Life Insurance and Estate Value

Monty_Mole

Hi - I am currently doing the estate valuation for my wife who passed away.
The house we live in is mine and has only ever been in my name and paid for from my account (we didnt have a joint account). However we did have joint life insurance. The life insurance company agreed to pay this out about 13 months before my wife passed away as she was, at that stage, classed as terminally ill. We immediately used the money to pay off the mortgage on the house. I am working out how this fits in relation to her estate for the valuation on the HMRC website. Is it not part of it? Or, as it was a joint life insurance then is half or all the money it paid treated as part of the estate which was then gifted to me? Or something else? And help appreciated.

Yorkshireman99

Monty_Mole wrote: »

Hi - I am currently doing the estate valuation for my wife who passed away.
The house we live in is mine and has only ever been in my name and paid for from my account (we didnt have a joint account). However we did have joint life insurance. The life insurance company agreed to pay this out about 13 months before my wife passed away as she was, at that stage, classed as terminally ill. We immediately used the money to pay off the mortgage on the house. I am working out how this fits in relation to her estate for the valuation on the HMRC website. Is it not part of it? Or, as it was a joint life insurance then is half or all the money it paid treated as part of the estate which was then gifted to me? Or something else? And help appreciated.

As it was spent before her death it does not form part of her estate. Assuming she left her esatate to you there would be no IHT anyway. How much do you think your estate is woerth including anything you received from your wife? You might want to get some paid for professional advice on futrue IHT planning if you have children.

Keep_pedalling

Depending on what sole assets she held you may not even need to go through probate. The house and insurance payout do not form part of her estate, so you will only need probate if she held any assets with institutions that will not release them without probate. These would typically be things like large cash deposits or equities holdings.