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Posted (edited)

Just wondering what the situation would be if a few siblings inherit family home (in future) but one of the siblings is living with the threat of bankruptcy?

Would the off. receiver force the family home to be sold?

The worried sibling's % share would not cover all their debt - but it would clear some.

Or is it more likely the off receiver puts a charging order on the property so that if future sold, the worried sibling (bad debtor) would automatically lose their % share of the sale proceeds?  Can they put a charging order on part values?


Is it better to preempt any awkward situation by discussing protective measures with parents now? 

Worrying situation...



Edited by HP Mum

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I bought a lottery ticket today but no-one  can register a debt against camelot on the off chance i might win the jackpot.


the property doesnt belong to the debtor and if they go bankrupt any future earnings, inheritance/lottery win cant be considered when making that order, only what is true at the time.


the receiver cant place a charging order on the property even if the person had died and the executors hadnt done their work yet. It isnt yours

 so assuming bankruptcy on a date to be determine din the future and you then inherit a windfall. that wil be paid out in cash and you will have to inform the receiver, not the executoer of someone else's estate. They do the wishes of the deceased and i doubt if the will says they your share should be paid to the OR.

You may wish to discuss this with your parents and theh they may cut you out of their will to save you the bother and to make sure your siblings get the money, not some money grabbing corporation. Obviously if they live longer than your bankruptcy you will get nothing but not be subject to any constraints of any order so will feel hard done as your siblings have an extra holiday on your share

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The bankruptcy process generally lasts one year from the date of the bankruptcy order until discharge. If the sibling inherits a share of the family home within that year, the inheritance will be considered an asset which is vested in the trustee. It is possible that a sale of the property will eventually be forced in order to release the sibling's equity whether or not that equity is enough to settle all debts owed. The other siblings or someone else could 'buy out' the trustee in order to keep the property, but the bankrupt sibling would no longer have any beneficial interest.


If the inheritance is received before the banktuptcy is made, it is an asset so may be subject to similar proceedings in a subsequent bankruptcy. If the inheritance is received after the date of discharge, it is no longer subject to banktupcy proceedings so the sibling would keep it all.


Where a charging order is placed on a property, if the siblings are joint tenants, the deed will change to tenants in common. Each tenant in commons' beneficial interest will be established at that point. For example with three siblings they may have a beneficial interest of a third each. It's also possible they are already tenants in common so beneficial interest is already established.


It is only the beneficial interest of the debtor which is subject to bankruptcy proceedings or a charging order. The beneficial interest of the other siblings is protected as they have no liability for the debt.


The parents could disinherit the sibling to protect the equity. Also, it is the date of death which is relevant so even where a beneficiary has not yet received any inheritance, it is deemed that the beneficiary holds the assets at the time of death, and not the date of actual inheritance once probate is finalised.


Edited by Will Goodfellow

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Thank You very much Will.   This is perfectly succinct and what I needed to read.  Preemptive prudence.  

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