Tax Debt on Death

edited 30 November -1 at 1:00AM in Deaths, Funerals & Probate
6 replies 802 views
Shellie19721Shellie19721 Forumite
11 Posts
edited 30 November -1 at 1:00AM in Deaths, Funerals & Probate
Hi
My step father has passed away but had left a tax debt and a joint loan with my mother secured against their house.
Will these debts need to be paid out of any equiette that’s in the house.
Please note this is in Scotland.
Thanks
Michelle

Replies

  • Yorkshireman99Yorkshireman99 Forumite
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    Hi
    My step father has passed away but had left a tax debt and a joint loan with my mother secured against their house.
    Will these debts need to be paid out of any equiette that’s in the house.
    Please note this is in Scotland.
    Thanks
    Michelle
    What other assets are there in the estate?
  • Hi,
    There is nothing other than the house.
  • Yorkshireman99Yorkshireman99 Forumite
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    Hi,
    There is nothing other than the house.
    In which case the debts plus funeral costs and any other debts.
  • Keep_pedallingKeep_pedalling Forumite
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    The secured loan is now the sole responsibility of your mother, so if she has no other means of paying it then yes it will have to be payed from the house equity either by selling or taking out equity release.

    HMRCs debt is not secured, but if they held ownership as tennants in common then it will have to also come out of the equity. If they held the house as joint tennants then his estate is insolvent which makes things a bit tricky. How much is owed to HMRC?

    If the house is tennants in common, who has he left his share too?
  • SeniorSamSeniorSam Forumite
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    I believe that the debt will have to wait if there are no assets of the husband, other than the home. The wife cannot be forced to sell the property to meet the debt, it will need to be honored from the proceeds of sale when she dies unless there is anything in an agreement signed by them both to say otherwise.

    Sam
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
  • Keep_pedallingKeep_pedalling Forumite
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    SeniorSam wrote: »
    I believe that the debt will have to wait if there are no assets of the husband, other than the home. The wife cannot be forced to sell the property to meet the debt, it will need to be honored from the proceeds of sale when she dies unless there is anything in an agreement signed by them both to say otherwise.

    Sam

    The OP said there was also a joint loan secured against the house so that creditor can force the sale of the house as the widow is now solely responsable for that debt.

    HMRC could do likewise if the house was owned as TiC, and if the dept was large enough could do so if owned as JTs by getting the joint tenancy undone through the courts, but that really happens.
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