Dealing with debt after death - advice?

BellagioPenguin

Hi, hoping for some advice.


My mother-in-law dies suddenly at the weekend. She has a will which leaves everything to her husband. She has little in the way of assets (clothes, inexpensive jewellery, phone, old laptop) and the house they live in is jointly owned but has been subject to an Equity Release through one of those reverse mortgages, I believe that this has been running for so long that there is more owned by RSA than by them. Apart from this shared asset they had completely separate financial arrangements with neither being fully conversant with what the other's affairs were.

As we have started to go through things we have found that she owes money to a catalogue and has a couple of credit cards. Her recent email shows that one card (Vanquis) has a next payment due of almost £150 which leads me to believe that there may be quite a large sum outstanding on this. I have contacted both credit card companies to inform of the death and they could not tell me what the balance owing was, apparently they will formally write to me about this.
There were 3 Over 50 plans running. Tesco have said they will pay out, no problem, approx. £750. Two Sun Life ones need a death certificate and they are set up to pay to a funeral home, total of about £1100. There is approx. £700 in her bank account a large portion of this is a recently received pension payment.


We found paperwork for life insurance/assurance which my father-in-law had taken out on my mother-in-law. He has no recollection of this but it was paid and up to date and will pay him out a few thousand. They couldn't be too specific over the phone but this is what we can read from the rather complex paperwork.


Now the question!s:
- once the funeral has been paid I know that her debts need paying off. Which would be priority, the credit cards or the catalogue?
- would we be expected to pay back the pension she got in December if it is not paid in arrears?
- would we be expected to sell the house to cover any debt that was left unpaid as her half was her biggest asset? Obviously we would not want to do this as it would leave my father-in-law with no home and with the equity release there wouldn't be much paid out to him after all the fees RSA put on.
- would my father in law be expected to use his life insurance payout to cover expenses and debts?


Sorry if I have rambled. This has come as an awful shock to us all and it's hard to know where to begin. It's all a bit overwhelming.

Keep_pedalling

Credit cards and catalogue are both unsecured debts and would have to be treated equally, so if there is insufficient assets within the estate to pay them fully then they would be paid pro rata basis. So if one creditor was owed £2000 and another £1000 but after funeral costs there was only £300 left in the estate then the major creditor would get £200 and the other £100.

Dealing with an insolvent estate is not something to be taken lightly, so you really need to establish what assets your MILs estate has. The big question is on the home ownership and whether they were joint tenants or tenants in common.

Crabapple

If the credit card is with her bank you may find the bank use their right of set off and take any funds left giving no option anyway.

Try not to pay anything until the full picture is known. DWP will ask for any overpaid pension back and do usually pay in advance.

BellagioPenguin

I know this seems dim but what is the difference between joint tenants or tenants in common? I hope that when we locate the will that it will say this on there, her sons all have copies but have put them in the "safe place" that they can't remember!


Credit cards were with Very and Vanquis not the bank.


She gave her car (worth a few hundred quid) to her grandson at Christmas when he passed his driving test and apart from the house which is equity released there really aren't any assets.


I will get try to find out the source of the pension and notify them.


We are going over to the house tomorrow to try and hunt down any other paperwork so we can, hopefully, get a clearer picture of things. It is so difficult when only one person knows things and you can't talk to them.

Mojisola

BellagioPenguin wrote: »

I know this seems dim but what is the difference between joint tenants or tenants in common?

Joint tenants both own all the property - when one dies, the other still owns all the property.

Tenants in common own defined shares in the property - when one dies, the value of their share becomes part of their estate and may not be left to the surviving partner.

Mojisola

BellagioPenguin wrote: »

My mother-in-law dies suddenly at the weekend. She has a will which leaves everything to her husband.

She has little in the way of assets (clothes, inexpensive jewellery, phone, old laptop) and the house they live in is jointly owned

There were 3 Over 50 plans running. Tesco have said they will pay out, no problem, approx. £750. Two Sun Life ones need a death certificate and they are set up to pay to a funeral home, total of about £1100. There is approx. £700 in her bank account a large portion of this is a recently received pension payment.

It's likely that there won't be anything left after a funeral has been paid for - be careful about getting involved with the debts.

BellagioPenguin

Mojisola wrote: »

Joint tenants both own all the property - when one dies, the other still owns all the property.

Tenants in common own defined shares in the property - when one dies, the value of their share becomes part of their estate and may not be left to the surviving partner.

They will be Joint Tenants then as we know from when they wrote the will that the property was shared and in death it transfers to the other. They had wills that on death transferred everything to the surviving one and then on their death to her sons. They explained all this to us when they set up the wills along with the fact they had this equity release reverse mortgage which meant that when they died the house would then transfer to RSA who this is with.

Keep_pedalling

BellagioPenguin wrote: »

They will be Joint Tenants then as we know from when they wrote the will that the property was shared and in death it transfers to the other. They had wills that on death transferred everything to the surviving one and then on their death to her sons. They explained all this to us when they set up the wills along with the fact they had this equity release reverse mortgage which meant that when they died the house would then transfer to RSA who this is with.

Not necessarily, you cannot actually leave anything held as JTs in a will, so it is not usual to have statements like that in a will.

The only way you can be 100% sure is to check the title register at the land registry which will cost you £3.

https://www.gov.uk/search-property-information-land-registry

Malthusian

BellagioPenguin wrote: »

They will be Joint Tenants then as we know from when they wrote the will that the property was shared and in death it transfers to the other. They had wills that on death transferred everything to the surviving one and then on their death to her sons. They explained all this to us when they set up the wills along with the fact they had this equity release reverse mortgage which meant that when they died the house would then transfer to RSA who this is with.

You may have misinterpreted Mojisola's post. When they said "when one dies, the value of their [tenants in common] share becomes part of their estate and may not be left to the surviving partner" this means "their share may or may not be left to the surviving partner" rather than "they are not allowed to leave their share to the surviving partner".

As KP says, the property may still be tenants in common, with the Will specifying that the deceased partner's share transfers to the other on death.

would my father in law be expected to use his life insurance payout to cover expenses and debts?

Assuming that he is the policy owner - not the deceased mother in law - then no. It's his money and he is no more liable to pay off her debts with it than with any other money he might have.

If the late mother in law owned the policy and it was not written in trust, then the proceeds would most likely be paid into her estate, and could therefore be used to cover debts.

Mojisola

Malthusian wrote: »

You may have misinterpreted Mojisola's post. When they said "when one dies, the value of their [tenants in common] share becomes part of their estate and may not be left to the surviving partner" this means "their share may or may not be left to the surviving partner" rather than "they are not allowed to leave their share to the surviving partner".

Yes, that's what I meant - thanks for putting it more clearly.

BellagioPenguin

Thanks for all of the information. We have advised everyone we can find links to of her passing. The will has been located and her husband is named Executor. Once all the info comes through we will give it to him and we have advised him that there as the over 50s plans don't cover funeral costs and she owes some money that he will then need to speak to CAB or a solicitor on how to proceed because of the property. Not an easy thing to say but at least it is done now and we know not to do anything further.