Inherited debt? Legal position.

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Inherited debt? Legal position.

Post by Baby Huey @ Fri Jul 06, 2018 2:52 pm

Without wanting to go into why I would feel no moral obligation, having lost both my parents fairly recently I was just wondering what the legal position is regarding debt.

For example, what would happen if someone turned up with proof that my Dad owed them 10 Grand?
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Re: Inherited debt? Legal position.

Post by Turntable @ Fri Jul 06, 2018 2:59 pm

If your parents had an estate and money was inherited then it is owed. If they had nothing then the debt has gone.

Basically whoever deals with the estate has an obligation to pay out all creditors from the proceeds before distributing the remainder according to the will (or laws if there is no will)
So assuming you were the one who handled the estate then you were obliged to pay them before taking the money
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Re: Inherited debt? Legal position.

Post by Greg66 @ Fri Jul 06, 2018 3:14 pm

Yeah. That.

The executors can be on the hook personally for debts owed by the estate if they distribute the estate fully (leaving nothing left) without having investigated whether there are debts to be paid (I think) - and then a creditor turns up.
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Post by Baby Huey @ Fri Jul 06, 2018 4:24 pm

Thanks folks.

That's good to know. My Dad was far better at borrowing money than he ever was at earning it.
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Re: Inherited debt? Legal position.

Post by Firkin @ Fri Jul 06, 2018 5:28 pm

So say he owed more than his estate was worth, what happens then?

Is it a case of everyone getting so many pennies in the £ so everyone gets some of their debt?
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Post by Paul H @ Fri Jul 06, 2018 6:04 pm

Firkin wrote:So say he owed more than his estate was worth, what happens then?

Is it a case of everyone getting so many pennies in the £ so everyone gets some of their debt?


iirc if you owe the taxman he takes the full amount and what's (if any) left is then divided as you say.
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Re: Inherited debt? Legal position.

Post by Greg66 @ Fri Jul 06, 2018 10:03 pm

Paul H wrote:
Firkin wrote:So say he owed more than his estate was worth, what happens then?

Is it a case of everyone getting so many pennies in the £ so everyone gets some of their debt?


iirc if you owe the taxman he takes the full amount and what's (if any) left is then divided as you say.


If a deceased’s estate is insolvent (debts exceed assets) then it is really no different to an insolvent company. Anyone who holds security over an asset in the estate can snaffle the asset. There are rules as to who gets paid out of what’s left in priority to anyone else (yes, usually the Revenue, but after any professionals engaged with the task of sorting out the mess). Once the priority payments have been made then general creditors get x pennies on the pound for their claims.
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