Releasing funds from deceased's peer 2 peer accounts

jaytee28

Hi

I am an executor (and beneficiary) of the estate of a close friend who passed away last year.  His financial affairs were quite complex so I obtained the services of a solicitor from early on. About five percent of my friends savings were in three peer 2 peer organizations,  Crowdstacker, Crowd2Fund and Funding Circle.  While all three provided figures for probate (and inheritance tax was payable overall), encashing the funds has been an unexpected issue.  The solicitors have passed a letter on  to me from one of them that suggests that depending on where the money was invested it may be unrecoverable, or not  for several months.

All the other bank accounts have been encashed and the solicitor has made two "interim payments" from the estate, but the other beneficiaries like myself really wanted to obtain closure and have the estate finalized, so this is frustating.

Has anyone else found themselves in a similar position and can you offer any advice?  

Many Thanks.     

Keep_pedalling

Unfortunately P2P is very different to investing in funds or shares, and can be much harder to get your money out. Your friend’s cash has been lent to business borrowers, and repayments come from the borrowers not the P2P company, so withdrawing it is not straight  forward.   

The money is likely to be taken up in multiple loans, and some of those loans will be or will end up in default. It could actually take years to get full closure on these accounts. I don’t know about the other two, but funding circle have a secondary market where loan parts can be sold to other lenders. That was useful if you wanted fast access to your cash, but the secondary market was and still is suspended to to the COVID crisis.

I have got out of P2P, but still have Funding Circle and Assetz Capital accounts, as I can’t close them as both contain bad debts. Most ( probably all) will never be repaid but they still show as money invested 4 years after I got all my other money out.

Marcon

jaytee28 said:

Hi

I am an executor (and beneficiary) of the estate of a close friend who passed away last year.  His financial affairs were quite complex so I obtained the services of a solicitor from early on. About five percent of my friends savings were in three peer 2 peer organizations,  Crowdstacker, Crowd2Fund and Funding Circle.  While all three provided figures for probate (and inheritance tax was payable overall), encashing the funds has been an unexpected issue.  The solicitors have passed a letter on  to me from one of them that suggests that depending on where the money was invested it may be unrecoverable, or not  for several months.

All the other bank accounts have been encashed and the solicitor has made two "interim payments" from the estate, but the other beneficiaries like myself really wanted to obtain closure and have the estate finalized, so this is frustating.

Has anyone else found themselves in a similar position and can you offer any advice?  

Many Thanks.     

The snag is that these aren't just 'bank accounts'. What you are being told is accurate - and if you look at the websites for each of the firms, you'll see the issues which arise when an investor dies and why paying out on demand isn't an option.

I'm afraid the only realistic (if unwelcome) advice is that you need to have patience and wait for things to move forward, as they will eventually will.

jaytee28

Thank you both for your replies.  Speaking to the other beneficiaries tomorrow so shall pass this on.  Thankfully P2P only about 5% of the estate.  Really appreciate your advice. 

Fly_Guy

One aspect of this that springs to mind is that for an estate paying IHT the book value of these investments, as reported and taxed, may well be more than the actual recoverable value of assets that can ultimately be extracted - largely due to bad debts.

As such, at some point you need the platforms to realise / acknowledge the loss so that you can reclaim the overpaid IHT. Simply having a remaining, but unrecoverable, balance on the books for years and years (as mentioned by Keep_pedalling above) is just going to cost you solicitors fees and prevent that IHT refund claim.

getmore4less

is there an option to effectively transfer the account to you  as you can do with a nominee account for shares.

With nominee/shares they create you an account and transfer everything over (often free service) that way you inherit the assets.

if they can do that you get control to do a managed exit by having knowledge of the underlying loans,

Having solicitors do it can cost more than its worth.


You get to close the estate accounts but may have to take the hit if there was IHT paid on nominal values that may not get recovered.

Keep_pedalling

getmore4less said:

is there an option to effectively transfer the account to you  as you can do with a nominee account for shares.

With nominee/shares they create you an account and transfer everything over (often free service) that way you inherit the assets.

if they can do that you get control to do a managed exit by having knowledge of the underlying loans,

Having solicitors do it can cost more than its worth.


You get to close the estate accounts but may have to take the hit if there was IHT paid on nominal values that may not get recovered.

I don’t think it is possible to transfer the account, but the OP says that he is the executor so there should be no problem in getting the P2P companies to deal direct with them.

Keep_pedalling

Fly_Guy said:

One aspect of this that springs to mind is that for an estate paying IHT the book value of these investments, as reported and taxed, may well be more than the actual recoverable value of assets that can ultimately be extracted - largely due to bad debts.

As such, at some point you need the platforms to realise / acknowledge the loss so that you can reclaim the overpaid IHT. Simply having a remaining, but unrecoverable, balance on the books for years and years (as mentioned by Keep_pedalling above) is just going to cost you solicitors fees and prevent that IHT refund claim.

That is a good point. I have just had a look at my Assetz Capital account. Which still has a book value of just over £600 nearly half of which has accumulated through penalty interest payments which is never going to be paid. 

Checking through the previous tax statements I could have claimed the unpaid capital against CGT, so it really should not count as part of my estate.

On funding Circle I have 2 old very small bad loans that are marked as bad debts, so they should not form part of my estate, but to complicate things one of them (owing me £10.17)  is receiving recovery payments (£1.71 last year) from the loan guarantor so maybe it is, and at this rate it is going to take 6 years to be rid of it.

jaytee28

Thank you all for the further replies, I really appreciate it, I was clueless about P2P previously.   I've spoken to the other beneficiaries today on the phone and we're resigned to a long process with this.

The letter I was forwarded by the solicitor from Crowdstacker mentioned the "secondary market". Do we know when that is likely to be reinstated after the Covid suspension?

And the IHT refund - yes I guess a "silver lining" of sorts is that we may well have paid too much IHT on the probate valuations.

On the option of myself as executor taking over the accounts,  again Crowdstacker mentioned that possibility in their letter.  My solicitor is advising against that right now, but presumably I have the final say so.   

Once more many thanks

Marcon

jaytee28 said:

The letter I was forwarded by the solicitor from Crowdstacker mentioned the "secondary market". Do we know when that is likely to be reinstated after the Covid suspension?

You'd need to ask them direct. Some providers have recently reinstated, others have yet to do so.