Intestate death and insolvent estate

Hitchamite

This is somewhat niche, but I'm wondering if anyone has any advice, please?

Thankfully I intervened tonight before my friend went ahead and arranged her late aunt's funeral - she died intestate - after learning that although she was the lady's next of kin she had no other legal powers. I therefore pointed out that by acting without agreement she was risking leaving herself wide open to all sorts of issues with / claims from her six other first-cousins. Moreover, early indications point towards this being an insolvent estate.

I was hoping to find some advice on the forum re drafting an agreement between the cousins as to who should apply for Letters of Administration, and who would foot the bill for her funeral, but any other constructive input would be appreciated.

Normally, I'd head straight to a lawyer on this one, but the legal bill is likely to equal the funeral costs and the financial outlay simply isn't going to be covered by the estate.

What a mess - and just three days from Christmas.

Keep_pedalling

If the estate is truly insolvent, no one should attempt to administer it.

xylophone

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

Please do not arrange a funeral if you do not know where the money to pay for it will come from. Call us for more information on what to do in this situation.

Brynsam

Leave well alone; nobody should apply for Letters of Administration if an estate is believed to be insolvent. If any creditors come calling, invite them to apply if they wish to do so.

G_M

If the PR’s have any doubts about whether the estate will be solvent or not, in order to ensure that they are not personally liable, when making any payments from the estate, they must follow the order of payment in AIEDPO 1986 which sets out how the Insolvency Act 1986 (IA 1986) applies to insolvent estates.
If an estate is insolvent and is not being administered in bankruptcy, (i.e. outside court), the usual provisions of bankruptcy law apply. This means that secured creditors are paid first as the order of payment under bankruptcy rules applies only to unsecured creditors, followed by specially preferred debts, preferred debts, ordinary debts and deferred debts. Reasonable funeral, testamentary and administration expenses have priority over preferential debts. The PR’s must proceed with extreme caution as if they pay an inferior debt before a superior debt leaving insufficient monies to cover the superior debt; they could find themselves personally liable. The PR’s must pay debts in the order of priority found in s328 IA 1986. They must ensure that all creditors in the same class are treated the same, as they cannot pay one creditor in the class in full and not pay the other creditors in the class in full. If however the PR’s have made the payment in good faith at a time when they believed the estate was solvent, then they will have a defence.

https://www.tbilaw.co.uk/site/blog/family-matters-blog/what-does-administering-an-insolvent-estate-mean

Owain_Moneysaver

If the estate is insolvent, and no-one wants to pay for the funeral, the local authority should be asked to provide a public health cremation.

Hitchamite

Many thanks for all your responses, which stopped her visiting the deceased's flat the next day. As suggested, I steered her towards the Bereavement Advice Centre who are now advising on how to negotiate with her cousins as to how to proceed.

Potential crisis averted! Thank you once again for your input.

AnotherJoe

Surely there's nothing to stop her paying for the funeral if she wishes to?

That wont obligate her in any other respect?

Silvertabby

AnotherJoe wrote: »

Surely there's nothing to stop her paying for the funeral if she wishes to?
That wont obligate her in any other respect?

That's the way I understand it. The person who arranges the funeral signs the contract with the undertaker, and so is then personally liable for the bill.

It's then ususal practice to use any assets to pay for/help pay for the funeral - but if the niece pays the total cost herself then I can't see how it would be classed as 'intermeddling'.

But happy to stand corrected if I'm wrong.