Settling car finance of deceased

[bmwmike]

Hello

Possibly daft question but i've not done this before.

Person passes away and has a PCP, with 8k outstanding. Original supplying dealer offers to buy back for 9k (example figures) but the person arranging this is not yet the executor (but will be), and it seems like the granting of probate takes ages.

Is it OK to "sell" the car and keep the funds aside until the estate is dealt with formally, or must the car sit in the garage until the estate is wound up properly? There is enough money in the estate to cover other obligations, for sure. Also the PCP payments are frozen, so its costing nothing other than depreciation (potentially) and taking up space. Also needs to be insured etc.

Thanks
Mike

[anonymous-user]

There is the technical matter that if the buyer wants to know who they're buying the car from then the name of the deceased is probably still on the V5, so they may not want to pay anyone else for the car without knowing the executor is properly appointed and has the power to sell.

If you're the executor what I personally would do is pay off the car finance myself and then try to sell the car for the estate, so the amount of finance you pay off effectively becomes an interest free loan from you to the estate which can be recovered later. I'm not saying that's a "proper" or "normal" course of action but it's a practical approach that can get things done.

I believe that just selling the car would be a clear breach of the finance agreement. And wouldn't the buyer have a hissy-fit if they do an HPI search and find finance outstanding? You certainly don't want to sell the car on the basis the buyer will pay off the finance - because if they don't the estate will still be on the hook and you will be personally on the hook to the estate for any loss to the estate.

[Mark V GTD]

I understand most finance companies have a bereavement specialist and best to consult them in this instance. Sorry for your loss.

[bmwmike]

Thanks All, I probably should have said i've spoken to the finance company already. I may also have a buyer either privately or the supplying garage.

My question was really one of legality - can I sell the car and settle the finance before I am technically the executor? As I understand it, i need authority (grant of probate) to be in place in order to execute the will. I don't have that yet, and it can take weeks (we have to value the house first i think). In this case with the car, i won't be taking money out of the estate but will be settling a liability of the estate.

From what everyones said i guess its OK, just feels a bit weird doing this before i'm officially executor.

[Vasco]

bmwmike said:

Thanks All, I probably should have said i've spoken to the finance company already. I may also have a buyer either privately or the supplying garage.

My question was really one of legality - can I sell the car and settle the finance before I am technically the executor? As I understand it, i need authority (grant of probate) to be in place in order to execute the will. I don't have that yet, and it can take weeks (we have to value the house first i think). In this case with the car, i won't be taking money out of the estate but will be settling a liability of the estate.

From what everyones said i guess its OK, just feels a bit weird doing this before i'm officially executor.

I can't see how you have any authority to handle the deceased's estate until the Grant of Probate has been issued.

[eliot]

Vasco said:

I can't see how you have any authority to handle the deceased's estate until the Grant of Probate has been issued.

Indeed.
If the deceased had a will and you have settled IHT then probate is just a couple of weeks (well it was for me pre-covid)

Essentially until probate is granted you can’t really do anything.

[Mr Whippy]

I’m pretty sure executors are expected to manage the estate‘s finances before probate.

If the estate has funds to pay off liabilities/debts, I think beneficiaries would expect you to do that on a car which would otherwise depreciate and also the cost for credit eating into their inheritance, and/or HMRCs tax take.

You can’t distribute estate assets or income before probate.

[bmwmike]

Vasco said:

I can't see how you have any authority to handle the deceased's estate until the Grant of Probate has been issued.

eliot said:

Thanks, as i suspected.

Vasco said:

I can't see how you have any authority to handle the deceased's estate until the Grant of Probate has been issued.

Indeed.
If the deceased had a will and you have settled IHT then probate is just a couple of weeks (well it was for me pre-covid)

Essentially until probate is granted you can’t really do anything.

Thanks. Settling IHT comes as part of valuing the estate, is that right? In which case, we haven't started that, but I guess i had better pull my finger out.

You've both answered my question anyway, which is I can't do anything until officially having the authority to do so.

I take it I *can* cancel netflix etc, and inform the banks so they freeze accounts?

[bmwmike]

Mr Whippy said:

I’m pretty sure executors are expected to manage the estate‘s finances before probate.

