Support needed in dealing with debts after mother’s debt

TamsinEls

all,

We’re in a position where our mum will imminently pass away and I am in the process of sorting her finances. I have read lots and advice online but so much isn’t relevant because my mum doesn’t own anything and is on benefits. So just need a bit of advice and if there are other threads that already support with these kinds of enquiries, please do sign post them.

Her current finances are this:
- everything is up to date - no arrears
- she rents from the council
- she has a catalogue, two credit cards and Argos card - these total £9,000
- she has a little nest egg of £7,000
- there is no will
- there is little of value in the house (tv, furniture etc)
- there is no life insurance or any other financial products like bonds
- she separated from our father 18 years ago and none of her debt is jointly held (all in her name) but they are still legally married

I understand from reading online, first the rent needs to be up to date (this is current), then funeral expenses are paid out (an invoice will go direct to the bank from the funeral directors and once they see a death certificate etc, they will pay this direct) and the left over monies are then paid to debtors in a set order. I have to write to all the credit cards etc and get a final statement of debt and check if she has any insurance.

I have a few questions:
- do I need to apply to be an executor despite the ‘estate’ being small?
- are we as children liable for any debt left over once the funds run out?
- is there an expectation that we have to sell things from the house and put the cash into the bank to pay off debts? (Sounds silly but I am worried about this as I was hoping to donate loads to a local charity as they will help with transporting and clearing the house)
- if we are not liable, how do we write to get the left over debt written off?

I have tried speaking to citizen’s advice but they have passed me on to national debt line as they offer specific advice on dealing with estates. I’ve been on hold with them for the last three days, waiting an hour at a time and not managed to get through.

Any advice and support would be great because this whole period is really hard and now I’m worrying about making a mess of things with her finances and causing me and my brother problems. She’s only 62 and I have no experience of any of this so I have littl knowledge other than what I’ve been reading on UK gov website and Age Concern’s guidance.

xylophone

Below might help - there is a phone number.

https://www.bereavementadvice.org/topics/probate-and-legal/insolvent-estates/

unholyangel

TamsinEls wrote: »

I understand from reading online, first the rent needs to be up to date (this is current), then funeral expenses are paid out (an invoice will go direct to the bank from the funeral directors and once they see a death certificate etc, they will pay this direct) and the left over monies are then paid to debtors in a set order. I have to write to all the credit cards etc and get a final statement of debt and check if she has any insurance.

I have a few questions:
- do I need to apply to be an executor despite the ‘estate’ being small?
- are we as children liable for any debt left over once the funds run out?
- is there an expectation that we have to sell things from the house and put the cash into the bank to pay off debts? (Sounds silly but I am worried about this as I was hoping to donate loads to a local charity as they will help with transporting and clearing the house)
- if we are not liable, how do we write to get the left over debt written off?

I have tried speaking to citizen’s advice but they have passed me on to national debt line as they offer specific advice on dealing with estates. I’ve been on hold with them for the last three days, waiting an hour at a time and not managed to get through.

Any advice and support would be great because this whole period is really hard and now I’m worrying about making a mess of things with her finances and causing me and my brother problems. She’s only 62 and I have no experience of any of this so I have littl knowledge other than what I’ve been reading on UK gov website and Age Concern’s guidance.

Secured creditors are the only thing which take priority over funeral expenses. A mortgage is a secured debt because the debt is secured against the property. If the debt is not secured against a particular asset then it is not a secured debt.

Normally the debts die with the estate (assuming no one has signed jointly or as guarantor for anything). However, if the estate is insolvent then most likely you do not want to touch the estate because if you err in distribution at all, you can be personally liable.

TamsinEls

Thanks for the advice - in response to your point about potentially becoming personally liable if I get involved in distribution and make a mistake.
I am just wondering who would conduct the distribution if it wasn’t me? Having looked at the next steps as there is no will etc, I am the next eligible person to become the administrator. Or does the bank handle anything?
Thanks for any further help.

Silvertabby

My sympathies to both you and your mum in this difficult time. Been there myself.

