Brother not allowed to be Executor due to having an IVA and I might be somehow liable for his debt?

SpideressUK

My mum made my brother and myself joint Executors in her Will (and we are the only beneficiaries - it is a 50/50 split).  The solicitor informed us that due to my brother having an IVA he is unable to be an Executor and I have to be the "sole" Executor (he is OK with that and if that is how it has to be then I am OK with that).  However (and this is what I am hoping someone here might be able to explain) the solicitor told him something about me (as the only Executor) being liable for my brother's debts should he "default" on his IVA.  We are not sure "how" he could "default" as such? We understand that now my brother is due to inherit enough money to cover his entire debt the reduced amount in the IVA is no longer reduced and the full amount is owing.  The solicitor has told us that she will try to negotiate some clemancy on his IVA which may allow a few thousand less than the overall amount be paid back.

From my understanding the solicitor will get all the money from my mum's estate and she is then legally bound to pay my brothers IVA BEFORE she gives him the balance of his inertitance.  I would just get my half minus whatever her fees etc are.  However it is this bit about me being potentially liable for my brother's debt which is confusing me (not that he has an intention of "defaulting").  What would he need to do to "default" - for eg would he need to phone his IVA and say "I refuse to pay any more and am closing my relationship with you down"? Would "defaulting" need moving house and trying to become untraceable? If any of that happened would the solicitor take his IVA payment from my half of the inheritance and pay my brother's debt with it?  Would the solicitor hold his full half then once I had paid his debt would my brother get his full inheritance (and I just get what is left after his debt has been paid?)

Thank you

Marcon

SpideressUK said:

My mum made my brother and myself joint Executors in her Will (and we are the only beneficiaries - it is a 50/50 split).  The solicitor informed us that due to my brother having an IVA he is unable to be an Executor and I have to be the "sole" Executor (he is OK with that and if that is how it has to be then I am OK with that).  However (and this is what I am hoping someone here might be able to explain) the solicitor told him something about me (as the only Executor) being liable for my brother's debts should he "default" on his IVA.  We are not sure "how" he could "default" as such? We understand that now my brother is due to inherit enough money to cover his entire debt the reduced amount in the IVA is no longer reduced and the full amount is owing.  The solicitor has told us that she will try to negotiate some clemancy on his IVA which may allow a few thousand less than the overall amount be paid back.

From my understanding the solicitor will get all the money from my mum's estate and she is then legally bound to pay my brothers IVA BEFORE she gives him the balance of his inertitance.  I would just get my half minus whatever her fees etc are.  However it is this bit about me being potentially liable for my brother's debt which is confusing me (not that he has an intention of "defaulting").  What would he need to do to "default" - for eg would he need to phone his IVA and say "I refuse to pay any more and am closing my relationship with you down"? Would "defaulting" need moving house and trying to become untraceable? If any of that happened would the solicitor take his IVA payment from my half of the inheritance and pay my brother's debt with it?  Would the solicitor hold his full half then once I had paid his debt would my brother get his full inheritance (and I just get what is left after his debt has been paid?)

Thank you

If someone with an IVA receives a windfall (and an inheritance counts as a windfall), then that has to be contributed towards paying off the debts if the IVA contains a 'windfall' clause requiring this.

If an executor pays an inheritance direct to someone who has an IVA, and the creditors miss out as a result, the executor could be personally liable for not checking the status of the person to whom the inheritance was being paid/ensuring that the insolvency practitioner is aware of the position. 

How would someone default? If you handed over the loot and he went on a massive spending spree and blew the lot...that would be an example!

