Clarification needed

Twinklewinkle

I am looking for clarification on how a deceased estate is calculated when I joint owned property is involved. My husband and I owned our house as joint tenants and this has passed to me by survivorship. My question on this is, for purpose of the estate calculation to settle his debts, is his half of the house included in the estate? I have had two solicitors giving different answers. One advised that it isn't so therefore his estate is insolvent therefore his debts do not need to be paid. The other advised that it is and, because of that, there is enough money in the estate to settle his debts and I need to now pay them. I am now unsure which one is correct and hope to get further insights here. 

Savvy_Sue

It may be worth saying what size of debts, and what sort. I may be wrong, but I believe that in some cases those owed money may be able to come after the house and force you to sell if you do not make arrangements to pay. 

Keep_pedalling

His share of the house is part of his estate for IHT purposes but not for probate. 

Technically a creditor could obtain a court order to sever the tenancy to get there money back but the debt would have to be very high for it to be worth their while considering the legal cost involved in doing that.

Did you husband have any other assets after covering funeral expenses?

Twinklewinkle

Savvy_Sue said:

It may be worth saying what size of debts, and what sort. I may be wrong, but I believe that in some cases those owed money may be able to come after the house and force you to sell if you do not make arrangements to pay. 

Thanks for your comment Sue. The debts are a credit card of £8K, another one of £1K, a sole personal loan of £13K. He was also a guarantor for a business loan of £11K.

Twinklewinkle

Keep_pedalling said:

His share of the house is part of his estate for IHT purposes but not for probate. 

Technically a creditor could obtain a court order to sever the tenancy to get there money back but the debt would have to be very high for it to be worth their while considering the legal cost involved in doing that.

Did you husband have any other assets after covering funeral expenses?

Hello. Thank you for your comment. The solicitors confirmed that there is no need to pay IHT so that is a relief. We had other joint assets ( things in the house and a car), however those barely cover the funeral expenses. 

Savvy_Sue

Keep_pedalling said:

His share of the house is part of his estate for IHT purposes but not for probate. 

Technically a creditor could obtain a court order to sever the tenancy to get there money back but the debt would have to be very high for it to be worth their while considering the legal cost involved in doing that.

Did you husband have any other assets after covering funeral expenses?

This is the situation I was referring to as a possibility.

Twinklewinkle said:

Savvy_Sue said:

It may be worth saying what size of debts, and what sort. I may be wrong, but I believe that in some cases those owed money may be able to come after the house and force you to sell if you do not make arrangements to pay. 

Thanks for your comment Sue. The debts are a credit card of £8K, another one of £1K, a sole personal loan of £13K. He was also a guarantor for a business loan of £11K.

I have no idea whether anyone would consider those worth forcing a sale for, but it's important to deal with an insolvent estate in a particular way, especially not to 'intermeddle' or to pay off some debts and not others. 

Is there a will? If so, who is executor? If it's either of those solicitors, I believe they should effectively do nothing, because the estate can't pay them. But if YOU in your personal capacity have engaged with them, there may be charges for their advice. I'd say that's all you want, advice not further action. 

If you're the executor (or some other lay person), or if no will, everyone who enquires about a debt can be told "Mr T died on ddmmyyyy, the estate is insolvent, EITHER no-one is applying for probate OR there is no will and no-one is applying for Letters of Administration." Don't give your phone number, repeat as necessary. 

Just checking, did he have any insurance, or a work pension? Things like that may mean you're entitled to a payment, which would hopefully be written 'in trust' which means it passes to you outside his estate. If it's not 'in trust' it's more complicated.

Keep_pedalling

Was the business loan for his business or someone else's? If the latter is the business still trading and paying off that loan?

The normal way to handle unsecured loans where the estate is insolvent is to write to each creditor to inform them of the death (include a copy of the death certificate) that the estate is insolvent and that no one is administrating it. That will normally be the end of it.

You need to check that the business loan is not a secured one as they often are which could take the form of a charge on your home.