Not every life is profitable, at least in financial terms, and it is important to remember that your debts do not die with you. A High Court ruling showed the serious problems that dying insolvent, without putting your affairs in order, can create for your loved ones.
The case concerned a once highly successful businessman whose fortunes suffered greatly in the 2007 financial crisis and who was heavily indebted when he died. His widow set about administering his estate. Some years later, after acknowledging that the estate was bankrupt, she obtained an administration order. A trustee was duly appointed to administer the estate for the benefit of its creditors.
The trustee later took action against the widow claiming that various sums of money and business assets that were transferred to her personally in the years following her husband’s death were part of his estate and should therefore rightfully have been distributed to his creditors.
Ruling on the case, the Court noted that the widow was not financially sophisticated and had faced heavy family responsibilities following her husband’s death. She had spoken movingly of the toll that the financial wrangling and litigation had taken on her, her new husband and her young children.
The Court, however, ordered her to transfer shares that formerly belonged to her husband to the trustee, together with cash sums totalling more than £700,000. The Court was troubled by the calamitous impact its decision would have on the family, particularly the children, but was compelled to conclude that the widow’s various defences to the trustee’s claim could not succeed.