- August 14, 2023
- Posted by: legaleseblogger
- Category: Related News
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Title: Seeking advice on handling debt after the unexpected passing of my mother
Introduction:
This post seeks guidance on a complex situation that arose after my mother’s sudden demise about two months ago. I apologize in advance for the lengthy and disorganized text, as my life has been quite chaotic lately. I initially posted this in r/personalfinance, unaware of the UK-specific subreddit. While the users there were helpful, I want to ensure I cover all my bases, which is why I am reposting here.
Background:
My mother’s passing caught us off guard, necessitating my sisters and me to sort through her belongings and address various administrative tasks. During this process, we discovered that she had taken out a loan of ┬ú5,000 from Tesco Bank. At the time, we were uncertain whether the debt would still be valid following her passing, so we decided to wait for Tesco Bank to approach us.
Recent Development:
A few days ago, during a brief work break, I received a call from someone claiming to be from Tesco Bank. Unfortunately, I was unable to engage in a conversation due to time constraints. Nevertheless, I anticipate that the call pertained to the aforementioned debt. Notably, my mother possessed no assets of value; she resided with me in a privately rented flat, and the £200 remaining in her bank account was transferred to me. While my sisters and I will receive financial compensation through life insurance, pension, and death in service benefits, the debt would not significantly impact us. Nonetheless, I had assumed that since my mother had no means to repay the debt from her estate, it would become null and void.
Seeking Clarification:
As a novice in matters involving probate and estates, I am uncertain if life insurance, death in service benefits, or the pension would be considered part of my mother’s estate, thereby necessitating repayment of the debt. Given my current emotional state, I wish to avoid making impulsive or incorrect decisions. Hence, I have turned to this community in the hope that someone might offer advice or guidance to help me resolve this predicament.
Conclusion:
Thank you for taking the time to read this message, despite its jumbled nature. Your advice would be greatly appreciated, and I would be immensely grateful for any suggested solutions to this complex situation.
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****** just grabbed a
Sorry to push you to another sub but legaladviceuk is the one you need here. You will get proper lawyers there.
Generally the debt belongs to the estate not to you or other descendents. However, depending on how the death is service and life assurance are set up, they may be part of the estate and will need to be used to repay the debt. Normally they wouldn’t be set up that way and Tesco will be out of luck, but needs confirmation.
If you were the beneficiary of the insurance or your sister, then that is not money for the estate.
If the estate was broke after the funeral then that is the end of any claim against it.
You send Testo the Death Certificate and a cover letter informing them the funeral wiped out the estate. That is basically it.
If you profited from the estate however then you may need to pay the estate back to make right on the debts it had at the time of death. Though this does not sound like that to me.
Unfortunately you may have started distributing assets before understanding the situation for your mothers estate.
Assuming your mother’s estate had some capital (however little that may be) you may have needed to use that to settle any debt before any distributions can occur.
I am a little unsure if probate is required of the assets are, as say, so little.
Did you act as executor of her estate?
If so, it is your duty as executor to understand all this (not having a go, just saying legally as executor you are liable for working this out).
As executor before distributing her assets (I.e the ┬ú200) you should have settled any debts. Tesco bank canÔÇÖt come after you personally for the debt but they do have a claim against her estate (for which her executor is responsible for managing – so this is you if you are the executor).
Funeral costs come before settling debt so make sure you have proof of how much you paid for the funeral to prove there wouldnÔÇÖt have been anything left to settle debts.
You may need to apply for probate if there isnÔÇÖt enough in her estate to cover her debts.
Usually, pensions, life insurance and death in service donÔÇÖt count as being part of her estate; but it might be worth checking the specifics.
Have you sent Tesco Bank copies of her death certificate?
Firstly, I’m sorry for your loss. Hope you are doing OK
Life insurance may form part of the estate, from which Tesco Bank could expect to be repaid, depending on remaining funds after funeral. However if the policy was written into trust, it will not be part of the estate. You’ll need to check that.
Death in service usually would not as it is setup differently and likely already in trust.
Pensions are complex, but probably not part of the estate, but there may be tax implications. The provider(s) will be able to advise.
Dealt with my mum’s death a few years back.
> As it stands, my mum didn’t have anything to her name.
That’s the main thing that matters, Tesco need to go after the estate which will say there is no money, the debt should be wiped (bar the ┬ú200 which should be used to pay off debts) unless… see “if no” below.
> Me and my sisters will receive compensation in the form of life insurance, pension and death in service
Were you and your sisters named beneficiaries?
If yes, that is your money and not the estates (in most cases).
If no, it is the estates money and the debt will have to be paid from that.
Look at the wording of the death in service, life insurance, and pension death benefits. Does it name the beneficiary as you or the estate?
Send them a copy of the death certificate, tell them there were no assets (presuming that’s true of course, which it seems to be based on your post).
Keep a note of funeral expenses, with receipts.
If you’re not acting executor, get the executor to do this.
https://www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/dealing-with-the-debts-of-someone-who-has-died#:~:text=Any%20remaining%20debts%20are%20likely,co%2Dsignatory%20of%20the%20debt.
There’s some great advice here and a couple of incorrect answers. Firstly I am so sorry for your loss. I work in employee benefits and have for many years so hoping I can clarify some of the information about death in service and pensions.
Death in service from an employer rarely forms part of the estate and is likely to be paid directly to the beneficiaries. If your mother’s nomination form was out of date (e.g. naming a spouse she subsequently divorced) it may slow things down and you may be asked to provide the employer with additional information.
If she had a workplace pension of the type where you pay in money to a savings “pot” (what’s commonly known as a defined contribution or DC pension) this will likely be paid out in the same way as death in service and outside of the estate.
