The level of consumer debt in Britain has exceeded £1 trillion. This is formed in large part, of increasingly large mortgages, precipitated both by increased house prices and relatively low interest rates. In this climate in which borrowing is de rigueur, it is all too common for people to accumulate debt with little or no thought for the future. Indeed, a startlingly large proportion of people assume that, when you die, your debts will be written off. This is, of course, not the case. In fact, the death of the debtor has little effect on the debt itself – it must still be paid back by one means or another.
The Estate
When an individual dies, all of their assets (including money, property, shares and insurance payouts) are bundled together and valued as one. This collection is known as the person’s estate. When an individual makes a will, they will name someone to take charge of their affairs after their death. This person is called an ‘executor’. If, on the other hand, they have Died Intestate (that is, without a will), then an ‘administrator’ is appointed to carry out the same duties. The first task facing this individual, after having valued the estate, is to begin to pay off any outstanding debts from the estate.
In paying off these outstanding debts, the executor or administrator must ensure that they repay the deceased individual’s creditors in a certain order: Mortgages and secured personal loans; funeral and admin costs; inheritance tax then utility bills, credit cards and other taxes.
It is often thought that a surviving spouse or civil partner will automatically ‘inherit’ the deceased individual’s debts, but this is not necessarily the case. Nothing will be paid to the beneficiaries of the will until all of the debts have been cleared, but there are only certain circumstances in which a partner would be liable for these debts. The most common of these is if you were to have a loan in a joint name (that is, your partner’s and your own), or if you acted as a guarantor against a loan taken out in the deceased person’s name. In these circumstances, the responsibility for paying back the money is passed to you.
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Housing
If there is not enough money in the estate to pay off the outstanding debts, and you jointly owned a house with the deceased individual, there is a chance that you may be forced into selling the property in order to satisfy the creditors. Your course of action in these circumstances depends on the legal position of your tenancy; if you were tenants in common (that is, each of you owned a specific share in the property) then debts will first be paid from the deceased person’s portion of the house.
However, you are likely to have to negotiate with the creditors in order to avoid the forced sale of your portion. If, on the other hand, you were joint tenants (that is, you owned the entire property together), the deceased person’s portion will pass directly to you. However, creditors can still attempt to force the sale of the property through an Insolvency Administration Order, and so you would almost certainly be best off trying to negotiate a payment plan with those who are owed money.
Last week the employed solicitor wrote to me saying they have now received a further invoice from HMRC for rental income during her lifetime and ai do not know what this is. I have called them twice to be told that the relevant team will call me back.
My mother suffered from Alzheimer's in her latter years and spend a number of years in care homes.
I was not privvy to her financial affairs as 2 of my brothers decided to take care of all that.
I thought the flat had been sold to pay for her care but apparently not and unknown to myself the flat had been rented out to pay towards some of the care costs. I was unaware of this until the solicitor told me the flat could not be sold until the tennant is removed.
Am I liable to a portion of this money (almost "£1200) that HMRC are now demanding which the Solicitor did not take into account whilst sorting the estate.
I do ot have this sort of spare cash as the money from my inheritance went towards paying off some of my own debts
Basically I had been with my partner for about 6 months. We were engaged,and he moved into my house.
Things didn't work out so we parted and he moved into a rented room.Soon afterwards i was notified that the bailiffs were coming to my house because he owed £7333.l knew that he owed it, but he told me that he had recently arranged it to be taken out of his weekly wage (but obviously he hadn't).I was horrified at the thought of bailiffs coming to my house, so my brother reluctently lent him the £7333 on the understanding that my ex paid him £500 per month untill it was paid. My ex wrote out an agreement and signed it. I signed to say i had witnessed it. Unfortunately my ex died (he took his own life),after only making one payment. My brother now says that i will have to pay him back. Will I?
Many thanks
My father passed away 18 months ago, as executor I dealt his estate, all known debts were paid and his house was sold.
His house was a park home on a rented the pitch space. Both the house and pitch space were sold to a new owner. Part of the sale agreement included the buyer paying any outstanding pitch fees. We have this agreement in writing.
Today my solicitor emailed me to say she has received an invoice from the company that previosuly owned the pitch space, the invoice is requesting my father's estate pay £1500 in unpaid pitch fees.
I do not think I should have to pay this, but I'm not sure how best to take this forward, the invoicer has threatend to take me to court if I don't pay it.
Can anyone advise me?
She had Council help with care fees, but the local authority made a mistake in calculating the care costs and are asking me, the son, to pay £950 of the arrears.
Do I have to pay as it was the Councils fault in their assessment of the care costs. My mother left £1000 after all funeral costs etc were paid.
Thank you
Colin
Thanks
He had life insurange which was paid out while he was alive due to terminal illness,he wanted to divide it between 3 people myself his sister and another friend but didn't as he died before he could do that.The money was paid into his account and as far as I know still there.
His sister doesn't want to deal with his estate so someone else maybe a creditor will have to be appointed.
My question is, as she would have been the beneficiarie of his life insurance had it not already been paid to him does she have a claim to that money or will the administrator use it to pay his debts.
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