Partner has recently died...what happens about joint mortgage?

getmore4less

if advising a person on life cover you cannot rely on the other persons will to provide cover for the risk(wills can be changed).

The risk was another person dieing, them having life cover on their own life is not appropriate even in trust because they can just stop paying the premiums.

kingstreet

The_J wrote: »

We don't know the situation fully enough to comment. There could be dependents from the previous marriage, the wishes and plans of the life insured could therefore have been complicated and therefore a trust would not offer the flexibility required.

As we'd gone somewhat off-topic, I'd merely joined a discussion about the best way to write life cover. I still think you're better off writing a single life policy in trust.

I couldn't agree more about the case in the opening post, but we haven't been told how the cover was written or its intended purpose*, so I kept away from commenting on it specifically.

If anyone can tell me a better way of writing single life cover, I'll gladly stop writing it in trust.

Why wouldnt it offer flexibility? A flexible trust would cater in most cases.

Quite. Beneficiary classes are capable of responding to changes, such as change of spouse, or birth of children.

*Just re-read. Mortgage protection.

The_J

Clearly it's easy and obvious for us, we're finance professionals, but explaining it/giving the choice to someone who hasn't changed their will for 20 years is going only one way...

magpiecottage

The_J wrote: »

Without knowing the conversation we cannot be sure but it's far easier and more flexible to not put something into trust and sort out your will (IHT notwithstanding).

I disagree on two grounds.

Firstly, a term assurance only has value if the person covered by the policy dies (or at least becomes seriously ill) so it can be abandoned if a couple split up and it is no longer required.

Secondly, a term assurance that is neither in trust nor assigned to a lender will pay out into the estate and cannot be paid until probate is sorted out. Even if there is a Will and it is not challenged (and in a case like this that is always a possibility) it can take months. In the meantime the survivor has to meet the mortgage payments.

So I think there may be grounds for complaint. It will depend on the recommendation, though. I would not normally expect an adviser to go into the intricacies of the right trust for the circumstance but they should at least make the customers aware of their potential value and suggest they speak to their solicitor about it.

If that was not done then the policy was not suitable for purpose and I would be inclined to uphold a complaint.

That is without looking at whether a joint policy incurred unnecessary cost.

opinions4u

Trying to recall the term assurance I used to sell (tied).

I don't think it had the option of being written in trust.

rlaforge

Hi all. Lots of interesting feedback but looks like my original post has opened a huge can of worms.

Was trying to think back to 2008 when policies were taken out as to whether there was any discussion about it being held in trust, I am pretty good with details like this so my feelings are that the options weren't explained. If I remember rightly the policy applications were completed with the mortgage advisor from the building society.

I have two children from a previous marriage and my partner also had two sons with his wife. Strangely enough I have had a discussion with her today regarding his assets and she has said that the mortgage will be paid off and has offered to let me have £10k to put towards mortgage payments on the basis that it could take months to go through probate. I have said I will think about it as I'm not sure what the implications of this will be.

kingstreet

How will the mortgage be paid off?

The_J

Yes, if the life policy was LTA and you didn't reduce your mortgage the payout should only cover the mortgage. Unless your partner had additional savings/assets?

At best I think you'll be able to get half the mortgage paid off and be grateful for that. It will at least make it manageable and give you options with regards to remortgaging.

edit: I would definitely push the building society about the advice. They might poo themselves sufficiently to offer you a decent payout.

DVardysShadow

The_J wrote: »

The only negligence here is the lack of a will.

The_J wrote: »

That would never be upheld because the advice is perfectly acceptable if the will was in order.

The_J wrote: »

We don't know the situation fully enough to comment. There could be dependents from the previous marriage, the wishes and plans of the life insured could therefore have been complicated and therefore a trust would not offer the flexibility required.

You seem to have known enough to comment ....

As a lay person, I am expecting a Mortgage Advisor to be selling a policy to protect the interests of the surviving partner in the mortgaged property. It is that simple. Never mind dicking around with dependants from the previous marriage. All this advisor seems to have done is sold a load of policies and trousered the commission without regard for what the policies are supposed to achieve.

I expect the industry to be doing better than this, and it seems that the professionals here are of the same mind too.

The_J

DVardysShadow wrote: »

You seem to have known enough to comment ....

As a lay person, I am expecting a Mortgage Advisor to be selling a policy to protect the interests of the surviving partner in the mortgaged property. It is that simple. Never mind dicking around with dependants from the previous marriage. All this advisor seems to have done is sold a load of policies and trousered the commission without regard for what the policies are supposed to achieve.

I expect the industry to be doing better than this, and it seems that the professionals here are of the same mind too.

You presumably know exactly what happened and what was referred to in the conversation? No? Oh.

I was assuming that the adviser would have gone through a compliant process, it's hard to imagine now that this would be different (it was through a building society) and it's likely that any reason for recommendation would have been spelled out in writing. "A lump sum will be paid out into your estate to be distributed as per your wishes" - almost inevitable and then boom, no complaint.

The culture of finding someone to blame for their lack of personal responsibility is a cancer on our society. It's not helped by people like you using hyperbole and prejudice to push your own agenda. Who was it that said a little knowledge is a dangerous thing?