death and credit card debt

horseypony

they do have a small mortgage which is due to end early next year but they have insurance so this will be paid on death.

skintandscared_2

re-mortgage to the value of the cards, pay them off and then let the insurance policy pay off the balance of the mortgage

(yes, I accept there are no doubt a gazillion reasons why this wouldn't actually happen and it's just my wishful thinking that the poor chap can live out his days without worrying about it...)

lisyloo

re-mortgage to the value of the cards, pay them off and then let the insurance policy pay off the balance of the mortgage

Sorry to hear of the situation.

The current insurance policy will be for a specific amount either (level or decreasing).
It won't automatically cover any additional fund taken out on the mortgage although it's possible there is some excess.

If I were in that position the first thing I would be looking at is finding out the value of the insurance policy versus the mortgage to see if there is any excess.
Also what other assets are there?
If he is pre-retirement then there may be a lump sum and/or pension payable from any pensions schemes he's in.
Does he have "death-in-service" benefits at work?

Mojisola

horseypony wrote: »

he has no savings but owns half the house, so will they make her sell the house??

It depends on the way they own the house. If they are "joint tenants" then they both own all the house and when your father-in-law dies, your mother-in-law will become the sole owner. The house will not be part of your father-in-law's estate.

If they are "tenants in common" then whatever proportion of the house your father-in-law owns will be part of his estate.

birkee

paye wrote: »

I agree. Get on it right away.

Doesn't a 'giver' have to survive 7 years(?) before the gift is free of tax to the receipient?

chattychappy

Mojisola wrote: »

It depends on the way they own the house. If they are "joint tenants" then they both own all the house and when your father-in-law dies, your mother-in-law will become the sole owner. The house will not be part of your father-in-law's estate.

If they are "tenants in common" then whatever proportion of the house your father-in-law owns will be part of his estate.

It doesn't depend a huge amount, really. If the estate is insolvent and the wife took the house by survivorship (ie joint tenants), then the wife can be required to make up the shortfall in the estate up to the value of the late-husband's share of the house.

Ie JT or TIC, the house can still be used. But there is more procedure (including a court order) and proactive effort by the CC required for JT. Also an element of court discretion. See post #10. Wth TIC, the executors have an immediate duty to the CC to pay the debt out of the estate as far as possible.

birkee wrote: »

Doesn't a 'giver' have to survive 7 years(?) before the gift is free of tax?

No, that is inheritance tax. Not an issue here if the estate is insolvent/gift to spouse.

birkee

Seem to recall, that if one partner goes into care, then the system can call upon their share of the house to pay for their care. You have to go through some paperworks performances to change this default position for joint owners.

How do we know if we are Joint Tenants?
To find out if you are Joint Tenants, you will need to check on your Title Register Document. If you have a mortgage then this will be held by your mortgage company, but for £3 you can now check your Title Register Document online at http://www.landregistryonline.co.uk.
The Title Register Document will show the names of the people that own the property and, if you are tenants in common will also have wording similar to: "No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court".
How to avoid losing your home to pay for long term care
As current legislation stands, if somebody has to go into long term care the Local Authority has the power to seize all
but £20,000 of their assets as a contribution towards the cost of that care.
A common problem is how to protect the family home from being seized in such a manner – and as official government
statistics show that some 69,000 homes are sold every year to fund long term care (which is equivalent to one home
being sold every four minutes) this is a big issue - but it easily be addressed by making the correct type of Wills.
First of all, though, it is important to understand that whilst you are both alive if one of you goes into long term care
then the Local Council cannot force the sale of the property provided that it is in both your names (e.g. owned 50-50) –
they can only force the sale if the person going into long term care owns the property 100% outright.
But what if one of you dies? You need to ensure that the ‘survivor’ never owns the property 100% outright.
This is achieved by the first to die having a Will leaving his/her share of the property to the eventual heirs of your estate
after you have both died, but specifying that the survivor of you has a lifetime right to live in the property (a ‘Life
Interest’). Thus the survivor only owns 50% of the property and its sale cannot be forced to fund long term care.
In reality, you do not know which of you is going to die first and so you both need such a Will. Such Wills are often
referred to as ‘Protective Property Trust’ Wills or ‘Life Interest’ Wills. To make them, you must both be alive now.

If there is no such wording in the Title Register Document then you are almost certainly joint tenants.
Quick Tip: When you've got your Title Register Document, download it and print it out: it also tells you your Land Registry Administration Area and your property's Title Number - both of which are required for severing the Joint Tenancy.

Mojisola

chattychappy wrote: »

It doesn't depend a huge amount, really. If the estate is insolvent and the wife took the house by survivorship (ie joint tenants), then the wife can be required to make up the shortfall in the estate up to the value of the late-husband's share of the house.

Are you certain about this? The surviving spouse hasn't inherited anything from the person with debts because they were both owners of the whole property. As the surviver wasn't responsible for the debts, I don't see how a claim can be made on their property.

birkee wrote: »

Seem to recall, that if one partner goes into care, then the system can call upon their share of the house to pay for their care.

If one of a couple needs to go into the care, the family home is disregarded in making the assessment. The LA can't make a claim on it.

chattychappy

Mojisola wrote: »

Are you certain about this? The surviving spouse hasn't inherited anything from the person with debts because they were both owners of the whole property. As the surviver wasn't responsible for the debts, I don't see how a claim can be made on their property.

Yes, absolutely. It's given in s421 IA1986 as quoted earlier in the thread and there has been much case law.

http://www.legislation.gov.uk/ukpga/1986/45/section/421A

Yes, we have joint owners who have a property. It was considered unfair on creditors if one owner could die leaving debts unpaid whilst the other owner takes over full ownership.

chattychappy

Mojisola wrote: »

Are you certain about this? The surviving spouse hasn't inherited anything from the person with debts because they were both owners of the whole property. As the surviver wasn't responsible for the debts, I don't see how a claim can be made on their property.

Yes, absolutely. It's given in s421 IA1986 as quoted earlier in the thread and there has been much case law.

http://www.legislation.gov.uk/ukpga/1986/45/section/421A

Note the application and title of s421A

s421A Insolvent estates: joint tenancies.
(1)This section applies where—(a)an insolvency administration order has been made in respect of the insolvent estate of a deceased person,(b)the petition for the order was presented after the commencement of this section and within the period of five years beginning with the day on which he died, and(c)immediately before his death he was beneficially entitled to an interest in any property as joint tenant.

Yes, we have joint owners who have a property. It was considered unfair on creditors if one owner could die leaving debts unpaid whilst the other owner takes over full ownership (ie takes the beneficial interest that was previously that of the deceased).