SpideressUK

Marcon said:

SpideressUK said:

My mum made my brother and myself joint Executors in her Will (and we are the only beneficiaries - it is a 50/50 split).  The solicitor informed us that due to my brother having an IVA he is unable to be an Executor and I have to be the "sole" Executor (he is OK with that and if that is how it has to be then I am OK with that).  However (and this is what I am hoping someone here might be able to explain) the solicitor told him something about me (as the only Executor) being liable for my brother's debts should he "default" on his IVA.  We are not sure "how" he could "default" as such? We understand that now my brother is due to inherit enough money to cover his entire debt the reduced amount in the IVA is no longer reduced and the full amount is owing.  The solicitor has told us that she will try to negotiate some clemancy on his IVA which may allow a few thousand less than the overall amount be paid back.

From my understanding the solicitor will get all the money from my mum's estate and she is then legally bound to pay my brothers IVA BEFORE she gives him the balance of his inertitance.  I would just get my half minus whatever her fees etc are.  However it is this bit about me being potentially liable for my brother's debt which is confusing me (not that he has an intention of "defaulting").  What would he need to do to "default" - for eg would he need to phone his IVA and say "I refuse to pay any more and am closing my relationship with you down"? Would "defaulting" need moving house and trying to become untraceable? If any of that happened would the solicitor take his IVA payment from my half of the inheritance and pay my brother's debt with it?  Would the solicitor hold his full half then once I had paid his debt would my brother get his full inheritance (and I just get what is left after his debt has been paid?)

Thank you

If someone with an IVA receives a windfall (and an inheritance counts as a windfall), then that has to be contributed towards paying off the debts if the IVA contains a 'windfall' clause requiring this.

If an executor pays an inheritance direct to someone who has an IVA, and the creditors miss out as a result, the executor could be personally liable for not checking the status of the person to whom the inheritance was being paid/ensuring that the insolvency practitioner is aware of the position. 

How would someone default? If you handed over the loot and he went on a massive spending spree and blew the lot...that would be an example!

Hi

Thanks.  I think he must have the "windfall" clause and he is likely to owe the full amount unless the solicitor gets him some clemancy.  The solicitor is clear that she is law bound to pay the IVA before paying my brother any inheritance (which is logical as someone unscrupulous could just take the inheritance and "run" rather than paying the full IVA). 

My concern is what he said to me that *I* might be personally responsible for his debt and the "why" of that part is what I am failing to understand.  I have no access to any of mum's assets - everything is going into a "client account" held by the solicitor so whilst I might be "the executor" it is not up to me or even authorised for me to access any of the assets to distribute them.  My brother said the solicitor had said something about ME being responsible for HIS debts if he "defaults" and that is also a part we are unclear on unless him personally "defaulting is him saying to his IVR people "I am no longer going to pay the set monthly amount and I am severing the connection I have with you".  I am supposed to be signing something soon and was just trying to find out if by doing so I am somehow tying myself into a contract where I might end up being personally responible for my brothers debts.

Keep_pedalling

If the beneficiary is undischarged bankrupt then any inheritance has to go to the OR, but I don’t think this is the case with an IVA, but the experts in this field can be found over in the Bankruptcy and living with it board so it might be better to ask your question over there. 

Marcon

SpideressUK said:

Hi

Thanks.  I think he must have the "windfall" clause and he is likely to owe the full amount unless the solicitor gets him some clemancy.  The solicitor is clear that she is law bound to pay the IVA before paying my brother any inheritance (which is logical as someone unscrupulous could just take the inheritance and "run" rather than paying the full IVA). 

My concern is what he said to me that *I* might be personally responsible for his debt and the "why" of that part is what I am failing to understand.  I have no access to any of mum's assets - everything is going into a "client account" held by the solicitor so whilst I might be "the executor" it is not up to me or even authorised for me to access any of the assets to distribute them.  My brother said the solicitor had said something about ME being responsible for HIS debts if he "defaults" and that is also a part we are unclear on unless him personally "defaulting is him saying to his IVR people "I am no longer going to pay the set monthly amount and I am severing the connection I have with you".  I am supposed to be signing something soon and was just trying to find out if by doing so I am somehow tying myself into a contract where I might end up being personally responible for my brothers debts.

