Auntie doesn't want WOL payout to go to Son-in-law!

LilyJ91

Hi all,

My Auntie and Uncle set up a whole of life insurance on a second death basis a little while back, my Uncle has since passed away.

It was set up so that my Cousin (their Daughter) could pay the potential IHT liability on their estate but my Cousin has broken up with her Husband and they are planning to get divorced in due course.

If, Heaven forbid, my Auntie was to die before the divorce was finalised (it could be quite drawn out) she is worried that her Son in Law would be entitled to half of the Whole of Life Insurance payout. Does anyone know if this would be the case?

In terms of the WOL policy as well as other assets such as investments and pensions, my Auntie is also unsure as to whether they can be "put in trust" to ensure the money goes solely to her daughter.

Any preliminary advice/guidance would be much appreciated. We are also thinking about contacting a solicitor and/or financial adviser.

Lily x

kingstreet

If the right kind of trust was used; it should be possible to change the potential beneficiaries without having to cancel and start again.

Contact the insurer and ask.

Death benefit from pension plans can be diverted using a nomination of beneficiary/expression of wish form. Ask the provider.

On the other issues, legal advice would be prudent.

Weighty1

As above, if the money was for IHT planning then it should absolutely have been written in trust. Depending on who were named as the beneficiaries and trustees it should be possible to ensure that the soon to be ex-son in law doesn't receive any of the proceeds.

Certain investment bonds can be placed in trust, ISA's can't, pensions can be but income received from them is taxable as though not in trust. As Kingstreet suggests legal and independent financial planning advice would be extremely prudent at this time.

LilyJ91

Thank you both very much! That info is very useful and we will indeed seek professional advice.

The Whole of Life plan is indeed in Trust with my Cousin as the sole beneficiary. Despite this being the case, if say the payout was to occur prior to the divorce being finalised, could my Cousin's husband have a claim to the money in divorce proceedings even if the intention of my Aunt and Uncle was for it to be used to pay the IHT bill?

Similarly I don't know if he would have a claim to any pension death benefits even if my Cousin were nominated.

Thanks guys!

Weighty1

LilyJ91 wrote: »

Thank you both very much! That info is very useful and we will indeed seek professional advice.

The Whole of Life plan is indeed in Trust with my Cousin as the sole beneficiary. Despite this being the case, if say the payout was to occur prior to the divorce being finalised, could my Cousin's husband have a claim to the money in divorce proceedings even if the intention of my Aunt and Uncle was for it to be used to pay the IHT bill?

Similarly I don't know if he would have a claim to any pension death benefits even if my Cousin were nominated.

Thanks guys!

It would be dependent on the type of trust used. If it was an absolute trust then this means your cousin is DEFINITELY going to benefit from the proceeds and therefore *could* be accounted for in divorce proceedings.

If it was a flexible or discretionary trust then whilst your cousin may be named as the beneficiary this is dependent on the trustees discretion and so these normally can't be taken account of in divorce proceedings.

sheramber

If it is used to pay IHT there won't be anything for the son in law to claim a share of.

LilyJ91

Thanks very much guys, it is much appreciated Lily x