Help with debt to Local Authority

Creashor

Hi

I have been asked by my wife to sort out her late Father’s estate. Currently, I am being chased for an outstanding debt of £12.5k for his in-home and residential care. 

His estate doesn’t have that money but is due to receive a rebate from his rent (that was still being paid for despite his move into residential care) and a small life insurance policy. 

In total, I estimate his estate to be worth no more that about £8k. That will be reduced by £3.5k for his funeral costs. 

The LA are demanding the residual amount to set against the debt.

My question is simple, do they have a legal right to that?

We haven’t employed a solicitor due to the uncomplicated nature of his estate. 

Any help would be gratefully received. 

Thanks

Owain_Moneysaver

This estate is not uncomplicated. It is insolvent. Normal advice is to not "intermeddle" in an insolvent estate, and tell the council the estate is insolvent with no administrator. If they want to, they can apply to be appointed administrator as creditor of the estate. 

If you have already started to administer the estate, you should seek professional legal advice. There may be other creditors of the estate (overpayment of pension or DWP benefits, etc) and if you don't do this correctly you can be held personally liable as administrator for the debts. 

Silvertabby

Does that £8K include the life insurance policy?  Was it paid to a nominated beneficiary?  If so, then it may not be part of your fil's estate. 

xylophone

As Silvertabby says, the  insurance policy may have been written in trust with a named beneficiary and so not part of the estate - if so, then creditors have no claim against it.

The rent rebate and any other monies in his name  are part part of his estate.

If there is not enough to meet his obligations, ( the estate is insolvent) then there specific rules relating to the order in which creditors must be paid.

You may prefer not to intermeddle  - see https://www.bereavementadvice.org/topics/probate-and-legal/insolvent-estates/

Creashor

Thank you so much for your replies. I am waiting to hear from the Life Insurance company so I will enquire. 

It all seemed so simple. No mortgage, no debts (bar the LA care bill) and no assets. Up until the identification of the rent over payment, it seemed that we would not even need probate to get things tied up. However, the landlord is insisting on a letter of administration before the release of a refund. 

Having read up on insolvent estates after reading the first reply, I’m now concerned that we may end up making a mistake and become liable. For instance, I think there is a small overpayment from his private pension provider, who will want repaying. How does that compare to the debt to the LA? Who gets paid first? I suspect a solicitor is required and the money we paid for his funeral will go in fees to them. 

I really feel for my wife. Grief topped with stress about these matters isn’t something she needs. 

Again, thank you for your kindness in replying. 

Keep_pedalling

If that is all he had he should have been fully funded, and his only contribution to his care costs should have come from his income.

So either he was incorrectly assessed or his contribution out of income was not paid. If the former then you can challenge the costs,  If the latter what happened to the income that should have gone to the LA?

xylophone

https://forums.moneysavingexpert.com/discussion/6142504/care-home-fees/p3
This thread bears some similarity to the above in so far as there appears to have been some liability to pay most pension income to the authority?

While the deceased was at home, was he responsible for his own financial affairs?
Or was a PoA in place?

Creashor

My Father in Law was cared for by my sister in law, and it was she who was administering his affairs, although, from what I can see, this was done on a casual basis. Looking at his bank statements it is becoming apparent that she was not doing that properly (I'm being kind, here). When he died, the social worker responsible for his case, advised my wife that she felt that my sister in law was not coping or fit to continue to have that responsibility, hence why we have now been left to sort out the mess.

Some tough family conversations to be had but I believe that a solicitor will be required.

xylophone

 When he died, the social worker responsible for his case, advised my wife that she felt that my sister in law was not coping or fit to continue to have that responsibility, 

A bit late?

Creashor

Yes. I also can't believe that the local authority and the bank did not throw up red flags. 
Unfortunately, the more I am discovering the more I feel that this isn't just a case of who has a right to the estate, but how did the estate end up where it has.

Brynsam

Creashor said:

Thank you so much for your replies. I am waiting to hear from the Life Insurance company so I will enquire. 

It all seemed so simple. No mortgage, no debts (bar the LA care bill) and no assets. Up until the identification of the rent over payment, it seemed that we would not even need probate to get things tied up. However, the landlord is insisting on a letter of administration before the release of a refund. 

Having read up on insolvent estates after reading the first reply, I’m now concerned that we may end up making a mistake and become liable. For instance, I think there is a small overpayment from his private pension provider, who will want repaying. How does that compare to the debt to the LA? Who gets paid first? I suspect a solicitor is required and the money we paid for his funeral will go in fees to them. 

I really feel for my wife. Grief topped with stress about these matters isn’t something she needs. 

Again, thank you for your kindness in replying. 

Provided you haven't yet done anything which could be construed as winding up the estate, walk away now, however hard that is emotionally, especially for your wife. Don't worry about settling debts; just tell all creditors nobody is administering the estate but if they want to do so, they can. As for the refund of rent, forget it; if you aren't administering the estate, you don't need to worry about claiming it.