Sister died leaving large debts before she has received inheritance

[debjones1004]

I am in a sad and very complicated situation. My Mum died in August 20 (expected) and my sister died suddenly just before Xmas (unexpected). I am Executor for Mum, she left a will and property to be sold and shared equally between us three daughters. There is no clause in Mum's will to specify any changes should one of us depart before her, or before the estate is settled. I will therefore pass my unmarried late sister's share to her only son.

Mum's estate is almost sorted, I have a Grant of Probate and my surviving sister and her partner are buying the property. Myself and my late sister would then have had our share. My late sister has died with a lot of unsecured debt and she died intestate. There are no assets, apart from the pending inheritance from Mum, which would cover all those debts. I am acting as her Executor and will be obtaining Letters of Administration. Her only son is quite frankly not capable and has agreed.

My query is does the pending inheritance form part of her estate, or is the estate based only on tangible assets held at the time of her death? I have been told that debts die with you if there is no estate, so do I tell her creditors that and declare no estate to HMRC? Or must I wait until the sale of Mum's house is finalised and then include her share as the value of her estate and proceed from there? Many thanks for any advice.

[des8]

Condolences on your losses.

Your late sister's legacy, even if not received by her at the time of her passing, still forms part of her estate and should go towards settling her outstanding debts

[debjones1004]

Thank you. It's what I thought but just had to double check. Her son won't be happy but he should have her life insurance directly at least.

[des8]

Rather than just paying the debts directly, try negotiating for reduced settlement figure with the individual creditors.
You never know, some might have a heart!

[debjones1004]

Thanks DES8, will they really negotiate if they know there's an estate, or do I not have to tell them how much? Can I 'hint' that they may have to accept a lower settlement or write off, or is that illegal (rather than just immoral!)?

[des8]

I wouldn't start by telling them your sister had passed.
Just tell (in writing)) them you want to try and settle the debt and ask what discount will they allow for a lump sum payment.
Some might not think to ask what your authority is

[ostell]

Or you could tell them that she has passed and they might just surmise because the debts have not been previously paid that there is nothing in the coffers to meet their demands.

[debjones1004]

Thanks both! I'll be economical with the truth then