Insolvent estate with high debts

Hotglove

Thanks to all who answered similar questions to mine, the information given has been very helpful.
Now to my problem.
My sister recently died, she was a widow with no children, had dementia, was being cared for at a nursing home (where she died) I was a Deputy for her property and financial affairs.
She had debt problems and had been paying £1 pcm to around 10 creditors, total liability £185,000, total Savings (after funeral expenses) £10,000.
I have handled other small estates within the family, but none were insolvent, just a matter of paying a few bills and sharing the remainder. I have access to my late sister’s bank account and will pay the remaining care home fees, repay any DWP clawback, pay for funeral, etc.
My only concern is the correct procedure with creditors, as I understand it, I am not personally liable for my sisters debts, BUT, if I take on the administration of the estate, then make mistakes by, for example, paying too much to one creditor to the detriment of others, I could be liable for any losses incurred by my mistake.
I am waiting for an appointment with the bank and will find out then if it is possible to leave the account live and continue with the £1.00 pcm payments until the balance is nil.
I expect the bank to offer to transfer the funds to me (have an unused account that was set up to keep sister’s financial matters separate from my own)

I am not interested in taking on the job of, “Debt collectors’ clerk” so, if creditors are not prepared to write off the debt, I would simply pass the matter to a solicitors with the proviso that they would not allow fees to exceed the value of the estate.
It sounds a bit like blackmail, “Write off the debt, or it all goes to the lawyers” but I would prefer to see it go to the family, rather than lawyers (as I understand it, the lawyers’ fee is a higher status debt than unsecured creditors)
All input welcome.

securityguy

Walk away. 

Being a deputy ceased on death; the need to complete final accounts for the court of protection notwithstanding, you are no longer a deputy and have no control over the estate. 

You do not need to do anything: you do not need to instruct solicitors (who would want an advance or guarantee from you personally) nor do you need to help the creditors find an executor.  They can apply for letters of administration if they wish.  

Harsh, I know.  But taking this on will be hard work, expose you to some legal risk and drag on for years.  “I am not the executor and do not know who is” should be your only response. 

Keep_pedalling

You can’t touch her bank account under deputyship which ends on her death so please do not pay anything off. The bank should agree to pay the funeral directors directly so you can get them to submit the bill to the bank.

You should not pay any of the outstanding debt (including to the care home) as this could leave you financially liable. You should write to all of her creditors informing them of her death (include a copy of the death certificate) and tell them that the estate is insolvent and that no one is administrating her estate.

Tell the bank that that you are only concerned about them covering the funeral costs and that you are not administering the estate so not to distribute the remaining funds to you. If one of her creditors if her bank then it is likely that they will off set that debt with what remains of her account which means there may not be anything to pay the funeral costs.

if you are contacted by the DWP for any overpayment, you also tell them that the estate is insolvent and that you are not administrating it.

securityguy

Keep, funeral costs come very high up the order of precedence, ahead of debts; can a bank really preempt that and gain a preferred creditor status by setting off?   

Keep_pedalling

securityguy said:

Keep, funeral costs come very high up the order of precedence, ahead of debts; can a bank really preempt that and gain a preferred creditor status by setting off?   

Yes they can - see point 20
 
https://www.lawsociety.org.uk/topics/private-client/banking-practices-protocol-estate-administration

Brie

All you need to do, should you wish to, is to write to each creditor with a copy of the death certificate and say that unfortunately your sister has died and the estate is insolvent so nothing further will be paid.  Normally I'd say that anyone would need to have a certified copy of the death certificate but I wouldn't bother in this case as this is going to be the last contact you have with any of these companies.  If they come after you, you could respond with the same message as previously and include that since these were your sister's debts not yours they have no right to chase you for payment and to do so would be considered harassment.  

Sorry for your loss, sounds like it's been a very challenging time for you.  

molerat

Have you actually arranged the funeral ?   If the bank will not pay for it then you could end up liable for that cost as you engaged the funeral directors.  It might be easiest to just walk away and leave everything to others.  If you do write to creditors just enclose a photocopy of the death cert, if they want a true copy they can pay for one themselves !

Keep_pedalling

molerat said:

Have you actually arranged the funeral ?   If the bank will not pay for it then you could end up liable for that cost as you engaged the funeral directors.  It might be easiest to just walk away and leave everything to others.  If you do write to creditors just enclose a photocopy of the death cert, if they want a true copy they can pay for one themselves !

The bank is unlikely to refuse to meet the bill unless they are applying offsetting, but if the OP is yet to arrange the funeral they would probably be wise to wait until they have spoken to the bank. 

In the event that there are no funds for a funeral then the LA can provide a basic service. 

Marcon

Brie said:

All you need to do, should you wish to, is to write to each creditor with a copy of the death certificate and say that unfortunately your sister has died and the estate is insolvent so nothing further will be paid.  Normally I'd say that anyone would need to have a certified copy of the death certificate but I wouldn't bother in this case as this is going to be the last contact you have with any of these companies.  If they come after you, you could respond with the same message as previously and include that since these were your sister's debts not yours they have no right to chase you for payment and to do so would be considered harassment.  

Sorry for your loss, sounds like it's been a very challenging time for you.  

The message needs to be that nobody is administering the estate. If anyone does chase, OP can then helpfully point out that if they wish to apply to administer the estate, they are most welcome to do so. That should shut them up.

Hotglove

Thanks for the replies, all very helpful, I do not expect to have any difficulty with the bank releasing funds for the funeral, but, if they did, it would not matter, I have arranged a funeral that I think is suitable for my sister and the rest of the family and friends, if I paid for it personally it would be no big deal.
Having said that I have been amazed in the past at how casual banks can be with assets from an estate.
In one example, the widow of my Father-in-Law’s uncle named my FIL as next of kin and I ended up helping with the estate, the deceased was adopted and I could not find any relatives, the bank offered to turn the entire estate (Including decent house in SE, watches, jewellery, etc) over to me if I signed a letter of indemnity.
The matter was handed over to the Treasury Solicitor and, eventually, a distant cousin of the deceased was located, living in New Zealand.
It seemed bizarre that I, who was just being helpful to my FIL, was given the offer, from the bank, “Sign here for £750k”