19th July 2017 - Joint property ownership

The Estate - Joint property ownership

You must decide which type of joint ownership you want if you buy, inherit or become a trustee of a property with someone else.

You can own a property as either ‘joint tenants’ or ‘tenants in common’.

The type of ownership affects what you can do with the property if your relationship with a joint owner breaks down, or if one owner dies.

When someone dies, debts are recoverable from any assets or money left by the deceased.  This is known as the “Estate”.  No-one else has to pay for the debts unless they are already liable under the terms of the original agreement.

A person can be liable e.g. if the debt is in Joint names or if someone has signed as a guarantor.

The Home - Mortgaged house

When you buy a house in Joint names there are two types of ownership status you can have.

Joint tenants

As joint tenants (sometimes called ‘beneficial joint tenants’):

  • you have equal rights to the whole property
  • the property automatically goes to the other owners if you die
  • you can’t pass on your ownership of the property in your will

However, it is possible for creditors to apply for an “insolvency Administration Order” (IAO) within five years of the person dying.  This forces the court order on the surviving owner to pay the value of the deceased persons equity into the Estate.

If any of the creditors threaten to do this, it might be possible to negotiate paying a smaller amount in the settlement of the debt rather than lose the house.  The court will usually decide that the interests of the creditors are the most important, unless there are exceptional circumstances.

Although this is a rare procedure, it makes it very important that the surviving owner negotiates with any creditors to make arrangements to pay the debts.  It make prevent the insolvency administration procedure being used by creditors.. 

Tenants in common

As tenants in common:

  • you can own different shares of the property
  • the property doesn’t automatically go to the other owners if you die
  • you can pass on your share of the property in your will

If you owned the property as ‘tenants in common’ the property has to be formally transferred to the surviving owner.  In this case, if there were debts, then the deceased person’s share of the property would be used to settle the Estate debts.

If the property is to be sold, the Probate gives the Personal Representative (PR) the authority to sell it in accordance with the terms of the Will. If the property is registered and the person who died was the sole owner then PR will often either Assent (form AS1) the property to the person(s) who inherits it or Transfer (form TR1) the property to someone else.

If the deceased was a joint owner and the partner is still alive, you would normally just register the death with Land Registry by lodging a form DJP, along with an official copy of the Probate or death certificate.

It will mainly depend on what the deceased owned and what was outlined in the Will for the Estate, as well as what the beneficiaries intend to do with the property.

As part of the due diligence on an Estate it is important to obtain official copies of the registered title from Land Registry and get a valuation of the asset as early as possible in the process.  If Liabilities are then identified you can then very quickly confirm if the Estate will remain solvent.

Estatesearch™ provides early indicators of Joint accounts including buy to let and shared ownership mortgages,  that can help signpost professionals to check the status of assets and liabilities.  To find out about more features then click here.

17th July 2017 - Is the Estate solvent?

The first thing the executor should therefore do – before paying any debts – is ascertain the solvency of the Estate.  A simple balance sheet exercise should reveal if the estate is solvent or not.  But it is not always obvious what liabilities exist, there could be online gambling debts, store cards, hire purchase agreements or even payday loans.  If there is any risk that liabilities will outweigh assets, no immediate payments should be made to any creditors. 

If the estate is insolvent, the executor or personal representative should ensure that creditors are paid in the correct order of priority. It is crucial that no creditors are preferred ahead of others who are equally or higher ranked.  Any fees incurred by the executor for professional advice would be a priority debt and would be payable out of the estate before most other creditors’ claims.

Identify all debts and liabilities

If the estate is solvent, the executor should be certain that they are aware of all the debts and liabilities they are obliged to pay before finalising the estate.  In most estates, it’s not possible to be absolutely sure that all creditors have been identified, but protection against unknown claims can be easily obtained by placing notices under Section 27 of the Trustee Act 1925 (the Trustee Act 1958 in Northern Ireland) in The Gazette, and a local newspaper.

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, having regard only to the claims they have received notice of. 

A creditor who misses the deadline has no recourse against the executor personally, but can still pursue the beneficiaries who receive the estate. But the important thing for the executor is that they can, at a given point in time after the two month notice period has expired, hand the estate over to the beneficiaries, safe in the knowledge that they will face no personal difficulty if an unknown creditor later surfaces.

