Being blocked from Repaying a Equity Release loan on death of parents

ivyman

Looking for some advice/guidance as I find myself in a slightly frustrating position.

My parents took out an equity release on their property about 10 years ago. They have both recently died  but there is the slight complication that the 2 executors listed on the will have decided they don't want to perform the role.  They have completed the Govt forms PA15 which records the fact that they will be relinquishing the role for the estate.  My understanding in this situation is that responsibility then falls on the beneficiaries &/or direct next of kin. My brother and I are the sole beneficiaries and my brother, as he lives abroad, has granted me permission to act as administrator of the estate. 

We have applied for probate, about 8 weeks ago, but not yet had anything back.

As the equity release loan is incurring compound interest on a daily basis we would like to pay this off now, we have the funds required between us, but the equity release firm have stopped us doing this because, they say, I do not have legal authority to act for the estate yet and need to wait until probate is complete. This could be a number of weeks/months during which time the amount owed only goes one way.

They are the only organisation who are not recognising the PA15's and me taking on the responsibility for the estate. All other financial institutions associated with the estate have completed their obligations.

I have sent the equity release company the signed PA15's, copy of the will, proof of ID for both myself and my brother and copy of his letter of authority to act on our behalf.

Given that we want to "pay them money" and my understanding on who takes on the estate after the named executors have relinquished the role I don't understand the position they are taking or what recourse I might have to challenge it?

At the moment it just looks to me as though they just want to try and maximise how much they make from us!

Mark_d

Responsibility for your parents estate might fall on you but legally you only have permission to execute your parents will once probate is granted.  I don't see anything wrong with this company's position.

jlfrs01

The company concerned is acting properly given the situation but I'm wondering whether this is something a Solicitor could do if you have appointed one to handle the Estate? When I was waiting for Probate to be granted after my father died, I instructed the Solicitor to settle any debts from monies she was holding on the Estate's behalf. It helped I was a named Executor so if that's necessary for your Solicitor to act then perhaps ask one of the existing Executors to grant their authority. After all, if any are named beneficiaries it would be in their interests to prevent Estate funds from dwindling anymore than necessary. 

MWT

jlfrs01 said:

It helped I was a named Executor so if that's necessary for your Solicitor to act then perhaps ask one of the existing Executors to grant their authority. After all, if any are named beneficiaries it would be in their interests to prevent Estate funds from dwindling anymore than necessary. 

They have already signed the PA15 and removed themselves from the role, they certainly could not get involved again at this point even if it would help.

The oddity here though is that the OP is not trying to use funds within the estate, but is trying to clear the mortgage with funds from other family members, so unless the lender has failed to understand that point I'm surprised they would reasonably resist accepting the payment.

...on the other-hand the terms are likely to state that the 'personal representative' of the deceased is responsible for making the payment and until probate is granted there is nobody able to act in that role.

p00hsticks

jlfrs01 said:

The company concerned is acting properly given the situation but I'm wondering whether this is something a Solicitor could do if you have appointed one to handle the Estate? When I was waiting for Probate to be granted after my father died, I instructed the Solicitor to settle any debts from monies she was holding on the Estate's behalf. 

I suspect that an issue here maybe that unlike other debts, an equity release one will be secured on the property and therefore will require a change to the title when satisfied.... It's certainly not possible to exchange contracts on a house sale until probate has been granted, and I wonder if this may have a similar legal restriction...

Hoenir

ivyman said:

At the moment it just looks to me as though they just want to try and maximise how much they make from us!

What are the terms of the equity release ? Possibly not just interest involved. 

dunstonh

We have applied for probate, about 8 weeks ago, but not yet had anything back.

And there you have it.   Until probate is granted, you are not in a legal position to act on behalf of the estate.

I have sent the equity release company the signed PA15's, copy of the will, proof of ID for both myself and my brother and copy of his letter of authority to act on our behalf.

But until the grant of probate is confirmed, what you have sent them means nothing.

Given that we want to "pay them money" and my understanding on who takes on the estate after the named executors have relinquished the role I don't understand the position they are taking or what recourse I might have to challenge it?

you have no rights to challenge as it is probate that sets out who the legal representative of the estate is

At the moment it just looks to me as though they just want to try and maximise how much they make from us!

At the moment, they look as if they are following the law.

After probate is granted by the Probate Registry, the executor of the will then has the legal authority to proceed with administering the deceased’s estate.    It is probate that gives you the authority that you do not currently have.

The oddity here though is that the OP is not trying to use funds within the estate, but is trying to clear the mortgage with funds from other family members, so unless the lender has failed to understand that point I'm surprised they would reasonably resist accepting the payment.

It is because it brings value into the estate that was not there prior to death.  However, until probate is granted, the OP does not have the authority to act on behalf of the estate.

They are the only organisation who are not recognising the PA15's and me taking on the responsibility for the estate. All other financial institutions associated with the estate have completed their obligations.

Technically they are wrong.    Whilst their small estates exemption may be used for small values (typically up to £100k but sometimes lower), if probate is being obtained, then the small estates exemption shouldn't be used and they should wait until probate is granted.     However, in reality, you often see the executor use the small estates exemption incorrectly or the bank/building society do it as they know that in reality there is going to be no come back in the vast majority of cases and if there is, then its the executor that faces legal action as they are the ones that completed the paperwork.

MWT

dunstonh said:

It is because it brings value into the estate that was not there prior to death.  However, until probate is granted, the OP does not have the authority to act on behalf of the estate.

That makes sense from an IHT/CGT perspective, and should be considered potentially unwise on that basis alone. 

Also if the loan terms state that they only deal with the personal representative of the deceased there isn't really any way to do an end-run around that anyway.

ivyman

Thank you for all the comments and feedback, it looks as though we have no option than to wait for probate to complete and then pay of this loan.

Now just wishing you can get update on probate status earlier than the 16 week period stated.