debts in death without need for probate but will present

[josepth235]

I've been approached by someone acting on estate- i'm sure they are executors? one of the questions posed to me was can anyone ie- creditors that are owed sums -can they force them to disclose what is in the exec account from insurance payout? the deceased did not go to probate -so nothing filled? no-one is aware of the payout except insurance company.- it was a small sum of around £6000 but the exec is trying to haggle with the creditors to get full and final settlements at much smaller amounts and hopefully leave some funds for the benificaries?
I have told them that no-one can except a court order? is that correct? and thee likely of a creditor owed a couple of hundred pounds will not do that.

any thoughts guys?

will the debts outstanding of around £8k -will they be open to offers of prob 25%-45% of the balances to settle full ?
any on had similar experiences i can share with this person? thanks

The creditors are entitled to be paid, if there isn't enough money to pay the debts in full then the repayments will need to be scaled back and the creditors will get part but not all of what they're owed.

The creditors are entitled to know the value of the assets so they know they've been paid a proper proportion.

It's an insolvent estate and the beneficiaries get nothing.

They might accept less but there's so reason they should.

yeah i agree they are fully entitled to be paid back- think they wanted to know legally who they can disclose funds too? apparently they dont need to advise what currwnt balance etc is to the benaficiaries? so why to anyone else?

i think they just want to make sure the family get a little something?

Did the insurance pay to the estate or was it written in trust so that it fell outside?

If the former then the estate is more solvent than it was. If not then tough luck to the creditors.

As an executor one is obliged to manage the estate, pay debts and distribute the balance. One can negotiate and will have to if there's not enough cash to go around. OTOH dipping on the deceased's debts to pay to the rellies looks like sharp practice to me.

good question - i'm thinking to estate definitely. so the dodgy question is...lol

if they state that only 4k in estate and that they all agree to settle full and final -that leaves 2k for family...is that a bad thing? - who can see if theres 4k or 6k?? who do they have to disclose too?

thanks for your thoughts though

Gosh you need legal advice.

If the insurance was payable to, say, the wife on the death of the deceased, then the payout is the wife's asset. It is not, and never was, a part of the estate of the deceased, and so none of it can be claimed by the creditors.

In an ideal world, probate would have been granted, and accounts produced and signed off appropriately, so that creditors could see the insolvency of the estate, and then negotiations made so that if there was any estate left over after legal and funeral costs, that should have been divided proportionately between the creditors. If the estate could not cover legal and funeral costs, the creditors should have been shown accounts to prove this, and then they would write off the amounts owed

All this is assuming debts are solely in the name of the deceased. Any shared debts are of course immediately the liability of the person who is still alive to resolve.

As there has not been probate, and presumably, no legally signed off record of accounts created, the whole thing is a mess. A lawyer should be consulted to see what can be done retrospectively to tidy this whole thing up.

Also worth noting, a person can legally decline executorship, which can force a court to appoint an executor. Can be a good option with insolvent estates depending on the appetite of those involved.

some good points to relay back -thanks

no surviving husband/wife - all debts in name only. bank accounts lclosed without probate with couple hundred pounds in. Insurance paid out to exec as part of estate as no probate required. -not legally required -death cert/will and ID to ensure they are executor provided. so officially bank has couple hundred in -exec has insurance in other account not related to deceased.

their main concern is will those creditors -ie credit cards,phone bill etc be likely to deal with a reduced figure to settle -just as if the person was alive?

The correct thing to do is tell the creditors that there is £8000 of debt, and the total value of the estate is £4000, there each creditor will receive 50% of what is owed.

Is the executor suggesting lying to the creditors and saying that the estate is only worth £2000 and therefore all each creditor will get is 25% of what is owed, in order that the family gets a few quid?

Is the executor aware of their legal responsibilities?

It's fraud basically isn't it? Fraudulently deceiving the creditors for financial gain.

You can’t pretend you don’t have enough left to pay the creditors in order to keep some money! Surly that would be illegal.
Creditors might not be entitled to see accounts at this point but they will at some point and they could then sue the executor for misleading them.
If for ex they are owed 10£ and there is only £9 you can’t just try to convince them to take £5 by making them think you don’t have more - I can’t believe you would even ask!

No idea but I wonder if in that case they could go after the executor himself (and not the estate) and get possibly more than they would have received from a fair settlement.
Bad idea OP…

That.

Exactly

creditors would come before beneficiaries, so they could likely end up with nothing. An executor's job is to deal with the estate properly, and that is to gather in all funds, and to pay all debts, then pay the beneficiaries.

They need to put a notice in the gazette or the beneficiaries could be liable for any creditors that come forward later (that is what the solicitor told my parents).

If they don't want to do it properly then they should pass it over to somebody else. They are not doing it correctly if they are trying to hide income.

Sadly the beneficiaries won't get anything if the debts are more than the estate. It's harsh, but it's reality.

thanks for your thoughts- i think they will have to take onboard exactly what i said along with all your thoughts. just let it go insolved :)

thanks

just an update- passed on the wise words above- phillips and cohen ended up dealing with them and due to the amount of debt o/s and the estate value-they have said no further action from them and they will return to the orginal companies...does this mean someone else will chase or potentially the end of it? or does the exec now contact the original companies and make full and final settlements based pro rata?

Op is it you? Just name change and ask for advice.
P&C are debt collectors from Google. Is it worth paying for an hour of a solicitors time (or the Executor does if this isn't you) it sounds like the temptation to keep some cash is a bit overwhelming.

nope def not me, however they are close friends, so kinda relaying on messages hahaha

Ah that's nice of you. Can they afford some advice? Honestly would worry they will end up causing hassle for themselves.

Get formal professional advice - the estate should pay (costs of advice from solicitor).

The Executor needs to act in the best interests of the beneficiaries.

Get advice.

The estate is bankrupt - it cannot afford a solicitor. There are no beneficiaries.

The executors need to write to the debtors offering a proportional settlement of the outstanding debt. There is nothing else that can or should be done.

The executors are responsible for: settling the debts then distribute what is left as per wishes of the will. If they are executors, there is a will. If there is a will, they should have applied for probate.

They should not be lying. It is not their role to 'fiddle' the estate.

If the executor pays any money to beneficiaries when there are outstanding amounts due to creditors, the executor is personally liable to pay the creditors.

Criminal fraud plus the executor will end up personally liable for the money paid to the beneficiaries (since they’ve paid the money to the wrong people).