Credit Card Debt and Death

theonlyone12

A member of my family is sadly terminal and due to pass away soon. As horrible as it is we are having to think about dealing with the financial affairs.
I have a question with regards to this. The estate is small, very little cash but two life insurance policies worth about £8k. These have been left in a will along with all other assets (very little personal posessions) to her children.
The question is this person also has a £15k credit card debt. Can I ask
1. Is anyone liable for this debt?
2. If the above answer is no, since the assets have been left in a will to the children do the assets have to be used to pay down this debt or are they free to be passed on as per stated in the will and since credit cards are unsecured then the card company will need to bear this?

Thanks for help.

dunstonh

1. Is anyone liable for this debt?

no. If the assets are not sufficient to cover the liabilities in the estate then the debt cannot be passed to someone else.

2. If the above answer is no, since the assets have been left in a will to the children do the assets have to be used to pay down this debt or are they free to be passed on as per stated in the will and since credit cards are unsecured then the card company will need to bear this?

The assets are used to clear debts first. The Will doesnt avoid repayment of liabilities. If there are no value in the estate after clearing the debts then there is nothing to distribute and the Will largely becomes irrelevant.

dzug1

theonlyone12 wrote: »

A member of my family is sadly terminal and due to pass away soon. As horrible as it is we are having to think about dealing with the financial affairs.
I have a question with regards to this. The estate is small, very little cash but two life insurance policies worth about £8k. These have been left in a will along with all other assets (very little personal posessions) to her children.
The question is this person also has a £15k credit card debt. Can I ask
1. Is anyone liable for this debt?
2. If the above answer is no, since the assets have been left in a will to the children do the assets have to be used to pay down this debt or are they free to be passed on as per stated in the will and since credit cards are unsecured then the card company will need to bear this?

Thanks for help.

The estate of the deceased is liable for the debt.

In the circumstances the children will get nothing. The assets have to be used to pay the debt. There may be higher priority debts (eg admin expenses, funeral bill) that have to be paid first. The CC company will thus get only part of its money

bengal-stripe

The debts will fall to the estate.

After funeral expenses the estate will pay the debts (taxman first).
What is left will go to the heirs. If nothing is left, the heirs won’t get anything.

Hax

Did they have PPI on the credit card(s)?

theonlyone12

Hax wrote: »

Did they have PPI on the credit card(s)?

Thanks for the replies.

As far as I am aware, no.
Is it worth them taking it out now?

Typhoon2000

theonlyone12 wrote: »

Thanks for the replies.

As far as I am aware, no.
Is it worth them taking it out now?

Er, no. Definately dont take it out now.

dzug1

theonlyone12 wrote: »

Thanks for the replies.

As far as I am aware, no.
Is it worth them taking it out now?

Too late now - you can't insure against something that has already happened.

theonlyone12

dzug1 wrote: »

Too late now - you can't insure against something that has already happened.

She hasn't died yet. But it is likely to be in coming days/weeks.

Degenerate

I beg to differ from the above interpretations.

theonlyone12 wrote: »

The estate is small, very little cash but two life insurance policies worth about £8k. These have been left in a will along with all other assets (very little personal posessions) to her children.

A life insurance policy isn't an asset that forms part of the estate, it's a contract to pay out an agreed sum to a named beneficiary in the event of the insured person's death. The policies should not have been "left in a will", to anyone, they should have been named as beneficiaries in the contracts, which would then be fulfilled by direct payouts having nothing to do with the deceased's estate.

If no beneficiary is named then the payouts most likely will default to the estate and be swallowed up by the creditors. Hopefully your ailing relative named the appropriate people at the onset of the policies. If not, then I hope that they are still functional enough to take the action that is urgently required now.

dunstonh

life insurance policy isn't an asset that forms part of the estate, it's a contract to pay out an agreed sum to a named beneficiary in the event of the insured person's death.

Potentially it can be either.

If the policy is set up as single life, single owner and not in trust then the policy pays out into the estate. If it is in trust or has a different owner then it will be paid out to them. Most policies are not placed in trust so would form part of the estate.