Mother died and now accused of fraud what can we do?

jamesd

samja, both of your in-laws died at relatively young ages. Today a man retiring will on average live to be around 86 years old. A pension annuity is a bet of sorts: that you'll be one of those living a longer than average life and will continue to get the money for a good long time. If you don't then your money will be used to help pay for the benefits of those who do live a longer time. The annuity provides that long-term guarantee that if you do live a long time you'll continue to get paid.

Today there are new options as well as the older one of buying a pension annuity. You can keep the pension money invested in an "unsecured pension" and use "income drawdown" to provide an income instead of buying an annuity. That's possible until age 75. After that you can do something similar with an "alternatively secured pension". Both are really only applicable where the total pension fund value is more than 100,000.

It sounds as though your father in law did his best using the tools then available to provide for the possibility that he or his wife would live a long life and need income for that longer lifetime.

samja1

I keep replying to posts and being logged out of the forum half way through. When I log back in the post has disappeared.

ANyway, I agree with Jamesd who has written what I tried to write yesterday very succinctly.It is a gamble.EVen if my FIL had lved to 86 he would have got back less than half what he put in so the insurance company has done VERY well out of our famly even before they claim back most of what they have paid out. Our loss is someone elses gain. No, the pension gamble is NOT for us anymore. We will be doing something different.


Thank you Peterbaker we couldnt have put it better ourselves.

An IFA can save friends and famly and customers hundreds of thousands of pounds due to their knowledge of the financial industry. My husband has saved friends, family and customers thousands of pounds through his knowledge of the car industry.
I wonder how many IFAs have been ripped off by their local mechanic? How many mechanics have been ripped off by poor financial advisors? WHich costs more?

How do you know if your IFA is trustworthy or not? Probably in the same kind of way that you find out whether your local mechanic is trustworthy or not. Even when you limit the risk by listening to recommendations, choosing one who is a member of a recognised body etc you can still be ripped off. I wish I had done my degree in accountancy or something instead of the one I did.

You live and you learn and all that.

Samja1

MarkyMarkD

samja1 wrote: »

ANyway, I agree with Jamesd who has written what I tried to write yesterday very succinctly.It is a gamble.EVen if my FIL had lved to 86 he would have got back less than half what he put in so the insurance company has done VERY well out of our famly even before they claim back most of what they have paid out. Our loss is someone elses gain. No, the pension gamble is NOT for us anymore. We will be doing something different.

If the facts are as you've presented them, then there's something seriously wrong with the policy he bought. You would expect an annuity to pay out a fair amount - which means that if you live for the average number of years post retirement, you should get back roughly what you put in, plus some sort of investment return, less something for the insurer's costs and profit.

If an annuity pays out less than the starting value by the age of 86, that's ridiculous.

MarkyMarkD

peterbaker wrote: »

I must admit I wondered that too Marky, when you said something about "fraud, inadvertent or not". There is AFAIK no such concept in English law as inadvertent fraud, for that would simply imply an innocent mistake.

Fair cop, Mr Baker. Poor use of wording.

Failing to notify an insurer of your spouse's death, where that's material to the amount paid out, is not an innocent mistake IMHO - it's fraudulent. Being ignorant as to the requirement to notify wouldn't be much of a defence; knowing that it should be done and failing to ensure that it was done is IMHO fraudulent.

I don't know of any pension/annuity which pays the full amount to the surviving spouse - although I may be wrong - so the fact that the payout didn't change on the death of the original recipient ought to have been a clue that something was awry.

Alfie_E

MarkyMarkD wrote: »

Failing to notify an insurer of your spouse's death, where that's material to the amount paid out, is not an innocent mistake IMHO - it's fraudulent. Being ignorant as to the requirement to notify wouldn't be much of a defence; knowing that it should be done and failing to ensure that it was done is IMHO fraudulent.

It’s the duty of the person or persons administering the estate to inform the pension provider. This certainly doesn’t automatically include the spouse. If the person had been a very secretive person during their lifetime, there’s no reason to assume the spouse had ever seen a policy document. After the death, the spouse may have simply chosen not to have anything to do with handling their partner’s estate.

