Distributing deceased estate

Roo2000

Hello,

My father recently passed, divorced with no will. I'm the eldest of three sons and being the closest living relative (and as agreed by my brothers) I have started to collect and distribute his estate.

I setup a separate bank account to collect all estate assets and followed the guidelines on the .Gov website.

I had no idea who my dad had financial accounts with, so I started by contacting each bank from the cards in his wallet.

Along with this I used the TellUsOnce service to notify government companies and completed an online form to inform a number of UK banks.

Finally I took out a Deceased Estates advert in the Gazette in order to reach as many banks and businesses as possible.

I found who his current account was with and they closed the account sending the balance to the new Estate account I'd setup.

I then received a TAX refund and added that to the account. TV Licence and various refunds followed, all added to the Estate account.

I didn't end up with much in the Estate (around £3000) but completed a letters of administration application listing all debts I knew about.

This gave an "insolvent estate"? by which I mean there was more debt than credit.

Because of this I received a reply asking why I needed letters of administration as there was nothing to distribute.

That made sense to me.

The Gazette notice period has now recently expired, so I stated to contact the claimants that had contacted me.

There were 3 in total.

A store card.

An electric bill

A housing association (landlord).

I split what was left in the estate into what I believed to be fair amounts for each of the 3.

I contacted the housing association and they accepted my offer. It wasnt the full amount due, but what was left after my electric and store card allocations.

I contacted the electric company and then raised an issue with the bill. My dad had a Prepayment Meter, how was there a bill? They're currently looking into it.

Finally I contacted the company managing the store card.

When I contacted the probate company assigned by the store card provider, they advised me that they were managing collections for four accounts belonging to my dad.

Yet I had only received one letter from them about the store card.

I had put £600 to one side for this debt, which would have covered it. Now they say they need £6000 from the estate.

Sorry for the lengthy background..

My question....

As the company only informed me after the Gazette cut off of 3 of the accounts.

Should I only pay the full store card amount, or let them split the allocation over all accounts.

Surely the Gazette cut off is just that, a cutoff?

Should this company not be responsible for checking the Gazette and contacting me? Not to mention I gave my contact details to the actual credit companies when I went through my dads wallet.

As they hadn't contacted me I presumed that either the card balance was nil or it was an insignificant amount to ask for.

If any money now comes into the account that I didn't now about, do I have to contact this company again to offer more?

For example if the electric bill is quashed, do I send that to them?

bobster2

Sorry you're having to deal with this.

I'm sure others will be along with advice on dealing with debts. However, when it comes to finding assets (bank accounts) then The Gazette notice won't help with that. For finding accounts this free service is good...

https://www.mylostaccount.org.uk/

It's legit - led by NS&I and doesn't take too long. < 1 month

Keep_pedalling

The recommended process for dealing with an insolvent estate is to write to the known creditors informing them of the death, that the estate is insolvent and that nobody is administrating it. That should be the end of it.

Unfortunately it too late for that now. The first call on his estate is funeral costs you have not mentioned those so the action you needed to take would depend on whether the £3000 was after funeral costs or not.

If funeral costs were equal too or greater than the amount in the estate, then you should have written to his creditors and informed then that after funeral costs there were no remaining assets in his estate for distribution to creditors and therefore the estate is insolvent and there is nothing to distribute. If this was the case then you have made this approach somewhat difficult by offering them an amount of money.

If you were left with £3000 after funeral expenses, you should have written requesting a final statement on the amount owed and once you had that from all the creditors you should have paid then from estate funds on a pro rata basis. 

Roo2000

Keep_pedalling said:

The recommended process for dealing with an insolvent estate is to write to the known creditors informing them of the death, that the estate is insolvent and that nobody is administrating it. That should be the end of it.

Unfortunately it too late for that now. The first call on his estate is funeral costs you have not mentioned those so the action you needed to take would depend on whether the £3000 was after funeral costs or not.

If funeral costs were equal too or greater than the amount in the estate, then you should have written to his creditors and informed then that after funeral costs there were no remaining assets in his estate for distribution to creditors and therefore the estate is insolvent and there is nothing to distribute. If this was the case then you have made this approach somewhat difficult by offering them an amount of money.

If you were left with £3000 after funeral expenses, you should have written requesting a final statement on the amount owed and once you had that from all the creditors you should have paid then from estate funds on a pro rata basis. 

The £3000 is a rough figure and for explanation only. It was about £3200 after funeral costs and before anything was paid.

Luckily there was a funeral plan that covered the funeral.

The way I managed (or am managing) the estate is that if it was something that only needed to be paid as a result of my dads death, it would be paid from the estate.

Examples: 

A company cleared my dads home.

The estate paid for my dads death certificate.