If the estate has funds to pay off liabilities/debts, I think beneficiaries would expect you to do that on a car which would otherwise depreciate and also the cost for credit eating into their inheritance, and/or HMRCs tax take.

You can’t distribute estate assets or income before probate.

Ha, a conflicting answer, which also validates what i've been doing so far which is managing their affairs and neatly closing things off. I have not distributed any estate assets yet, and neither would i do so, until probate is granted, I just wasnt sure if that included getting rid of a car which is on PCP, and is technically a subscription just like netflix (which i've cancelled).

The interesting thing about the PCP was that if the deceased had been alive, they could VT and that would be the end of it. The finance company have said that because the person is deceased, the car will go to auction and IF it makes enough to cover the finance (or more) that is the end of it. If it fails to meet the outstanding balance, the estate is liable, unless there is no money in the estate.

[bmwmike]

Mark V GTD said:

I understand most finance companies have a bereavement specialist and best to consult them in this instance. Sorry for your loss.

Thank you.

[Vasco]

Mr Whippy said:

I’m pretty sure executors are expected to manage the estate‘s finances before probate.

If the estate has funds to pay off liabilities/debts, I think beneficiaries would expect you to do that on a car which would otherwise depreciate and also the cost for credit eating into their inheritance, and/or HMRCs tax take.

You can’t distribute estate assets or income before probate.

Until probate is granted there's no *guarantee* who the executors will be - any Will has to be proved to be valid, and the last one. There are many cases of disputed wills and invalid wills.
Much of the time it's both sensible and logical for those who believe that they will become executors to notify all banks, utility companies and any other relevant organisations of the death. In practice those organisations will usually freeze all movement.

[sociopath]

Vasco said:

bmwmike said:

Thanks All, I probably should have said i've spoken to the finance company already. I may also have a buyer either privately or the supplying garage.

My question was really one of legality - can I sell the car and settle the finance before I am technically the executor? As I understand it, i need authority (grant of probate) to be in place in order to execute the will. I don't have that yet, and it can take weeks (we have to value the house first i think). In this case with the car, i won't be taking money out of the estate but will be settling a liability of the estate.

From what everyones said i guess its OK, just feels a bit weird doing this before i'm officially executor.

I can't see how you have any authority to handle the deceased's estate until the Grant of Probate has been issued.

Actually cars are one thing that can be sold withi5ut probate. We did it with my mums car

[Mr Whippy]

Vasco said:

Mr Whippy said:

I’m pretty sure executors are expected to manage the estate‘s finances before probate.

If the estate has funds to pay off liabilities/debts, I think beneficiaries would expect you to do that on a car which would otherwise depreciate and also the cost for credit eating into their inheritance, and/or HMRCs tax take.

You can’t distribute estate assets or income before probate.

Until probate is granted there's no *guarantee* who the executors will be - any Will has to be proved to be valid, and the last one. There are many cases of disputed wills and invalid wills.
Much of the time it's both sensible and logical for those who believe that they will become executors to notify all banks, utility companies and any other relevant organisations of the death. In practice those organisations will usually freeze all movement.

For my Dad’s estate it took two years to get probate.
Needless to say his car was traded in to a main dealer within weeks of him passing away, and an estate bank account with executors controlling was opened to manage all income and costs in the meantime.

Disposing of a car should be fine because the value will be documented and trusted via a main dealer or similar.

As noted, depending on timeframes to probate maybe it’s not a big concern, but in my case waiting 2 years to sell a car would have been £5,000 in depreciation down the toilet.

Perhaps if you’ve no idea if there aren’t other wills floating around etc... I’ve no idea on that element.

[bmwmike]

Thanks all, really helpful.

I am definitely in line to be (joint with sibbling) executor, but as im not taking money out of the estate but rather settling a liability im going to go ahead and get the best price for the car and settle the finance. All parties aware etc.

Another question of I may - is it right that I have to get estate agents around to value the property, in order to give an estimate of the estate value to HMRC *before* I can apply to probate?

We actually have a solicitor but am going to do probate myself (with sibbling) because the solicitor hasnt thus far been overly helpful despite indicating we may get them to do probate. Will save us £1k approx doing it ourselves.