What are the risks of not placing a deceased estates notice?

If a deceased estates notice is not placed, a creditor may be able to enforce a debt against the executor long after the estate has been distributed. So historically it's been vital for an executor who wants to bring their liability to creditors to an end to either place a notice or buy insurance. 

Estatesearch™ now provides a new alternative for the executor with multiple benefits.  It proactively identify creditors within 48hrs, performs a bankruptcy and Insolvency check, but it also offers an additional protection against unknown creditors up to a value of £250,000 per Estate.  This removes the need to place a statutory section 27 notice in the Gazette and or local paper and reduces the time you have to wait from 2 months to 48hrs.

Find out about more features and or register your interest.

 

14th July 2017 - Impact of debts (Liabilities) after a death.

When someone close to dies it can have a devastating effect on several areas of your life. It can effect you emotionally and take a toll on your wellbeing, plans for the future, and your financial circumstances. 

There is uncertainty around what happens to the deceased's secured and unsecured debts after death.

If a person dies and leaves behind unsecured debts (like hire purchase agreements, personal loans, store cards and credit cards) the impact on what happens to these will depend on whose name the debts were in and whether the person had any assets to cover the liabilities.

There are limited exceptions where probate is not required, mostly where the estate is very small or when ALL bank accounts/property etc., are jointly owned by a surviving spouse or civil partner.

It is unlikely that the partner or spouse are aware of all accounts or debts in the decedent’s sole name.

Personal debt CANNOT normally be inherited provided the debt was incurred in the name of the decedent only, usually referred to as ‘sole name’. There are two exceptions,

  1. if the debt was guaranteed by a third party in which case the third party would become liable.
  2. if the decedent had gifted money not long before the death which could be interpreted as an attempt to avoid payment to creditors from the estate.

Seeing account balances for the previous seven years could alert to this type of activity.

If the debts were in the deceased's sole name only then these debts will either:

  1. be written off if the person didn’t have sufficient  assets to cover the liabilities, or
  2. need to be repaid if the person has left an estate with assets (e.g. savings or a house).

If your spouse has died and they had a liability in their sole name only, you won't be liable for that debt but the Estate will be.

If they left a will, any beneficiaries named in it will only receive their inheritance once funeral costs and liabilities have been settled.

 

Key steps to remember about bereavement and managing finances on behalf of an Estate

  1. When someone dies, it's important that you identify creditors and notify them about the situation. Write a letter to explain whats happened and let them know the Executor will be in touch to make arrangements to settle the liability.
  2. A person's estate is made up of any money they have in bank accounts or savings, any assets they have (like cars, caravans, antiques or jewellery) and any property they own. This could include a house that's in their name or one that's jointly owned with someone else.
  3. Always check to see if the deceased person’s debts are covered by a life assurance or payment protection policy which might repay the liabilities.

Estatesearch Credit & Liabilities report helps identify the liabilities within 48hrs and then has a very comprehensive policy that the protects executors and personal representatives from unknown creditors making a claim on the Estate. 


10th July 2017 - Risq Ventures to transform Estate Administration process with launch of Estatesearch™ Credit & Liabilities Report

New report collates creditor details on a deceased person within 48 hours and provides added protection to the executors of the estate.

10 July 2017 – BRISTOL, UK: The inefficient process of waiting for the publishing period of a statutory Section 27 notice (under the Trustee Act 1925 for England, or the Trustee Act 1958 in Northern Ireland) in The Gazette to expire, locate creditors and mitigate risk to executors is set to be transformed with the launch of the Estatesearch™ Credit & Liabilities Report.  Risq has worked in strategic partnership with Experian to provide access to comprehensive creditor and account details on a deceased person’s estate via a secure online portal.  This milestone delivers an innovative solution in line with the Steering Committee on Reciprocity (SCOR) published guidance for bereavement services and Estate Administration due diligence.  Using a combination of digital records and insurance protection, the Estatesearch™ Credit & Liabilities Report will make the process far more efficient, providing information and alerts on creditors within 48 hours, allowing for early distribution to be made while mitigating the liabilities to executors, administrators and personal representatives.

The first priority is to check if an estate is bankrupt or insolvent.  An insolvent estate is when a deceased person's debts are greater than the total value of assets, and therefore money is owed to their creditors. The rules of bankruptcy apply to insolvent estates, in that groups of creditors must be paid in a specific order of priority.

