If I were to die would my house HAVE to be sold to pay off these debts?

JenP85

I'm sorry if this is not the right section so please delete if so. And sorry in advance.

While I am not planning on going anywhere anytime soon I have been very ill lately and it is something I have been thinking about. I am going into hospital in two weeks time for a small operation and it's playing on my mind. 

My plan is to leave my house to my daughter and have filled out a will to cover this.
However, The problem is I have a few debts and i don't think my daughter would be able to pay for them as she is disabled and is on long term sick. I am trying to pay them off but it will take a few years. The debts I am worried about are as follows. 

I own a contract mobile phone. (13 months left) It's £46 a month. Sadly the phone was stolen two months ago while I was out. I no longer have to pay off the 'data' part of the contract just the phone itself.
I have a £600 over draft.
I had double glazing installed 2 years back and im still paying that off at £20 a month.
A £1k bank loan with £650 left to pay off.

If she was unable to pay this off for me would the house HAVE to be sold to pay them off? 
Thank you.

Additional: If i were to put the house in her name what would happen then? 

Flugelhorn

when someone dies certain expenses comes out of the estate ie funeral expenses and the debts. As it stands, unless you have some savings to cover these then they would remain as debts that the estate would have to cover so presume that unless your daughter can borrow the money against the house in order to keep it for herself, she would have to sell it (perhaps buy somewhere smaller?) 

JenP85

Flugelhorn said:

when someone dies certain expenses comes out of the estate ie funeral expenses and the debts. As it stands, unless you have some savings to cover these then they would remain as debts that the estate would have to cover so presume that unless your daughter can borrow the money against the house in order to keep it for herself, she would have to sell it (perhaps buy somewhere smaller?) 

Would she be able to set up a payment plan or would she have to pay them off in one go? 
For e.g take over the £40 a month phone contract and the £20 a month for the loan. 

Flugelhorn

I suspect it depends what she can negotiate, usually debts are paid off in one go from an estate, though the creditors usually have to wait until probate is granted and that can take some time - may give her time to sort things out 

MorningcoffeeIV

JenP85 said:

Flugelhorn said:

when someone dies certain expenses comes out of the estate ie funeral expenses and the debts. As it stands, unless you have some savings to cover these then they would remain as debts that the estate would have to cover so presume that unless your daughter can borrow the money against the house in order to keep it for herself, she would have to sell it (perhaps buy somewhere smaller?) 

Would she be able to set up a payment plan or would she have to pay them off in one go? 
For e.g take over the £40 a month phone contract and the £20 a month for the loan. 

She can't 'take over' the contacts but she may be able to negotiate a repayment plan.

Flugelhorn

JenP85 said:

Additional: If i were to put the house in her name what would happen then? 

there would be a cost to this as solictors would be involved, also be aware that if you need long term care, then the house would be considered to be an asset and if you had given it away then it would be "deprivation of assets" and you would be considered to still own it.

JenP85

Flugelhorn said:

JenP85 said:

Additional: If i were to put the house in her name what would happen then? 

there would be a cost to this as solictors would be involved, also be aware that if you need long term care, then the house would be considered to be an asset and if you had given it away then it would be "deprivation of assets" and you would be considered to still own it.

Apart from the the 'long term care' aspect of things would it affect paying off my debts if i were to pass away? Would they also look at it like that if it came to my passing and the need to pay off those debts?

Please don't misunderstand me. I am not trying to get out of paying debts that I owe. I have never done that and would never do that etc. I will hopfully pay off everything I owe long before anything happens to me but it is a worry and a worry that's only just really hit home since becoming ill (Cancer). I am early stages and while you never know how it'll go all early tests etc looks good for a full recovery.   

Thank you for your replys and for your help. 

Additional: The property is worth £130k (as of 2022) and the mortgage was paid off 6 months ago.  

Keep_pedalling

Putting some life insurance in place would cover dying with no liquid assets to clear debts and funeral costs.

When you die there is an order covering what gets paid and in which order. Secured dept comes first, funeral costs next, unsecured debt next and lastly your beneficiaries.

Keep_pedalling

Putting the house in her name would be foolish in the extreme. You could loose your house if she went bankrupt, died before you, needed residential care or was involved in a divorce. 

There is also the matter of deliberate deprivation of assets and a potential capital gains tax liability if the house is sold.

RAS

Sorry to hear about your situation.

You haven't said anything about your personal situation other than your health. Are you currently employed, retired, on benefits yourself?

Given you have a precondition, life insurance may be harder to get, but this is a relatively small amount of debt, so it may be possible to get cover.

Do check whether any of your existing contracts include cover?
Does your existing pension provide any sort of lump sum in event of your death? If so can you nominate your daughter as the recipient? That would remove the lump sum from estate and allow her to pay off the debts.

If no to all of those and you do become too unwell to pay them off, you might be able to get the creditors to write off the debt, if you explain the diagnosis. This may sound morbid, but you could write and sign letters beforehand and ask someone to date and post them with evidence if they were needed?

fatbelly

Who do you have as executor of the will? If your daughter is an adult, she may be a good choice so that she stays in control of the process.