Advice desperately needed.

MiniGal

Evening Money Savers.

I am writing this from Scotland where I am staying with a dear friend (who I will call X) and would just like to ask for some words of advice to prepare her for upcoming events.

To cut a long story short she has recently lost her husband in extremely traumatic circumstances. X had previously given up work due to ill health. At this moment in time it is hard to say whether she will be able to work in the future (she is around 50.)

So basically X has gone overnight from a comfortable but not extravagant lifestyle to having no income barring widows benefit. She is going to be selling up and moving back to England. She is expecting life insurance payout, death in service payout and a pension - all of this is complicated and she has been working with a financial advisor who she is meeting with in the next couple of weeks.

The reason for this post and for seeking some advice is that X's husband, unbeknownst to her, ran up a large credit card debt (with MBNA) prior to his death. Please do not make any judgements or comments on this, I can't go into the full story, it is too distressing. The debt is solely in Mr X's name.

The house now belongs solely to X and does not form part of Mr X's estate. X is sole beneficiary of his life insurance etc. so Mr X's estate has nothing in it. She has been told that making an estate insolvant is extremely difficult and possibly very expensive.

Basically we are investigating various options from you knowledgeable people. Why is it difficult, expensive and a bad thing to make Mr X's estate insolvant? Should she offer a full and final settlement to MBNA? Whay if any action could be taken by MBNA to retrieve the monies?

Any help would be gratefully received.

Yorkshireman99

X has no basic liability for the debt. However the rule on inheritance are different in Scotland so others will need to comment on how much, if any, of the house value is included in the estate.

TBagpuss

http://www.scotlanddebt.co.uk/articles/personal-debt-2/personal-debts-die-2205 might be a helpful organisation to contact.

Who told her that making an estate insolvent was expensive? Was it a solicitor? If not, then she needs to speak to one asap.

Keep_pedalling

You can't actually make an estate insolvent, it either is or it isn't. From what you have said the property was held as joint tenants so passes automatically to his wife. Although this means it not part of his estate it is possible for a creditor to pursue the recovery through the sale of the property by obtaining an Insolvency Administration Order, so it may still be wise to try and settle the debt.

The deceased must have had some personal assets, what for instance had he purchased with the credit card?

Skibunny40

Is she the executor? If so, she must cease to act on anything about the estate immediately now that she knows the estate's debts are more than the assets that Mr X has. If not, she will become personally liable for the debt (That's Scots law as far as I'm aware)and then go to court to get the estate declared bankrupt.

As someone else said, there's no choice ( unless the executor wants to pay the debt?) but I don't see why it would be difficult / expensive.She really needs to speak to a solicitor ASAP

MiniGal

Hi all, thankyou so much for your kind replies, I will try and answer your questions.

X has a solicitor who she is meeting with in the next 2 weeks, along with financial advisor. The idea of this post was to try and gather information before hand incase any decisions have to made quickly. It is the solicitor who has said that an insolvant estate could well be a long and expensive and stressful process. We have no idea why and hoped someone could help?

X is sole executor and beneficiary of Mr X's will. Every document and financial detail is being sent to solicitor and nothing has been acted on yet.

There are absolutely no assets as a result of the credit card debt - for reasons I won't go into as X will read this and it is very distressing. Personal assets would be things like tools but nothing specific of value which belonged solely to Mr X.

Once again thankyou for responding, any further advice would be much appreciated...

Crabapple

Administering an insolvent estate can be long and expensive and stressful.

Best advice would be for her not to. She does not have to act as executor and there's nothing to be a beneficiary of so walk away.

rockey100

I'd recommend a good solicitor that can work through finances and help solve or come up with settlements for Mr X's "debts" .

Keep_pedalling

Crabapple wrote: »

Administering an insolvent estate can be long and expensive and stressful.

Best advice would be for her not to. She does not have to act as executor and there's nothing to be a beneficiary of so walk away.

She may not be able to walk away, a creditor can still pursue a dept and force a house sale even when it was held as joint tenants, but I suspect that would only happen if the debt was large enough to make the legal costs involve worthwhile.

coolcait

If the estate is insolvent, then it's not all that difficult nowadays to apply for bankruptcy. An executor can do it via the debtor application process to the Accountant in Bankruptcy - no need to go to the courts.

If your friend's solicitor isn't an insolvency specialist it might be an idea for your friend to get a second opinion about applying for bankruptcy on Mr X's estate. Or even phone the Accountant in Bankruptcy directly for some general information.

My strongest piece of advice would be to make absolutely sure that there is no possibility that the house, or any other assets, might form part of the estate, as that could indeed make things long, complicated and expensive.

Keep_pedalling

coolcait wrote: »

If the estate is insolvent, then it's not all that difficult nowadays to apply for bankruptcy. An executor can do it via the debtor application process to the Accountant in Bankruptcy - no need to go to the courts.

If your friend's solicitor isn't an insolvency specialist it might be an idea for your friend to get a second opinion about applying for bankruptcy on Mr X's estate. Or even phone the Accountant in Bankruptcy directly for some general information.

My strongest piece of advice would be to make absolutely sure that there is no possibility that the house, or any other assets, might form part of the estate, as that could indeed make things long, complicated and expensive.

Why would anyone do that it offers no protection for the deptors wife? Declaring the estate banckrupt is more likely to be done by the creditor as it is the first stage in recovering the dept from the joint asset.

We don't know the size of the debt, but if it is under £5k the bankruptcy is not an option anyway so the creditor is more than likely just to wright it off. Best option once all the assets and debt are known and it is confirmed that the estate is insolvent is to simply inform them of the fact together with a statement that you have no intention of administering the estate, and hopefully they will simply write it off.