Money issues

[worriedforMIL]

FIL passed away and MIL has been left with debt and worry. I thought they had savings. They have a house and pension related to his previous work. I know they inherited quite a bit from their parents as well.

So it was a shock to find they have apparently done equity release and have business debts. The council may pursue for this. MIL is asking for us to help but don't know what to do. Saying she may have to sell her house. We have our own family and not exactly financially well off either.

I think she needs you to go through all debts and income with her. Find out what the detailed picture is.

Stepchange may be a good first place to call for advice.

Were the business debts in his name only? Or did they have a limited company? Do they have an accountant?
Worst case scenario, she should be able to downsize and live off the employment and state pension. She probably needs lots of reassurance.

I meant to say, once you have the complete picture, why not post on the legal forum for advice?

There are credit card debts also. Both nearly 80.
Not a limited company, all in both names it seems.
Yes thought that about downsizing. However the house needs work. It is all a muddle.

YY to reassurance and I think taking things one step at a time, not rushing into anything straight away.

Thanks, good idea.

Credit card debts are generally in one name only - if it was his then they will all be written off, even if MIL was also a cardholder on the account.

We wished we had known this when my DF died as my parents spent his last year scrimping to pay off the credit card debts so my DM wouldn't inherit them - then the remainder were all written off on his death as he had been the primary card holder.

Really? OK useful to know.

What happened with probate for your FIL? Weren't all debts looked at then?

@TellingBone - that's a good point but when my MIL died , FIL ( in his 80s ) did not do probate. He was encouraged to but didn't - house was still there so no immediate reason. It would have been better but he didn't - I am not sure it is unusual - but I get your point.

@worriedforMIL - equity release ( well a while ago was for people who did not know what compound interest is. ) Immediate debts payable should be the priority ( I think ) and then what are the debts on the house & other debts e.g. credit cards etc ( credit cards to be paid of asap if she is liable)

What I think & you need to get better advice than me ( not a lawyer nor accountant ) I do not think you are liable for MIL's debts - so if you can help her sort out what she has and what she owes - then she can decide properly what she can do - But do ask someone more qualified than me - I wish you and your MIL well - Basilisk

It is quite recent, probate has not been done yet I don't think.

I googled and it said debts in the one name come out of the estate and assets, so maybe it depends on that. As homeowners it would be different I suppose.

It says here

"You may not need probate if the person who died:

had jointly owned land, property, shares or money - these will automatically pass to the surviving owners"

www.gov.uk/applying-for-probate

Does equity release not mean that both of them can still live in the house until the death of the second person? Then the house is sold and the firm gets their rather large cut?

Yes debts in one name come out of the estate - but the estate is only what was held in your FIL's name only

Anything that was held in joint names is untouchable - that goes directly to your MIL and is now her's.

Now if it was her debt as well, it's still her debt.

But basically she can't inherit his debts, if they aren't covered by his estate they are written off.

To give the example of my DF, my parents had almost entirely joint finances. So 'the estate' consisted of one aged car worth about £100, £50 of premium bonds and several £1000s of credit card debt in DF's name. The house, savings, current account were all joint names so weren't the estate. Debts were written off and that was it. No probate.

OK thanks for the info.

Yes that is the case for equity release I think. But with any loans or credit cards it is important to find out the details of whether they were joint or in his name with MIL as an extra cardholder yes?

How did the debts get dealt with Anna if you don't mind me asking? Just via the cards or something else?

You need to speak to a debt charity. Credit cards are unsecured debt and almost always in one name. If there is no money to pay there is no money, there isn't much they can do. You need a qualified debt advisor to look at it. It may be that bankruptcy or an IVA is the best option once it is clear what debt she is liable for. Stepchange, Christians Against Poverty and CAB are all options. There are likely to be smaller debt charities in your area too. Look at the Money Advice Service website as they likely have a directory. Age Concern may be able to provide more specialist advice.

I phoned up each credit card company bereavement line. If I recall correctly they wanted a copy of the death certificate and the will but it was them that told me the money would be written off - they were very used to it.

I can't remember that well but I think I didn't have to send them loads of financial info - they just said 'The debt is gone!'

My DM was stressing about her equity release at the time as well but that was a piece of cake as well - just told them my DF had died and that was it. I'll just find out when she dies if there is any money in the house or not I think not

Thanks for the advice, it is such a stressful time