Fathers insolvent estate, no will, company director. Help!

hanfrangipane

Hi All,


I'm in desperate need of some advice as we are in a bit of a tricky situation and there is no cash in Dad's estate to fund proper advice so I want to get as much info as I can before we think about spending more from our own pockets.


My Dad died suddenly on the 5th February with no will. The salient points are as follows:


- Legally married to my Mum but separated for 16 years (although I'm aware this has no bearing, but she is financially independent from him with her own home and mortgage etc)
- Homeowner but with minimal equity in home, lived alone
- Has 1 share in a limited company with 1 other director/shareholder who is continuing the business on his own at the moment with the remaining employees although the company itself is in financial distress so may not continue long term.
- Dad had an overdrawn Directors Loan Account, would estimate this at net £5k once his outstanding salary is netted against it.


Estate as follows, from what we can ascertain:


Assets:
House £120k (max value I'd say, would be sold as a clearance job at best)
Motorbike £1k (Old bike, hasn't been ridden in years so unlikely to be worth much)
Company Share £1.00


Liabilities:
Mortgage £95k
Secured Debt £10k (estimate, don't think we know of all creditors yet, Lloyds have a charge on Land Registry after mortgage provider but we haven't found a statement for this but I found a loan document for at least £6k)
Credit Cards £20k minimum from statements we have found
Overdraft £2k
Unsecured Loans £4k
Payment Plan £20k?! (He told me about this a couple of years ago and said he was on a payment plan to clear around £20k but had things under control, I wasn't aware of all other debt, he has had an email from PP saying his DD has bounced so I'm assuming this is still outstanding but don't know balance)


So net balance is £(10)k without any balance for the payment plan and other creditors we have not yet unearthed. There was £36k secured by each director within the business but I think the other director has signed forms for this to pass to him solely.


My Dad was clearly in significant financial distress and the state of the house gives some indication towards his state of mind. I lived with him for a few months in 2014 and hadn't been back since, he had kept myself and sister at arms length (she lives with me), only visiting us and making excuses for us not to go to his house which we thought nothing of at the time.


I've read a few threads on insolvent estates but can't seem to find answers for this specific situation. I'm reading terms like intermeddling which are concerning me as we were about to apply for LoA which I am gathering may be a wrong move. We haven't yet formally notified anyone other than using the 'Tell us Once' government service but his bank must know somehow as all his DD have been cancelled according to letters/emails/texts we are receiving. Possibly because he used same bank as the business and the other director notified the business arm?


We called a few solicitors in the week following his death but they all said they wouldn't act for an insolvent estate so although I feel like we need advice because of the limited company share I don't want to unnecessarily burden ourselves financially. Myself and my mum are financially stable but don't have much disposable income to contribute to resolving this if the estate can't afford legal fees and I fear that getting too deeply involved could open a real can of worms.


In an ideal world we would walk away, allow the house to be repossessed, his company share to transfer to his business partner and myself and sister/mum to be clear of financial burden, we do not wish to gain from any of this. Nothing was jointly owned or in joint names so I understand that liabilities would not pass to my Mum as his wife.


Funeral costs so far have been paid by my grandmother on my Mum's side - this was done to alleviate the initial distress to us and will be repaid by our eventual inheritance on that side. We are happy to stand this cost ourselves and are not looking to recuperate it from the estate. My mum was, however, planning to claim the one off bereavement payment and allowance as she is entitled because he died before state retirement age, which will go straight towards repaying funeral costs to Gran. Will applying for this impact anything? I 'm assuming it won't form part of estate as it is Mum's entitlement.
(http://www.moneysavingexpert.com/family/what-to-do-when-someone-dies?_ga=1.249449095.1444583820.1453216105#extracash)


So, what would you do?!


Clearly my Dad has not dealt with his affairs very well but please be sensitive as most of this was new information to us a couple of weeks ago and it is still quite distressing to know that he didn't ask for help. I would have had him move in with me in an instant if I'd have known things were this bleak.


Thanks in advance for any help.


