Mother in laws estate

sixtyfoothigh

Hello,
My mother in law died on New Years Eve. I'm helping my husband sort out her estate. She had a complicated life and her affairs are not in good order. Her filing system was interesting... basically carrier bags and boxes, but not in any particular date or category order. She did however appear to have an insurance plan for £6k to cover funeral expenses and outstanding debts. She only had around £400 in the bank. 

A few questions:
1) Given the circumstances it would seem sensible to place a deceased estate notice - she had mentioned debts, but we can't for the life of us figure out who she owed money to. I'm assuming if we place one of these and wait the correct period, at that point we should have no concerns over creditors we're not aware of appearing out of the woodwork.
2) We've found a local funeral director that offers an all inclusive package £2600 - is it true that we can claim this cost from the estate, or do debts have priority over funeral costs. We're not trying to be unreasonable if she does have creditors then they should get paid - but we obviously need to plan the funeral now, and won't know about debts for a couple of months. (And don't think £2600 is unreasonable, anything lower than that was direct cremation and didn't include a service to say goodbye - we're hoping if after creditors come out of the woodwork there's money left that we can pay to have her ashes interred in her late husbands plot and a new headstone with both names put up - but that can wait until we know what's happening with her debts).
3) If we get the money from the bank and her insurance, pay for her funeral, and then the remaining money doesn't cover her debts, how is it worked out? Is it pro rata? Or do we have to follow any other legal processes?

Thank you in advance for any help.

Savvy_Sue

Funeral takes priority over debts, but if you suspect estate will be intestate, do NOT attempt to deal with it. Do not post a notice in the Gazette, do not attempt to work out who the creditors are, let them come to you and then say "the estate of Mrs X may be insolvent and no-one is administering it." 

Check the details of the insurance: does it say 'funeral plus debts' or is it a straight funeral plan? If it's 'plus debts' you may need professional help because dealing with insolvency isn't simple, but it costs money.

Is there a house to sell?

Keep_pedalling

The first call on any estate is funeral costs ( including interment of ashes and headstone) , so  you do not need to worry about paying those from the estate,If after that her debts exceed her assets then the estate is insolvent, in which case you should not attempt to administer it. 

If all she has is £400 in the bank plus the insurance policy, then I would not put a notice in the gazette. In the first instance I would just look at her bank statements to see if there are any regular payments going to pay credit and or  store cards, and see if there are any statements in her “filing system”. Debts should be paid pro rate, but frankly there will be little if anything left over after funeral costs, that I would simply write to any creditors that you do uncover informing them of her death (enclosing a death certificate) and let them know that her estate is insolvent and that no one is administering it. 

sixtyfoothigh

Thanks for replying. I don’t necessarily think it will be insolvent. From the paperwork I’ve found so far I think she owed a few hundred pounds in council tax from arrears a few years ago. (The most recent documentation was her owing £800 but that was from 3 years ago and from her bank statement I think she’s been paying more council tax than needed so has been paying it off gradually so probably owes less than that now). But her records are impossible (on certainly incomplete), and I don’t want to assume it’s the only debt, as I know she has been a victim to doorstep loans people before (don’t know if she was at the moment) - but never to the tune of more than a few hundred quid at a time, though she always hid evidence she was doing that. 

She’s in a council rented property. We’ve already gone through nearly everything there trying to find info. She has nothing of value in the property. She has a new oven and new tv that we actually owed both of (have proof of that as we bought them recently while trying to help make her life a bit better) and everything else is literally junk (though potentially her mobility scooter could be sold).

Ill call the council and find out tomorrow about if she does still owe them money, but if it’s what I think then it looks solvent so we would start to administer. And then surely we would have to put a notice in the gazette to cover ourselves? My question was more what happens if we do get a nasty surprise that does mean the estate is actually insolvent - we can’t just turn around then and stop administrating can we? Or does sorting out the funeral and putting a notice out to find out about debts not count as starting to administrate?

The insurance was “Asda over 50 life insurance” for “funeral costs, dealing with outstanding debts, and leaving a gift to loved ones”. If there hadn’t been this policy the estate would have been insolvent. So I guess I need to find out that she has a valid claim before making a decision on whether we proceed with sorting her estate out. Again, does ringing the insurance company to enquire if we can make a claim count as administration? Or would we actually have to get the claim processed for it to count?

If we can claim the insurance and the debts are what is apparent her estate will give my husband about £2k once debts covered and funeral paid.

Thanks again for your help.

sixtyfoothigh

@Keep_pedalling her bank statements show her normal direct debits for utilities rent etc. The only clue is her council tax debit is higher than it should be for a one person flat in that area. But she dealt with nearly everything in cash - she’d take out cash and live off that. My main concern for hidden creditors is door step loan people - she was a very vulnerable lady and had owed money to them before - and would always deal with them in cash.

Sea_Shell

Even if you find that the estate is only just solvent, is it worth the risk of administering for a couple of £k? 

But then I don't know what happens to an un-administered estate it it comes to light that they did, in fact, have substantial (hidden) assets ?       That "missing/lost" Building Society pass book with £10,000 in it, that type of thing.

Keep_pedalling

Council tax is a priority debt and comes before a claim for in secured debt. Is your husband the only beneficiary? 

Robert_McGeddon

Be careful about indebtedness to the council. They sometimes assert a right to money for dilapidations, notice period etc. Also, if you're going to administer the estate then effect a house clearance ASAP but if not you can't really touch her possessions.

getmore4less

Possessions can me moved for safekeeping without intermeddling. 

getmore4less

I recall council tax and HMRC lost the preferential status years ago. 
They fall into unsecured creditor pot. 
(HMRC priority change Dec2020) 

Keep_pedalling

getmore4less said:

I recall council tax and HMRC lost the preferential status years ago. 
They fall into unsecured creditor pot. 
(HMRC priority change Dec2020) 

I know HMRC lost that status, but according to this website council tax still has it.

https://www.moneyadviceservice.org.uk/en/articles/dealing-with-the-debts-of-someone-who-has-died

If by doorstep loans the OP is referring to unlicensed loan sharks, I don’t think they would be enforceable.