There was an outstanding council TAX bill.

Similarly if it was something I received as a result of my dads death, that I wouldn't normally receive, it was credited to the estate.

My dad received a TAX rebate.

My dad was in credit with the water company.

There was a TV licence refund as its paid for in advance.

All of the above went into the estate.

The point I'm trying to clarify is..

Is there a cutoff point.

I believed that placing a notice in the Gazette gave three months and one day for any creditors to make themselves know.

After this time any creditors that made themselves known you could say "Sorry, I didn't know about you. I've paid everybody I knew about and the estate is now nil".

Surely if the estate isn't insolvent, you can't keep the money in an account forever. Just incase a debt that you didn't know about came along in 20years time?

So as I've accounted for the Store card (I knew about it as the company let me know before the gazette expiry) I've not accounted for the other accounts managed by the company employed by the store card company to collect.

It seems a bit unfair that I was able to allocate the store card company the full amount as they contacted me and now they have to spilt it with companies that I had spoken to, but didn't make a claim before the deadline.

By allocating in the way I did the Estate account would have been left Nil and all claimants would have received either the full amount or what was left in the estate.

Now I've raised a concern with the electric provider, the estate balance may become £400.

Would I leave the £400 there incase of a new claimant (even after the Gazette deadline) or would I offer it to the company that's dealing with the store and credit cards. Even though I'm about to send them the full amount for the store card they contacted me about.

If I receive any bills for my dad in future do I keep them to one side incase I may receive a credit I didn't know about in future?

If so, what was the point of the Gazette claim period?

Surely there should be a cutoff or reasonable period of time?

I know there is no money in this for me and my siblings, I'm just trying to distribute fairly and not break the Law.

bobster2

Roo2000 said:

The way I managed (or am managing) the estate is that if it was something that only needed to be paid as a result of my dads death, it would be paid from the estate.

There is actually a list specifying the order in which different types of debt should be settled. Some forms of debt have priority over others. An executor shouldn't just be settling bills as and when they come in. 

Will see if I can find a link to the order of priority.

It's too late for this now but if an estate is insolvent yes you can just leave the money in an account and then it will be up to creditors to apply to administer the estate if they want to get their hands on it.

user1977

Roo2000 said:

Keep_pedalling said:

The recommended process for dealing with an insolvent estate is to write to the known creditors informing them of the death, that the estate is insolvent and that nobody is administrating it. That should be the end of it.

Unfortunately it too late for that now. The first call on his estate is funeral costs you have not mentioned those so the action you needed to take would depend on whether the £3000 was after funeral costs or not.

If funeral costs were equal too or greater than the amount in the estate, then you should have written to his creditors and informed then that after funeral costs there were no remaining assets in his estate for distribution to creditors and therefore the estate is insolvent and there is nothing to distribute. If this was the case then you have made this approach somewhat difficult by offering them an amount of money.

If you were left with £3000 after funeral expenses, you should have written requesting a final statement on the amount owed and once you had that from all the creditors you should have paid then from estate funds on a pro rata basis. 

If so, what was the point of the Gazette claim period?

Surely there should be a cutoff or reasonable period of time?

Cut-offs are (usually) just the normal periods of prescription for debt (six years in England & Wales, five in Scotland).

Gazette adverts seem to be misunderstood - the only legally significant point is that they're taken to be a base level of due diligence that an executor should do in order to avoid incurring personal liability. The advert doesn't mean that the estate (and therefore the beneficiaries) aren't still liable for debts.

I don't think you've said what other checks you've made e.g. checking through bank statements for transactions which might suggest other debts (or assets), or simply waiting to see if any more post arrives (don't know how long it's been since the date of death).

Roo2000

user1977 said:

Roo2000 said:

Keep_pedalling said:

The recommended process for dealing with an insolvent estate is to write to the known creditors informing them of the death, that the estate is insolvent and that nobody is administrating it. That should be the end of it.

Unfortunately it too late for that now. The first call on his estate is funeral costs you have not mentioned those so the action you needed to take would depend on whether the £3000 was after funeral costs or not.

If funeral costs were equal too or greater than the amount in the estate, then you should have written to his creditors and informed then that after funeral costs there were no remaining assets in his estate for distribution to creditors and therefore the estate is insolvent and there is nothing to distribute. If this was the case then you have made this approach somewhat difficult by offering them an amount of money.

If you were left with £3000 after funeral expenses, you should have written requesting a final statement on the amount owed and once you had that from all the creditors you should have paid then from estate funds on a pro rata basis. 

If so, what was the point of the Gazette claim period?

Surely there should be a cutoff or reasonable period of time?

Cut-offs are (usually) just the normal periods of prescription for debt (six years in England & Wales, five in Scotland).

