Insolvent estate

[riverpebbles]

Hi, my sister died (by suicide) recently and I suspect has an insolvent estate. She was on benefits for years and always overdrawn but had somehow managed to open two credit cards (with low limits) in the last three months. She left no will. I am not next of kin (my mother is) but am trying to help by notifying organisations. I don't know whether this is the kind of situation that needs a lawyer or accountant to help? We (my husband and I) could almost certainly afford to cover any debts so it could be easier and cheaper just to pay rather than get professional help.

I am so sorry. Very sad.

AFAIK there is no liability for any CC debts if the cardholder dies and leaves no money that could pay it off. So if her estate has no funds you won’t have to pay the CC debt.

Thank you. I understand that an insolvent estate means that the debts are written off but I don't know how to prove it? Does it need a solicitor to provide evidence of that?

It is not your problem to sort out. There are grants available for funeral costs but someone with an interest in her estate (such as a creditor) would need to apply for letters of administration and it simply isn't worth the hassle.

This also means no one can take the money sitting in her account unless it's to pay for a funeral. To take from her bank account would need grant of probate unless she whas made a will appointing executors.

Rather, that some debts are written off depending on what money is left, etc.

Collaborate that is helpful, thank you. I didn't know where the 'duty of action' (?) lay so that is helpful.

So if we/my mother wanted to take money from her account to pay for the funeral that would need a grant of probate?

Also not sure whether overpaid benefits will just be reclaimed?

Thank you all for your help, I have absolutely no experience in dealing with this stuff.

Sorry for your loss
There is a booklet or online “What to do when some one does” on www.gov.uk that is helpful and this might also help:
www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/dealing-with-the-debts-of-someone-who-has-died

I would check with her bank, but funeral expenses are a priority before anything else, so check what they need from you to allow this to be paid from her account. Normally an invoice from the funeral directors and they will pay them directly, but all banks differ.

As regards anyone else, I’d use the “tell us once” service, and if anyone is looking for executors, simply respond “we understand the estate is insolvent, there are no executors”.

Most definitely do not get involved with anything beyond the funeral, and do not pay any of her debts. The benefits department etc will all have their own people who sort these out.

Have a look at this www.bereavementadvice.org/topics/probate-and-legal/insolvent-estates/

It all depends on what it takes to get money sitting in her account. Banks should ask for either a grant of probate or a copy of a will naming you executor. Otherwise they'd have no business letting you have the money as you'd have no legal authority.

As it costs to get probate there would have to be sufficient in the account to make it worthwhile.

I've dealt with an insolvent estate, virgin & halifax just wrote it off after verbally telling them. Barclays asked for a few more details but again just wrote it off.

If she died without leaving a will, then you could ask a solicitor to deal with it and save the hassle at such a distressing time, but of course they will charge for doing it.

My dad died intestate and insolvent. I notified all the credit card companies, bank, HMRC etc with his death certificate etc but made it clear I was not going going to act as his executor. Myself and my sister were his next of kin but there is no obligation to deal with it or apply for a grant of probate.

Basically, there is no point taking on the hassle of this if there are no funds to distribute - ie debts are greater than assets as was the case here. There is no moral or legal obligation to do so either.

I’m very sorry for your loss.

@caranations

If she died without leaving a will, then you could ask a solicitor to deal with it and save the hassle at such a distressing time, but of course they will charge for doing it.

I would avoid a solicitor if at all possible. If the estate is insolvent, whoever acts as executor would have to pay for the solicitor out of their own money.

Hi, thanks for all the help, everyone.

We've discovered more debts but also a small amount invested in a pension. So I think (?) that the pension could pay some of the funeral costs and that would be it.

I assume we can get the pension paid to my mum as next of kin, and if anyone came asking we just show receipts for the funeral expenses?

Just to be clear there was no will so there's no executor.

Pensions don't always form part of the estate. In a the case of a relative of mine, where I handled the estate (with probate through letters of administration), the estate was insolvent, so debts had to be written off by the creditors, but her son still got a lump sum from her pension.

Someone may be named as the beneficiary of the pension, and trustees of a pension usually follow this, but can make their own decision. Next of kin doesn't particularly entitle someone to it, although, again, the trustees are usually sensible. Your mother would have to apply to the trustees (with your help?) for the money to be released to her. Call the fund - they'll be used to dealing with this, and can tell you what documents they require.

could you ask the pension people to pay the funeral expenses directly, so there is an audit trail id any questions later.
i have taken funeral bill with death certificate, proof of i.d. etc to bank, and asked them to write a bankers draft in favour of the funeral directors. then taken that to the funeral directors. never been a problem.
but i assume from what you have written, that there are no funds/not enough in any bank account ?
as others say, do not get involved beyond arranging funeral.
my sympathies.

Forgot to say - it's the estate that owes the debts, and for the funeral expenses (but not for any get together afterwards), and I think funeral expenses take first priority before debts. So that comes out of any money in the bank, for instance, before what's left is paid out to organisations owed money. When that's gone, its gone, and that's that - they have to write it off.

Pension money most likely doesn't come into this.

This is very helpful, thanks both. We'll see what the pension people say.