Han

Yorkshireman99

The bottom line is to do nothing if, as it seems, the estate is insolvent. If you do start dealing with it you can be accused of what is known as "intermeddling" and you can end up incurring liability.

wwl

If the estate is insolvent, there is probably no reason to get involved and some reasons not to.
Applying for LoA is probably a bad idea as you have nothing to gain and potentially a lot of hassle from debtors trying to con you into believing you or someone else is liable for the debts. Without LoA there is nobody for them to chase.
Re. the company, the first stop would probably be the company's accountant and/or legal advisor if there is one From what you say it seems there is no value in the company share, but the other director should probably get advice on how to proceed. It may be that without LoA the company might be in some sort of "Limbo"....

hanfrangipane

Would even sending letters to known creditors/utilities letters we have collected etc, just advising them of his death and that the estate is insolvent be classed as intermeddling. Just a simple notification?

What happens to his company share? I've asked someone I know in business if they can advise on what happens here but I don't want either Richard to be screwed over or us to end up with the responsibility.

Can we apply for the widows/bereavement payment to help with funeral bill without 'intermeddling'?

The threads I've read do seem to indicate the 'do nothing' approach is correct but it doesn't feel intuitive at all!

hanfrangipane

wwl wrote: »

If the estate is insolvent, there is probably no reason to get involved and some reasons not to.
Applying for LoA is probably a bad idea as you have nothing to gain and potentially a lot of hassle from debtors trying to con you into believing you or someone else is liable for the debts. Without LoA there is nobody for them to chase.
Re. the company, the first stop would probably be the company's accountant and/or legal advisor if there is one From what you say it seems there is no value in the company share, but the other director should probably get advice on how to proceed. It may be that without LoA the company might be in some sort of "Limbo"....

Cross posted with you! Richard does seem to be getting advice from company advisors so I guess I will just leave him to it other than to advise him of the situation, I.e. That we are not intending to administer the estate.

I'm guessing I will need to advise the mortgage company at the very least and post back his house keys? We have been to the house and collected our childhood belongings and some of his clothes that we wanted but haven't taken anything of value, there wasn't anything to take!

Marktheshark

Lock the property and post the keys.
Stay out of it unless you want a shed load of hassle.
The mortgage company will use a locksmith to change locks anyway even with the keys.

Yorkshireman99

hanfrangipane wrote: »

Would even sending letters to known creditors/utilities letters we have collected etc, just advising them of his death and that the estate is insolvent be classed as intermeddling. Just a simple notification?

What happens to his company share? I've asked someone I know in business if they can advise on what happens here but I don't want either Richard to be screwed over or us to end up with the responsibility.

Can we apply for the widows/bereavement payment to help with funeral bill without 'intermeddling'?

The threads I've read do seem to indicate the 'do nothing' approach is correct but it doesn't feel intuitive at all!

Informing creditors is not intermeddling but nobody has any obligation to do anything. It may sound harsh but keep out of it is the best advice.

Keep_pedalling

I would just inform the mortgage company of the death, the fact that you believe his estate to be insolvent and that you will not be administering it it. As the largest creditor they will in all probability have to take the job on.

TBagpuss

As others have said, don't apply for LofA.
Notifying organisations of your dad's death isn't intermeddling - for that, you would normally need to actually deal with assets - so for instance if you sold the bike, that could potentially be intermeddling. If you sold the bike and used the money to pay towards a debt that would definitely be intermeddling.

I would suggest that you send the keys to the mortgage lender with a copy of your Dad's death certificate and notify them that you believe the estate is insolvent but that you have had no dealings with the estate and have no plans to apply for LofA .

The issue with an insolvent estate is that if you do deal with it, you have to follow very strict rules (as on bankruptcy) and if you get it wrong, you may be personally liable to any creditor who doesn't get what they should have, under the insolvency rules. So much better to stay out of it.

konark

Was there no life insurance or insurance to pay off the mortgage on death?

The funeral should have been paid from the estate. I know it's insolvent but there's usually some money somewhere.

Keep_pedalling

konark wrote: »

Was there no life insurance or insurance to pay off the mortgage on death?

The funeral should have been paid from the estate. I know it's insolvent but there's usually some money somewhere.

Unfortunately judging by the number similar threads, it seems having no insurance to cover a mortgage is now as common as not having a will.