Widowed Mum has paid off my Dad's credit card debts .... did she need to?

Johnhowell

Chicken_Licken wrote:

The house was under a joint mortgage which automatically passed to my Mum on my Father's death and as such my Father had no other 'assets' to leave my Mother or myself. I believe the 'death in service' payment she received is regarded as hers and not part of my Father's estate.

I have noticed in another similar post about the "mortgage being transfered to the surviving spouse; therefore no assets remaining for the deceased spouse." This is incorrect, the mortgage company obviously still wants its money so just changes the name on the contract - how nice of them!

Firstly, did the mortgage have insurance cover for serious illness or death. This happened to a friend within a year of taking out a mortgage, on diagnosis the mortgage was paid off. Sadly within two years he passed away, but his wife had a roof over her head.

My late step father died owing over £30,000, the property was solely in my mothers name because she bought before they met and married. A couple of the creditors phoned up and asked to be included in the estate, but when I said the estate was only worth £320 they went away. The "death in service" discretionary payment was Mums not the estates so was not considered

This "death in service" money may have to be used to pay the debts and Inheritance Tax on the estate - just so that the house does not have to be sold to realise that value of the estate.

John

lixi

Calley, you summed it up pretty well. It is about calling in the assets and satisfies the debts of the deceased from those assets. Sometimes there are odd rules that apply, like what happens on the death of a joint tenant but otherwise you can assume it is about "fairness", as the law sees it anyhow. It is difficult to generalise and sometimes a single fact can change how a rule applies to one person's circumstances which is why you can only give general advice before looking at the individual circumstances in each case.

Talking about that which I have posted, we are on fairly safe grounds as far as principles go.

I don't think it is fair that a multi-national corporation can take proceedings against a widow and having obtained judgment put a charging order against the marital home solely in relation to debts from the deceased. But, that is the law. Unfortunately, we are all free to contract our assets away if we see fit, no matter how bad the terms of the deal are to us. There is a latin phrase that governs the court's views on that and it is "caveat emptor" or "buyer beware". [I know, I'm getting boring now :-) ]

In these kind of situations, the law sees a contract that was made between two parties (the corporation and the deceased) which must be satisfied if at all possible.

Chickin Lickin, I am no expert on endowments unfortunately and that is certainly an area that I would get some specific advice on. Definitely raise it with the CAB if you go. I haven't even read Martin's new article on it ;-)

lixi

"I have noticed in another similar post about the "mortgage being transfered to the surviving spouse; therefore no assets remaining for the deceased spouse." This is incorrect, the mortgage company obviously still wants its money so just changes the name on the contract - how nice of them!"

=== John, any mortgage that is entered into jointly, or any loan or credit card or other credit card agreement for that matter, will have a provision in the terms of the agreement to the effect that the borrowers are jointly and severally liable. That means that if one person dies, goes bankrupt or runs off and turns hippy, that the lender can claim the full amount from the remaining borrower, whether or not they in theory can claim half of the outstanding amount from the other party.

"Firstly, did the mortgage have insurance cover for serious illness or death. This happened to a friend within a year of taking out a mortgage, on diagnosis the mortgage was paid off. Sadly within two years he passed away, but his wife had a roof over her head."

===Definitely something to consider but not always the case

"My late step father died owing over £30,000, the property was solely in my mothers name because she bought before they met and married. A couple of the creditors phoned up and asked to be included in the estate, but when I said the estate was only worth £320 they went away. The "death in service" discretionary payment was Mums not the estates so was not considered"

=== Good point well made but completely different from the facts applicable to Chickin Lickin's Mum. So far as I understand it, claims have been settled and this was a retrospective query so CL's mum is not at risk of losing her house anyway.

This "death in service" money may have to be used to pay the debts and Inheritance Tax on the estate - just so that the house does not have to be sold to realise that value of the estate.

===Exactly

Chickin Lickin,

Glad I helped clarify this for you. Your mum did the right thing (and sorry for hijacking your thread - I just try and clarify things and get carried away!)

Lixi x

inmypocketnottheirs

This has obviously been a difficult time for both you and your mother. At the end of the day your mum has a roof over her head and can sleep at night for having done the right thing. Peace of mind is worth considering in these circumstances. Whilst with hindsight it may have been possible to dance around these debts, I think it is better to concentrate on moving forward. That said, I am certain it may be worth considering a claim for mis selling on the endowment, but if it only fell short by £1500 not quite sure how much compensation your mum may be entitled to.

Chicken_Licken

Thank you Lixi for your words of wisdom once again! And don't apologise for hijacking my thread, your info has been great and it's comforting to know that are people out there who will take the time to help and guide others. It means a lot.

We are still going to visit the CAB and possibly speak to a speciliased probate solicitor who is a friend of a family friend to clarify our particular position. Discussions on this thread have also made me realise we need to understand the quagmire that is inheritance tax so currently looking into that too!

As for the endownment misseling my belief is that it's not just the shortfall that is paid back to you as compensation but the potential investment that you have lost. There is a very complex way of working out what these amounts maybe but the compensation paid to you is not just whatever shortfall you may have received as inmypocketnottheirs commented. Do visit the endowment action website as suggested by Martin if you feel you have a potential claim to make as it's very comprehensive but easy to read.

I'm sure we will get there in the end but having the support of the people who have contributed to this thread has made a big difference. I'm now going to use the 'pay it forward' principle as thanks to you all and try and help others as you have helped me.

Happy Money Saving!

Johnhowell

lixi wrote:

"I have noticed in another similar post about the "mortgage being transfered to the surviving spouse; therefore no assets remaining for the deceased spouse." This is incorrect, the mortgage company obviously still wants its money so just changes the name on the contract - how nice of them!"

=== John, any mortgage that is entered into jointly, or any loan or credit card or other credit card agreement for that matter, will have a provision in the terms of the agreement to the effect that the borrowers are jointly and severally liable. That means that if one person dies, goes bankrupt or runs off and turns hippy, that the lender can claim the full amount from the remaining borrower, whether or not they in theory can claim half of the outstanding amount from the other party.

Lixi,

I appreciate that the loan/mortgage still needs to be paid - what I was commenting about was the misunderstanding by the two posts that once the mortgage has been transfered to surviving spouse that the property no longer contributed to the estate of the deceased spouse for purposes of IHT and debt cover.

With regards Mortgage Insurance, I cancelled my cover last year because I live alone and the property is not required for anyone. So, if I die then it can sold and the mortgage redeemed. The situation would be different if I was married then insurance cover I would consider a priority.

John