Tax Debt on Death 27 March 2019 at 10:29PM edited 30 November -1 at 1:00AM in Deaths, Funerals & Probate 6 replies 802 views

Shellie19721

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

Yorkshireman99

Shellie19721 wrote: »

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?

Shellie19721

Hi,
There is nothing other than the house.

Yorkshireman99

Shellie19721 wrote: »

Hi,
There is nothing other than the house.

In which case the debts plus funeral costs and any other debts.

Keep_pedalling

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?

SeniorSam

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

Keep_pedalling

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.