[anonymous-user]

Yes, you need to submit the estate with a sensible value for the house and then it's adjusted later when the actual selling price is known. Absolutely normal.

The only "funnies" that arise are if the house takes a very long time to sell and there's the possibility of a rise (or fall) in value between death and sale. Best to side-step all of that IMO by getting on with a swift sale.

[valiant]

If you’re the executor of the will and it’s a straight forward jobbie then I can’t see it being a problem.

You’ll have to put a realistic value of it on the forms which is pretty easy to suss and then hold onto the money until probate is granted.

We used a probate solicitor for the tax side and bits of the will we dealt with but he was clear in our case that we could proceed with stuff before probate as long as we were scrupulously clear in accounting and making declarations for everything. We closed accounts and centralised all the monies ready for probate and distributed soon after.

Property is a bit different but everything else you can crack on. All finance houses tend to have bereavement departments who are trained in dealing with this sort of thing and much better than going into a branch to notify (except the post office, they’re a bunch of bds who don’t know their arse from their elbow)

[anonymous-user]

bmwmike said:

is it right that I have to get estate agents around to value the property

If it's a terrace of 20 identical houses there's nothing to stop you looking at recent selling prices and simply going with an average of those. More usually, it's best to get some input from an estate agent(s) and use their indicative selling price, suitably averaged if more than one. It's just a question of making sure the executors estimate is a genuine estimate and not a wild guess. Bear in mind you'll be paying IHT (if any) based on the estimate before probate is granted.

The key thing to remember is there's no such thing as a "probate valuation". You either use the actual selling price (eventually) or need to pay a professional valuer to do a full RICS valuation. Best avoided in most cases IMO as it's spending money you don't need to spend, and if the property sells shortly afterwards you'll have to revert to actual selling price in any event. So there's a lot to be said for landing at a sensible estimate.

[eliot]

I did my mum’s estate myself, all done online - as there was a will and it was straightforward.

you have to settle iht before you can do anything - i guessed my mums house value but i would recommend using an ea.
Dont be tempted to undervalue it.

once you have settled iht, you get a code from hmrc and that along with the death cert, original will etc are posted off (i got certified copies of the will in case it got lost)

once you have probate you can start selling assets such as the house and getting things in order

you also need to put notices in the gazette and local papers for anyone having a claim on the house - and wait 3 months at least


do setup a separate account to deal with the estate, i used my normal current account but i can get confusing if you are not very disciplined

as others say, all utilities and companies etc have a deceased section - you get straight through to a human that are very helpful

once everything is sold and all debts are cleared you do a final account which shows all final balances etc and then split the money up.

I did make a couple of small interim payments to my brother (less than 1% of his final share), dont be tempted to dish out tens of thousands in case something unexpected comes to light - because in reality it wasn’t yours to give away really and you may struggle to get it back of the beneficiaries

and finally if like me, a solicitor and myself was named as executor - then you are a little snookered because they have to sign off for probate and they wont unless they were doing it.
They wanted £1600 to do probate and chose to pay them £350 to resign from the will to enable me to carry on doing it myself

I don’t really see the justification to solicitors charging a % of the estate value - from death to probate was 6 weeks, which included waiting two weeks for the solicitor to retrieve the will and another week from to resign from the will (1 page letter - easy money - tossers)

[valiant]

Just get three estate agent around to value and take the average or the value of the estate agent you engage for the forms. You can correct the amount of the actual sale price later.

You can also, if you want to do so now, market the house subject to probate being granted.

If you’re doing it yourself, double check the tax implications. There are exemptions that can raise your IHT threshold depending on circumstances.

[Sheepshanks]

bmwmike said:

Another question of I may - is it right that I have to get estate agents around to value the property, in order to give an estimate of the estate value to HMRC *before* I can apply to probate?

You have to figure out if IHT is payable, and pay it if possible, before even applying for Probate.

What's the value of the estate? I've been through it three times and we just estimated property value, but they were all well away from IHT thresholds - most recent was last year with FIL, but he only owned 25% of his property and he was also well under the IHT level.