Insolvent estate and pension

[Pepperwand]

I would really appreciate some help with this as I'm getting conflicting information online.

My mum recently passed away, she had around £4k in her current/savings accounts which has all but gone on funeral costs. She had no property or other assets apart from approx £25k in a SIPP pension. She did however have around £30k in debts (credit cards and personal loan.)

My question is whether her pension fund forms part of her estate and therefore has to be used to pay the creditors? Even then it won't cover the debts but the first creditor I've written to has asked to see proof that she had no assets in the form of bank statements, they haven't mentioned the pension which is why I'm a bit confused.

Many thanks for your help.

Don’t dents fie with you?

Debts

As far as I'm aware, pensions funds don't usually form part of the estate.

I received my parents private pension and it did not form a part their estate so was not included by the solicitor.

@FabbyChix
Debts don’t die with you it’s not quite as straightforward as that.

However in general a deceased persons money house (usually) savings plus stuff like stocks shares, antique paintings etc come to less than what they owed in loans mortgages overdrafts credit cards etc then the house /antiques etc are sold and cash savings etc transferred to pay the debts and if there are any debts left these have to be written off.

There are some exceptions but that’s the main way it works otherwise what’s stopping anyone with a x thousand pound house building up a debt of more than than and expecting their heirs to get the house and the creditors to get nothing.

@Berthatydfil is correct (as far as I've understood it.) I am not personally liable for her debt but her estate does have to go back towards paying her debts off. If the pension is included, that means I will receive zero inheritance as it will all be wiped out. If it isn't included there will at least be something left. The money doesn't really matter to me but I know she would be upset if she knew I may not receive anything after her death.

The position on the pension fund (whether it is part of the Estate or not) depends on how it is written. You need to check with the SIPP provider. Most schemes would be written so that they fall outside the Estate.

Thank you everyone. I have heard back from the pension fund and it is held in trust for me as a nominated beneficiary so falls outside of her estate.

Excellent news Pepperwand, and thanks for updating.

If the estate is insolvent, now the funeral has been done and paid directly from her account, the pension is outside her estate etc, I’d think about if you really want to deal with this?
Have a look into “intermeddling in an estate” and assuming you’ve haven’t done this or applied for probate etc, it might be easier to simply inform her creditors that she has died and there is currently no appointed executor but they are welcome to do so if they wish.