Credit Card Debt and Death

Degenerate

dunstonh wrote: »

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.

Most are done that way? I don't have a basis to dispute that, but ye Gods, isn't the whole point supposed to be about making sure your loved ones are ok on your death, not your creditors? If most are done that way it would seem to me that most people taking out life insurance policies are being mis-sold them.

dzug1

theonlyone12 wrote: »

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

You still can't insure against a known event

bengal-stripe

Degenerate wrote: »

......isn't the whole point supposed to be about making sure your loved ones are ok on your death, not your creditors? If most are done that way it would seem to me that most people taking out life insurance policies are being mis-sold them.

Most life insurances are taken out at a younger age with death (hopefully) many years away.

In those intervening years, some of the people who are important to you today, will leave your life,
others, that will become dear to you, haven’t entered your life yet.

Nobody knows today, what’s thirty, forty or fifty years down the road.

theonlyone12

Hi
Thanks for all the help. Sorry for late reply. Joys of Xmas!
I have found out the one of the policies actually names her daughter as beneficiary.
The value of it is £4k. So I take it she will get her money and the remaining £4k will go to estate and hence against the £15k debt? Is that right.

Also the daughter is now nervous she is liable for the full debt as she is the beneficiary for the life insurance policy. I told her there is nothing to worry about. I take it this is correct? She is nothing to do with the credit card debt and not a cardholder or anything. Although she does have a joint bank account with a separate institution (no debt on it)?
I presume none of this effects anything.
So £4k will go to daughter
£4k remaining to estate.
This £4k goes towards deceased debts.
Estate balance approx -£11k. I take it this gets written off and no one is liable but the estate?

Hope this is right. Just want to put peoples minds at rest as obviously have enought to be worrying about. If I am correct on above is there a link to a goverment website that would confirm this?

Thanks

PNPSUKNET

the £4k will also have togo against debts

theonlyone12

PNPSUKNET wrote: »

the £4k will also have togo against debts

Even though it has a beneficiary?
I thought that it passes outside of the estate if it has a beneficiary? (from what I understand of above)

lisyloo

My understand is that where a beneficiary is named, then the trustees of the scheme will pay the money direct, so it's "in trust".

However I would urge you to check with the insurers whether it's "in trust" or not.
If you are excecutor then getting something in writing to protect yourself who be highly adviseable.

Also be careful with the personal possesions. You may find that technically the items should be sold to go into the estate, so you can't just hand them out when there is a debt outstanding.
Gold jewelry may be worth something and you need to be careful of your liabilitiues as an executor.

theonlyone12

Luckily, I doubt it will be me being executer. Sounds like a headache!
She doesn't have many personal possesions, just clothes and low value furniture, so I doubt that will be a problem.
The person has not passed away yet. Do you think its worth her giving away her personal things that the family want kept now ?

jonesMUFCforever

bengal-stripe wrote: »

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.

Taxman no longer gets priority - everybody will be treated the same.

lisyloo

There won't be any tax due on a tiny estate.