Father Strikes From Grave

[A_Landlord]

On the flight back from my Easter break in Marbella I read the following article in the legal advice section of this weeks SUR newspaper:

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There are more debts than assets in our father’s estate

My father died two months ago, and my two brothers and I went to the notary and accepted the inheritance. The problem is that my father had so many debts, that the assets of the inheritance are not enough to cover them. I would like to know if we are responsible for the debts and can be forced to pay them, taking into account that the debtor was my father, not us, and, if that was the case, whether we can refuse to accept the inheritance even if we have already accepted it? (we have the Deeds signed by the notary).

From Lawyers:

You should have accepted the inheritance in profit of inventory; that way, you would pay the debts exclusively with the money / assets existing in the inheritance, and if there were more debts than benefits, you would not be responsible for them. However, once you have accepted the inheritance, unless the Deeds include a clause stating that the acceptance is conditional on the debts being covered exclusively with the assets pertaining to the inheritance, I am afraid you are responsible for your father’s debts and may be forced to pay them out of your own assets. Unfortunately, once you have accepted the inheritance it cannot be renounced. That is why it is essential to check the way the Acceptance of Inheritance Deeds is drawn up.

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I wonder how many more tales of golden retirements will fall on the unsuspecting kids to pick up the bill. Then resulting in more forced sales of holiday homes to clear debts.

[leicestersq]

On the flight back from my Easter break in Marbella I read the following article in the legal advice section of this weeks SUR newspaper:

--------------------

There are more debts than assets in our father’s estate

My father died two months ago, and my two brothers and I went to the notary and accepted the inheritance. The problem is that my father had so many debts, that the assets of the inheritance are not enough to cover them. I would like to know if we are responsible for the debts and can be forced to pay them, taking into account that the debtor was my father, not us, and, if that was the case, whether we can refuse to accept the inheritance even if we have already accepted it? (we have the Deeds signed by the notary).

From Lawyers:

You should have accepted the inheritance in profit of inventory; that way, you would pay the debts exclusively with the money / assets existing in the inheritance, and if there were more debts than benefits, you would not be responsible for them. However, once you have accepted the inheritance, unless the Deeds include a clause stating that the acceptance is conditional on the debts being covered exclusively with the assets pertaining to the inheritance, I am afraid you are responsible for your father’s debts and may be forced to pay them out of your own assets. Unfortunately, once you have accepted the inheritance it cannot be renounced. That is why it is essential to check the way the Acceptance of Inheritance Deeds is drawn up.

-----------------------

I wonder how many more tales of golden retirements will fall on the unsuspecting kids to pick up the bill. Then resulting in more forced sales of holiday homes to clear debts.

I am not sure I believe this story.

The debt dies with the debtor. I think it is true that any assets belonging to a debtor have to be used to pay back any outstanding debt and cannot be be passed on as inheritance until all debts are cleared, that would make sense. But the idea of someone being tricked into inheriting a net debt doesnt ring true, not in the UK at least.

[A_Landlord]

I am not sure I believe this story.

The debt dies with the debtor. I think it is true that any assets belonging to a debtor have to be used to pay back any outstanding debt and cannot be be passed on as inheritance until all debts are cleared, that would make sense. But the idea of someone being tricked into inheriting a net debt doesnt ring true, not in the UK at least.

The lawyers appear to have a regular section in the newspaper - "Law firm Ilagoson answers readers’ queries", so I guess it must be Spanish law.

[thecrashingisles]

The lawyers appear to have a regular section in the newspaper - "Law firm Ilagoson answers readers’ queries", so I guess it must be Spanish law.

How are people's estates administered if they retire to Spain and die there as residents?

[Snugglybear]

I am not sure I believe this story.

The debt dies with the debtor. I think it is true that any assets belonging to a debtor have to be used to pay back any outstanding debt and cannot be be passed on as inheritance until all debts are cleared, that would make sense. But the idea of someone being tricked into inheriting a net debt doesnt ring true, not in the UK at least.

"Sur" is a Spanish newspaper - an English-language version is available on line at http://www.surinenglish.com/

It appears to be the case that, in Spanish law, a beneficiary under a will can inherit the entire financial assets and debts of the deceased, as explained in the paper.

[Si1]

"Sur" is a Spanish newspaper - an English-language version is available on line at http://www.surinenglish.com/

It appears to be the case that, in Spanish law, a beneficiary under a will can inherit the entire financial assets and debts of the deceased, as explained in the paper.

so adds weight to Warren Buffett's assertion that you should not invest in things you do not understand

[leicestersq]

"Sur" is a Spanish newspaper - an English-language version is available on line at http://www.surinenglish.com/

It appears to be the case that, in Spanish law, a beneficiary under a will can inherit the entire financial assets and debts of the deceased, as explained in the paper.

Well you have put me right on that. I have to accept that Spanish law really is this daft.

Perhaps there is an opportunity for another form of tourism, from Spain to the UK. Bring your ailing or recently deceased relative along with will beneficiaries to the UK to avoid any of this falling 'accidentally' into debt.

Indeed, if you really hated someone, and you knew your time on earth is limited, why not give away your assets, wrack up us much debt as you can, and leave the lot to that person. Sounds like the perfect way to stitch someone up, with no comebacks.

[Deckard]

Indeed, if you really hated someone, and you knew your time on earth is limited, why not give away your assets, wrack up us much debt as you can, and leave the lot to that person. Sounds like the perfect way to stitch someone up, with no comebacks.

Clearly, you don't watch Ghost Hunters International

[_w_]

It appears to be the case that, in Spanish law, a beneficiary under a will can inherit the entire financial assets and debts of the deceased, as explained in the paper.

