Insolvent Estate and how best to deal with it

DapperDanMan

Hi

My brother in law died in November 2016 and I have been dealing with the estate as executor since then. Now a lot of the work has been done such as informing creditors, government agencies and Life Insurance and Pensions.

The situation as it stands at the moment is the estate has no money in it at all.

The Life Insurance went directly to the surviving widow - I did apply for it but they bounced it back to me as it was for her to receive and not the estate. The various private Pensions that had death benefits are also paying directly to the widow and bypassing the estate. So currently the estate has a balance of 0.

The funeral was paid by family members and settled by the widow on receipt of life insurance.

The debts of the deceased however are still outstanding and I am looking for advice regarding handling of this. As there is no money in the estate at present there can be no payment of the outstanding debts. As the estate has not received any money I have not distributed any to the sole beneficiary.

Should I seek legal advise on the next move here? Clearly the creditors will need to be informed (which I haven't yet done) of the lack of any estate money to pay off the debt even in pro-rata part. If I seek legal advise who pays for that advise as clearly the estate has no money to do this?

The property was owned jointly by the deceased and his wife and this has already been transferred to her as they were joint tenants.

I have to say it seems odd that Life Insurance, Property and Pension Life payment all skip the estate.

Any information regarding this would be very useful.

Thank you

Yorkshireman99

DapperDanMan wrote: »

Hi

My brother in law died in November 2016 and I have been dealing with the estate as executor since then. Now a lot of the work has been done such as informing creditors, government agencies and Life Insurance and Pensions.

The situation as it stands at the moment is the estate has no money in it at all.

The Life Insurance went directly to the surviving widow - I did apply for it but they bounced it back to me as it was for her to receive and not the estate. The various private Pensions that had death benefits are also paying directly to the widow and bypassing the estate. So currently the estate has a balance of 0.

The funeral was paid by family members and settled by the widow on receipt of life insurance.

The debts of the deceased however are still outstanding and I am looking for advice regarding handling of this. As there is no money in the estate at present there can be no payment of the outstanding debts. As the estate has not received any money I have not distributed any to the sole beneficiary.

Should I seek legal advise on the next move here? Clearly the creditors will need to be informed (which I haven't yet done) of the lack of any estate money to pay off the debt even in pro-rata part. If I seek legal advise who pays for that advise as clearly the estate has no money to do this?

The property was owned jointly by the deceased and his wife and this has already been transferred to her as they were joint tenants.

I have to say it seems odd that Life Insurance, Property and Pension Life payment all skip the estate.

Any information regarding this would be very useful.

Thank you

How much are the estate debts? The creditors may be able to recover funds by claiming against the house. You need professional advice since by intermeddling you could have become persoanally personally liable. You would have to pay for this yourself.

DapperDanMan

The debts are spread across several creditors and are all unsecured loans and credit cards.

So is there a legal requirement for the executor to pay for legal assistance with the estate when the estate has no money?

I do not understand why you use the term intermeddling as I am a named executor on the will not some random joe having a go. Also personally liable for estate debt when the estate itself has no money could you explain this. No money has entered the estate and none has exited it.

I am aware that creditors may seek recompense from the property and I have made the widow aware of such a possibility.

Keep_pedalling

DapperDanMan wrote: »

The debts are spread across several creditors and are all unsecured loans and credit cards.

So is there a legal requirement for the executor to pay for legal assistance with the estate when the estate has no money?

I do not understand why you use the term intermeddling as I am a named executor on the will not some random joe having a go. Also personally liable for estate debt when the estate itself has no money could you explain this. No money has entered the estate and none has exited it.

I am aware that creditors may seek recompense from the property and I have made the widow aware of such a possibility.

The normal advice for dealing with insolvent estates is not to get involved beyond informing creditors the the estate is insolvent and that you are not acting as the estates representative. Intermermeddling in this case simply means you have effectively taken on the role of executor so you can no longer back out of that role. Doing this in an insolvent estate means you have to be ultra careful if you don't want to accidentally get held responsible for those debts.

