Dealing with a deceased persons Estate may often involve scenarios more complex than those envisaged. It is possible, for example, that the deceased owes money, is owed money, or even that they both owe money and are owed money! In any case this will affect the value of their Estate. We will deal here with what happens if the deceased is owed money, before considering what happens if they owe money.
Money owed to the deceased is counted as part of their Estate: Their Estate is everything they owe and are owed less anything they owe. It will in this case become the responsibility of the Personal Representative who acts on behalf of the deceased to claim back the money owed, and it will be in the interests of all the benefactors of the will that this is achieved.
Money owed to the deceased must be declared as it affects the amount of inheritance tax on the deceased’s Estate and may also impact on what is paid out under the terms of the will.
Recovering the Debts of the Deceased
Recovery of casual debts related to sales or money lent may be difficult and there will be no legal obligation on the part of the debtor to pay outstanding money. In many cases it will be difficult to prove how much of a debt is owed, and even if a debt exists at all. This demonstrates the importance of having written agreements drawn up of all significant debts owed – with no written agreement even in your life time a debt owed to you is not worth the paper it is written on, whereas a dated record of the agreement is binding: This goes for contracts of all kinds.
Be sure also to check whether the deceased may be owed things such as insurance on damage or theft of property, tax rebates, and so on.
Business debts should be recoverable, although the law regarding business debts varies depending on what type of business owes money. In the case that business debts are owed it is in your interest to seek legal advice. Your first port of call may be the Citizens Advice Bureau.
Dealing With the Debts of the Deceased
When someone dies it is often wise to advertise in the local papers for creditors, in order to see whether they are owe any money. As well as doing this, the Personal Representative must search through their personal documents and their bank accounts (or statements) for evidence of regular and ongoing debt payments. If they do owe anything then this amount must be taken from the total value of the Estate and will therefore reduce their Inheritance Tax liability.
All debts must be paid for from the Estate of the deceased, although it must be noted that this cannot be done until some Inheritance Tax has been paid on the Estate. Be sure to tell all creditors that the debtor is deceased as this will allow some reprieve from immediate payments having to be made. It is unlikely if there is ni money left in the Estate that the beneficiaries of the will need settle the debt unless it was incurred a joint debt.
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Hi,
My brother passed away this year. He had several Asset Reunifications companies chasing him. I understand he was entitled to some money from a property sale going back to 2001.
How can I establish where any money is held and by whom.
I could sign up with one of the Asset companies but they are asking between 19% & 25% plus VAT.
R G - 14-Apr-21 @ 2:49 PM
Around 5 years ago a cousin of mine passed away without leaving a will, he had no living immediate, i.e never married and had no children and his only sibling (also unmarried with no children) had pre-deceased him.His estate was dealt with by Solicitors and an Aunt of mine and myself and my siblings were contacted some considerable time later to say we were beneficiaries and a sum of money paid to us.Fast forward six months we received a letter stating that they had distributed the estate incorrectly and we had to repay but by this time the money was spent (proof of this can be provided).A few months after that they realised they had also incorrectly valued the estate and we had to repay more.My Aunt is now being pursued by the underpaid beneficiaries and she in turn is pursuing us, although not through the Courts. Whilst I am happy to make a payment of whatever I can raise to reduce the amount she is being pursued for my current circumstances mean I cannot borrow the full amount owing and my Aunt is very understanding of this. My questions are firstly why are the Solicitors not liable and secondly should she pass away during this process (she is of advancing years i'm not being unkind) would her Daughter as her sole beneficiary be able to officially pursue us, i.e through the Courts
Terry - 5-Nov-20 @ 10:19 AM
both my parents have died. My parents gave me money each month to stay in there failing business. that withheld me from getting a job myself. but now its showing a hole in the inheretance. this money was not a lifestyle thing. was just so i kept doing & keeping the company going. and other stuff. adds upto £23000 over a 5 year period. will i lose this money? cause i cant pay it back?will i lose my house.
parker - 6-Oct-20 @ 11:48 AM
My X partner Owed my mum £5000, it went in as a Hotchpoch in the will and was taken off any money I received..as He Promised to pay it back !
He has not.. he lied to a Dying woman on her death bed!
I have no money to take him to court..what do i do?????
D - 27-Sep-20 @ 10:27 AM
I loaned my father £40,000 in 2007 to buy his house and agreed he would pay me back when he sold the house. He sold the house but did not pay me back but bought another house in Scotland. He died in 2017 leaving everything to my younger sister and the house. He died owing me £40,000 and now I have to fight his solicitors and claim from his estate and prove the money was not returned.
Cindy - 23-Sep-20 @ 9:41 AM
My sister lived with our Dad for three years before he died. She loaned him £30,000 during this time. He has left the house to us in his will. My sister is staying in the house and buying me out. She says that the £30,000 needs to be taken from my payout and given to her. Is this correct ?
Jules - 31-Aug-20 @ 3:13 PM
I'm owed a large amount of money from someone who has died. I'm trying to find out from his parents who is dealing with his estate but they are messing me around. Where can I get some help??
