Brother-in-law died, no will, no up to date paperwork, no state pension, loads of bills!

sixtyfoothigh

We've just gone through something similar with my MiL. We didn't realise until we started going through the labyrinthine paperwork "system" that the estate might be insolvent. She lived in a one bed council disabled access property which was stacked with random junk and we'd already started taking trips to the dump before we discovered the potential insolvency and got advice on here.

Having spent the last three weeks really doing nothing but thinking about these situations here is what I understand. Dealing with insolvent estates can be hard and complicated and open you up to financial liability - mostly because if you mess up paying the creditors correctly you can put yourself liable for debt. The creditors must be paid in a strict order. Most creditors are priority 5 (unsecured creditors). If you paid the funeral costs (priority 2) and secured creditors etc. and there's a bit of money left then you pay the unsecured creditors each a pro rata portion of what was left, and a new priority 5 creditor came out of the wood work later you might be liable to pay them as if you'd known about them at the time. You can do things to protect yourself from liability - but they cost money (such as paying to take out an ad in the gazette, or going to court for an Insolvency Administration Order) - and technically you could claim that money back against the estate (legal costs are priority 3)... but if there's no money in the estate then it's just throwing bad money after good. Also it's a lot of time and effort - for no gain (other than "feeling you've done the right thing").

Hence the advice to just walk away from an insolvent estate is good advice. Don't do anything and just write to anyone who is hassling you with the memo "the estate looks likely to be insolvent and no-one is administering it". From a landlords PoV technically what they should then do is serve a notice to the Public Trustee that they are terminating the tenancy due to a death of someone where no-one is administering the estate - they will then get permission (eventually) to clear the property and re-let. They would obviously be losing money on rent that entire time (unless they have landlord insurance)... I suspect most landlords would ignore the law and just clear the property (I work in housing and the stories of illegal stuff landlords pull makes my brain melt). If there's anything you want in the property the landlord would need to give you permission to access and take stuff, which they don't have to do. So if you go with the sensible walking away option you have to be ok with losing anything that's in there.

The position I was in was that I had half cleared the property and junk before I realised the situ. The council were desperate for the property back and we had no desire to prevent someone on the waiting list getting a much needed home. So we photographed and made a list of all the junk (prior to it being taken to tip and/or collected by charity), and moved paperwork and the limited number of items that might have value to storage. This is one of the bits that I'm still vague on... clearing the property and disposing of items is normally considered intermeddling, however actions that secure/prevent loss of the estates assets or if actions are necessary or charitable or normally considered not. If anyone challenges us on it then genuinely I think it was a necessity to return the property to the council (to stop further debt being built up and preserve anything that was left of the estate) and we have secured the very limited assets that were there safely in another location (plus we have recorded/photographed what went to charity if we need proof it was of no value). Was that intermeddling? Maybe... probably... the council were just happy to get the property back (even told us we could leave most of the bulky furniture and they would clear it, if that meant they could have it back quicker) and I'm hoping someone will be made happy by finally getting the accessible accommodation they've been waiting for.

We then set up a new email address which wasn't linked to our names and emailed all her creditors that we were aware of to say we wanted to inform them of her death and that the estate was likely insolvent (based on our brief enquiries), that no-one was administering, and that they were very welcome to administer themselves and if they were interested we'd hand over everything - but PS she probably only had a few hundred in her account (attached a recent bank statement), probably around £1-2k in debts, and the reasonable funeral costs we were paying (and had receipt for) would be first call on the estate should anyone administer it (leaving nothing for the creditors to have a pro rata share of). So far everyone has emailed back to say "no no, zero chance in hell we want that hassle, we'll write it off". This probably works well given that my MiLs creditors were all quite small amounts - the largest was the council at £1.3k (everyone else was £200 - £500 each).

I guess we could have not done a lot of the above, but then we would have lost the photo albums and letters and other stuff like that.

Phew. Turned into an essay!!!! TL;DR - definitely consider walking away, but if you've already started clearing the property it's not the end of world and worth doing some reading to understand your position.

S. x

Bobbysoxx29

Thanks for all your comments. There is certainly a lot to think about.
Firstly, he was my husband's brother( the username is a ruse, I am female!)
There are 3 siblings, my husband and 2 younger sisters. We have employed a house clearance firm who have cleared the place and haven't found anything of value or any meaningful paperwork( i.e. a will). We visited once with the landlord (he had to break in and found him, so he changed the lock) to see if we could find anything (bank statements, savings pass books or a will), but all we found some unopened bills (Water, gas, electric, council tax) and some old pass books, pep statements, insurance policies from years ago. His sister says he had a few pence in his bank account and when she informed DWP they had no record of him. We think he had several thousand pounds in savings which he used for his day to living and didn't bother to claim anything. (He lost his wife 10 years ago and she sorted everything)

Bobbysoxx29

Just for the record he was 74 years old.

