potentially change things regarding your grandmother's will. What I mean is that you could sign half your dad's flat over to your aunt, but she could inherit the whole of your grandmother's flat and not sign any of that over.