IVA - Inheritance help please.

DogoTheDog

Hi there, 
Hoping someone can help.
Apologies as I've posted similar to the inheritance section but thought this might be a more suitable location.

I'm working on my Father's Estate and have just learned that one of the beneficiaries (my brother) has an IVA against him and my understanding is that any money left to him would first go to satisfy the IVA.  This individual can be somewhat volatile so it’s a bit scary to have to break this to him so I’m yet to tell him of this finding. I’m sure he knows he has an IVA but is maybe hoping that we won’t check and it will go undetected.

I’ve read that sometimes the IVA company will take all of the money in question but sometimes they will leave a portion for the beneficiary even if the IVA is not full repaid. Does anyone have any experience with this?

Also, should we tell the beneficiary first about this potential issue before we call the IVA company to notify them? Or do we leave it to the beneficiary in question to notify them and provide us with written confirmation as to how we move forward with the monies owed to them?

I don’t want to do anything to enflame the issue. Honestly my life would be easier to give the money to my brother, but I know we have to follow the law.

Just looking for any guidance for anybody who has been through anything like the above.

Thanks in advance for any help.

RauHughes

The inheritance will be due into the IVA. The only time the IP will set aside some of the funds if is the beneficiary is required to pay towards funeral or legal costs, or if the inheritance will be sufficient to settle the IVA in full + the fees of the arrangement (and possibly statutory interest depending on the terms of the proposal)

Failure to intrude the funds would cause the IVA to fail, which would be sufficient grounds for creditors to petition for bankruptcy which they may do if the inheritance is significant as this would ensure they received their share. If you believe your brother may try to retain the funds, it may be worth having a difficult chat with him as he could end up in a significantly worse position.

As for your legal obligation to notify the IP - I don't know. I feel you need legal advice from a solicitor on your obligations as executor. It's common for a Will to include a clause to exclude inheritance being paid to anyone subject to formal insolvency proceedings - are you sure this clause isn't contained within the will?

The position for your brother is clear, for you less so. I'd seek legal advice 

fatbelly

As executor your duty is to discharge the estate in line with the will.

What happens then is not your problem and you should not get involved.

sourcrates

There are specific rules for when a beneficiary is bankrupt, I cannot find anythng that secifically relates to IVA`s, but i would assume the rules are the same, you need to check the insolvency register to confirm the IVA is still live, the duty then falls on the insolvent to inform their IP of the inheritance.

You certainly need legal advice on how to proceed with this, as you can be sued if you get it wrong, and make payment to the wrong party.

JCS1

I have a vague memory that the executor has to pay funds over to the IP in these cases, and checking for insolvency is something the executor has to do.  I would suggest some time with an insolvency solicitor to check the law, as an executor you don't want to do anything wrong.

normanna

DogoTheDog
Your brother must tell his IP about the inheritance anyway.  I would strongly advise you speaking with a solicitor.  Your duty as an executor is not just to follow the wishes of your father, you have legal obligations when settling the estate, one of which is to check if a beneficiary is bankrupt and there can be serious implications for you if you fail to disclose.  Whilst this is an IVA  I would have thought that disclosure would still apply.  Please seek legal advice as I have just been through the executor process myself but fortunately this did not apply.  

I had to contact a solicitor as I had a complex issue to resolve and the fees were not as high as expected and they do get paid from the estate so I wouldn't let an expense put you off seeking advice.

Sorry for your loss.