Negotiating Estate Debts with High Street Bank

vitaweat

7thwave said:

Downsizing would be sensible, but she is very attached to the house. Although it's not what brought me initially to this forum, any sources of good advice on this that you can direct me to would be very much appreciated.

Downsizing is simply selling a house and buying a smaller (and usually cheaper) one!  Normally this means you can free up some capital which you can either keep as a lump sum or use to provide an income plus the new place should be cheaper to run.
The downside is that she will need to pay legal fees and probably stamp duty too which will eat into the cash she gets.  Plus moving is a complete PITA at the best of times and even more so if you're old and frail.

Linton

7thwave said:

......

If plan A (essentially a charge on the house only) isn't acceptable to the bank, then me trying to persuade all of the other executors to volunteer/propose a repayment schedule to the bank - even an interest free one - will be a difficult sell for me to make to them right now. One of the other executors definitely has their own significant money problems, and which my dad had been trying to help them with. I've also had a number of difficult conversations with them recently about the fact that we do need to settle dad's debts. They were also aware that dad had taken out this loan but I was in the dark about it and only found out after he'd passed away.
.........

Perhaps coming up with a payment proposal would be easier to sell if you explained things bluntly to them:
it is the executors legal duty to pay off any debts before an estate is distributed to the beneficiaries. If they don’t the courts can hold them personally responsible.

For example see https://www.co-oplegalservices.co.uk/media-centre/articles-jan-apr-2017/executors-personal-liability-explained/

7thwave

Linton said:

Perhaps coming up with a payment proposal would be easier to sell if you explained things bluntly to them:
it is the executors legal duty to pay off any debts before an estate is distributed to the beneficiaries. If they don’t the courts can hold them personally responsible.

I do know this, and it's why I'm here! I'm trying to get the ducks in a row to help me get that fact across to others who need to understand it better, especially about how we best go about negotiating settlement with the bank, something I have no previous experience of - you people have waaaay more experience of this than me.

Keep_pedalling

vitaweat said:

7thwave said:

Downsizing would be sensible, but she is very attached to the house. Although it's not what brought me initially to this forum, any sources of good advice on this that you can direct me to would be very much appreciated.

Downsizing is simply selling a house and buying a smaller (and usually cheaper) one!  Normally this means you can free up some capital which you can either keep as a lump sum or use to provide an income plus the new place should be cheaper to run.
The downside is that she will need to pay legal fees and probably stamp duty too which will eat into the cash she gets.  Plus moving is a complete PITA at the best of times and even more so if you're old and frail.

There is always the option the last resort of using equity release to provide the funds to pay off the debt, and to give the OPs mother financial comfort in her latter years. This would mean all the siblings needing to agree and to complete a deed of variation to do away with the trust giving sole ownership to their mother, but  trust no longer serves the purpose that it was put in place for, so hopefully none would object.

The down side is that the children’s inheritance will be reduced or even lost altogether if long term residential care is ever needed, but the priority now should be the widow.

xylophone

but she is getting increasingly frail and we haven't planned for how we might have to pay for residential care should she need it -

If your mother needed care tomorrow, you would put the house on the market, repay the debts from the proceeds - your mother would receive half the remainder and the Trust would receive the other.

Your mother's half (plus her pension income etc) would finance her care until such time as her assets were reduced to the point where the LA would step in.

xylophone

Another thought, if your mother is becoming increasingly frail, is the family home suitable anyway?
Are there any schemes for the frail elderly in your area where your mother could rent?

You could then sell the property, repay the debts and pass the 50% of the remainder of the proceeds to your mother to enable her to pay her rent and day to day costs.