Mother just died, I have no money of my own, what to do

AlAlbert

I'm wondering how I should deal with the following situation. Any advice would be gratefully received.
(1) My widowed, retired mother died a couple of days ago at the of 84. It was at home and unexpected, so the coroner is now in charge. It is unlikely that there will be a post mortem and I'm expecting to hear from the coroner at some point this week.
(2) My mother's estate consists of (a) her house, (b) those household contents that belonged to her (worth very little), (c) a current account with around £6000 in it at the time of her death, (d) an instant access savings account with around £2000 in it, (e) an ISA with around £2000, (f) some very small shareholdings (say £200-worth), and (g) a very small amount of Premium Bonds (£50 I think).
(3) At the time of her death, she had debts of £5000 to a credit card, around £500 to a care provider, and around £1000 to various utilities.
(4) So net cash assets of only roughly £3750. The house comprises the vast bulk of my mother's estate. Although other similar houses in the area have sold for £900,000 recently, my mother's house is in a very poor state of repair: No double glazing, old central heating, rotting wooden sash windows, some tree-caused subsidence has caused cracks, bathroom and kitchen need modernising, generally poor state of repair. As a result, I don't know how much it might be worth at open market prices.
(5) I have been either the sole or primary carer for my mother since around 2003 when her mobility began to be seriously impaired by arthritis. I have been living in my mother's house in total since 2001. Since 2015 or so, as my mother's care needs increased, I have had very little income and I now have no money of my own and no income. I spent whatever savings I had on general household expenses. I receive no benefits. After my own money ran out, all my living expenses were and are paid for by my mother.
(6) I do not have any joint bank accounts with my mother but I have access to her current and instant savings account online to pay bills, take out money, etc. as needed for the household, food, bills, etc. Clearly I need to go on paying bills, council tax, etc. in order to be able to eat, have somewhere to live, and even have clothes to wear, etc! In principle I can find a job but it seems probable that no amount of money I can earn in the short term will materially change the situation.
(7) It seems likely that my mother's estate will be subject to some amount of inheritance tax. Depending on what allowances can be claimed and the value of my mother's house, this could be between £10,000 to £140,000 (or more). The only way to pay this will be to sell the house for whatever it is worth in its current somewhat run down state.
(8) I'll need to use my mother's funds to pay for her funeral and property valuation for inheritance tax purposes (as well as the usual bills).
(9) I am the sole beneficiary in my mother's will and the sole executor. I am 50, single.

Sorry for the information dump. It's difficult to know what to include and what not to include.

So the overall, net situation seems good in principle. At the end of it when the house is sold I'll be left with a substantial cash balance. But also my home will be gone. And I've got to get there first.

So my questions are:
(1) What do I do to pay for things in the short term? I have no choice but to use my mother's funds. According to her will and her wishes her money is mine to use but I understand that using it might actually be illegal until probate is obtained. Unfortunately I can't wait for probate. What is the correct way forward here?
(2) It is likely that I am going to run out of money before the house is sold. My mother was just about breaking even before she died since she had a state pension and smallish private pension coming in regularly, neither of which I will now be receiving. I cannot borrow money: Understandably no bank is likely to loan me anything. Does anyone know of any way to release some of the value of the property before it is sold? I am too young to obtain an equity release mortgage, not that I could get it before probate was granted anyway.
(3) The same issue relates to things like moving expenses or storage. I will need to clear out the house (which my mother's family have lived in for over a hundred years) and that will take both time and storage space, so I'll need storage before the sale of the house. I cannot pay for a storage unit as things stand, unless I can release some equity from the house in advance of its sale. Any ideas?

If anyone knows what to do in this situation, I'd be really grateful. Yes, I did want to plan more carefully for this scenario which I knew was coming but my mother believed in keeping everything "simple". Some planning would have avoided both the need to pay inheritance tax (the iniquitous existence of which angers me greatly) and the cashflow difficulty I now find myself in. As I noted above, generating income would seem to be helpful but I think it very unlikely that I'll be able to generate enough in the short term to make a material difference to the potentially very substantial expenses I know I'll have to pay out in that timeframe.

Keep_pedalling

There is no reason you cannot access the cash before probate most banks and financial institutions will pay the executor those sort of small amounts  without probate. The first call on the cash is funeral costs, so you can pay that out from the cash in her bank.

Write to the credit card company informing them of the death, and that they cannot be payed until you have probate.

Are you sure about inheritance tax? Hers estate would need to exceed £500k for IHT to effects it, and it could be double that if she was a widow.

Are you living in the house?

AlAlbert

Keep_pedalling said:

There is no reason you cannot access the cash before probate most banks and financial institutions will pay the executor those sort of small amounts  without probate. The first call on the cash is funeral costs, so you can pay that out from the cash in her bank.

Write to the credit card company informing them of the death, and that they cannot be payed until you have probate.

Thanks, that's reassuring.

Keep_pedalling said:

Are you sure about inheritance tax? Hers estate would need to exceed £500k for IHT to effects it, and it could be double that if she was a widow.

Are you living in the house?

Fairly sure about the inheritance tax but it depends on valuations and what I can claim. My father left everything to my mother so that means his allowance of £325,000 was not used and should be available to be used now. My mother's allowance is £325,000 and because I am her son there's an additional £175,000 allowance for leaving her house to me. That gives a total allowance (if I am correct) of £825,000. Thus it depends how much the house will be valued at. It won't be worth the £900,000 that other local houses were values at recently but, despite its poor condition, it could conceivably be valued as high as £850,000. This would result in an IHT bill of around £10-11.5K. Although this would be mercifully low, I'd still have to sell the house to pay it. Of course, the bill could be lower or even non-existent if the house valuation was lower. I just don't know how the local property prices have moved since the last local sale or how much the physical deterioration of the house will bring down its value.