Rachel - 24-Aug-20 @ 11:39 AM
Can someone contact me in connection with an inheritance or inheritances due to me. Many thanks, Guy Martin.
Guy - 19-Jul-20 @ 7:22 PM
Can someone contact me in connection with an inheritance or inheritances due to me.
Guy - 19-Jul-20 @ 7:20 PM
My neighbor died, I was his carer and friend, he paid for the upkeep of my car and petrol on our journeys out weekly....no other monies changed hands, the solicitor has written to me asking for 10,000 is this right as I live in a homeless room and I am on benefits
lorna - 21-Mar-20 @ 7:53 AM
My 30 year old son died last month leaving a lot of debt. He did not leave anything at all. No money no assets and he lived at a homeless shelter. How do i prove to his debtors that he died pennyless. I have written to them and told them but i am afraid they are going to want proof and i have nothing
Sue - 20-Nov-19 @ 5:48 PM
I have cared for my mother for past 9 years living with her in property owned by her in that time I also have been given a child arrangements order for my grandson who has also lived in the property since 6 and is now 13 and registered disabled. My mother has been given days to live and now I am worried sick as the home will be sold to pay equity and other debts them the rest of estate is left to me in her will. There is no money only the home which after all is paid should be around £300000 . The problem I have is when the home is sold me and grandson will have no where to live until I get this and I don’t know what to do
Carrie - 5-Mar-19 @ 6:17 AM
My friend recently died owing me £10k, there is not nearly enough in his estate to pay it back.Can I record it as a loss of some sort in a tax return?
Iain - 19-Jan-19 @ 11:43 PM
Hi,
my father died in December 2018 and without making a will. He had a partner but they never married.I am applying for authorisation to deal with his small estate.
There is a complete breakdown in any relationship between his partner and our family.Now since Dad died his partner is claiming she lent my father a considerable amount of money and she will be applying to his estate and us to pay this back.There is no agreement that we are aware of, nor any record of him paying her money from his bank account.She is claiming he has been paying her back.
Obviously if he did borrow this money we are happy to pay it back if there are sufficient funds, but I am suspicious that this has been made up as she is now aware that my bother and I will inherit his estate. My brother and I were extremely close to my father so we are finding this whole situation very upsetting and awful... at this time to be receiving letters and messages money grabbing is quite sickening). She insisted a long time ago that their house and vehicles be entirely in her name, which foolishly Dad agreed to, so she is already keeping their house and sold his car within two weeks of his death. His only asset in his name is a small shop, which is up for sale.
Do you have any advice please on what we should do about this claim of a loan to her?
Many thanks
saramarie - 9-Jan-19 @ 4:04 PM
I loaned my son 30,000 6 years ago he refused to pay anything back. He has now died and I wondered if I can claim it from his estate. No writtenagreement but I do have bank proof I did actually transfer the money to his account.
dunholm - 6-Jan-19 @ 1:36 PM
I loaned my son £30,000 from my bank to clear his morgage. He refused to pay it back. Now he has died can I claim the money loaned from his estate . No written agreement just a trusted arrangement between mother and son. But I do have proof I gave him this sum in old bank records .
dunholm - 6-Jan-19 @ 1:32 PM
Hat22 - Your Question:
Our elderly mother has Alzheimer's and terminal cancer. She has a few rental properties but her income is less that her outgoings. My siblings and I are proposing to each put in a lump sum (around £10k each) to cover her future care costs and any outstanding bills so that we have a fund to draw on. In the event of her death, how can we ensure that our money is repaid as debts before it is taken into account for inheritance tax.
Our Response:
You need to speak to a legal/financial professional about this as we can't really give individual advice of this nature. If your mother has rental properties meaning her income is insufficient, can any of them be sold etc?
InheritanceIssues - 1-Aug-18 @ 3:15 PM
Our elderly mother has Alzheimer's and terminal cancer. She has a few rental properties but her income is less that her outgoings. My siblings and I are proposing to each put in a lump sum (around £10k each) to cover her future care costs and any outstanding bills so that we have a fund to draw on. In the event of her death, how can we ensure that our money is repaid as debts before it is taken into account for inheritance tax.
Hat22 - 31-Jul-18 @ 4:16 PM
Afriend of mine lend me money a month ago.He suddenly died a few days ago.Do I still need to pay the money back.Ther was no written agreement.
Francis - 16-Jul-18 @ 11:52 PM
A friend lent me £10,000 we wrote something down ourselves and I signed and dated it. I would pay him monthly. He died suddenly and now his siblings are trying to claim the money from me. Where do I stand? And who do I pay it to?
Nat - 12-Jul-18 @ 3:48 PM
Tutti - Your Question:
Hi my friend gave me £20,000 and didn’t want me to pay her back however I insisted I made payments. She made a will and told her solicitor it was a loan although we never wrote anything down. He has said I owe the money to her residue ? Which any left goes to a charity that she chose. Do I pay the charity? Does it have to be in one lump?! Thanks
Our Response:
You could try and contest this if it was originally a gift;if however, you made repayments, it may be difficult to prove. Seek professional legal advice.