The next step is to publish a deceased estate’s notice (under the Trustee Act 1925 for England, or the Trustee Act 1958 in Northern Ireland) in both The Gazette and a local newspaper to ensure that sufficient effort has been made to locate creditors, prior to distributing the estate to beneficiaries and protecting the executor or trustee from being liable from any unidentified creditors.

The online service, believed to be the first of its kind, is the result of a close working relationship between Risq and Experian’s Partnerships and Alliances team.  Estatesearch™ accesses the Delphi and ExPin services to identify liabilities associated with the deceased estate.  The main features of ExPin enables an improved matching engine that will mean an increase in data returned as well as a reduction in false positives, providing even greater confidence in the results.

As Colin Blears, Director of Risq Ventures explains “Administering the estate of a deceased person can be an extremely stressful and emotional process for the family and professionals involved. With an increasing number of consumers using online services, the process of finding information on the deceased’s financial liabilities is becoming harder.  Yet publishing a Section 27 statutory notice and an advert in a local newspaper for a period of at least 2 months or replacing with an indemnity policy to protect the executors and administrators, still remains the most common practice by probate professionals."

“However, this approach can cause disruption to the family, delays in the process of estate administration and only opting to use insurance for speed can be seen as taking a light touch. The Estatesearch™ Credit & Liabilities Report provides a more efficient and reliable alternative in a fraction of the time compared to what many would consider a rather slow and unsatisfactory process in today’s digital world.”

The Estate Search Credit & Liabilities Report includes:-

  • UK creditor data (banks, building societies, payday loans, store cards, online gambling, etc), both secured and unsecured

  • Previous address history

  • Financial connections,

  • Solvency warnings, Bankruptcy, Individual Voluntary Arrangement (IVA) / County Court Judgements (CCJ)

  • Alerts to signpost professionals on financial affairs or liabilities that require further investigation

  • Report refreshes up to the date of distribution of the Estate

  • The Estatesearch™ Estate Administration Protection, underwritten by the UK insurance arm of Munich Re, allows early distribution of the estate, while protecting the Executors and Beneficiaries against a subsequent claim from an unknown creditor, including claims from HMRC, health providers, bank, building society, mortgage lender, credit card provider, direct debit, utility companies and local authorities.

  • The scheme still allows the Executor to continue to place a Section 27 statutory notice, with the Protection applicable just four weeks from date of publication.

The Estatesearch™ Credit & Liabilities Report including protection for executors, administrators and personal representatives is now available and costs £185+VAT which is chargeable as a disbursement to the estate.  For further information go to www.estatesearch.co.uk

 

Alastair Luff Director of Products, Consumer Information Services, UK & Ireland at Experian said; “Our work with Risq Ventures demonstrates our commitment to innovation. Risq Ventures have identified a new sector that could benefit from a digital, data-driven solution. The new Estatesearch™ Credit & Liabilities Report is powered by our Experian ExPin, providing exceptional data match rates which ensure faster decision for consumers. ExPin ensures you won’t have to work with fragmented or siloed data, improving decisions and creating a better experience for you and your customers. It utilises our wealth of experience within the data world, giving help and guidance, and data matching capabilities.”

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About Risq Ventures
Founded in 2015, Risq Ventures Ltd (Risq) is a private investment firm, specialising in growth acceleration for innovative UK companies serving the financial services and legal sectors. Risq Ventures Ltd is an Appointed Representative of Momentum Broker Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority.

Risq comprises a team of experienced entrepreneurs who have successfully taken businesses from concept through formation and growth to successful trade sale in the property, insurance and tech industries. Risq works with key stakeholders to make investments in businesses, identify mergers or acquisitions, and strategic alliances in the residential and commercial property sectors. Its most recent investment was in Terrafirma Mine Searches Ltd in October 2016.

Estatesearch™ is a trading division of Risq Ventures and has been developed by Risq in conjunction with market knowledge experts, providing a solution for probate professionals to identify and mitigate the financial liabilities associated with a deceased estate. For further information visit www.risq.co.uk

 

Media Contact

Louise Burke
Zapp Communications
louise@zappcommunications.co.uk
07917 176095