Act now on mis-sold endowments: new article

dunstonh

Does it make any sense to you?

No. Endomwents with joint names to cover mortgages should have been set up on joint life, first death basis. Not joint life, last death as that would be pointless.

Also, what are the consequesces if, at the end of the term we don't have enough money to pay the shortfall?

The lender will ask for their money and the endowment will go some way and your MIL will have to find the rest. If your MIL cannot they will ask for the funds and leave it up to your husband and MIL to find them. Both your husband and MIL are liable. You can start planning now by putting some aside. You could also ask the lender to switch the amount of the projected shortfall to repayment basis for the remaining years.

I would also suggest you get the policy reviewed by an IFA because it doesnt seem right that it was not set up on a first death basis and you may be able to take the complaint down that route (which suffers no time bar). An IFA will be able to guide you on this once they have ascertained the policy details.

marie17

Thank you Dunstonh.
My husband said to tell youthat the mortgage was too out in 1988, it was only £7,000. The endowment pays out approx £4,000 and the insurance policy pays out aabot £2,000. Although the shortfall is only £1,000, we don't have it. We were wondering what would happen if, should something happen to my mother-in-law, although we would probably be able to carry on with the mortgage, we wouldn't be able to save as well for the shortfall as we are just about coping on the money we get. Also, as the wording on the mortgage was that whoever is left at the end, they own the house, should something happen to my husband, where do we, his family stand? also, we know my husbands mum has money in another account that would cover the shortfall, we don't know what state her mind will be in in 3 1/2 years time. Should we see about putting the money in another account ready for 2011. Thank you

jamesd

You should:

Follow dunstonh's suggestion about the insurance, because this may eliminate the mortgage problem, since the policy appears not to have been drawn up to properly protect your mother in law. The financial adviser would be responsible for restitution if it was found to be an incorrectly advised sale.

Find out who legally owns the house today, not solely what is on the mortgage. What do the records at the Land Registry say about who owns it? If it is 100% owned by your mother and she requires residential care she will have three main choices:

• Selling the property only once she needs residential care. The council will force this if necessary, to recover their non-medical care costs.
• Taking out a lifetime mortgage, either with or without interest payments. Using the funds, if sufficient, for a critical needs funding plan that will pay for her care. The house will be sold on her death. The lifetime mortgage option is why there is ultimately no problem paying the mortgage if there is a shortfall, since it can be used to pay the shortfall and she could continue living there until health or death causes her to leave.
• Selling the property and moving into a property that is more suitable for her as alzheimers and age affect her.

If you and your husband are still married when he dies you'd normally inherit any share of the house ownership that he has or inherits, subject to your mother in law's will and his and whether she has any other children.

From the description so far it sounds as though he currently doesn't have any ownership share at all. If so, you should probably forget inheriting the house, since it's likely to be used to fund care for your mother in law. If he does currently have no share ownership it's almost certainly too late to change this because it would be seen by the council as seeking to avoid the obligation of your mother in law to pay for her care.

At the moment it looks as though the house is likely to be sold to pay for her residential care. Good planning now might be able to delay this until her death but it probably can't eliminate it unless her health deteriorates very rapidly.

A discussion with Citizen's Advice is probably a really good idea so you and she can get personal advice that will consider all of her needs and how to provide for them. Getting a plan in place before alzheimers makes it impossible for her to make legal agreements would be an excellent idea.

marie17

There were definately 3 names on the mortgage, my husband, mother-in-law and father-in-law. The house would finally be owned by whoever was left living, regardless when the mortgage was paid off. My husband hasn't made a will yet. his mother has, but we don't know what is in it. We are totally confused with it all. We don't even know where any of the paperwork is, the mon who arranged the mortgage is dead, and the company was sold. we really don't know where to start. Where do we go to check the land registry?
thank you

jamesd

marie17 wrote: »

The house would finally be owned by whoever was left living, regardless when the mortgage was paid off.

That's not an ownership for a property at a particular moment in time. More a description of how it's supposed to be inherited. At the moment, your mother in law is living, so if that's the agreement, it appears that she currently has 100% ownership and will have until she dies. But in that case, what I've written above about selling to pay for care will apply because it will be one of her assets that can be sold to pay for care.

marie17 wrote: »

My husband hasn't made a will yet. his mother has, but we don't know what is in it. We are totally confused with it all. We don't even know where any of the paperwork is, the mon who arranged the mortgage is dead, and the company was sold. we really don't know where to start. Where do we go to check the land registry?
thank you

Try the Land Registry. This property purchase may be sufficiently long ago that they don't have records, in which case you may have to ask the mortgage company for a copy of the deeds.

Please also use the CAB. It's so much easier dealing with these things if you start now. You've a lot to think about when you add the alzheimers planning to the picture and you can do a great deal to make things easier in future years. Far more than just the mortgage.

marie17

We have just been on the Land Registry Website and obtained a copy of the registry. It clearly shows 3 owners to the property. My father-in-law, mother-in-law and my husband. has this helped at all?

dunstonh

I would now ask the endowment provider what basis the life protection is set up on and on whom. Normally you would expect joint life, first death basis. In that case, the endowment would have paid out and could be used to clear the mortgage. Were the life company informed of the death?

marie17

Thank you
I have seen a letter off the endowment company thanking my mother-in-law for informing them of the death of my father-in-law. But that's all i've seen.So they do know. We were wondering if myfather-in-laws share of the property automatically went to my mother-in-law, or does she and my husband now own half each? It's such a mess really.

jamesd

That Land Registry entry is excellent news! Unless his will said something different your father in law's portion would have passed to your mother in law on his death. You should check to see if the will if there was one says split his portion between your mother in law and your husband. Meanwhile your husband's share helps to reduce the chance of a forced property sale by the council in the future.

Next stop as dunstonh says is the insurance company and asking them for details of the policy - who was covered, when it was to pay out. Two purposes: first to see if they just made an administrative mistake and should have paid out. If not, to see if the policy was properly sold or not, and perhaps seek financial redress from whoever sold it.

marie17

Thank you so much for all the advice you have given. I really don't know what we would have done without yours and dunstonh's help. we wouldn't have known where to have started. We are going to visit my mother-in-law soon and will see about finding what's in the wills. Thank you
:j