Creditor claims against estate?

db_york

Our neighbour has been worried by advice she has been given following the death of her husband. I'm not sure she has been advised correctly 

She is very worried about potential creditors appearing years down the line and claiming against the estate.  She thinks that creditors can turn up at any time, with no evidence, and make claims against their joint property.

I don't believe that.  

I believe if the house was owned jointly, then the house is not part of the estate - it might be subject to IHT but that's not the issue. As far as creditors are concerned, the estate doesn't include joint assets.

Is that right?

Can creditors make a claim at any time? It seems unclear. I have read that:
Once the death is posted in The Gazette, creditors have two months to respond
AND 
Creditors have six years in which they can make a claim 
AND
Creditors can make a claim at any time

Which is it?

Is there some kind of indemnity insurance to protect the executor against late claims after the estate has been distributed? I suspect  my neighbour has been persuaded to take this out. 

Any advice gratefully received thanks 

DE_612183

Surely "further down the line" the property is not joint  it's hers only?

If the estate is aware of any debts they should settle them - not just hope that they don't turn up in the future - I'd say if you ignored a debt you knew about ( as an executor of the estate ) you are failing in your duty and I guess any creditor could make a claim against you.

p00hsticks

My understanding is that if property is owned jointly, then it passes directly to the survivor on the death, but half the value of it is be included in the estate. 

I'm not sure where that leaves the executor and beneficiaries if there are not enough other assets in the estate in the form of savings etc to cover all the debts owed..... 

DE_612183

p00hsticks said:

My understanding is that if property is owned jointly, then it passes directly to the survivor on the death, but half the value of it is be included in the estate. 

I'm not sure where that leaves the executor and beneficiaries if there are not enough other assets in the estate in the form of savings etc to cover all the debts owed..... 

Correct - but once it's passed to the survivor it becomes theirs.

Does your neighbour know of any creditors that might "appear"?

If so it's probably better to try and deal with it now.

Keep_pedalling

p00hsticks said:

My understanding is that if property is owned jointly, then it passes directly to the survivor on the death, but half the value of it is be included in the estate. 

I'm not sure where that leaves the executor and beneficiaries if there are not enough other assets in the estate in the form of savings etc to cover all the debts owed..... 

if they are joint tenants then it passes by survivorship, if tenants in common by will or intestacy. If the latter it is part of the estate for both IHT and probate purposes.

Keep_pedalling

Does she actually think her husband was in debt?

Apart from the house what sole assets did he own? Who is the executor?

Posting in the LG protects the executor from any claims but not the beneficiaries. Debts become statute barred after 6 years (5 in Scotland) and cannot be enforced after that 

db_york

Keep_pedalling said:

Does she actually think her husband was in debt?

Apart from the house what sole assets did he own? Who is the executor?

Posting in the LG protects the executor from any claims but not the beneficiaries. Debts become statute barred after 6 years (5 in Scotland) and cannot be enforced after that 

No, as far as she knows there were no creditors. An elderly old fashioned gentleman with no lifestyle issues.  

Widow is executor, using a solicitor who seems to have alarmed her, though she possibly has misunderstood. 

That explanation about time limits makes sense. 

Thanks 

Hoenir

db_york said:

Widow is executor, using a solicitor who seems to have alarmed her, though she possibly has misunderstood. 

Misunderstood. In undertaking the role as executor. The solicitor will naturally wish to protect themselves against personal claims. For the small cost of an advert in the LG and a local newspaper. This will cover a multitude of common eventualities.  Remember the solicitor has no zero knowledge and is totally reliant on being informed. 

db_york

Keep_pedalling said:

p00hsticks said:

My understanding is that if property is owned jointly, then it passes directly to the survivor on the death, but half the value of it is be included in the estate. 

I'm not sure where that leaves the executor and beneficiaries if there are not enough other assets in the estate in the form of savings etc to cover all the debts owed..... 

if they are joint tenants then it passes by survivorship, if tenants in common by will or intestacy. If the latter it is part of the estate for both IHT and probate purposes.

If held jointly, the house would not be part of the estate, and therefore put of the "reach" of creditors? Whereas if held as TiC, the value of the estate would be greater and a creditor could potentially pursue a successful claim?

Though as I've explained, I doubt there are any creditors at all, known or unknown

db_york

DE_612183 said:

Surely "further down the line" the property is not joint  it's hers only?

If the estate is aware of any debts they should settle them - not just hope that they don't turn up in the future - I'd say if you ignored a debt you knew about ( as an executor of the estate ) you are failing in your duty and I guess any creditor could make a claim against you.

There are no known creditors. 

db_york

p00hsticks said:

My understanding is that if property is owned jointly, then it passes directly to the survivor on the death, but half the value of it is be included in the estate. 

I'm not sure where that leaves the executor and beneficiaries if there are not enough other assets in the estate in the form of savings etc to cover all the debts owed..... 

I found this on national debtline site. "Each owner owns all of the (joint tenancy) property. When one owner dies, their share does automatically pass to the other owner. It does not form part of the estate available to creditors" . There may be something about IHT but it's the availability to creditors that is the concern 

There are no known creditors, it's the possibility of them appearing later that is worrying her