Mojisola

Bobbysoxx29 said:

Just for the record he was 74 years old.

If he really didn't claim his pension, there's quite a sum built up in that.

p00hsticks

Mojisola said:

Bobbysoxx29 said:

Just for the record he was 74 years old.

If he really didn't claim his pension, there's quite a sum built up in that.

Except that, as far as I'm aware, only a spouse has any claim on a deferred state pension if someone dies before claiming it, and he is apparently a widower. So as far as I can see, if you defer and die before claiming it's not something that the estate can then claim and use to set against any debts.    

Mojisola

p00hsticks said:

Except that, as far as I'm aware, only a spouse has any claim on a deferred state pension if someone dies before claiming it, and he is apparently a widower. So as far as I can see, if you defer and die before claiming it's not something that the estate can then claim and use to set against any debts.    

That's rough.  The most the estate can claim is three months payments - I thought it would be the full amount.

xylophone

some old pass books, pep statements, insurance policies from years ago. 

The pass books showed that all cash had been withdrawn?

The PEP statements indicate that they were encashed?

https://en.wikipedia.org/wiki/Personal_equity_plan

Has anybody checked with the insurance companies as to the fate of the policies?

Is it likely that he had an occupational pension that was never claimed?

Bobbysoxx29

I'm in the process of using a lost account founder to see if he had any money anywhere due to finding various statements dated at least 5 or 6 years ago. Apparently he was in the process of trying to "cash in" an insurance policy which his sister's were going to sign the papers. They live in the same town whereas we live closer to him but BIL didn't want my husband involved. The landlord also knew about this as it was going to pay the rent he owed but unfortunately BIL died before completing the process. His sister has all the paperwork that we found and does seem to know a little more about the situation but is worried as she herself is on benefits and all the reprocussions that entails if any money is found. She does not want to be the executor but having read the posts on here I'm starting to think we need legal advice which means more money and some more sleepless nights!

Malthusian

Mojisola said:

p00hsticks said:

Except that, as far as I'm aware, only a spouse has any claim on a deferred state pension if someone dies before claiming it, and he is apparently a widower. So as far as I can see, if you defer and die before claiming it's not something that the estate can then claim and use to set against any debts.    

That's rough.  The most the estate can claim is three months payments - I thought it would be the full amount.

The terms for deferring State Pension are very generous - in the sense that you wouldn't be able to get that kind of a deal on the open market. (5.8% of the forgone income for life, inflation-linked and guaranteed, in exchange for the loss of the capital on death.) But only if you live long enough to get full value back. As with any collective pension or insurance, those who die early subsidise those who live for ages.

Bobbysoxx29 said:

She does not want to be the executor but having read the posts on here I'm starting to think we need legal advice which means more money and some more sleepless nights!

As far as I can see you and she should just walk away. Tell the landlord and any other creditors that the estate is insolvent, nobody is dealing with it, and they're welcome to apply for letters of administration.

It is not clear that clearing the house was intermeddling. And even if it was, it would be simpler for the landlord to pay lawyers to administer the estate than to pay lawyers to take you to court and force you to administer the estate. They may do neither and write off the arrears rather than throw good money after bad.

Someone mentioned the DWP forms, but having some DWP forms sent to you in no way constitutes intermeddling. Filling them out, sending them back and getting the DWP to pay the State Pension due would be intermeddling.

xylophone

The terms for deferring State Pension are very generous - in the sense that you wouldn't be able to get that kind of a deal on the open market. (5.8% of the forgone income for life, 

Just for the record he was 74 years old.

 His pension was therefore old scheme  - the  deferment terms were much better than those under the new scheme and had he chosen to bring his pension into payment shortly before he died, he may well have been in a position to settle all his debts.

https://www.litrg.org.uk/tax-guides/pensioners/what-state-pension-deferral#:~:text=If you defer claiming, you,to get extra state pension.

The OP has added the information that the deceased was a widower.

(He lost his wife 10 years ago and she sorted everything)

See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/591894/state-pension-deferral-if-you-reached-state-pension-age-before-6-april-2016-and-you-die-extra-information.pdf

What happens if I die whilst deferring my State Pension and I reached State Pension age before 6 April 2016?

This depends on whether you are married or in a civil partnership at the time of your death, and whether you die before or after you claim your State Pension.

If you are not married or in a civil partnership If you die before claiming your State Pension

If you are not married or in a civil partnership and you die before claiming your State Pension, someone else may make decisions about your estate. They may be able to claim up to three months of the State Pension you have not claimed, and this could include any extra State Pension you have earned before your death. This will be paid to your estate. They cannot choose a lump-sum payment.