Do proceeds of Bonds go to estate?

Farside71

My mum is currently in latter stages of terminal brain cancer so I am assessing her finances at present in preparation for the inevitable.

She has a bond with a large insurance company which has been written with both me and her as beneficiaries. The death benefit is 101% and will pay out on 1st death. i.e. hers. The bond is not written in trust. She is recorded as the 'investor'.

What I'm not sure about is whether the proceeds of this will be shared 50% between myself and her estate, or whether I'm the beneficiary and would receive the full amount. Would her estate have any interest in that?

I am a higher rate tax payer and her estate is likely to creep into IHT according to my assumptions so far.

I'm aiming to be executor on her estate, although there is so much to take in, I feel well prepared having read as much as I can so far.

Yorkshireman99

Farside71 wrote: »

My mum is currently in latter stages of terminal brain cancer so I am assessing her finances at present in preparation for the inevitable.

She has a bond with a large insurance company which has been written with both me and her as beneficiaries. The death benefit is 101% and will pay out on 1st death. i.e. hers. The bond is not written in trust. She is recorded as the 'investor'.

What I'm not sure about is whether the proceeds of this will be shared 50% between myself and her estate, or whether I'm the beneficiary and would receive the full amount. Would her estate have any interest in that?

I am a higher rate tax payer and her estate is likely to creep into IHT according to my assumptions so far.

I'm aiming to be executor on her estate, although there is so much to take in, I feel well prepared having read as much as I can so far.

You need to look at the exact terms of the bond to see where the proceeds go. Are you sure it is not written in trust?

Malthusian

Your post is contradictory. You say that the bond is not in trust but then say that both you and her are "beneficiaries".

What you have written suggests that both of you are lives assured. Are you sure that the bond pays out on the first death of one of you and not the second death? That would be more typical.

If by "she is recorded as the investor" you mean she is the sole owner (or policyholder) of the bond then 100% of the proceeds will go into her estate.

You need to be clearer about a) who owns the bond b) who are the lives assured. Who is the owner of the bond determines where the proceeds will be paid. Who are the lives assured is a completely separate question and determines when the proceeds are paid (i.e. on whose death).

Farside71

Thanks for your replies....I think you've helped me a lot.


I will double check the document I have tonight (I don't have a lot unfortunately), but I believe she is recorded on the document as 'investor'. I'm assuming that term equates to owner then and she is sole owner.


I can see no evidence that anything was written in trust.


When I said beneficiary, I was wrong to say that. It is definitely written on a first life basis however it's on her life and my life. So I am a life assured, not a beneficiary I would guess. I think it's a half-baked attempt at inheritance planning.


So I'm assuming from this that it will all go to her estate.

Yorkshireman99

Farside71 wrote: »

Thanks for your replies....I think you've helped me a lot.


I will double check the document I have tonight (I don't have a lot unfortunately), but I believe she is recorded on the document as 'investor'. I'm assuming that term equates to owner then and she is sole owner.


I can see no evidence that anything was written in trust.


When I said beneficiary, I was wrong to say that. It is definitely written on a first life basis however it's on her life and my life. So I am a life assured, not a beneficiary I would guess. I think it's a half-baked attempt at inheritance planning.


So I'm assuming from this that it will all go to her estate.

Ask the company what can be done and for any clarification. Not all do it the same way.