Death of person with Unsecured Loan and Legal Responsibilities and Rights

[Heckler]

Hi all

 

Hope you can help me with a few questions.

 

My father passed away last week

we are currently in the process of sorting out his affairs.

 

 

He left a will and a small amount of savings.

So far we are on top of everything

 

 

after taking legal advice regarding an ISA with just over 5k in it

have been informed that due to the small amount of savings and the will... probate isn't needed.

 

But there is a loan outstanding that was unsecured and taken out in March/April of 2015 to have solar panels installed on their house.

 

 

This loan was done soley in my late fathers name.

Once the funeral expenses have all been paid out there isn't enough left over to clear the remainder of the balance..

. It won't even come close to putting a dent in the remaining £8.5k or so (I think the original amount was 10k) after about 15-16 months of paying £126 a month.

 

He co-owned a house (they'd done a separation of tenancy to cover any potential problems should my dad have to go into care if my mum passed first) and my mum inherits everything.

.. Which is the house and a small amount of savings (less than 7k total)

and funeral expenses that are expected to be a little north of 5.5k.

 

The loan in unsecured with Icanobank...

but we need to know if my mum will be expected to continue with payments,

or if a demand for the balance will be made (which cannot be paid in full)

or if they may try to make a claim on the house when it's sold

(my understanding is that they cannot try to force it's sale as it was an unsecured loan).

 

 

There is a small mortgage remaining on their house of about 18k

 

We are still in the process of sorting out my mums finances,

she will retain 2/3 of my dads pension each month

and the DWP are currently calculating her state pension

but have said that my dads NI payments

(mum only ever worked part time) can be used to top off my mums,

so she should be getting the full £155 per week.

 

 

This means that her income would be enough to cover all of her outgoings..

. unless she has to keep making payments on this loan in my dads name.

 

Your advice would be most welcome

as I want to be fully aware of legal rights and responsibilities before contacting them to inform them of his passing.

[Mr.P]

You say there was a separation of tenancy. Does this mean that your parents owned the house as Tenants in Common with an equal split of the value ?

 

If this is the case, then that share of the equity in the property now forms part of your late father's estate along with savings and personal possessions. In this situation, there would be an expectation by the creditors that any debts owing would be paid off in full and they would not care if the property was sold or not.

 

However, being unsecured creditors, they would have to go to court several times before they could force a sale.

[Heckler]

Sorry for the delay, had the funeral and everything to deal with and just didn't feel like doing anything else.

 

My dad had parkinsons, and what they call parkinsons dementia (not alzheimers).

As they jointly owned the home and my dad was considered unable to make decisions for himself anymore..

 

. My mum decided to protect her share of the house in case dad had to be placed in care at any point. Bear in mind this was around Feb of this year and he was doing pretty good.

 

After speaking with a solicitor,

they advised that my mum should change her will and they should separate the ownership of the house.

 

If anything happened to my mum first, half the house would be placed in trust for my sister and I and probably rented out to pay any extra fees that would be needed to place my dad in care. his disability benefits and pension, + a rental income would have been more than enough to cover a decent place for him.

 

My mum also set up legal power of attorney for my sister and I as well as adjusting her will.

 

My dads will remained the same, everything goes to my mum if alive and after that their house is split between my sister and I along with any savings.

 

The loan was taken out when my dad was more capable of making decisions, in fact he was more for having the solar panels fitted than my mum or I

 

. The loan was for just under £10k, and over the course of 10yrs will total around £15k.

 

Sadly my dad suffered a few falls this year, and each time he had one...

whilst not injured physically...

it took a great toll on him all the same.

 

The dementia side got rapidly worse in the last 6-8 months and after a fall in mid May,

again uninjured aside from bumps and bruises...

 

he became bed ridden and sadly passed away due to the parkinsons causing his swallowing to become problematic, he inhaled a small amount of food which caused a severe lung infection, that became pneumonia and he died from respiratory failure due to his parkinsons.

 

We have now sorted out my mums finances, and she will have enough to stay in the home and doesn't want to move at all.

.. 43yrs living in that house with my dad and all the memories are not things she wants to leave behind.

 

The solicitor is currently transferring the property into my mums name.

All of my dads savings have been dealt with and total about £7k, with funeral expenses standing just under £5k mark at the moment with a few more small things to do.

 

I estimate there will be about £1500-2000 left in my dads side of things.

All of his benefits, pension have been stopped, accounts closed and we are just double checking that there isn't anyone else to notify.

 

Due to the will and small amount of savings, probate wasn't needed, nor were letters of administration.

 

We have notifed Icano bank, and are waiting for a letter from them so we can send a copy of the death certificate to them... Only then will they deal with me about the unsecured loan.

 

The solicitor has advised that although they could go after part of the property, it's very unlikely, and even more unlikely that they could win and force it's sale.