This is not advice, just musing aloud....

If your mum were to spend, say, £2k on things to make her remaining time more comfortable, her remaining estate would only cover her funeral costs. Then you will safely be able to tell her creditors that her estate is insolvent and that there is no executor.

However, is your mum sure that she has no pension rights tucked away? I speak from experience of the LGPS, when we would contact people at 60 to offer them a small pension - to be told that they had no idea that they had joined the scheme in the first place.

Keep_pedalling

Her estate is not small it is actually insolvent as depts exceed assets. The general advice for insolvent estates is not to administer them as getting it wrong can leave the administrator responsible for the debts.

The bank will pay the funeral costs directly to the FD, but as for the rest, I would simply write to her creditors explaining that the estate is intestate and that there is no administrator.

Mojisola

TamsinEls wrote: »

- if we are not liable, how do we write to get the left over debt written off?

Any advice and support would be great because this whole period is really hard and now I’m worrying about making a mess of things with her finances and causing me and my brother problems.

As others have said, don't do anything - the estate is insolvent and the only way you can completely avoid problems is to do nothing.

It feels wrong but it is the only way to ensure that you don't make yourselves responsible for the debts.

AnotherJoe

Silvertabby wrote: »

My sympathies to both you and your mum in this difficult time. Been there myself.

This is not advice, just musing aloud....

If your mum were to spend, say, £2k on things to make her remaining time more comfortable, her remaining estate would only cover her funeral costs. Then you will safely be able to tell her creditors that her estate is insolvent and that there is no executor.

However, is your mum sure that she has no pension rights tucked away? I speak from experience of the LGPS, when we would contact people at 60 to offer them a small pension - to be told that they had no idea that they had joined the scheme in the first place.

Great Idea.

Owain_Moneysaver

TamsinEls wrote: »

I am just wondering who would conduct the distribution if it wasn’t me?

One of the creditors may take on the role of administrator as that way they get (some of) what they're owed.

is there an expectation that we have to sell things from the house and put the cash into the bank to pay off debts?

Yes. All the assets in the estate have to be liquidated and the proceeds paid to the creditors. This is one area where if you take on the administration you must be very careful. If you could sell something for 99p an awkward creditor may expect you to do so and demand the 99p (and you as administrator can't claim anything for your time and effort, only out-of-pocket expenses - which a creditor can also be awkward about).

You should also be aware that if there are any refunds due to the estate (eg council tax or utility bills that have been overpaid, or any income tax refund) they will also go to the creditors.

However (if she is still legally able to make her own decisions) your mother can give away her £7000 to you during her lifetime and this will not be part of her estate and will not be reclaimable by her creditors. Some people would think this to be immoral or dishonest.

TamsinEls

Honestly, I’m not worried about the money - if what is left over after three funeral pays of part of her debt, I would be happy. It sits more comfortably with me.

I am just concerned about having to sell things - honestly I just don’t think anyone can expect that I have the time in my life to sell a sofa, tv, fridge etc. The contents of her house do not amount to much and it’s hardly a reasonable expectation to be able to sell the contents in the small window we would have in which to vacate the property. Most of it is going to charity apart from a few mementos (I really want her butter knife as it reminds me of her).

I think I will take the advice of not becoming the administrator and allowing a creditor to do this should they wish is something I hadn’t known was an option. She has £7,000 but nearly £4,000 will go on a funeral. The other £3,000 can be sorted as they wish.

I will look at letter templates online and follow that support. Thanks for the help everyone
X

TamsinEls

In response to your question - at the moment she is in intensive care so there is no reason for her to spend the money and I don’t want any questions raised about money being spent while she is in hospital.

Pensions - definitely none as she’s been a housewife all her life. Definitely no current life insurance (she did have an endowment which paid out Hence the small nest egg) so there is no other possible source of money into the equation.

We talked about the idea of power of attorney a while ago and it was a ‘maybe sometime’ idea we were going to return to. We just didn’t know we had such a short amount of time left.