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Sorry to labour the point but you do need to check. The most common way for such policies to be written is so they do not form part of the estate.There's no reason they wouldn't. There's no reason she'd be putting them in trust or anything else. It's all part of the estate. It seems likely that she thought the 'debts would die' and we'd get to share the proceeds of the policies though.0 -
Yorkshireman99 wrote: »Sorry to labour the point but you do need to check. The most common way for such policies to be written is so they do not form part of the estate.
I'm fairly certain on this - but what would I need to look out for to identify that? I've called round them all, and none have implied any issue with claiming them, other than it going to next of kin, or in one instance, to the executor only. Aside from that, knoing my mum there's little chance she thought to put them in trust, she'd assume that the family would receive the proceeds.0 -
Ask the company for details.0
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I'm fairly certain on this - but what would I need to look out for to identify that? I've called round them all, and none have implied any issue with claiming them, other than it going to next of kin, or in one instance, to the executor only. Aside from that, knoing my mum there's little chance she thought to put them in trust, she'd assume that the family would receive the proceeds.
You see, the bit in bold hints that you may have two types of payout here. The first type 'being paid to next of kin' hints at being outside of the estate and the second 'to the executor only' hints at it being a part of the estate. You need to contact the insurance companies and explicitly ask is it part of your mothers estate or not.
You mention that your mother would not 'put them into a trust'... but this would have nothing to do with your mother anyway, it would be the fine detail and wording of the insurance policy that decides if a trust is involved.0 -
Is there a will? You say:
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I will be acting as executor on the estate, which amounts to a house (worth maybe £40-50k in current condition, that she wants to leave to my sister)
Originally posted by sweenster
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Either there is a will leaving the house to your sister, or there is not a will leaving the house to your sister. Your mother's wishes are only valid in so far as she set them out in a will.
OP has since clarified that there is no will (and they are in Scotland).How's it going, AKA, Nutwatch? - 12 month spends to date = 2.31% of current retirement "pot" (as at end March 2024)0 -
MichelleUK wrote: »You see, the bit in bold hints that you may have two types of payout here. The first type 'being paid to next of kin' hints at being outside of the estate and the second 'to the executor only' hints at it being a part of the estate. You need to contact the insurance companies and explicitly ask is it part of your mothers estate or not.
You mention that your mother would not 'put them into a trust'... but this would have nothing to do with your mother anyway, it would be the fine detail and wording of the insurance policy that decides if a trust is involved.
I think I'm right in saying that it's actually relatively unusual for life insurance policies to form part of the estate. If the premiums are paid by the subject of the insurance, they are written in trust with the insurance company operating on the basis of an expression of wishes, plus its discretion. It's not a case of the deceased setting up a complex trust themselves, and they may not have any idea of what will happen: the policy is probably "on death, we will pay your nominated beneficiary, if not we will use our discretion, if not we will drop it into your estate as a last resort".
There are plenty of people for whom a death in service benefit plus a modest life insurance policy would instantly take them over the IHT threshold, so the need to keep life insurance (because death in service benefits are just life insurance under another name) out of IHT is hardly exotic weird stuff.0 -
securityguy wrote: »I think I'm right in saying that it's actually relatively unusual for life insurance policies to form part of the estate. If the premiums are paid by the subject of the insurance, they are written in trust with the insurance company operating on the basis of an expression of wishes, plus its discretion. It's not a case of the deceased setting up a complex trust themselves, and they may not have any idea of what will happen: the policy is probably "on death, we will pay your nominated beneficiary, if not we will use our discretion, if not we will drop it into your estate as a last resort".
There are plenty of people for whom a death in service benefit plus a modest life insurance policy would instantly take them over the IHT threshold, so the need to keep life insurance (because death in service benefits are just life insurance under another name) out of IHT is hardly exotic weird stuff.
Ok, thanks, this makes sense now. I'll need to check with them all. Needless to say, if the proceeds come to us as beneficiaries without becoming part of the estate then it completely changes my view of this.0 -
Actually, after a lot of googling, the general consensus seems to be that most life policies are NOT written in trust. Most insurers specifically state that the payout will be part of your estate.
Putting in trust is clearly a nomination that needs to be made (i.e. default position is that it's not in trust), and I'm once more back to thinking that it's highly unlikely this would have been a consideration for my mum when she took out all these over 50's policies. I haven't had a chance to call and confirm though.0 -
Unless the position in Scotland is different it is unusual for them to be written in a way that the proceeds become part of the estate. That is a large benefit inasmuch as it means that it reduces any IHT potential. As a general rule don't make assumptions which could very costly. If the policy proceeds do not form part of the estate then it seems that the estate is insolvent. If so you should just tell the creditors and let them deal with it. Whilst asking a solicitor is sensible don't spend too much if the estate is insolvent.Actually, after a lot of googling, the general consensus seems to be that most life policies are NOT written in trust. Most insurers specifically state that the payout will be part of your estate.
Putting in trust is clearly a nomination that needs to be made (i.e. default position is that it's not in trust), and I'm once more back to thinking that it's highly unlikely this would have been a consideration for my mum when she took out all these over 50's policies. I haven't had a chance to call and confirm though.0 -
Yorkshireman99 wrote: »Unless the position in Scotland is different it is unusual for them to be written in a way that the proceeds become part of the estate. That is a large benefit inasmuch as it means that it reduces any IHT potential. As a general rule don't make assumptions which could very costly. If the policy proceeds do not form part of the estate then it seems that the estate is insolvent. If so you should just tell the creditors and let them deal with it. Whilst asking a solicitor is sensible don't spend too much if the estate is insolvent.
There's clearly no IHT implications here and never was, so that doesn't seem relevant, it certainly wouldn't have come into any decision making process. I don't really see how it's useful to suggest leaving the creditors to 'get on with it' when I've also clearly said we want to retain the house.0
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