Probate and property

sashley90

Morning, i cant sleep due to all this stress at the moment everytime i close my eyes all i see is numbers and probate! argh.
My dad had terminal cancer bless him, he and the kids lived with me and my husband the past 18 months during his deterioration. We've taken the kids on since his passing. I cared for him and he died at home with us. He prepaid for his funeral as we knew it was something that needed to be arranged but he did this over a number of years little bits at a time so that doesn't need to be covered by the estate.
G6jns, how do you mean do nothing? just notify them and leave it at that?

G6JNS

If the estat3e has debts that exceed the assets. Then just tell the creditors this and let the mortgage holder deal with it.

DandelionPatrol

G6JNS wrote: »

If the estat3e has debts that exceed the assets. Then just tell the creditors this and let the mortgage holder deal with it.

Normally, I would agree with this, but I am quite concerned about the position of OP's siblings who are minors.

As already mentioned, their shares in the estate cannot be disposed of by deed of variation. And the house is a real asset which they stand to inherit, with debt attached. Normally, debt dies with the debtor, but in this case, as I think the minors may well inherit the asset, they will also end up picking up the debt.

Given the potential risk of the minors inheriting the debt, in this case, I would be most reluctant to let the mortgage lender administer the estate, because it would be in their interests to disburse the shares in the property to the minors and the other siblings rather than write off the debt - simply to be able to keep the debt attached to someone. Indeed, they may have a duty to their shareholders and investors to do exactly this.

Now, my first thought is that the siblings will need some legal advice as beneficiaries, to check out whether the possibility I am raising is actually forestalled by some other legal consideration, in which case all is well and good.

My second thought is that sashley may need to take on administering the estate, despite the downsides of administering in insolvency, to prevent the mortgage lender taking on the role, if there is any risk of lumbering the siblings with the mortgage debt. If that is required, it will probably be a nerve racking ride for a year or 2, letting the mortgage lender do a repossession. Again, some legal advice will be required.

getmore4less

DandelionPatrol wrote: »

And the house is a real asset which they stand to inherit, with debt attached. Normally, debt dies with the debtor, but in this case, as I think the minors may well inherit the asset, they will also end up picking up the debt.

That's not how it works if the debt secured on the asset is more than the asset value and there is no other money in the estate to cover the debt.

This is complicated by a second owner and more so by them being in jail (this is a new twist not many will have come across)

OP start here and look for other references.
http://www.bereavementadvice.org/probate-and-other-legal-procedures/insolventestates.php


I think there are two option

Try to help and tidy up the estate.
Let the ex/creditors sort it out.

Limited info but I am thinking the second option is probably the best option it could turn into a lot of work for nothing.

Named executor do not have to do the job if they don't want to.

UNless there is a compelling reason to want to keep the house I can't see anything that would make doing the admin of this estate a sensible option.

The other issue will be the minors, get that sorted through the relevent bodies, the default is they "belong" to the surviving parent which if it is the ex in prison will mean social will have to get involved if not allready.

DandelionPatrol

And the house is a real asset which they stand to inherit, with debt attached. Normally, debt dies with the debtor, but in this case, as I think the minors may well inherit the asset, they will also end up picking up the debt.

getmore4less wrote: »

That's not how it works if the debt secured on the asset is more than the asset value and there is no other money in the estate to cover the debt.

This is complicated by a second owner and more so by them being in jail (this is a new twist not many will have come across)

So how does it work?

The second owner in jail is a new twist which may make the logistics of sorting it out more difficult, but there is no fundamental difference to how things should play out.

If the siblings do inherit the share of the house to the point that they are registered as owners, then they will inherit the debt secured on the asset. In a positive equity situation this is fine. For negative equity, your link seems to cover it

1. Secured creditors. They will recover what they are owed from the asset which secures the debt. Examples of a secured debt are a mortgage on a property or a loan for purchase of a car. If the asset against which the debt was secured does not cover the entire debt, the balance of the debt falls into the unsecured creditors category.

The adult siblings here can be protected by the ability to renounce the inheritance by Deed of Variation.
What is required for the minors is for the house to be dealt with within the estate and no share of house to pop out the other end to be distributed. I would still recommend paid for legal advice to confirm the position in the link and to ensure that the mortgage lender could not use the position of estate administrator to land the debt on the minors.

nom_de_plume

I think this one really needs professional advice. As I understand it the debt on a joint mortgage passes to the other party. It may be in that case that Dad's estate includes 50% of the house value (or whatever his percentage share of the property is) and Mum now inherits a massive debt.

I suggest avoid the lenders at this stage and get some paid for independent advice. The lenders may welcome the keys being handed back as, if I am correct, it's likely their best bet at recovering the bulk of their funds.

Was there any insurance attached to the mortgage BTW?

http://www.money.co.uk/mortgages/should-we-get-a-joint-mortgage.htm

getmore4less

nom_de_plume wrote: »

I think this one really needs professional advice. As I understand it the debt on a joint mortgage passes to the other party. It may be in that case that Dad's estate includes 50% of the house value (or whatever his percentage share of the property is) and Mum now inherits a massive debt.

I suggest avoid the lenders at this stage and get some paid for independent advice. The lenders may welcome the keys being handed back as, if I am correct, it's likely their best bet at recovering the bulk of their funds.

Was there any insurance attached to the mortgage BTW?

http://www.money.co.uk/mortgages/should-we-get-a-joint-mortgage.htm

The debt remains with the full property thats the way the mortgages work.
this is also covered in the relevent acts that the deafault secured debts stay with the asset so don't get paid from other funds in an estate unless the will makes that provision.

nom_de_plume

getmore4less wrote: »

The debt remains with the full property thats the way the mortgages work.
this is also covered in the relevent acts that the deafault secured debts stay with the asset so don't get paid from other funds in an estate unless the will makes that provision.

I did wonder. My scenario seemed too simple.

It would however help if the OP could give a bit more detail on the size of the debt v's the value of the rest of their Dad's estate.

getmore4less

DandelionPatrol wrote: »

So how does it work?.

In practice there are a few ways.
insovency order.
Someone pays of the debts freeing up the asset
Someone administers the estate and deals with the mortgage

The easiest is let the lender/ex sort it out and don't get involved if the estate is insolvent
ex will end up picking up any shortfall, the liability cannot transfer to the beneficiaries.

You can't inherit a mortgage debt even if you want to, the lender has to agree to it in practice you get a new mortgage to pay of fthe old one.

getmore4less

nom_de_plume wrote: »

I did wonder. My scenario seemed too simple.

It would however help if the OP could give a bit more detail on the size of the debt v's the value of the rest of their Dad's estate.

This will be critical, I asumed there was nothing as that is what is implied.

One thing they can't do is sperate the house from the rest of the estate as some of the shortfall may fall into the unsecured debt class.

I say "may" as this would need checking.