There is also some doubt over whether or not I'll be able to claim my father's unused inheritance tax allowance. Although he definitely left everything to my mother, it seems that my mother never obtained probate for his will. I won't be able to prove anything about him having left her anything or that he did not use any of his IHT allowance. I don't know if it is possible after all this time (I presume it must be) but I might have to do probate for his will first.

If I cannot claim his allowance then the IHT bill would go up to something in the region of £141,000 (or less if the property was valued lower).

Yes, I am living in the property. It's my home.

naedanger

I think you should also be able to claim a residence nil rate band in respect of your father so giving £1m in total.

Do you have you late father's will? If so then I don't think the fact that probate was not obtained for his estate should matter. (I don't know for a fact, but would think it is a common situation.)

TBagpuss

As others have said, as the executor you should be able to access the funds in her accounts even before you have probate - most banks will release smaller amounts on the basis of you signing to say you are the executor and will indemnify them. 

You can normally also ask a bank to pay the funeral directors directly from her accounts, although that may not be what you want to do here. 

If you have no income of your own then you may be able to claim benefits to cover your immediate outgoings until probate is granted.

It's not unreasonable to look for a job, too. 

In terms of the house, as soon as you get probate, put it on the market - in the mean time, talk to some local agents for marketing advice - what they realistically think it will sell for in its current condition, and whether there is anything you can do that would be affordable or which you can do yourself to make it more marketable. 

Sea_Shell

If you don't HAVE to sell the house to pay IHT, is it your intention to keep it, or to still sell up and move to something more suitable, whilst releasing some equity?

Flugelhorn

I am so sorry to hear that you are having to deal with all this .
I think @naedanger is right and it is likely to be an IHT allowance of 1 million so you may not have to pay any. If the balance at the bank is 6K then they are likely to let you have that to deal with funeral expenses etc .
Appreciate this isn't the best of times but you are probably entitled to universal credit at some level which will keep things ticking over.
Also appreciate that there may be lots of emotional attachment to the house but there is the option of selling it "as is" to a developer maybe? You may not get the max price possible but it is likely that there will be enough money for you to find somewhere else and have some cash in the bank.

Blindalley

Great stuff from people above. My heart goes out to you. A carerer who probably gave and gave ( saving the state and us money ) . Wish you well, with the good advice here . Take care

Keep_pedalling

Probate is often not required when the first spouse dies, this does not effect your ability to claim his NRB, you will also be able to claim his residence NRB, so it is highly unlikely that IHT will be due on the estate. You will have to use IHT 400 and associated forms rather than IHT 205 which might seem a bit daunting but it is really not that difficult and you will get plenty of help from the regulars on here.

Are you planning to sell the house? I think you would be wise to, otherwise you will find yourself asset rich and cash poor having to manage a money pit of a house. 

AlAlbert

naedanger said:

I think you should also be able to claim a residence nil rate band in respect of your father so giving £1m in total.

Do you have you late father's will? If so then I don't think the fact that probate was not obtained for his estate should matter. (I don't know for a fact, but would think it is a common situation.)

Good grief, I think you're right. Thanks for this! I had missed this in my reading of the inheritance tax information. This website seems to confirm the situation: https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold

Unused residence nil rate band (RNRB)
Any RNRB that’s not used when someone dies can go to their husband, wife or civil partner’s estate when they die. This transfer can also happen if the first of the couple died before 6 April 2017, even though the RNRB was not available at that time.

The RNRB and any transferred RNRB is available if the surviving husband, wife or civil partner:
leaves a home to their direct descendants
includes the home in their estate

Yes, his original will is somewhere in the house so I should be able to find it.

Flugelhorn said:

I am so sorry to hear that you are having to deal with all this .
I think @naedanger is right and it is likely to be an IHT allowance of 1 million so you may not have to pay any.

Yes, I think he is right. The significance of the passage from the gov.uk website that I quoted above had completed passed me by. Thank you to both @naedanger and yourself for pointing this out. This will completely remove my mother's estate from inheritance tax, which I have to say is a weight off my mind.

Flugelhorn said:

Appreciate this isn't the best of times but you are probably entitled to universal credit at some level which will keep things ticking over.

This did not occur to me. I've never claimed benefits and it had not occurred to me that I would be eligible for any benefits. I'll look into this.

Flugelhorn said:

Also appreciate that there may be lots of emotional attachment to the house but there is the option of selling it "as is" to a developer maybe? You may not get the max price possible but it is likely that there will be enough money for you to find somewhere else and have some cash in the bank.

Yes, the most likely buyer given its condition is a developer. I'll be very sad to see it go. All the same, when all this is over I should have a healthy pot of money which would allow me to rent. (Buying in London, even with the proceeds of a sale, would still be very difficult).

Mojisola

AlAlbert said:

All the same, when all this is over I should have a healthy pot of money which would allow me to rent. (Buying in London, even with the proceeds of a sale, would still be very difficult).

It will all be overwhelming at the moment but, when things settle down, give some thought as to whether you want/need to stay in London.

Unless you have a good collection of friends and family in the area, it could be worth making a fresh start in a cheaper part of the country where you could buy outright.