 

.. worse case scenario seems to be that they may place a lean on the property for payment when it's sold.

.. which could be 10-15yrs down the road as my mum was younger than my dad and in reasonable health (touch wood).

 

My thinking is that they may accept a part payment to finish the loan as they can't force my mum to take it on and although possible.

.. very improbable they would try and force the sale of the house.

 

With around £9k left on the loan...

we were thinking that as dad had no other debts and there will only be at most £2k left from his savings

... that a final offer of (whatever is left) would be all that is possible... but it's roughly 1/5th of the total.

[dx100uk]

Are the panels mentioned on the,agreement?

Sure there was a case recently whereby that tried to repo the panels

If not tough luck on them nowt they can do to anyone

 

Dx

[Heckler]

I don't know about the panels...

 

the company that they went through supplied and fitted the panels, whilst Icano Bank provided the loan.

I'd have to see the actual agreement to know any more than that.

 

Also,

I found out yesterday that Icano had taken another direct debit payment out of my mums account of some £126..

 

. This after the date of my dads passing and after his name has been removed from the joint account.

 

Would she be within her rights to have that direct debit returned under the DD guarantee as it's not her debt and the bank account is no longer in my fathers name.

[dx100uk]

yes under the DD guarantee sure

 

 

dx

[Heckler]

We've not heard anything from Icano since we sent of the death certificate,

 

all of the funeral expenses have now been paid from my dads savings and the house has been transferred into my mums name...

 

There's virtually nothing left of his savings now as it turned out to be less than I initially thought and the funeral and extra expenses came to around £5600

[goodatresearch]

Mr P at #2 is correct.

 

The creditor could indeed go after the equity in the property (dads 50%).

 

I personally wouldn't make any offers of payment which would leave mum with less to live on.

 

Worst case scenario is they will put a lien on the house (as already mentioned).

Would a lien be awful?

It would he paid off after sale and after the mortgage was paid off, it is highly unlikely they would force sale?

 

Can you imagine the bad press, throwing an old lady out of her home.

 

I would wait until they make contact again.

[unclebulgaria67]

Surely it is up to the executor of the estate to deal with any outstanding liabilities in the deceaseds sole name.

 

The loan was unsecured and there is no money left to pay the loan.

 

The creditor then has to decide how they want to secure the loan debt and to contact the executor of the estate.

[goodatresearch]

Isn't that what I said?

 

Unfortunately there seems to be a lot of bad advice about debt following death.

 

1). An unsecured debt doesn't mean it can be ignored. It had to be paid out of the estate before inheritance is distributed.

 

2). If there isn't enough money after reasonable expenses and funeral costs the debt dies

 

3) However if there is an house held as tenant in common then yes it can pass to the beneficiary but the creditor can still come after the deceased share. Even if the house is held as joint tenancy the creditor can bring insolvency proceedings for 5 years post death.

[unclebulgaria67]

Yes. I was adding that the Solicitor might well have been the executor and therefore the person legally responsible for estate matters, rather than the family.

 

If Solicitor was executor, they should have looked at the loan terms as part of their work and presumably have written to the Bank to advise them of the death.

 

It then surely follows that they might receive further correspondence as executor regarding how the Bank wants to proceed.

[Guest]

do the loan terms say anything re death. recalling an old (so prob not generally applicable nowadays) cred card where the terms said on death it wld be written off.

[goodatresearch]

Yes. I was adding that the Solicitor might well have been the executor and therefore the person legally responsible for estate matters, rather than the family. If Solicitor was executor, they should have looked at the loan terms as part of their work and presumably have written to the Bank to advise them of the death. It then surely follows that they might receive further correspondence as executor regarding how the Bank wants to proceed.

 

Another misunderstanding. Whether probate is applied for or if this is not necessary, as in this case, who ever is dealing with the estate had to contact all creditors.

 

do the loan terms say anything re death. recalling an old (so prob not generally applicable nowadays) cred card where the terms said on death it wld be written off.

 

This isn't a CC. The creditor is entitled to repayment. In reality, the worst the creditor will probably do is go for a charging order.

[Guest]

This isn't a CC. The creditor is entitled to repayment. In reality, the worst the creditor will probably do is go for a charging order.

i know its not a credit card! was a general thought, which i qualified, to just double check the terms.

relax.

[dx100uk]

well id keep quiet if the supposed creditor has not made any more contact to date..

 

then if they do we'll read things they write carefully first before jumping to any action.

 

dx

[Heckler]

My dad left a will, that stated simply that everything passed to my mum if he died first, after that it was to be divided between my sister and I... My sister gets an extra little lump sum from the sale of the house (after both have died) to even out some help my folks gave me to buy a house.

 

All my dad has was a small amount of savings and his share of the house.

The house has now passed to my mum and the savings used to pay all of the funeral costs, wake, flowers and so forth.

