Inheritance 26 March 2021 at 3:26PM in Bankruptcy & living with it 4 replies 381 views

mothmus

My Sister lives with my mum, she has mental health problems and hidden the fact she has run up alot of debt and a CCJ. 
My Mother is elderly and has no will and owns the house outright.
I have one other sibling, we have talked about the future and my mother wanted my sister to live there indefinitely.
We do not object to this but the debt she has run up is more than the share of the house she would inherit.
How do we protect the house from potential charging orders or bankruptcy?
Can we setup some kind of trust, or a will?
Thanks.

[Deleted User]

You don't, if she's a beneficiary. If one of her creditors gets a charging order, they would be paid from her share of the sale of the house, whenever that may be. Your share would remain unaffected.

The only alternative is that she is removed as a beneficiary.

mothmus

Thanks,
our main concern is if she declares bankruptcy after becoming a beneficiary, would that force a sale?
we would not be able to buyout her share right away.

Mouse007

You say your mother has no will, then the simple answer is to get one drawn up with your sister’s share held in a life interest trust. That would put the house beyond the reach of her creditors.

Might be a difficult conversation with mum, but you need to have that chat to encourage her to make a will and protect the home.

Keep_pedalling

Mouse007 said:

You say your mother has no will, then the simple answer is to get one drawn up with your sister’s share held in a life interest trust. That would put the house beyond the reach of her creditors.

Might be a difficult conversation with mum, but you need to have that chat to encourage her to make a will and protect the home.

Agree, your mother would be foolish in the extreme in not making a will. Even without the debt she should be protecting your vulnerable sisters interest in the house. It makes sense for her to leave the house you and your other sibling with your sister getting a lift time interest, which will give her a roof over her head for as long as she needs it.

Get her to contact a local solicitor ASAP.  Without the debt,this could be achieved through a deed of variation, but that would be treated as deliberate deprivation of assets while she has significant debts.