Loan liability after death.

drongo123

Hi,

Not sure if I'm posting this in the right section, apologies if it's misplaced!

Here's the story, my father-in-law passed away before Xmas an everything was willed to his wife. The mortgage was payed off as he was covered, but it turns out he had 3 other personal loans in his name only. One was on his work vehcle which had protection and was cleared. The other 2 where unsecured personal loans, one of which my Mother-in-law did'nt even know about!
She received correspondance this morning from the bank demanding payment of the loans. Is she liable for these debts even though they were not taken out in her name?
I would imagine that unsecured loans would pass to the spouse, but I need to be sure.

GerardKeating

drongo123 wrote: »

Hi,

Not sure if I'm posting this in the right section, apologies if it's misplaced!

Here's the story, my father-in-law passed away before Xmas an everything was willed to his wife. The mortgage was payed off as he was covered, but it turns out he had 3 other personal loans in his name only. One was on his work vehcle which had protection and was cleared. The other 2 where unsecured personal loans, one of which my Mother-in-law did'nt even know about!
She received correspondance this morning from the bank demanding payment of the loans. Is she liable for these debts even though they were not taken out in her name?
I would imagine that unsecured loans would pass to the spouse, but I need to be sure.

The bank would have a claim against the estate of your late Father-in-Law, in theory the debt should be paid from the estate BEFORE anyone inherits.

If the loans exceed the value of the estate, no-one is liable for the excess but the bank could go after anyone whom inherits the estate.

The executor of the estate should be taking care of this, they should not let anyone inherit from the estate untill all debits are cleared.

dotsman

I'm afraid GerardKeating is right on this. The loans should have been cleared by the estate prior to inheritance. AS it is, she will have to clear the loans up to the value of the inheritance.


You don't say how much the loans are for, nor how much money was inherited. If the money inherited exceeds the loans, then she will have to pay them off. If they don't, I'm not sure exactly what the process is. Although one would think that the value of the home would easily cover these debts, I do know that family homes are given certain protections, and the fact that the home wasn't secured on the loans, I don't think that the bank could go after the house.


If it's large sums of money, I would speak to a solicitor on this.

drongo123

Thanks for the helpful replies,

I could'nt really be clearer in the OP as my MIL has'nt been very forthcoming with information!

As far as I have been able to ascertain, there are 2 loans still outstanding, one for around 10K, the other, she won't tell us!:rolleyes:
Anyway, she did'nt know about these loans so did not disclose them to the solicitor handling the will. So as far as the solicitor was concerned, the estate did not have to go to probate. (The third loan, the motor loan, was cleared as I said.)
MIL got correspondance from the bank in the last day or demanding the outstanding loans be paid. She is due around 17k from an insurance policy, but it looks like that will all go on the 2 loans.

GerardKeating

drongo123 wrote: »

Thanks for the helpful replies,

I could'nt really be clearer in the OP as my MIL has'nt been very forthcoming with information!

As far as I have been able to ascertain, there are 2 loans still outstanding, one for around 10K, the other, she won't tell us!:rolleyes:
Anyway, she did'nt know about these loans so did not disclose them to the solicitor handling the will. So as far as the solicitor was concerned, the estate did not have to go to probate. (The third loan, the motor loan, was cleared as I said.)
MIL got correspondance from the bank in the last day or demanding the outstanding loans be paid. She is due around 17k from an insurance policy, but it looks like that will all go on the 2 loans.

Your mother-in-law should pass the correspondance to the solicitor whom handle the probate and let him sort it out.

drongo123

GerardKeating wrote: »

Your mother-in-law should pass the correspondance to the solicitor whom handle the probate and let him sort it out.

Easier said than done, my friend.
You see, she is adamant that, since the loans are only in her husband's name she does'nt have to pay them, so she won't even tell the solicitor.
I'm just trying to get as much info as possible to give her a wake up call.

IsThatSo?

Get your OH to advise her to hand docs over to Solicitor. Try not to get too involved in it yourself, firstly because its a stressful time for you MIL and you don't want to look like you are interfering nor is it your responsibility to ensure this is resolved. Your MIL is a grown woman and if she wants to have a tantrum about this then that is her business. Once the shock of the loans wears off she might see some sense, she must have gotten some fright getting that information, I know I would!!!!

Don't know how "outlaw" relations are in your family but just be aware that you don't want bad feeling longterm over this, so say your bit and stand back from it.

sceptre

IsThatSo? wrote: »

Don't know how "outlaw" relations are in your family but just be aware that you don't want bad feeling longterm over this, so say your bit and stand back from it.

I'd agree with all of IsThatSo?'s advice but especially that part!

GerardKeating's obviously correct - your mother-in-law (or rather the estate) is liable for the debts. Realistically, she should tell the solicitor involved about this (also, while I've no legal reference to back up this statement, I'm pretty sure she's legally bound to) as it'll save her an amount of hassle in the long-run so while obviously she's still coming to terms with a bereavement and may not be thinking the whole thing through in a rational way, say your bit if that's what you want to do and definitely talk to your OH about it - it'll be better coming from there if it needs to be pressed home.