Insolvent Estate, in what order do I pay creditors?

Max2000gi

Hi,

I lost my Dad just before Christmas, three weeks later my mum also passed away.  As an only child I  am dealing with their estate. Please can anyone advise on the following? They were both living in Norfolk U.K. 

They're estate value is £19,232 made up of bank savings. No shares or property.

My mum for the last two years has resided in a Dementia care home.  She had to pay towards this care, which I thought had been paid, however, it turns out that my dad hadn't been paying the county council there care home money. 

Since their deaths I have also found out that my dad had an outsranding unsecured loan and a credit card with an outstanding balance on it.   

They have also been overpaid rent benefit and I have just been notified that DWP are looking into overpayment of DLA

I am being chased by Norfolk County Council for my mums care home expenses of £19, 607 my dad's home care expenses of £471.

I am being chased by Gt. Yarmouth borough Council for overpayment of rent benefit of £3,552

Nationwide want their loan repaid of Dad's loan £3;336

And credit card company want their bill paid of £1,423.  

DWP are going to be looking into overpapent of DLA, with a view to claiming this back.  Don't know as yet, how much this is going to be.

Obviously there is not enough money to pay everyone and I understand there is a correct way to pay creditors, but what I need some advice on, is how much do I pay each creditor, with the money I have available?  Is there some formula that has to be applied to value of repayments in these sort if instances?

Hope someone can please advise, as along with dealing with the grief of losing both of my parents in such a short time, trying to sort their finances out is proving very stressful. 

I just want to make sure I do it correctly so I'm not liable for any of these bills.

Thanks.

Newly_retired

Have yoou paid for their funerals from your own money or from the estate? Funeral costs take priority.

madbadrob

See https://www.bereavementadvice.org/topics/probate-and-legal/insolvent-estates/  this is comprehensive.  A quick call to Citizens advice to confirm but I believe if you have multiple in any group and the costs are greater than the estate then you divide the money available by the creditors and pay them an equal amount.  Id say hold off until DWP have been in touch to clarify as they will come back at you if you do settle and dont give them priority.  CAB is a must though if I was you

Flugelhorn

Take a deep breath. I am sorry you are being hassled for money like this. There is no hurry and agree with above that you need to get all the figures first before paying any debts 

Sea_Shell

The usual advice is NOT to administer an insolvent estate.

Have you "intermeddled" and already handled any estate funds? Or just made enquiries?

RAS

Unless those savings were wholly in mum's name, she should only have been paying a fraction of her care costs. The lower capital limit is still £14,250, I think.

If the estate is insolvent, avoid dealing with it, and offer the paperwork to the creditors if one wishes to sort it out. You can get the bank to pay the funeral costs from the savings and ascertain the value, but need to halt at that point.

Keep_pedalling

Have you actually touched any of the money in the bank account yet? 

Keep_pedalling

What makes this situation even more complex is that there are two insolvent estates that are interlinked. How much of the money did they hold in joint accounts?

Flugelhorn

Keep_pedalling said:

What makes this situation even more complex is that there are two insolvent estates that are interlinked. How much of the money did they hold in joint accounts?

Presume Dad's estate will have to be dealt with first and his debts - then likely that there will have been nothing left to be inherited by mum and hence no money to pay her debts (care home etc) 

doodling

Hi,

As others have pointed out, the OP needs to take stock of where they are and secise the best way forward.

There are two estates, has the OP intermeddled (basically started acting in the role of administrater with respect to the deceased's assets) in either of them?  It is possible that one estate has been intermeddled in and not the other.

The OP needs to work out the status of each estate in sequence, starting with the first deceased estate first.  One might be insolvent and the other not.

Once the OP has all the above information then, where an estate is insolvent and they haven't intermeddled then they would be advised to step away from doing anything other than using any cash to pay for the funeral (which isn't intermeddling), noting that the cash needs to come from the correct estate.

If the OP has intermeddlesd in an insolvent estate then they are stuck administering it.  In that case they need to spend some time working out the rules (which to be fair is what they asked for here) before doing anything - getting g it wrong can leave them with personal liability.

fatbelly

Please be aware that there is no time limit here and it may be a problem if any creditor appears after you have distributed UNLESS

you put a notice in the gazette. Many people will tell you that this is a waste of time but by doing so, you do cover yourself.

https://www.thegazette.co.uk/wills-and-probate/place-a-deceased-estates-notice

It also adds a useful delay and lets creditors know you are dealing with this properly