Inherited A Property but...

holly_hobby

getmore4less wrote: »

If the OP can raise funds against the property then there will be no need to sell the house, the house can be transfered and the money put into he estate to pay off any debts.

There is no restrictions on distributions before all debts are paid as long as there are retained funds to pay the debts.

Yes thats the same as my saying all debts have to be discharged before the estate can be distributed ... the nut is assets can not be bequested unless the estate has sufficient funds to settle all liabilities from other sources. (ie life assurance etc)

The OP can't raise funds against property on a mortgage (to repay the existing mortgageee) until they are the legal owner - beneficial ownership doesn't wash for mortgages, they must be on the deeds.

Already suggested for speed they contact the lender to see if they will allow tsf of the mge under inheritance (which some consider such as Halifax used to), as additional issue is that a mge of £1300 will be below the minimum mge advance of most lenders (except a select no whom don't have a min loan, such has Halifax, but work on min valuation instead).

Of course the securing of any finance, either personal loan or against the house will ALL boil down to the OPs status ...

Hope this helps

Holly

steveeo

getmore4less wrote: »

The most likely process would be you buy the house off the estate with a mortgage/loan that covers the debts and whatever else the lender will give you.

Can this be done? If so, this could be a good way of sorting this out.

There is no IHT due on the estate

steveeo

holly_hobby wrote: »

Already suggested for speed they contact the lender to see if they will allow tsf of the mge under inheritance (which some consider such as Halifax used to), as additional issue is that a mge of £1300 will be below the minimum mge advance of most lenders (except a select no whom don't have a min loan, such has Halifax, but work on min valuation instead).

Holly,

We have a meeting next week with the mge company so see what options but do you think they would tsf the mge over without having our names on the deeds?

At this meeting we can pay the outstanding amount by card to settle it but its the rest of the unsecured debts that we need to cover and the only way we could do this is to make some funds available from the house and the only way we could do this is if the house is in my wife's name so it is a catch 22

Thanks
Ste

antrobus

steveeo wrote: »

We want to pay all the debts off so everyone else can have everything else left in the will, this seems the right thing to do as the property is the most valuable asset on the estate but to do this we will need to raise funds on the property.

That's not the way it works. The Administration of Estates Act 1925 specifies a specific order in which the deceased's estate should be used to pay their debts. Subject, of course, to any contrary intention being expressed in the Will. But anyway, you can't simply decide to change things off your own bat. (There is a processs.)

As a general rule, if someone dies leaving a will that has a specific bequest of an asset (eg a house) to one beneficiary, with the remainder (ie everything else) being left to another, then any debts get paid out of the remainder, and the first beneficiary gets the house free and clear. Because it's assumed that it is what the deceased intended to happen.

steveeo wrote: »

...We are meeting with the solicitor next week but i am just trying to understand things and the law beforehand.

Ah well, if there's a proper solicitor handling the estate, they'll sort it out.

Conrad

steveeo wrote: »

We live in a council house at the moment but want to buy the house on the "right to buy"



We have poor credit history for a start

First point, only a few lenders offer RTB and they will not accept those with poor credit history unless it was very minor.


I suspect what you will end up doing is selling the inherited property to fund the RTB purchase.

In due course you might be able to raise a sub prime mortgage on Granddads place and then use the proceeds to buy the RTB house. The lenders than can consider sub prime are;

Kensington
Melton (SBSLS)
GE Money / I-Group
A couple of other small niche lenders but they are very fussy

JimmyTheWig

antrobus wrote: »

As a general rule, if someone dies leaving a will that has a specific bequest of an asset (eg a house) to one beneficiary, with the remainder (ie everything else) being left to another, then any debts get paid out of the remainder, and the first beneficiary gets the house free and clear. Because it's assumed that it is what the deceased intended to happen.

At which point presumably the first beneficiary could, if they wanted to, secure a mortgage on the house and gift some money (e.g. the equivalent of the debts) to the other beneficiaries.

But is the problem in this instance not that the remainder of the estate doesn't cover the debts? Therefore the house must be used to cover the debts?

steveeo

Conrad wrote: »

First point, only a few lenders offer RTB and they will not accept those with poor credit history unless it was very minor.


I suspect what you will end up doing is selling the inherited property to fund the RTB purchase.

In due course you might be able to raise a sub prime mortgage on Granddads place and then use the proceeds to buy the RTB house. The lenders than can consider sub prime are;

Kensington
Melton (SBSLS)
GE Money / I-Group
A couple of other small niche lenders but they are very fussy

As I said before, we could sell the property and that would end all issues with the estate and we would buy our council house on RTB but her granddad wishes is for us to bring his grandchildren up in his house but this is where we need help.

Thanks for the list of subprime mortgage lenders

steveeo

JimmyTheWig wrote: »

But is the problem in this instance not that the remainder of the estate doesn't cover the debts? Therefore the house must be used to cover the debts?

That's correct up to now (still waiting on life insurance policy's to see what they cover but we don't think they are worth much) and we are trying our best for it not to be sold

Thanks

Ste

holly_hobby

steveeo wrote: »

As I said before, we could sell the property and that would end all issues with the estate and we would buy our council house on RTB but her granddad wishes is for us to bring his grandchildren up in his house but this is where we need help.

Thanks for the list of subprime mortgage lenders

Unfortunately the rights of creditor and legal responsibility of the executor will over rule any formal will bequest.

Your OPs grandfather wanted his property to go to her, but made no provision for the repayment of the debt on it.

He has died.

The mge lender wants their money, and the executor has a legal duty to pay them (and all creditors/HMRC) BEFORE legal ownership and formal transfer of the property and other assets can be completed (assuming all other liabilities have been provided for from capital of the estate) ... if there isn't sufficient free capital to repay, the sale of assets will be reqd, which may equate to sale of the house and proceeds not only repaying the mge but other debts too.

The bottom line is, if the decds estate has debts, they must be wholly repaid/provision made, by the administrator from the estate, before any dividing up of bequests can be administered (be that from capital, or disposal of assets) regardless of how or where the decd wanted his bits and pieces to go - end of.

Indeed I've seen cases were the estate was all but wiped out for beneficiaries, where the decd had effected a will, but no provision for os debts and IHT liability - they recd the residue after the sale of the properties (of which they were the beneficiaries), which wasn't much at all.

So although Grandad wanted GDaughter to inherit the house and make it her home, the reality of it transpiring is dependant upon several factors I'm afraid.

You'll understand more when you speak to your Probate solicitor.

With regards to possible tsf of mge under inheritance and if permissible from the lender (which it may not be as not all consider this), this can only be possible if it has been established that the estate is able to satisfy other debts from other available capital/assets.

You need to establish what the details of probate are from the executor, such as ...

• what the total estate debts are (secured, unsecured, inc utilities, funeral costs, admin/legal costs) ?
• what the total valuation of the estate is ?
• will that all be covered by liquid assets (ie bank deposits, life assurance, os pension payments, etc) ?
• if there is a shortfall, what assets will be sold to meet the reqd amount ?

Hope this helps

Holly

antrobus

JimmyTheWig wrote: »

At which point presumably the first beneficiary could, if they wanted to, secure a mortgage on the house and gift some money (e.g. the equivalent of the debts) to the other beneficiaries.

Once probate is completed, and the estate distributed, the new owners of the property can (of course) do what they like with it.

JimmyTheWig wrote: »

But is the problem in this instance not that the remainder of the estate doesn't cover the debts? Therefore the house must be used to cover the debts?

If that was the case, then yes the house would have to be sold, and the specific beneficiary would (I'd guess) get everything.