Help with debt to Local Authority

Creashor

I suspect that it is too late for that.
We have not made any formal claim to be recognised as administrating the estate but I have spoken to various parties (bank, the local authority, life insurance company and the housing association). I did this to try and establish what the situation is. It was only as I peeled back the first layer or two that it became clear that all was not rosy.

Creashor

I've just received a call from the LI company who've advised that the money is on the way to the account, so I'm pretty sure it's too late to back out now.
Of course, I wish I had known about this when we were asked to step forward by the Social Worker. There is no will so no executor was named and it seemed to be the right thing to do. Anyway, it is what it is.
I have established that the estate is definitely insolvent. Having looked at the order in which creditors must be paid, I am slightly stuck.
There are no secured debts or any taxes owing. The funeral costs come next, which have already been paid at the time by my wife. My understanding is that she should be reimbursed (though that will exist only on a spreadsheet until such time that I have agreement from the other creditors). The confusing point comes next. My FiL's private pension has continued to be paid in error so a refund of that will need to be paid but I am unclear as to the priority versus the claim for his care costs from the Local Authority. Does one trump the other, given there will be insufficient funds to pay them both?

Brynsam

Creashor said:

I've just received a call from the LI company who've advised that the money is on the way to the account, so I'm pretty sure it's too late to back out now.
Of course, I wish I had known about this when we were asked to step forward by the Social Worker. There is no will so no executor was named and it seemed to be the right thing to do. Anyway, it is what it is.
I have established that the estate is definitely insolvent. Having looked at the order in which creditors must be paid, I am slightly stuck.
There are no secured debts or any taxes owing. The funeral costs come next, which have already been paid at the time by my wife. My understanding is that she should be reimbursed (though that will exist only on a spreadsheet until such time that I have agreement from the other creditors). The confusing point comes next. My FiL's private pension has continued to be paid in error so a refund of that will need to be paid but I am unclear as to the priority versus the claim for his care costs from the Local Authority. Does one trump the other, given there will be insufficient funds to pay them both?

Get proper advice urgently from a professional - relying on this site, where we haven't got much information, isn't in your interests. If the life policy was written under trust, it's almost certainly not part of the estate, so all may yet be well.

Ratkin007

You've mentioned rent rebate and Housing Association. Was your father in law in receipt of housing benefit or was he responsible for paying his own rent. If Housing Benefit then be careful of accepting any refund as it could be a HB overpayment. The HA should know about making sure that is checked but just in case.

xylophone

It seems to me that only monies properly due and owing to your FIL can be regarded as part of his estate.
If you are saying that the pension was paid after his death (and was not paid in arrears), then such money cannot be his and therefore must be returned?

If he overpaid rent and this overpayment is returned, then the money forms part of his estate.
Order of debts is here
https://www.bereavementadvice.org/topics/probate-and-legal/insolvent-estates/

You will note that the funeral costs are second only to secured creditors. It would seem that there are no secured creditors?

The LA is an unsecured creditor - it would appear that it can make a legitimate claim on  whatever is left after the funeral expenses.

With regard to the insurance policy, you must establish whether or not it was written in trust with a named beneficiary and so not part of the estate.

Creashor

Regarding the pension, yes, this money will have to be returned to the pension provider. My issue was whether or not those funds were considered as a debt in the same way that the LA debt is. Your point is a good one. If those funds were never his, they should not be counted as a part of the estate. 

I will confirm the position with the Life Insurance company. 

Thanks for your help. 

HHarry

Contacting Banks, etc to determine the financial solvency (or otherwise) of the estate shouldn’t class as intermeddling.  Otherwise you’d have no idea whether or not you should get involved.

Arranging, and paying (out of the estate for), a reasonable funeral shouldn’t get you in any bother.

Robert_McGeddon

Keep_pedalling said:

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?

I'm not seeing how Keep_pedalling's post has been addressed.

People requiring social care should be assessed and means tested by the Local Authority. If their net assets are under c£16,000 (from memory!) the LA picks up the tab, be it for care at home or residential care. Between c£16K and c£23K the care costs are split between the LA and the care recipient. Above c£23K the care recipient has to self-fund.

Given the numbers thus far in the thread it may be that the LA should be picking up the care costs and it may therefore be that the estate is actually solvent.

Linton

Yes, Keep Pedaling's point is very important - if  money was wrongly not paid to the care home and is not in the deceased's bank account it is possible that SiL could be held personally responsible for the debt.

Creashor

Yes. That is the crux of it, I think.
He has not received any benefits, other than his state pension, for at least 5 years. He had no other assets, lived in a housing association flat but did receive just about £1200 pcm from two pensions. Our assumption was that his pensions were contributing to his care up to the legal limit. Since the demand prompted us to investigate, and after receiving the bank statements this week, it is clear that the money has gone elsewhere, probably to the SiL, given that she had sole access to his account.

It is this element that is troubling us so greatly. The death has hit her very hard and her mental state is fragile. We need answers but lockdown makes a face-to-face discussion as to what has happened very difficult. My wife is concerned that unless my SiL is supported in person, well you can probably guess the rest. She is faced with the prospect of involving the police but her appetite for that is zero.

We are going to be speaking to a solicitor because we are concerned that by uncovering this and not informing someone, that we are complicit after the fact in someway.

No one should think that I'm using this message board as a source of truth or singular guidance, but it is useful for me to learn from the experience of others and any pointers they can give.