Gazette adverts seem to be misunderstood - the only legally significant point is that they're taken to be a base level of due diligence that an executor should do in order to avoid incurring personal liability. The advert doesn't mean that the estate (and therefore the beneficiaries) aren't still liable for debts.

I don't think you've said what other checks you've made e.g. checking through bank statements for transactions which might suggest other debts (or assets), or simply waiting to see if any more post arrives (don't know how long it's been since the date of death).

Thanks,

Yes I have misunderstood the Gazette advert in that case.

My dad died mid December 24.

I contacted everyone I could find up until late January and took out the Gazette notice then.

The Gazette claim period expired at the start of this month (April).

One of the first things I did was to check bank statements in order to find and close accounts for outgoings. Utilities etc.

None of the credit cards showed on my dads bank statements.

Which is why I believed there was nothing on them.

My next course of action will be to settle with the card companies for the amount remaining in the estate. Leaving the estate value as Nil.

Which leads to the next dilemma.

Scenario..

I've now settled with all interested parties I know of.

The electric company decides to uphold my complaint and refund £400 to the estate.

The estate is now in credit by £400.

What do I do with that?

1.Hold on to it for 6 years (I'm in England), just incase a new debt appears.

2. Take my brothers out and spend it on wine, women and song?

3. Recontact all parties I settled with and offer them more?

Does settled, really mean settled in this case?

doodling

Hi,

I don't think that placing a notice in the gazette protects the Administrator of an insolvent estate from creditors coming to light after the notice has expired - if you really wanted to do that there is a mechanism (issuing a "notice of intended dividend" - see What should a creditor do if they are owed money by a deceased's estate? | The Gazette which explains it from the other side) but you probably don't want to go down that path.

What should have happened is that all the assets and debts were identified and then the remaining assets paid out according to the rules.  In your case, all the debts you identify are ordinary unsecured debts so once you had agreed all of them (which hasn't happened yet in the case of the electric bill) you would then pay them pro-rata from the assets you have.

The rules for distributing an estate are set out in law and there is no place for judgement - you say "By allocating in the way I did the Estate account would have been left Nil and all claimants would have received either the full amount or what was left in the estate." - that can't be right, all the debts you describe are in the same legal category so should be paid pro-rata, you can't favour one creditor over another.

Unfortunately, things are now complicated.

You have effectively paid some of the debt to your Dad's landlord by clearing your Dad's home so that needs to be offset against what they should receive (and they may question whether clearance was worth the price you paid).  At least you know what is owed to the landlord and what you paid for the clearance.

You don't know the size of the debt due to the electricity supplier so that needs to be determined.

It sounds like there are significant, still valid debts to various other creditors as well as the store card.  These need to be identified and agreed.

Once you have got full details of all the debts then you can work out how much each party is due to receive.  If you have already overpaid anyone then in theory you can recover it, in practise the money is probably gone.

None of the above protects you against more debts coming to light unfortunately (although the bigger the size of debt you identify now, the smaller your liability would be in the future due to the way they are paid pro-rata).

Once you have started Administering the estate you are not permitted to stop so it you are stuck with the job now, but you can see why the advice is to avoid Administering an insolvent estate if you possibly can.

Roo2000

The rules for distributing an estate are set out in law and there is no place for judgement - you say "By allocating in the way I did the Estate account would have been left Nil and all claimants would have received either the full amount or what was left in the estate." - that can't be right, all the debts you describe are in the same legal category so should be paid pro-rata, you can't favour one creditor over another.

Unfortunately, things are now complicated. You have effectively paid some of the debt to your Dad's landlord by clearing your Dad's home so that needs to be offset against what they should receive (and they may question whether clearance was worth the price you paid).  At least you know what is owed to the landlord and what you paid for the clearance.

I understand.

They did reply back saying that they were happy to accept the amount as full settlement. I'm unsure if that counts for anything?

Would it be acceptable to consider that debt dealt with?

You don't know the size of the debt due to the electricity supplier so that needs to be determined.

Understood. So I'll hold off paying the credit card companies in the case nothing is due.

If nothing is due I'll send all left in the estate to the company managing the credit accounts. They can then pay off each card accordingly.

If the electric company believe something is due, I'll pro rata the 4 credit accounts and electric account. Sending the correct amount for each.

It sounds like there are significant, still valid debts to various other creditors as well as the store card.  These need to be identified and agreed.

All 4 accounts store/credit cards are being managed by the same probate company.

Thats they only reason I learnt of of the new debts, when I contacted to pay the one I knew about.

So is it safe to consider all outstanding debts identified?

If not how long do I wait until administering the estate.

I waited the Gazette 3 months +1 day because I thought that was the required wait period.