If the depts are small it is likely that the creditors will write them off, but if they are larger then the creditors may try to legal action to recover them by if nessasary forcing the sale of the house.

DapperDanMan

So to this point I have dealt with the form filling and telephone calls etc. I was not aware of the lack of estate funds at the start of this process believing that money would be forthcoming to settle in full.

Can I opt out of being the executor and hand this over to a solicitor as I have no wish to get involved with debts of other people. I want to assist the widow in any way I can to alleviate the stress of it but I am beginning to see this as a step to far.

The debts total some £33k the smallest being £400 (approximate figures).

getmore4less

No solicitor will touch it as there is no money.

In practice liability of the executor cannot exceed the estate value unless very careless and failed to secure assets.

Depending on exactly what you have done you may not have intermeddled but probably have.

Creditors might back off when told there is nothing but unlikely at 33k if the hubby was not the sole beneficiary of the debt if it occurred recently.

Eg if a credit card or loan paid of a mortgage the creditor may show more interest in recovery.

You are the one with the details so can decide how much help you you need if you decide to notify creditors further and once they are informed there is nothing in the estate any come back asking for more information.

Any benefits involved?
They could trigger DWP having an interest.

DapperDanMan

There are no benefits to my knowledge. The debt has not paid off a mortgage.

There were no other assets, he had a company car and has nothing but a few tools and clothes. He was not one for expensive watches or jewelry. All bank accounts were in joint names with his wife.

If the assets of the estate are 0 then liability is 0 if they cannot exceed the assets.

I am sure once informed some of the creditors will be asking questions and to be quite frank I wouldn't blame them. I would of course assist them to the best of my knowledge.

nom_de_plume

I guess the main point is that you do not make any payments from any assets of the deceased (or even give anything away). I fail to see how simply investigating the assets of the deceased can be classified as inter-meddling as it is only by doing so that one can ascertain the estate is indeed insolvent or otherwise.

Mojisola

DapperDanMan wrote: »

My brother in law died in November 2016 and I have been dealing with the estate as executor since then.

nom_de_plume wrote: »

I guess the main point is that you do not make any payments from any assets of the deceased (or even give anything away). I fail to see how simply investigating the assets of the deceased can be classified as inter-meddling as it is only by doing so that one can ascertain the estate is indeed insolvent or otherwise.

If DDM means that he has officially signed the oath to become executor of the estate, he has taken on the responsibility and it's too late to back out.

DapperDanMan

Mojisola wrote: »

If DDM means that he has officially signed the oath to become executor of the estate, he has taken on the responsibility and it's too late to back out.

I haven't signed an oath. I was named in the will and have proceeded from there. Probate has not yet been applied for.

It is more a matter of knowing my own limits and I have no legal experience or indeed any practical experience of handling creditors. I do know however that once I inform the creditors it may lead to a chain of events which may require legal knowledge and therefore incur costs appropriate to that.

I think what is needed is an hour or two of consultation with a Solicitor / Probate specialist. Any recommendations on this, would a general Solicitor be OK or should I look for someone who advertises a specialty in probate? As for payment well we will have to take it on the chin and agree a rate and pay it without reference to the estate as it has no money.

Tuesday_Tenor

The fact that there are no assets at all in the estate will make it simpler for you. I believe the risk of personal liability would only arise if there were some assets but you apportioned them incorrectly, by not following the correct priority order or getting the pro rata proportions wrong.

In your case, simply write to the creditors stating that the estate is insolvent and it has not been possible to pay ANY outstanding debts. ETA: or even to pay for the funeral, which was paid by family members.

In this circumstance the creditors cannot come after you, personally, for money owed by the deceased.

As pointed out, where the debt is significant creditors may investigate the previous asset of the jointly owned house, but that is outside the estate so is something they would have to pursue with the widow.

If you, as executor, have had dealings with the Land Registery to remove the deceased from the house deeds then I don't think you could refuse to pass on the details of the property to the creditors if they ask. So you are correct to advise the widow that creditors might make such investigations.