remainderman predeceased a life tenant

JPR66

hi, having so 2 different answers off 2 different solicitors Im looking here for advice.
My dad was a remainderman on a property where the life tenant still resides.
However my dad has left some debts (mainly HMRC) & basically there is insufficient money to cover the cost of the funeral.
On the probate application I dont know how to value the estate.  In cash terms its in a negative & if I declare the value of the property as part of his assets Im worried that creditors will expect payment, but no-one can access it until the life tenant dies.  Is it therefore an asset at all?

Marcon

JPR66 said:

hi, having so 2 different answers off 2 different solicitors Im looking here for advice.
My dad was a remainderman on a property where the life tenant still resides.
However my dad has left some debts (mainly HMRC) & basically there is insufficient money to cover the cost of the funeral.
On the probate application I dont know how to value the estate.  In cash terms its in a negative & if I declare the value of the property as part of his assets Im worried that creditors will expect payment, but no-one can access it until the life tenant dies.  Is it therefore an asset at all?

If you've given two different solicitors the same information, they should give the same advice. Did you seek a second opinion because you didn't like what you were told the first time (not uncommon!), and possibly give the second one a slightly different picture?

The property almost certainly has a value, even with a life tenant in situ. See https://www.thegazette.co.uk/all-notices/content/103591

When you say there is 'insufficient money' do you mean actual cash, or assets overall? If there's any chance the estate is insolvent, and you've not yet started to do anything which could be construed as administering the estate, think long and hard before doing anything.

JPR66

I'm pretty sure I shared the same info but time had passed & I wanted to double check I understood correctly. Assets overall are less than £4000. Debts exceed that by quite a margin. The document is really useful. Thanks for sharing that. I'll be reading it in depth as I don't want to make any mistakes. Can an estate be insolvent with a property in trust?  I'm finding this all very confusing but the lack of funds means there is nothing available to pay a solicitor 

doodling

Hi,

I thought that the answer was an obvious one which was that of course the estate includes the remainder but I think may be wrong try:

https://trustsdiscussionforum.co.uk/t/death-of-remainderman-before-life-tenant-deceased/17040

That suggests that it may have a zero value for probate but (according to other posts on that forum) the value of the remainder would eventually be distributed as per the deceased's will.

This looks like a complex area of trust law so I would pick a solicitor and follow their advice.  For what it is worth, as non-lawyer, I think the solicitor who says it has no value for probate is probably right.

doodling

Hi,

Just to follow up, I have no idea how that position with respect to the probate value of the remainder would interact with an insolvent estate.

It would be a separate question as to whether creditors could recover what they are owed when the trust eventually ends.

Keep_pedalling

If the life tenant is the surviving spouse of the testator they are the beneficial owner of the property and for IHT purposes it forms part of their estate. If a remainderman dies before the life tenant then it can’t form part of their estate. I assume the same applies for a non spouce

JPR66

Thanks keep pedalling. The life tennant is his mother not spouse but I guess that makes little difference.

Doodling, you've hit on a big concern. Can that happen? One solicitor said yes but the other said there is no way for them to find out about the property as it's not part of his estate. Very confusing. Was one of them making it too complicated so as to recruit me as a customer?

JPR66

I should also say that there is no will and no requirement for IHT as even with the property it's well below the threshold so no IHT forms needed as part of the probate application.

His estranged wife (no relation to me) has signed over her legal rights/duties as she wants no part of anything

Keep_pedalling

JPR66 said:

Thanks keep pedalling. The life tennant is his mother not spouse but I guess that makes little difference.

Doodling, you've hit on a big concern. Can that happen? One solicitor said yes but the other said there is no way for them to find out about the property as it's not part of his estate. Very confusing. Was one of them making it too complicated so as to recruit me as a customer?

I meant the spouse of the testator (presumably your grandfather) not your father. The will would have created an immediate post-death interest trust and the trust is currently the legal owner. The will should also have taken account of the possibility that one of the remaindermen might pre decease the life tenant and say what should happen to that that persons share, so you should check what the will actually says about this.

Is sounds very much like your father’s estate is insolvent and there is no need to apply for probate. The best option here is to write to his creditors informing them of his death ( enclose a copy of his death certificate) and explain that his estate is insolvent, that it has insufficient assets to cover funeral cost and that no one is administering the estate.

Malthusian

JPR66 said:

Thanks keep pedalling. The life tenant is his mother not spouse but I guess that makes little difference.

Doodling, you've hit on a big concern. Can that happen? One solicitor said yes but the other said there is no way for them to find out about the property as it's not part of his estate. 

Both those answers sound like "yes" to me, except one added "...but maybe you'd get away with defrauding the creditors". 

The original Will which left the property to the trust may have specified what happens if the remainderman predeceases the life tenant. That may well be your dad's estate, but you won't know that without looking at the terms of the trust. Who are the trustees of the life interest trust? It is their job to work out who receives the trust funds on the life tenant's death. If the answer is "your dad's estate", it then falls to you to deal with.

JPR66

Yes on reflection it does make both answers sound like a yes, until, as was quoted "it's not part of his estate". Hence my confusion!

To be honest no one is likely to get any money from it in the next 10+ yrs

The will leaving the property in trust does not have a provision for this scenario sadly.