My dad now passed 4 months ago, so technically I've waited 4 months for debts to come to light.

None of the above protects you against more debts coming to light unfortunately (although the bigger the size of debt you identify now, the smaller your liability would be in the future due to the way they are paid pro-rata).

Once you have started Administering the estate you are not permitted to stop so it you are stuck with the job now, but you can see why the advice is to avoid Administering an insolvent estate if you possibly can.

The above 2 statements confuse me slightly.

As I didn't know about 3 of the 4 credit debts and the landlord agreed a settlement, I believed the store card and electric could be paid in full from the rest of the estate.

Everybody happy, would that still be an insolvent estate?

What happens when an estate is worth thousands with no know debts.

I imagine the estate would be distributed to benrficarys? But how long do you wait before administrating it?

And then after it has been administered and a debt does come in, are there no funds available for it or do beneficiaries have to share the cost?

doodling

Hi,

Lots of questions, I'll do my best with answers in bold:

Roo2000 said:

The rules for distributing an estate are set out in law and there is no place for judgement - you say "By allocating in the way I did the Estate account would have been left Nil and all claimants would have received either the full amount or what was left in the estate." - that can't be right, all the debts you describe are in the same legal category so should be paid pro-rata, you can't favour one creditor over another.

Unfortunately, things are now complicated. You have effectively paid some of the debt to your Dad's landlord by clearing your Dad's home so that needs to be offset against what they should receive (and they may question whether clearance was worth the price you paid).  At least you know what is owed to the landlord and what you paid for the clearance.

I understand.

They did reply back saying that they were happy to accept the amount as full settlement. I'm unsure if that counts for anything?

Would it be acceptable to consider that debt dealt with?

Yes, the debt is dealt with but you may have paid them too much - the extra that you may have paid them should go to the other creditors.

You don't know the size of the debt due to the electricity supplier so that needs to be determined.

Understood. So I'll hold off paying the credit card companies in the case nothing is due.

If nothing is due I'll send all left in the estate to the company managing the credit accounts. They can then pay off each card accordingly.

You need to understand the role of that company and possibly check with the original creditors that they are authorised to represent them.  Whilst I doubt it is the case, I can see the possibility of a scam whereby you pay for an optional service which conveniently manages those creditors for you - you don't have the money to pay for such a service if that is the case.

If the electric company believe something is due, I'll pro rata the 4 credit accounts and electric account. Sending the correct amount for each.

Yes, but that is unfair on those creditors if you have fully paid the landlord as the landlord should have been prorated as well.  Just hope that they don't question the numbers as the consequence would be you finding the amount you overpaid the landlord from your own money, sharing it out to the other creditors and then trying to recover that overpayment to the landlord.

It sounds like there are significant, still valid debts to various other creditors as well as the store card.  These need to be identified and agreed.

All 4 accounts store/credit cards are being managed by the same probate company.

That isn't something I have come across before hence my comment above.

Thats they only reason I learnt of of the new debts, when I contacted to pay the one I knew about.

So is it safe to consider all outstanding debts identified?

If not how long do I wait until administering the estate.

You need to use your knowledge of the deceased together with any documentation you found in their effects to reach your own conclusion.  Sorry that isn't a clear answer.  If you want a formal process which would definitively finalise the estate then see the link I posted in my previous post - I don't know enough to be able to tell you exactly what you need to go down that path, whether a notice of dividend in the gazette is sufficient or whether there is other legal process that accompanies it.  Doing that is unusual in the context of this forum.

I waited the Gazette 3 months +1 day because I thought that was the required wait period.

My dad now passed 4 months ago, so technically I've waited 4 months for debts to come to light.

None of the above protects you against more debts coming to light unfortunately (although the bigger the size of debt you identify now, the smaller your liability would be in the future due to the way they are paid pro-rata).

Once you have started Administering the estate you are not permitted to stop so it you are stuck with the job now, but you can see why the advice is to avoid Administering an insolvent estate if you possibly can.

The above 2 statements confuse me slightly.

As I didn't know about 3 of the 4 credit debts and the landlord agreed a settlement, I believed the store card and electric could be paid in full from the rest of the estate.

Everybody happy, would that still be an insolvent estate?

If all the debts could be paid then the estate wasn't insolvent.

What happens when an estate is worth thousands with no know debts.

I imagine the estate would be distributed to benrficarys? But how long do you wait before administrating it?

And then after it has been administered and a debt does come in, are there no funds available for it or do beneficiaries have to share the cost?

If the estate is solvent and the executor has advertised in the gazette then the responsibility for any debts that subsequently come to light passes to the beneficiaries.

bobster2

Good point above - I'd be very wary of what a "probate company" is.