It's an all or nothing situation. Either you accept the estate and take on board both assets and liabilities, or you reject the lot.

Children are given the option and are given time to check whether the estate value is net positive or not. In this instance it sounds like the chilren were very poorly advised and accepted without knowing.

[davidg]

"Sur" is a Spanish newspaper - an English-language version is available on line at http://www.surinenglish.com/

It appears to be the case that, in Spanish law, a beneficiary under a will can inherit the entire financial assets and debts of the deceased, as explained in the paper.

It is the same situation in France. If you have any doubts about the estate you should only accept under 'l'acceptation sous benefice d'inventaire" - although there is a new legal term to describe this (acception a concurrence de l'actif net - since Jan 2007). Any debts can be recovered through a British court and the process is very easy for creditors.

In France (and it appears Spain is the same) you can

i. accept debts and assets - the normal situation in France

ii. accept assets only if they are larger than the debts - very few people do this

The situation is not well known and notaires will not tell you about it because going through the procedure is very time consuming for them but they get paid the same as for a standard inheritance.

there are lots of cases of people being bankrupted after accepting estates with considerable debts

caveat emptor.

David

[leicestersq]

It is the same situation in France. If you have any doubts about the estate you should only accept under 'l'acceptation sous benefice d'inventaire" - although there is a new legal term to describe this (acception a concurrence de l'actif net - since Jan 2007). Any debts can be recovered through a British court and the process is very easy for creditors.

In France (and it appears Spain is the same) you can

i. accept debts and assets - the normal situation in France

ii. accept assets only if they are larger than the debts - very few people do this

The situation is not well known and notaires will not tell you about it because going through the procedure is very time consuming for them but they get paid the same as for a standard inheritance.

there are lots of cases of people being bankrupted after accepting estates with considerable debts

caveat emptor.

David

Well all I can say is that the law in France is mad too. Unless you were mad, or naive, or tricked, on one would accept net debt as an inheritance. So those people who have been bankrupted over it were one of the above, and should be protected by the law. A simpler way would be to let any net debt die with the person.

So it looks like good ole Blighty gets it right some of the time.

[frenchy]

Well you have put me right on that. I have to accept that Spanish law really is this daft.

Perhaps there is an opportunity for another form of tourism, from Spain to the UK. Bring your ailing or recently deceased relative along with will beneficiaries to the UK to avoid any of this falling 'accidentally' into debt.

Indeed, if you really hated someone, and you knew your time on earth is limited, why not give away your assets, wrack up us much debt as you can, and leave the lot to that person. Sounds like the perfect way to stitch someone up, with no comebacks.

Why would Spanish law be daft? You borrow against assets, then you die but the assets are still there so why should the debt die with you? It is called a secured debt for the very reason that erh... it is secured against an asset! As the lawyer quoted explains there is a very simple way to avoid being "stitched up" like you say. What is the alternative you propose? Borrow to the brim to buy a great big house, die not long after and then party time for your heir?

[davidg]

Well all I can say is that the law in France is mad too. Unless you were mad, or naive, or tricked, on one would accept net debt as an inheritance. So those people who have been bankrupted over it were one of the above, and should be protected by the law. A simpler way would be to let any net debt die with the person.

So it looks like good ole Blighty gets it right some of the time.

I don't disagree with your point of view. One high profile case is Francoise Sagan's son. Bonjour Tristesse indeed!

In the case of Sagan minor (Denis Westhoff ) he was aware of the 1.5 million euros of debts but hopes that he can profit in the long term from his mum's backcatalogue. I would say that most people in France are not aware of the inheritance laws though.

[leicestersq]

Why would Spanish law be daft? You borrow against assets, then you die but the assets are still there so why should the debt die with you? It is called a secured debt for the very reason that erh... it is secured against an asset! As the lawyer quoted explains there is a very simple way to avoid being "stitched up" like you say. What is the alternative you propose? Borrow to the brim to buy a great big house, die not long after and then party time for your heir?

Did you miss this post?

The debt dies with the debtor. I think it is true that any assets belonging to a debtor have to be used to pay back any outstanding debt and cannot be be passed on as inheritance until all debts are cleared, that would make sense. But the idea of someone being tricked into inheriting a net debt doesnt ring true, not in the UK at least.

Of course the creditors have the rights to have the debt paid back from any assets from the deceased's estate. It is the 'net debt' after those assets have been taken into account that should die, if there is a net debt.

[leicestersq]

I don't disagree with your point of view. One high profile case is Francoise Sagan's son. Bonjour Tristesse indeed!

In the case of Sagan minor (Denis Westhoff ) he was aware of the 1.5 million euros of debts but hopes that he can profit in the long term from his mum's backcatalogue. I would say that most people in France are not aware of the inheritance laws though.

Interesting. The one doubt I have is that he may have been better off putting in a bid for the back catalogue on his own account and borrowed the money to pay for it. If his bid had been lower, he might have been able to obtain the asset and leave the debt with the creditors. If he couldnt do that, and so had to accept the inherited debt, it can only be because the value of the asset to both the creditor and the inheritor, is higher than the debt it was secured against. In which case this isnt a situation where someone has accidentally been stiffed into taking on a net debt.

It is where people are not making informed decisions, and are naive about the law and its consequences that would worry me.

[Laughing Gnome]

A feudal principle.

All those who are vehemently opposed to any inheritance tax should be enthusiastic supporters.

Consider a system of law where debt can be secured against one's unborn descendants.

The majority will be born into bondage and order will be restored.

[snowflux]

It's the same in Germany, too. If you accept an inheritance, then you also accept responsibility for any debts associated with it. Looks like the UK's the odd one out here.