Inheritance tax, and jointly owned property sold to pay care debt

Hoenir

As an aside presumably your interest in your late mother's house was acquired at arms length. 

poseidon1

sclare said:

Thank you again @poseidon1. My mother did have a will, but given the size of the debt, my mother's estate is insolvent, even with the 50% of the property included. I understand that that means there is no need for probate. Is that right?
But I also gather that that makes administering the estate much more of a responsibility. 

My plan at the moment (once I get all the information I need) is to complete the tax return for the year of death (23/24) to establish how much tax is owed. The relatively modest amount of savings that she had is in the process of being transferred to me to join what was left in her CA which I have placed in a new and separate account in my name. Once I have all the info regarding her capital and debt (which is all to the one creditor - the council) is that the point where I might need a solicitor to see what the next stage is?

Since it is clear the estate is insolvent, I think you should see a solicitor before proceeding any further ( ie do nothing more at this stage ) since the responsibily burden does increase somewhat. 

Sadly  insolvent estates are not necessarily exempt from probate, and there could have been a case for you to do nothing and merely let the council take action ( as the primary creditor)  to obtain a court issued  Insolvency Administration Order (IAO). Under this procedure, a qualified Insolvency practitioner takes over the administration of the estate on behalf of the creditor to recover what they can, with any deficit written off.  Bear in mind other creditors such as HMRC have to stand in line with the council to take a potential loss on their liabilities, proportionately.

The important point to note about IAOs is they apply to assets  passing under the will or intestacy of  a deceased but significantly, do not jextend to jointly owed property.  It is for this reason you need to see a solicitor ( ASAP), to see if you can step back from the estate and leave the council to invoke an IAO.

A solicitor will need to advise whether your actions so far, mean you have already intermeddled and assumed the obligation of estate executor, but given the circumstances you have outlined it would  be preferable to have  the whole matter  revert to the council under an IAO, with you cooperating with the Insolvency administrator to the extent your  solicitor deems appropriate.

With UK cost of care spiralling significantly, your mum 's situation will not be unusual.  I  am sure other forum members would be interested in whether you are successful in this matter reverting to an IAO, and if so whether the procedure ultimately  operates to protect jointly owned property which reverted to you by survivorship. I note in this regard the council did not impose a legal charge on the property.




 

poseidon1

By the way have a read of thread just  below yours titled ' Any experience dealing with a partners debt who has passed'.

Its  a deceased insolvent husband scenario,  leaving behind a jointly owned house with the widow. An AIO also cropped up in the discussions, although in his case a couple of creditors did impose charges on the marital home.

sclare

"A solicitor will need to advise whether your actions so far, mean you have already intermeddled and assumed the obligation of estate executor"

Ugh. That's a worry. The only things I've done so far are to contact her bank and building societies to establish what money she had. They've all closed the accounts, and as I'm a beneficiary of her will, and the amounts are small, the contents have been/are being transferred to the my discrete account. I've also contacted her occupational pension  providers, the DWP, and a land trust that she had an investment in. Surely it's okay to have done this, because it's what has established that there is not enough to pay the debt.
 I hope so. Because I really would prefer to just hand this over, as I'm so out of my depth.

RAS

You do need to check this. The transfer of funds to your account may be the issue.

poseidon1

sclare said:

"A solicitor will need to advise whether your actions so far, mean you have already intermeddled and assumed the obligation of estate executor"

Ugh. That's a worry. The only things I've done so far are to contact her bank and building societies to establish what money she had. They've all closed the accounts, and as I'm a beneficiary of her will, and the amounts are small, the contents have been/are being transferred to the my discrete account. I've also contacted her occupational pension  providers, the DWP, and a land trust that she had an investment in. Surely it's okay to have done this, because it's what has established that there is not enough to pay the debt.
 I hope so. Because I really would prefer to just hand this over, as I'm so out of my depth.

Emptying your mum's accounts into an account in your name could already be problem here. With an insolvent estate there is nothing available for beneficiaries, every penny ( no matter how small ) belongs to the creditors.

A solicitor would need to advise, whether the small sums you have taken into your control, now leaves you with obligation to follow through or whether you can return the amounts to an appointed estate Insolvency practitioner. Ideally you should have left the accounts frozen after notifying the banks and other instituions of her death,  but give no instructions on closing accounts or  terminating investments. The more proactive you are in delving into her post death financial position,  the more you give the impression of taking on the Executorship of her will and all responsibilities that go with that status.

So the advice you now need is whether you have already gone too far in establishing the available assets to be able to back out and leave the primary creditor to appoint their own administrator via an AIO.

I have to emphasise you should do nothing more  without consulting a solicitor.

 Even if  a solicitor ultimately confirms you have irreversibly intermeddled, you still need to establish whether your status as surviving  joint tenant of the property, protects its entire value ( not just your half share ) from the creditors of the estate. You certainly should not be volunteering  any share of the property to be available to creditors without taking advice.

sclare

Oh gosh. When I called to tell the banks of her death, they said that as the amounts were well below probate and I was a beneficiary, they would transfer the money to me. I didn't ask for that, so assumed this was standard. Kicking myself now.
I'm obviously aware that the money belongs to the creditors, which is why it's in a discrete account for transparency. But I didn't realise that would be an issue.

RAS

Was the money in the accounts enough to cover the funeral costs?

sclare

RAS said:

Was the money in the accounts enough to cover the funeral costs?

In her last weeks, mum had given us permission with our POA, to take some money from the account to meet her funeral costs, so that wasn't a problem

sclare

Update: I've managed to stop the BS savings from being transferred into my account (or at least both institutions said they won't transfer it). So only the current account monies have reached me, and in my new discrete account the reference from the bank makes it clear that it's from a probate closure. So hopefully it will demonstrate that I am not secreting anything away from the creditors.