Sounds like a simple misunderstanding of what was said. Ask the solicitor to clarify before you sign anything. Any idea what it is you are going to be signing?

getmore4less

Why is there a solicitor involved?

Sea_Shell

As a side question, more generally.    

What lengths is an executor supposed to go to before distributing an estate to anybody.   Is it an item on a legal "checklist" of things to do, in checking the financial status of the beneficiary?

Or does asking them the question count enough, in writing, even if they were found to have lied?

I'm sure there any many situations where a beneficiary's financial circumstances have been kept private, even amongst their family. 

Keep_pedalling

Sea_Shell said:

As a side question, more generally.    

What lengths is an executor supposed to go to before distributing an estate to anybody.   Is it an item on a legal "checklist" of things to do, in checking the financial status of the beneficiary?

Or does asking them the question count enough, in writing, even if they were found to have lied?

I'm sure there any many situations where a beneficiary's financial circumstances have been kept private, even amongst their family. 

Checking the insolvency record should be sufficient. Best to do this within 3 months of the death to make sure the beneficiary had not been discharged before that date.

https://www.insolvencydirect.bis.gov.uk/eiir/

if the OP looks up his brother on the above link, they will be able to find out who their insolvency practitioner is. I think that they should ring the IP and ask what they should do as regard distributing the estate.

SpideressUK

Marcon said:

Sounds like a simple misunderstanding of what was said. Ask the solicitor to clarify before you sign anything. Any idea what it is you are going to be signing?

I am not sure what she is going to ask me to sign but I am guessing it is something saying that I understand my brother can't be the joint executor due to his IVA and that I agree to be the only one and that she can proceed - I will ask her about this "potential liability to me" though.

All that I know that has been done so far is when my mum died in Oct 2020 we appointed the solicitor, I told the bank of mum's death (mum only has cash assets as her bunglow was sold as she was living in a care home) and the bank said due to over £50K in the account they could only transfer the money somewhere once "probate had been granted" (I and my brother were joint Lasting Power of Attorney for mum), I told the solicitor about my brother's IVA and she told me she'd apply for probabate but it might take 2 or 3 months to come through.  I am guessing that since we are about in that timescale the probate must have been granted so I think I need to sign something and in the meantime she is going to ask for clemency to my brothers IVA and pay things out.  I am not sure if she can pay my share out before she sorts out his IVA, I am in no rush for the money, I'd rather still have my mum here even though dementia had taken most of what was our mum away and I lost about a year of properly seeing her due to "window visits" - I'd still like to have her here to hug.

SpideressUK

getmore4less said:

Why is there a solicitor involved?

I know we could have done "Probate" by ourselves, particularly since it is just a "cash estate" and under £100K but mum's Will was done and held by that solicitor and we wanted to make 100% sure that everything had been done "correctly" in "closing down mum's life and distributing her assets" so that we did not need to worry that we had somehow done something wrong or not totally legal and spend the rest of our lives worrying that we would somehow have to pay back lots of money that by then we would likely no longer have.

Sea_Shell

Keep_pedalling said:

Sea_Shell said:

As a side question, more generally.    

What lengths is an executor supposed to go to before distributing an estate to anybody.   Is it an item on a legal "checklist" of things to do, in checking the financial status of the beneficiary?

Or does asking them the question count enough, in writing, even if they were found to have lied?

I'm sure there any many situations where a beneficiary's financial circumstances have been kept private, even amongst their family. 

Checking the insolvency record should be sufficient. Best to do this within 3 months of the death to make sure the beneficiary had not been discharged before that date.

https://www.insolvencydirect.bis.gov.uk/eiir/

if the OP looks up his brother on the above link, they will be able to find out who their insolvency practitioner is. I think that they should ring the IP and ask what they should do as regard distributing the estate.

So is this something that an executor is supposed to do as a matter of course?    Does it routinely appear in any "how to administer an Estate" guides?