Dealing with debts

Keep_pedalling

sweenster wrote: »

There's clearly no IHT implications here and never was, so that doesn't seem relevant, it certainly wouldn't have come into any decision making process. I don't really see how it's useful to suggest leaving the creditors to 'get on with it' when I've also clearly said we want to retain the house.

IHT is not the only reason for putting policies in trust, and these over 50s policies often do it so that the family can get emmediate payment to cover funerals without needing probate.

You said you mother wished the house goes to your sister, I can't recall you stating that you actually wanted to keep the house in the family yourselves.

If you want to do that you are certainly going to have to deal with the estate, and if the estate is insolvent come up with the funds to avoid the house being sold.

Yorkshireman99

sweenster wrote: »

There's clearly no IHT implications here and never was, so that doesn't seem relevant, it certainly wouldn't have come into any decision making process. I don't really see how it's useful to suggest leaving the creditors to 'get on with it' when I've also clearly said we want to retain the house.

Assuming the insurance does not form part of the estate then the estate appears to be insolvent. If that is the case then administering an insolvent estate is not a job for an amateur who is not skilled in the rules. It would be easy to end up being personally liable for some of the debts. Any professional advosor will tell you to walk away from the problem.

securityguy

sweenster wrote: »

There's clearly no IHT implications here and never was, so that doesn't seem relevant, it certainly wouldn't have come into any decision making process. .

Life insurance isn't just written in trust because of IHT; indeed, it's probably the least common reason (given most estates don't pay IHT).

Suppose you are a family man who is taking out life insurance because you want your non-working wife to be able to continue to feed and house your children should you die young. Life insurance written in trust means that upon production of a death certificate, your wife gets the money absolutely there and then, and can spend it on the necessities of life. If it's written into the estate, it could take at least six months, possibly more, to obtain probate and distribute what would now be a considerable estate. If you died intestate, or the will were challenged, it could be even more complex. Writing into trust means that in principle you die on Monday and your family have the money on Tuesday.

sweenster

This question had been comprehensively sidetracked.

None of the insurance policies are in trust, they form part of the estate.

Can anyone help with the original questions about the unsecured debt?

Keep_pedalling

It was important to establish the position on those policies, but now we have a clear understanding of the estates assets and debts, so the estate is not insolvent and all debts can be met in full, even if that means selling the house.

Next step is to establish the status of those unsecured loans. The offer she had to settle for 30% should still stand, but you do need to establish if any of these loans are actually enforceable. If she has not made a single payment against any one of these loans over the last 6 years nor sent them any correspondence admitting that particular debt, then that loan is statute barred and uninforcable

sweenster

Thanks. That's not the case for any of them, she had been making regular nominal payments of between £5 - £25 per month against each debt under an agreement drawn up by CAB that had been in place for probably 10 years.

What would the approach be re the 30% offer? Simply write and offer that amount based on previous correspondence?

Btw, when you say it may mean 'selling the house', I can't think of any reason why I or one of the other beneficiaries couldn't take it a mortgage to pay off the existing one - i.e. we works retain the house.

securityguy

"Btw, when you say it may mean 'selling the house', I can't think of any reason why I or one of the other beneficiaries couldn't take it a mortgage"

ie, selling the house: the estate sells it to someone, who either takes out a mortgage to pay for it or pays cash. That the buyer is a relative is immaterial: there's a sale, and the estate swaps a property for money.

The only issue is that if you are an executor and also a purchaser, you need to be careful to make sure the valuation is absolutely rock solid if there's any question that a debtor or other beneficiary might get a different amount of money depending on the price the house is sold for.

Yorkshireman99

sweenster wrote: »

This question had been comprehensively sidetracked.

None of the insurance policies are in trust, they form part of the estate.

Can anyone help with the original questions about the unsecured debt?

Have the insurance companies coonfirmed who the beneficiaries are? Without knowing that you can't be sure. Nobody is AIUI sidetracking but the information given is not clear. As I said before you cannot afford to assume anything.

getmore4less

if satisfied everything is in the estate then you need to work out the distribution of the residual.

Subject to no spouse that will be the kids so how many.

There is currently around £4k + the equity in the house(£14k-£24k) + any discounts you can get on the debt, £18k-£28k+ to be shared out to be shared out.

The secured debts stay with the property whoever want to take that on needs to pay that and raise enough to satisfy the other beneficiaries.

They could gift their shares to help keep the house or become joint owners.

sweenster

Yorkshireman99 wrote: »

Have the insurance companies coonfirmed who the beneficiaries are? Without knowing that you can't be sure. Nobody is AIUI sidetracking but the information given is not clear. As I said before you cannot afford to assume anything.

There are no named beneficiaries. I have claim forms from several and verbally confirmed with others that these are not in trust. It would presumably be clear on the money had to be paid to a specific beneficiary of a trust.