Spouse debt after death

chillertwist209

I’m a bit worried for my mother.  She’s still married to my father and they jointly own a house (not tenants in common).  They don’t love or even like eachother but won’t divorce and they currently live separate lives under the same roof. 

My dad has been in poor health for years and has taken out numerous loans, credit cards etc.  He’s having a very nice life on borrowed money that he knows he won’t ever live to repay. He doesn’t care about my mother at all, or anything that happens when he is gone.  

My mum has no debts.  Nothing joint with my father other than a bank account for bills and their home. She has cash assets from her own inheritance which she keeps in a sole account to stop my dad getting his hands on it.  

My mum is worried that she will have to pay off all his debts when he dies despite her having nothing to do with them.  She doesn’t even know the total level or the debt he might have.

Is there anything she can do to protect herself?   She’s worried the house may have to be sold to pay off his debts or she will need to use her inheritance to settle them.  

Any advice would be welcome.   

Flugelhorn

If they jointly own the house then it becomes totally hers on his death. the debts remain his and if there he has  no cash assets then they won;t be paid back 

thank goodness they are not TiC

His executor (you or your mum) will get chased by debt collectors / creditors - you just have to be firm and keep repeating that the estate is insolvent and no -one is administering it 

Marcon

Flugelhorn said:

If they jointly own the house then it becomes totally hers on his death. the debts remain his and if there he has  no cash assets then they won;t be paid back 

Not necessarily. 

Flugelhorn said:

His executor (you or your mum) will get chased by debt collectors / creditors - you just have to be firm and keep repeating that the estate is insolvent and no -one is administering it 

...in which case a creditor could apply for an Insolvency Administration Order.

More info: https://nationaldebtline.org/fact-sheet-library/debts-after-death-ew/ and scroll down to the section headed 'Property in Insolvent Estates'.

Flugelhorn

Thanks @Marcon - this is not what a relative was told some years back but you are right it is all there on this document 

Keep_pedalling

Flugelhorn said:

Thanks @Marcon - this is not what a relative was told some years back but you are right it is all there on this document 

The debt would have to be pretty big for a creditor to go to those lengths the legal costs are going to be pretty steep. 

Marcon

Flugelhorn said:

Thanks @Marcon - this is not what a relative was told some years back but you are right it is all there on this document 

It's one of those things which gets passed on with such confidence that nobody ever queries it, so it gains credibility in the telling and passes into folklore!

Keep_pedalling said:

Flugelhorn said:

Thanks @Marcon - this is not what a relative was told some years back but you are right it is all there on this document 

The debt would have to be pretty big for a creditor to go to those lengths the legal costs are going to be pretty steep. 

I've seen it used as a bargaining chip - it certainly sobers people up pretty quickly when they realise that, unhappily, 'their' property might not be theirs much longer, and makes them amenable to a discussion they might not otherwise have agreed to.

Spendless

I'm not sure I understand that. One part says it's not taken into account the other says if it's insolvent then creditors have up to 5 years to make a claim.

Joint tenant

Each owner owns all of the property. When one owner dies, their share does automatically pass to the other owner. It does not form part of the estate available to creditors. Therefore, the property is not taken into account when working out whether the estate is insolvent.

If you are unsure how the property is owned then you should contact land registry to find property ownership information, there is a cost of £3.

Property in insolvent estates

If the estate is insolvent and the property was owned as joint tenants, the creditor could apply to court to recover the deceased person's share of the property. This is called an insolvency administration order, the creditor has five years to apply from the date of death.

Creditors do not apply for insolvency administration orders very often. However, if a creditor threatens to do this, any surviving owner may need to try to negotiate with the creditor to prevent them making this application. The surviving owner could offer to pay a debt by instalments or offer a lump sum. If you need to negotiate, contact us for advice.

bobster2

chillertwist209 said:

My dad has been in poor health for years and has taken out numerous loans, credit cards etc.  He’s having a very nice life on borrowed money that he knows he won’t ever live to repay. 

Given the administrative burden and substantial costs I would expect an insolvency administration order would only really be likely in a situation where there was one major creditor willing to take on these costs.

With numerous loans / credit cards etc there probably wouldn't be a single creditor keen to take on the burden.

Keep_pedalling

My biggest concern here would be that the OP’s father, as a last act of spite, unilaterally splits the tenancy and makes a will leaving his wife nothing. 

Spendless

Keep_pedalling said:

My biggest concern here would be that the OP’s father, as a last act of spite, unilaterally splits the tenancy and makes a will leaving his wife nothing. 

Wouldn't he need Mum's signature to do so?  

elsien

No, severing a joint tenancy can be done by either party without the consent of the other.