There's probably less than £1000 left out of that. My mum has no intention of leaving the house she shared with my dad since 1973.

 

No probate was applied for as it wasn't required, all that was needed was a couple of forms to be signed to release the funds in my dads ISA and transfer the deed of the property.

 

I've been working out my mums income and expenditure now that all of her income is sorted out and she has enough coming in to pay all the bills, and have a little spending money each month... But if she has to then pay an additional £126 a month on the solar panels it means she has more to pay out each month than coming in.

 

Also, I've worked out that the income from the solar panels is almost half of what we were told they would earn...

They were sold them on the basis of not only saving money

(about £35-40 a month so far, but that will change with only 1 person in the house and not needing to do 1 or 2 daily washing machine loads along with extra dishwasher, lights and equipment my dad used to help).

.. the last 12 months provided just £532 income which isn't even close to the £1000+ promises made.

 

.. they also lost out on over 2000 units for the FiT because Eon failed to register their account

and then refused to accept the reading from 0 the day of installation and only from the date it was registered..

. which was in August 2015 after it was installed in April 2015, so they lost over £400 income that way too.

[goodatresearch]

The fact dad left a will is irrelevant.

 

You're now saying there's money left in the estate " less then a £1000".

 

The solar panel company are owed money,

the residue should have gone to them

 

as already stated

if they want to go after the equity in the house they are perfectly entitled to.

 

As for the promises of the solar panel company, that's a seperate issue.

[goodatresearch]

I'd wait to see what the company comes back with and go from there. I certainly wouldn't suggest she takes over the loan, your mum shouldn't have to live a life of poverty.

 

What does the loan agreement say about the savings/income? I seem to remember a case where a family weren't credited with the correct income from their panels.

 

What does it say will happen if the debtor defaults?

 

I supose they could take back the panels if they wanted to?

 

Have a read of the loan, just in case there is something you can use to your mums advantage at a later date. For now sit tight and wait until they make written contact.

[Guest]

have been informed that due to the small amount of savings... probate isn't needed

just for general ref;

if such a/c's and or savings are less than 25k then a bank can release funds to the next of kin without the need for probate/administration.

 

and, with an ISA; new rules allow for these to be inherited without tax consequences, if applicable. so, could consider keeping one (its interest wld be frozen upon the holders death) and then transferring it to an existing/new ISA.

[Heckler]

Yeah, we also discovered that if the ISA is more than £5000 then a form needs to be signed and witnessed by a solicitor.

 

 

Not sure on the exact cost as it may vary from one solicitor to another.

.. But we were charged £200 + VAT and another £200 + VAT for the deed transfers.

 

I know that the solicitors we used are expensive, but they've also been really efficient and their customer service has been top notch.

 

 

(we had a nasty experience with an incompetent solicitor when my brother died in 2007, and he messed up so much and overcharged that we had to get the Legal Complaint Service involved who found in our favour and we got a partial refund).

[Guest]

Yeah, we also discovered that if the ISA is more than £5000 then a form needs to be signed and witnessed by a solicitor. .

the form i was thinking of (re the ISA allowance) doesnt ask for it to be witnessed.

 

a ppty title deed transfer, if not joint, being a conveyance, wld attract a fee.

[Heckler]

Finally heard back regarding this,

they've accepted the offer to pay the remains of my dads estate as a final settlement on the account.

 

They asked us to send the payment and copies of invoices/receipts for funeral costs/expenses...

 

The only issue we have left is that we can't find receipts for all of the tiny items that you accrue...

but we do have invoices/receipts for the bulk of it.

 

.. I think there's a couple hundred pounds that we don't have receipts for..

. but may have bank statements showing payments going out.

 

I'm hoping that copies of everything coming close to the total will be enough,

they'd have to be quite picky to query a couple hundred pounds difference unless we can find bank statements to show payments.

[Mr.P]

Finally heard back regarding this, they've accepted the offer to pay the remains of my dads estate as a final settlement on the account. They asked us to send the payment and copies of invoices/receipts for funeral costs/expenses...

 

Only the beneficiaries of a will have any right to ask for a copy of the estate accounts & proof of expenditure. It is privileged information, and you are under no legal or moral obligation to provide the documents being asked for. A simple statement saying "£xxxx remains after funeral and other expenses" is sufficient.

[dx100uk]

i'd even go so far as to say you legally cannot do that [send them everything]

as there is more than one exec and the other one does not agree...

[goodatresearch]

Only the beneficiaries of a will have any right to ask for a copy of the estate accounts & proof of expenditure. It is privileged information, and you are under no legal or moral obligation to provide the documents being asked for. A simple statement saying "£xxxx remains after funeral and other expenses" is sufficient.

 

Actually I'd go further as it only the residuary beneficiary that has a right to the accounts. As advised just tell them what is left remembering to knock of allowable expenses (phone calls, stamps etc).