InheritanceIssues - 16-May-18 @ 2:54 PM
Hi my friend gave me £20,000 and didn’t want me to pay her back however I insisted I made payments. She made a will and told her solicitor it was a loan although we never wrote anything down. He has said I owe the money to her residue ? Which any left goes to a charity that she chose. Do I pay the charity? Does it have to be in one lump?! Thanks
Tutti - 15-May-18 @ 11:16 AM
mother and father put a £40000 loan on the house they transferred/sold to brother.This was done formally in writing to be repaid.Both parents now deceased, there are 3 siblings with no will. Can he be asked to repay the loan into the estate as currently there is no money in the estate and there is property and land to sell which requires conveyancing etc so funds are required to enable complete liquidation of the estate? As he is a beneficiary he is requesting that this is considered as part of his inheritance
Loanandinhertitance - 27-Mar-18 @ 3:52 PM
Alice Yelland - Your Question:
My godfather wants to loan me £30,000, at a low interest rate of 1% per annum. He is elderly, so what happens when he dies? Are there tax implications? Or does the loan pass on to his wife?
Our Response:
You could consider putting some documentation in place to deal with this. If not, it forms part of your godfather's estate and whoever is responsible for administering the estate will seek to recover from you.
InheritanceIssues - 20-Mar-18 @ 10:44 AM
My godfather wants to loan me £30,000, at a low interest rate of 1% per annum. He is elderly, so what happens when he dies? Are there tax implications? Or does the loan pass on to his wife?
Alice Yelland - 18-Mar-18 @ 7:15 AM
I was wondering what would be the best way to find out if someone (individual or company) has taken, claimed or received money, or held back money from my fathers estate after his passing?
He passed away a few years ago and I am this sole person responsible for his estate and assets. Upon looking through some of his paperwork, it seems like there might have been an account or two that may have been closed after his passing. As well as stocks and life insurance. I have called some of these companies but there's no record of these accounts on their end or my search seemed to get no real information.
If there is a website or place I can go that could show this type of information, it would be most helpful. Any suggestions all recommendations would be greatly appreciated. Thank you,
- Dennis Vaughan -
Bishop - 15-Feb-18 @ 7:46 PM
RASH - Your Question:
I gave my mother nearly £25,000 about 20 years ago to buy a share in her flat. Now she has died how do I get my money back from her Estate. I have the written confirmation from her that I gave her this money. I am one of the Executors. 2 of my siblings have agreed to pay their share of my money back with interest, the 3rd sibling is refusing to pay be back even a penny.
Our Response:
You haven't said whether it was a gift or a loan. If it was a loan, was there any documentation etc? If it was a gift you don't have any right to claim it back in the deceased's estate. When you say a "share in her flat" is your name on the deeds at all? You will probably need to seek professional legal advice on this.
InheritanceIssues - 20-Dec-17 @ 12:28 PM
I gave my mother nearly £25,000 about 20 years ago to buy a share in her flat. Now she has died how do I get my money back from her Estate. I have the written confirmation from her that I gave her this money. I am one of the Executors. 2 of my siblings have agreed to pay their share of my money back with interest, the 3rd sibling is refusing to pay be back even a penny.
RASH - 19-Dec-17 @ 4:14 PM
ian - Your Question:
I had given money to a private limited company by bank transfer. they then loaned the money for property development and would secure a charge over that property. They in turn paid me interest every month by bank.Some of it was paid by the company some of it was paid personally by the only director.Five years later he has died.How do we deal with this?I don't have any official paperwork apart from Bank statement showing my transfer to them.Emails stating that interest was being paid to me.Bank statements showing payments into my account from the company and the director personally
Our Response:
No paperwork? You say you "gave" the money to a private company, was this a gift or a loan based on what you'd get back from a future sale of the property. You can check with the land registry if there is a charge on the property, but apart from that we can't really advise - you need to speak with a solicitor/financial adviser if you can't resolve it with the company.
InheritanceIssues - 24-Oct-17 @ 9:45 AM
Dolly - Your Question:
My husband was the executor of a relative's estate, who died just over 2 years ago. The estate was finally wound up in July 2016. He has just received a letter from the local council advising that there are some outstanding care charges for the relatives home carers. Whilst they have resent a copy of a statement which states £250 is owed, is the council within it's rights to try to claim this more than 26 months after death, and more than 15 months after the estate has been settled and IHT paid? If this money is to be paid how does this affect IHT etc? I realise that this a small amount to be paid, but it is the fact that they have left it for over 2 years to follow this up.
Our Response:
Did your husband notify all the creditors at the time of death? We assume there must have been some documentation of the home carer's finances etc? The usual practice is to place a notice in the estates gazette and a local paper, this give protection against unknown claims. A deceased estates notice specifies a two-month period for claimants to contact the executor to register a claim against the estate. Once that time has expired, the executor may distribute the estate paying only the debts that they have received notice of. If a creditor misses the deadline there is recourse against the executor, but the beneficiaries can be pursued. The amount should have little impact on IHT.