Bankrupt Beneficiary - advice please

deputy2404

Hi all, I was made bankrupt with debts totalling 24K in November 2018. Sadly my mother passed away in March leaving an (unsigned) will leaving everything to myself and my siblings equally. She owned her house and at a rough guess, after selling the property, her estate will be worth 200K, leaving my share as 40K. I have contacted the official receiver to let them know about mum's passing and that I was named executor (something which I was assured wasn't a problem), however I was told to contact an insolvency practitioner as the OR's fees totalled a minimum 8K at the present moment and I was unable to ay off the creditors myself, they would have to be paid by someone else. I was wondering if anyone else has had any experience in this situation and what there advice to me would be as I know mum would be devastated to think that her money wouldn't be going where she wanted it to go and benefit the people she loved? Many thanks

broaps

Hello, it's a difficult thing dealing with financial matters when you are feeling sad but there may be a few problems in your path. An unsigned will is not valid for probate so you will need to apply for letters of administration to deal with the estate. I'm not sure if a bankrupt is eligible to act as administrator so it might be worth telephoning your local probate registry for advice. When dealing with a deceased estate a separate bank account has to be set up to collect any funds together and to settle bills so this may also cause a problem for you.Your share of the estate is classed as an after-acquired asset by the OR and they will want to be paid directly from the estate with the OR's fees added to your original debts. I am not an expert but have dealt with a couple of family estates in the last few years. I think you need some proper advice. Why not at least try Citizens Advice? There is some good stuff on the .gov websites too. Good luck.

broaps

I should have said that as there is no valid (signed) will the estate will have to be dealt with under the intestacy rules so equal shares to all children regardless of what your mother may have written down. Not leaving a valid will can cause all sorts of problems for a family but at least you have a written record of her wishes.

Malthusian

If she was unmarried then under intestacy rules her estate will be distributed equally to her children anyway.

This is not a reason for anyone reading this to not bother making a Will.

debt_doctor

Hi,

25.24A Acting as Executor of a will

There are no restrictions upon an undischarged bankrupt that would prevent them from acting as the executor of a will.

So no problems there (from the IS technical manual). You have done your bit regards your duty to inform the OR. Not sure if you are thinking of annulment (cancelling your bankruptcy) as the proposed lump sum is more than your bankruptcy debt.
As you have found there are fees - OR fees, Secretary of state fees and potentially IP fees.
You just might be in with a chance of annulment - but if an IP gets involved then this would look highly unlikely. IP fees mount very quickly.
DD

Minkym00

If you are planning to sell the property then there is no need for an IP to be appointed and they’ll fleece you with fees. If you are going for an annulment then all creditors have to be paid plus OR fees (£6k general fee and either £2775 if a creditor made you bankrupt or £1990 if you used the adjudicator). If you pay these fees from your inheritance then the OR will also charge a trustee fee of 15% of the value of the asset. However if you get a third party to pay these creditors then the 15% trustee fee doesn’t apply. So if you can get a sibling to pay the pay them back you will be better off.

https://www.gov.uk/government/news/changes-to-official-receivers-fees

Minkym00

Debt Doctor, you do know the Insolvency Service doesn’t publish the current most up-to-date technical manual right?

debt_doctor

Minkym00 wrote: »

Debt Doctor, you do know the Insolvency Service doesn’t publish the current most up-to-date technical manual right?

I do indeed. The public version used to be about 6 months behind the version that the IS used themselves - It's more like 2 years since there was any meaningful update - Would you agree?

DD

deputy2404

Minkym00 wrote: »

If you are planning to sell the property then there is no need for an IP to be appointed and they’ll fleece you with fees. If you are going for an annulment then all creditors have to be paid plus OR fees (£6k general fee and either £2775 if a creditor made you bankrupt or £1990 if you used the adjudicator). If you pay these fees from your inheritance then the OR will also charge a trustee fee of 15% of the value of the asset. However if you get a third party to pay these creditors then the 15% trustee fee doesn’t apply. So if you can get a sibling to pay the pay them back you will be better off.

https://www.gov.uk/government/news/changes-to-official-receivers-fees

We are planning on selling the property, is it worth going for an annulment do you think? Or could I simple write to the creditors myself and offer a full and final payment to them (paid by a 3rd party)? Or am I better off just to let the OR have it all, pay everyone back and take their fee, then presumably I'll be given back the 25p or so that is left over?

deputy2404

Minkym00 wrote: »

Debt Doctor, you do know the Insolvency Service doesn’t publish the current most up-to-date technical manual right?

I have confirmed with the OR that I am ok to act as executor/administrator

TBagpuss

You can act as executor/ administrator but it may cause some practical problems - particualrly as there is a house to sell. Would it be possible for your sister to apply for the letters of administration instead? (even if you then help her with the paperwork)

In terms of your position as a bnbeneficiary you have done the right thing in telling the OR of your inheritance. It will need to be used to pay your debts - I'd suggest getting some advice abotu whether you would be likely to be able to get an annullment or whether simply paying the debts and then applying to be discharged is more appropriate

There is an article here you might find useful https://debtcamel.co.uk/inherit-money-bankrupt/