Probate, POA and Executors

Hagarep

Hi
My mother in law has just passed away at 94 and my wife has joint POA for financial and health and property with her sister and they are both named sole beneficiaries and executors in the will
She owns a house but has minimal other assets and approx £3000 in a current account which will disappear when her liabilities and funeral costs are settled.
Unfortunately the house she owns has an equity release mortgage on it taken out many years ago with a balance which now far exceeds the current value of the house although I understand her liability will not exceed the sale value of the property.
Under these circumstances does the estate still have to go through probate?
Also do the executors have the same powers over financial affairs as they had with POA
How does the bank deal with the transfer from POA to Executor.
Thanks in advance

Keep_pedalling

Probate will be required to deal with the property. Did she make a will? 

What I am not sure of is how you deal with the property when the entire proceeds will go to the ER company. 

elsien

The power-of-attorney is no longer relevant as it ceases to have any application following death. There isn’t a transfer from the power of attorney because the assets/money should still in your mother’s name, just being managed by someone else
Any assets now form part of the estate and the executor steps in to do everything. 

If the bank account only has a small amount of money in, the funeral director can invoice the bank directly for those costs to be paid and the rest would normally just be passed to an executor on proof of death and of their own. 

Flugelhorn

re handling the equity release on the property - is there some way that the company involved can take over and sell the house etc? 

tacpot12

elsien said:

The power-of-attorney is no longer relevant as it ceases to have any application following death. There isn’t a transfer from the power of attorney because the assets/money should still in your mother’s name, just being managed by someone else
Any assets now form part of the estate and the executor steps in to do everything. 

If the bank account only has a small amount of money in, the funeral director can invoice the bank directly for those costs to be paid and the rest would normally just be passed to an executor on proof of death and of their own. 

Just be aware that the 'Tell Us Once' service doesn't inform the Office of the Public Guardian  (OPG) that the Donor of the PoA(s) has died. Although the OPG do use the General Registrar Office to check that someone really has died (and that the death has been registered) if they are notified that a Donor has died. So you need to write to the OPG and return the orginal and any certified copies of all the PoAs made by the Donor. 

tetrarch

There are immediate and a longer term practical problems here

"Minimal other assets" is a very vague term, some clarity would be helpful

In theory as it stands

The Funeral Director will be owed the funeral expenses
The legatees own the house contents
The ER Company own the house

Upon notification the bank should stop any direct debits. The bank should also release monies to cover a Funeral Expenses invoice. The £3,000 likely won't be enough to cover the invoice in full.

In theory, and this is just my opinion, it should be possible for your Wife and her sister to walk away from the process at this point, this is where the "other assets" becomes important because they could remove jewellery etc, but these assets technically belong to the estates beneficiaries, but only after expenses. Of course this jewellery (and other wanted assets may already have been gifted away...)

To step away you have to complete and submit Form PA15

https://www.gov.uk/government/publications/form-pa15-give-up-probate-executor-rights

At this point in my opinion you could just contact the ER company and leave the entire problem in their court to sort out. 

Having been through this process, not having to go through all the paperwork, time hassle of administering an estate would be a real boon.

Regards

Tet

 

Keep_pedalling

tetrarch said:

There are immediate and a longer term practical problems here

"Minimal other assets" is a very vague term, some clarity would be helpful

In theory as it stands

The Funeral Director will be owed the funeral expenses
The legatees own the house contents
The ER Company own the house

Upon notification the bank should stop any direct debits. The bank should also release monies to cover a Funeral Expenses invoice. The £3,000 likely won't be enough to cover the invoice in full.

In theory, and this is just my opinion, it should be possible for your Wife and her sister to walk away from the process at this point, this is where the "other assets" becomes important because they could remove jewellery etc, but these assets technically belong to the estates beneficiaries, but only after expenses. Of course this jewellery (and other wanted assets may already have been gifted away...)

To step away you have to complete and submit Form PA15

https://www.gov.uk/government/publications/form-pa15-give-up-probate-executor-rights

At this point in my opinion you could just contact the ER company and leave the entire problem in their court to sort out. 

Having been through this process, not having to go through all the paperwork, time hassle of administering an estate would be a real boon.

Regards

Tet

 

I think that is the way to go. The money in the bank could be used to pay any funeral expenses  by arranging for the bank to pay the funeral director directly to avoid intermeddling.

bobster2

Hagarep said:

Also do the executors have the same powers over financial affairs as they had with POA

No - it's a very different role.

Hagarep said:

How does the bank deal with the transfer from POA to Executor.

There is no "transfer" - the POA ceases to exist the moment someone dies. Bank will freeze the accounts as soon as they are informed of the death. And someone who is going to act as Personal Representative / Executor needs to apply to the bank to do that via their bereavement services.

Hagarep

Thank you all for your comments and I respond as follows
1) Both sisters are the sole beneficiaries to the will and are executors 
2) When the executors step in is the original frozen account transfered into a new account and what are the restrictions to this account. ie can outstanding bills be paid and settled or does this have to wait until probate is granted.
3) Total assets are Bank balance approx £4000, life insurance £1000, house value £150000, Contents £500 - Total £155500
Total Liabilities - Basic Funeral £1500, Loan £1500, house sale costs £3000, equity release mortgage £150000(amount of house sale). 

I am sure there will be other expenses so it is obvious there will be insufficient funds to settle all the liabilities.

Your help is much appreciated 

Hagarep

As executors how do you deal with the situation where the liabilities are greater than the assets?

Flugelhorn

Hagarep said:

As executors how do you deal with the situation where the liabilities are greater than the assets?

walk away. state that the estate is insolvent - let the ER company administer it