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Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.
May I confirm how much roughly how much was owing on your mortgage at the time of your wife passing please?
Did you apply to act as executor of your wifes estate?
just over The mortgage outstanding on the let house was £172,000, and that on our own residence was just over £188,000.
Yes I was the executor of my wife's estate.
Thanks. You are not liable for your wifes debts including debts to HMRC nor her credt card debts. The value of her estate would include 1) a half share of any equity in your joint home 2) any cash in bank accounts etc 3) any equity in any other land or property she owned and 4) the value of any other assets of investments including a notional value of any possessions if they have any monetary value.
Accordingly HMRC and credit card providers etc will not be able to claim against you personally for any debts but rather are limited to claiming against your wifes assets as set out above
So to be clear, even though part of the value of my wife's estate now resides in what is now my residence and part in what is now my let flat, I do not have to, for example, sell the flat in order to pay HMRC for my wife's Capital Gains tax bill?
I'm afraid I have to go back to work now - I came home for lunch to see if I had a reply. I will access it again about 6p.m.
Creditors (including HMRC) only can claimagainst your wifes assets as at the date of her passing. This is probably best set out in a simple example:
Let us say B dies owning jointly a property worth £200K with a mortgage of £100K and a debt to a credit card of £10K. Bs share in the jointly owned property is half of £200K less half the mortgage therefore it is £200,000 / 2 -£50K. Bs net equity in the property is therefore £50K. B owes £10K against a credit card and that creditor could claim against Bs £50K net equity share of the joint property but nothing more. In this example, there is sufficient money to pay the credit card debt albeit locked up in the jointly owned property.If B owed £100K insted of just £10K though, creditors could still of course claim the £50K equity B has in the jointly owned property but would not be able to recover the the balance as there is insufficient net equity.
Obviously the above is a simple example and your situation is more complex but the same principles apply so it is just a case of applying those principles in respect of each asset to calculate the equity your wifes estate held in the asset at the date of her passing. Creditors are limited in their claims to any equity your wife held in those assets - they cannot claim against your equity or against you personally.
If there is insufficient equity in your wifes estate to cover the demands you must proceed very carefully as executor as the estate will be technically insolvent - though I am not sure this is the case from the information you have provided. If this is the case consider contacting the insolvency service to assist you in administering the estate as there is a strict order you must pay out to creditors.
Assuming there is sufficient equity but the equity is locked up in property, creditors can seek to secure their debts agaisnt those properties (albeit they cannot touch your sare of the equity as above). They can go on to seek orders for sale. Such orders are comparatively rarely granted in respect of a property you are living in but may be more readily granted in respect of an investment property you do not live in.
Is there anything above I can clarify for you?
Many thanks for your answer. I'd forgotten I was going out with my daughter this evening, so I've printed off your reply and will study it to see if I need any more clarification. Thank you for offering that.
I am glad the above was of assistance. If I can assist any further please do not hesitate to revert to me
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Sorry for the delay in replying. I must say that you got my hopes up with your original answer that "You are not liable for your wifes debts including debts to HMRC nor her credt card debts". However, your later answers show me that I am liable, in that I have to pay off HMRC; if not, then my wife's creditors would not be able to pursue claims against the property - disappointing but realistic, and I suppose what I expected but wanted clarifying.
Thank you Joshua for your help.