Mother in laws estate

getmore4less

Keep_pedalling said:

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. 

I saw that and they say HMRC and council tax. 

Try and find any other reference that council tax is a preferential creditor including actual insolvency legislation
I have not found any. 

sixtyfoothigh

Thanks everyone for the replies.

It appears that we have two options:
1) Walk away from the estate completely and just arrange a funeral at our own cost. In which case we'll probably end up being around £3k out of pocket. 
Financial outcome = -£3k

2) Administer the estate appropriately including making sensible efforts to ascertain creditors
Financial outcome = depends on debts
Best case (based on the ca. £1k debts as we're aware of) = +£2k
Worse case (other creditors come out of woodwork and makes it insolvent) = £0 (if we handle the administration properly), or -£? (if we make a mess of the administration).

Can I stress that I'm pretty sure it's solvent, my question 3 was a hypothetical as I always overthink everything and want to know what the worse case answer will be, and didn't realise that it everyone's answers would focus on that because it makes it so very complicated. Give that she'd need to have around £4k in hidden debt (plus the £1k we know about) and we'd need to make mistakes to make option 1 more financially viable, we're probably going to go with option 2. Particularly because I think we may have already started intermeddling by starting her flat clearance before I even posted here... nothing of value in the property, but while we went through boxes and bags of junk looking for paperwork we had cleared a load out of junk and took photo albums etc. (philanthropically we know the local council will want the property back ASAP as they'll have a huge waiting list for fully adapted disabled access flats, and we want them to have it back). I never realised how many pitfalls there were in bereavement.

Given the above is it sensible or not to post in the Gazette? It seemed to be the done thing for an executer to cover themselves, because if we're acting I'd rather know her liabilities asap and get this done.

And finally, even though this estate's probably not solvent the responses HAVE been useful, as my best friend was talking to me about her mums situ and how she fears she'll be doing all this soon and her mum has substantial debt and no assets/insurance at all... I told her about this, and now she'll hopefully avoid a very tricky situ.

Thank you. x

Savvy_Sue

Personally, I still don't think a notice in the Gazette is worthwhile if your DH is the only beneficiary. The way I read this page is that if you don't post one, you could be personally liable for any debts crawling out of the woodwork after you've distributed the estate. If there were multiple beneficiaries, responsibility for those debts would rest with whoever dealt with the estate - you could ask the other beneficiaries to chip in, but I don't think you could make them do so. 

So if your DH is the only beneficiary, then he's the only one who's potentially responsible anyway. 

BTW, I would ask any creditors to 'prove' the debt, don't necessarily take their word for it. 

Check with the council what their minimum notice period is to end a tenancy after the death of the tenant. You might find that even if you clear the property in half that time, they'll still charge that minimum. 

And I would prioritise paperwork relating to bank statements etc and anything sentimental, then get a house clearance / clean done. It will cost, but in my experience it's worth every penny ... 

sixtyfoothigh

@Savvy_Sue
See maybe I've misunderstood - I thought that if we placed one that any hidden creditors had two months and one day to come forward. If after that time they haven't my husband can assume that money left in the estate is his to inherit (plus the small chance we find out we're dealing with an insolvent estate) and if they come through later than that we can tell them "too late" (and evidence that we have acted with diligence to establish who they were). Whereas if we don't do the notice they could appear at any point over the next 6 years until debts would become statute barred (and may come through at a point where we're in a less suitable position to deal with it).
It looks like it costs £215 to do notice with a PO box plus local paper notice - which seems like good value to know we've got this closed off in 8 weeks (rather than 6 years). But as admitted above, we're very new to all of this, so maybe I've misunderstood the purpose completely.

And thank you for the advice about the council. I spoke to them today and explained we were potentially dealing with an insolvent estate and that we hadn't decided yet if we were going to administer, and they said it would be terminated from the moment someone sent the death certificate and their normal practice was for insolvent estates to write off debt. They have sent me a copy of the form I would use to formally inform them and end the tenancy. They were very kind TBH and knew my MiL and her issues. 

sixtyfoothigh

I will add, if the estate was solvent we have every intention to sort properly. And I do want to get the property back to them quickly -  mostly as there must be disabled people on their lists desperate for a place like this. A local charity that helps homeless people into new housing is probably going to come and take the furniture. The rest is honestly just junk and will be going to the local tip in my car. She was in a tiny accessible 1 bedroom flat - apart from knick knacks and cushions and bags of "filing" there wasn't anything else. 

Savvy_Sue

OK, this page is from the Gazette, and still supports my contention that there's no point doing this if your DH is the only beneficiary. 

And this page is a useful guide to how to deal with debt after a death. They are still saying the HMRC and Council Tax are priority debts, and as you'll have seen there's a bit of a debate about that. But I think it's a useful start on how you get companies to 'prove' the debt. 

The other thing worth saying is that you can take your time over sorting the 'filing'. Get the post forwarded to your address, see what develops, if you haven't got bank statements ask the banks to provide them. 

And don't feel you have to provide your address and phone number to everyone asking for them in relation to MIL's debts. They can continue to write to MIL's address, post will be forwarded, you can deal with it in your own sweet time. 

BTW, it might be worth letting the council know that she may have taken out doorstep loans. The new tenant needs to be forewarned, but should NOT have your forwarding address! If someone at the door thinks they're owed money by the previous tenant, they can write to them and the letter will be forwarded by Royal Mail, thank you and good night. 

sixtyfoothigh

That's all really useful advice. Thank you so much and have a good night yourself.

getmore4less

Arranging and getting a funeral paid direct does not count as starting administration.

frayedknot

Is the funeral insurance 'assigned' to anyone. If it is it does not form part of the estate.
Good advice to clear flat asap, it isn't intermeddling.  And the rent can mount up.
Don't bother with the notice in the Gazette. Creditors can sue you as benefactor if not as executor. Doorstep lenders and the like have no legal leg to stand on. 

sixtyfoothigh

@frayedknot - we have spoken to the insurance and believe my husband is the beneficiary of the insurance. They said we just need to provide a death certificate and it would then be paid directly to him. If that's the case would it not count as part of the estate?

If that's the case then her estate would just be the £400 and would definitely be insolvent (as I still think her debts are around £1k). So if we then just clear the junk out from her flat, do the funeral, and notify those that we're aware of that she's passed but it appears to be an insolvent estate that no one is doing the administration for (using the template letter I've seen shared on here) - then that wouldn't count as intermeddling?

I actually feel a bit bad that if there is money left over from her insurance that genuine debt wouldn't be cleared, but I'm assuming if we did try to do what feels morally right that we would be intermeddling and actually could make ourselves liable for hidden debts later on.

I'll keep reading up as obviously if my husband is the beneficiary that's good news for us (as like for many people money has been tight!), but I just want to make sure we're acting properly/reasonably.