If she had a final salary pension, I’m not an expert in these and you will need to discuss with the employer but a lot of the old ones only had provision for a widows/widowers pension to be set up or for a dependant child. If she had this type of pension and you can find an annual statement this might help you understand if there are any death benefits payable and who might be eligible for them.
And although the Lifetime Allowance has been abolished, at present there is still a national value of £1,073,000 and if the total value of death in service and pensions paid out is over this, there may be a tax liability (nothing to do with the estate and inheritance tax, a whole different tax!).
Individual life insurance is very dependent on how the policy was taken out and structured. Some are in trust and do not form part of the estate, others will be part of the estate.
The overriding thing to remember is that the only entity that owes Tesco any money is the estate and you and any other relevant people are not liable for the debt.
Having just dealt with large sums of debts from multiple sources for my mam who also passed away, the majority of them accepted cash settlement offers of 50% – tesco being one of them. You aren’t liable for the debt if there is nothing to pay it with. If the house is the only source of value as in my case, they have options to make you pay if you are benefitting from the estate.
In our case we didn’t want to sell the house so I paid them myself as we were benefitting.
If there is random cash values you could tell them there is only enough for 50%. Try wrap it up with them or they will pass it onto a Bereavement debt specialist which really slows things down.
As a general rule for anything of value in the estate, In the eyes of the law it should be paid out in the following order – funeral costs, government debts (,,benefits council tax etc), mortgages, credit card/loan debts, inheritance
Firstly sorry for your loss, I would contact Tesco banks bereavement team and provide them with the information they require they might ask for a copy of the death certificate.
Some small insecure debts are actually written off in the case of death once provided death certificate, some pursue through their estate especially if itÔÇÖs a larger amount owed, and if that is the case here IÔÇÖd seek legal advice.
Debts die with the person. If they have no estate
I’ve just been through this with my father, he had hidden credit card debt.
The debts will transfer to the estate of your mother, if she has over £5k to her name in property or cash they are entitled to it. Talk to them about it.
I made a deal with credit card companies after explaining things. One of them let me clear the debt for 50% off after giving them a take it or leave it offer.
If her estate can’t cover the debt then send them a copy of the death certificate and explain things. You will not be liable at all, it will end there.
Nothing to add, but IÔÇÖm sorry for your loss mate.
I’m sorry I can’t help, but I’d explain this to your own bank, who can help you, then redirect you to other helplines, before contacting Tesco Bank
Thank you all for the advice and even condolences. Me and my sister just got off the phone with Tesco Bank so we can inform them of mum’s passing, we’ll send them a death certificate at some point and wait to see what they say.
I think after reading through all the explanations provided by people here, I may have to pay for the sole reason of the life insurance not having a beneficiary. (We’ll double check incase she does and its okay) As I understand although now we have ourselves down as the beneficiaries after the fact, I’m sure that doesn’t change the fact there wasn’t one written down before. I’m not sure if the fact only the life insurance is applicable to the estate might mean we don’t have to pay back the full amount, but maybe that’s speculation on my end. The life insurance is ┬ú20000 with the funeral costs of around ┬ú4200 deducted.
I’m gonna try and stop stressing about this as much as its out of my hands for now, but again thank you all, the feedback was invaluable and I’m glad 8 asked here first. At some point I’ll probably post again to ask the best way to gain the most from the money I receive. (in the likes of fixed savings accounts, premium bonds, etc.)
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As I understand estate refers financial assets e.g. shares, bonds, property and physical cash. Not insurance and death in service awards.
The only one I’m unsure of is pension but assuming it’s state pension and not private goes back to the government.
I don’t know what happens to work pensions. You may have to speak to the providers.
And 200 is so minimal I can’t realistically see them chasing you for that.
Sorry for the loss of your mum.
You MIGHT be able to get a funeral payment from the DWP. This is generally around half of the funeral cost.
My mum died, she’d owed a credit card. After I’d sent them the death certificate they wrote saying they’d appreciate me paying it back. I ignored the letter and nothing happened.
My mum had plenty of money to pay it back but I didn’t want to pay it back so didn’t.
Don’t worry and don’t pay it.
I’m sorry for your loss.
>and the only money she had in her bank account was £200, which went to me
And from you that £200 must go to Tesco Bank, as debts take priority over bequests
Yes all her things and assets go to debt before you
The Bank is not able to claim off of you personally, but off her estate. As the Bank has a well funded legal department, you need to seek Legal Advice quickly. Send the Bank a copy of the Death Certificate, and ask for a Statement of what they claim they are owed. In actual fact the Bank has no loss because the insure any Loan. The phone call might not have been genuine either. The Bank has to keep a record, so you want it in writing. I would offer a Without Prejudice interim repayment of ┬ú1 a month until The Estate is sorted. They would have to go to court to persue a claim, and as there was no property, how are thay going to persue a non-secured loan? Always assume the worst, I had to sort out the mess my Daughter’s Husband left her in when he left her with two young children, and then died. Its not easy because you are dealing with unfeeling robotic sharks in the financial world. Get advice from a specialist, even a Charity like Cruse. It is bad enough losing your Mother, without being harrassed by banks. They will sell on a Debt, and that’s another story.
So sorry for your loss
Do not pay a single penny to anyone. I think you can be one liable and they claim you’re accepting responsibility for the debt. Cunts
My mate works for a bank who processes deaths, just ignore the letters. He said a letter is normally sent if money is owed. However, the sums are very rarely chased unless it’s a substantial amount.
Check with a solicitor before speakin to the bank