This leads me to wonder why the problem wasn’t picked up later. The pension provider would have sent out periodic correspondence. Wouldn’t the mother-in-law have still been getting correspondence in the name of her late husband? Wouldn’t this include a yearly P60? It’s that question that suddenly made me think. If the pension provider believed they were paying money to the father-in-law, what were they doing when it came to tax? They would have needed a tax code. Has their tax office been providing a code for a dead person for the last ten years? This is starting to look complicated.

jamesd

MarkyMarkD, an annuity within the guarantee period would continue to pay out the full amount to the spouse for the duration of the guarantee period; a five year guarantee is common and longer or shorter terms are available. You can also choose anything from one third to the full pension to go to the spouse on death.

For a 75 year old man with a five year guarantee a 2/3 pension for the spouse decreases the initial level pension for a 10,000 lump sum from 1001 with Prudential to 773 with Prudential or Norwich Union, assuming the woman is five years younger. A ten year guarantee instead of five years would decrease the initial pension to 911 from Prudential while no guarante at all would increase it to 1035.

Not all of these options may have been available to samja1's father in law at the time he purchased this annuity.

samja1

Wouldn’t the mother-in-law have still been getting correspondence in the name of her late husband? Wouldn’t this include a yearly P60? (quote)

I am getting quite worried now. I need to speak to my BIL and see if he will let me look at the paperwork he has. Although he dealt with everything when my FIL died I think both my husband and BIL were named as executors of the will. We were quite recently married and had just had our first child at the time and neither of us was told much about what was happening except for the basics.

My MIL was a very honest person and she would not willingly have defrauded anyone but I dont understand why she didnt query any letters still adressed to her husband after his death. The only thing I can think of (and I know this sounds daft) is that she didnt think it mattered. She had absoltely NOTHING to do with the household finances until he died. She didnt even know what was in the bank accounts. SHe was like a child after his death not even knowing how to do the simplest of things because he had always done everything for her. This is why my BIL had to do so much when FIL died.

It woulndt surprise me if she just let everything tick along no questions asked. This is a scary thought. It is hard to ask these questions even now as they are not 'my' side of the family. When we were first married I remember asking my husband questions about his family he didnt know the answers to and it caused him such pain to talk about it all I stopped. What I didnt realise at the time was that his Dads death had caused him to have a mini breakdown. It is all very different now and he is much stronger emotionally.

In terms of how much he put in to the pension my husband knows it was at least a couple of hundred thousand pounds. I thought this was because he started to 'worry' about it too late in his working life and so threw as much money at it as he could in the last few years.

There are a lot of questions to ber answered and I dont know how to find out.

Samja1

MarkyMarkD

Thanks for your comments and clarifications, Alfie and Jamesd. The correspondence question is certainly an interesting one, as it would be the most obvious way by far that the MIL should have picked up that something was wrong.

It simply isn't normal to ignore the fact that you are getting correspondence in the name of your dead husband, IMHO - most people would be quite upset about it and would go to great lengths to stop it happening. If the MIL really thought that it "just didn't matter" then that's a bit odd IMHO.

jamesd

MarkyMarkD, I can easily see someone inexperienced in managing financial affairs, as she apparently was, simply assume that because the pension was in his name that's who the letters would be addressed to, to indicate which pension was involved.

There are some inconsistencies in what the pension company apparently said. One possibility might be that the person on the phone was thinking of only payments since her death, if it had taken a few months to notify them and a couple of pension payments had been made since her death.

samja1, in their letter the pension company will presumably get the story straight. For now waiting is just what you're stuck with. One inconsistency they need to resolve is why they would have continued paying a pension to her after his death but then changed their mind and said all of the money would have to be paid back once they found out that he had already died. The only reason I can see for her getting money after his death is if it was a pension that provided some income for her after his death (50% would be common), so repaying all of the money isn't consistent with that part of their story.

Hopefully it'll just turn out to be call center confusion with only a pension payment or two since her death to be repaid in full.

Ms_Chocaholic

Sorry to make light of a sad and difficult situation, but could your OH do a Harold Steptoe by any chance !!!