life insurance used to pay deceased debts

KITTEN8

My brother died witout making a will or namimg a beneficary on his life assurance.

He jointly owned a house with a friend that automatically went to the friend after death.

The very few assets he did have have been sold to pay for some of the funeral.

He left up to £40,000 of debt.

He wasn't married and didn't have children. But he did get life insurance. (no beneficary)

Anyway we all agree the life insurance should get paid to mum. So have just filled out forms to get grant of probate (administration)

My question is once the life insurance pay out does my mother then have to pay off all his debts with this money.

Errata

AFAIK Life insurance does not form part of a deceased's estate.

Mojisola

I think that if no beneficiary was named on the life insurance then it becomes part of the estate. Debts have to be paid off before anyone inherits anything but the funeral expenses come before debts.

rach29

Please get some advice from a solicitor, See if you can find one who offers a free half hour. Re the house, if it was owned with a friend are you certain the friend inherits? most solicitors setting up a purchase between friends would have seperated the asset in that case, Tenants in Common I think is the normal set up, Do ask a professional to look at this for you.

I'm sorry for your loss

Emmzi

the life insurance becomes part of the estate and yes, it does need to be used to pay off the debts.

Spendless

Wouldn't the share of the house also form part of the estate and have to be used for any debts? Assumming the house wasn't in negative equity.

Fang_3

Spendless wrote: »

Wouldn't the share of the house also form part of the estate and have to be used for any debts? Assumming the house wasn't in negative equity.

Not if held jointly. Though quite why a house bought with a friend was held like this is beyond me!

Mojisola

Fang wrote: »

Not if held jointly. Though quite why a house bought with a friend was held like this is beyond me!

Perhaps the friends wanted to make sure that the other wasn't left homeless if one of them died.

KITTEN8

Thank you for all your replies. Will def see a solicitor once life insurance pays out. House definitely goes to friend as they were joint tenants. I have seen all the paper work for this myself as I was the one doing probate and inheritance tax. The house is only included for inheritance tax and his half does go automatically to the friend.

House is not the problem. Just wanted to know if anyone knew 100% what the law is with the life insurance.



Fang not sure what your point is but please don't judge as you don't know anything about the situation

claretmatt

As the executor you need to pay creditors off before the estate can be distributed.

Life insurance comes in various guises. If it life insurance through work also known as a death in service benefit, then this can be paid outside of the estate.

If it is a personal contract taken out via a life insurance company then only if it is written in trust can it be payable outside of the esate.

Spendless

Fang wrote: »

Not if held jointly. Though quite why a house bought with a friend was held like this is beyond me!

Thanks. I wasn't aware of that. It's a relief to know as I am aware of debts run up by 1 family member and it has worried me, what will happen to the spouse if the other party was to die first.

I think perhaps there may be a reason that maybe the OP doesn't know or wish to share about why the house was owned this way (which is fair enough).