Estate - life insurance payout and debts

Jo12345

Good evening. I tried to search across the forums, but I still did not come across any advice to help with my situation. I hope someone can advise..

My husband died couple of months ago. We had a joint property, so that automatically transferred to me. I notified the mortgage company and I am paying the mortgage as normal, on my own at the moment. I am the administrator and there is no Will.
I started to look into the Probate, as it would be required to release the only asset my husband has had - a life insurance (there is no IHT due). My husband did not have any other assets, but some unsecured debt mainly in his own name.
I am hoping that the life insurance will pay off some of the mortgage - however - i am unsure how the estate will need to be administered, particularly as there is some debt that I worry about.

At the moment I believe I can do the following
1/ Estimate value of assets, exc property but including life insurance policy. Estimate value of his debts. Apply for a probate online
2/ Once the Life insurance pays out, administer in that order: pay myself for the funeral expenses (receipts kept), pay myself for the rent in his name that I had to pay just after he died, pay mortgage (can I only pay 50% of the balance at the point of his death OR can I pay off as much as I want from the estate ie 100% of the balance?), work out the order of unsecured debt payments and notify creditors (if any money left in the estate).
Is it a problem that a mortgage is now showing in my own name only?

I appreciate if anyone faced similar and could share their experience!

Savvy_Sue

The answer to paying off some of the mortgage is surely that it depends on the terms of your mortgage agreement. Would you be subject to an early repayment charge? 

Plus I don't think you could pay off 100% of the mortgage before paying off the unsecured debts. The debts were his, and if his estate is less than his debts they die with him, but his estate includes half a house. Do the debts exceed the value of half the house? 

badmemory

Were the debts in his sole name?  Are you sure the life insurance is not to be paid direct to you, that is does it actually form part of his estate?

xylophone

You need to check on whether the payout from the insurance company is (or is not) payable to his estate. It may not be - contact the insurer.
 https://www.confused.com/life-insurance/guides/writing-life-insurance-in-trust

If it is payable to the estate,  see https://www.moneyadviceservice.org.uk/en/articles/dealing-with-the-debts-of-someone-who-has-died

The first call on his estate is paying for his funeral.

Flugelhorn

I agree with checking - the life insurance may well be outside the estate and direct to you - in that case it need not be used for the debts and you can use it towards the mortgage - possibly with overpaying depending on the terms of your mortgage 

Keep_pedalling

Needing probate to release a life insurance payment would suggest that the policy had not been written in trust and therefore forms part of his estate. 

Dox

Your recent loss must mean your mind is still in a whirl. Have you checked with the insurer concerned that probate is needed to release the proceeds of the life policy and have they confirmed that it must be paid to the 'personal representative' (i.e. to you in your capacity as administrator of your late husband's estate)?

If the latter, you can use it to pay off reasonable essential funeral expenses (but not things like flowers or a post-funeral reception), but not the rent you paid after your husband died. You simply become another unsecured creditor, along with any other debts, I'm afraid. You certainly can't use it to pay off any of the mortgage.

You say you had a 'joint' property - held as 'joint tenants' (which does indeed mean you automatically 'inherit' his half) or tenants in common?

Jo12345

Dox said:

Your recent loss must mean your mind is still in a whirl. Have you checked with the insurer concerned that probate is needed to release the proceeds of the life policy and have they confirmed that it must be paid to the 'personal representative' (i.e. to you in your capacity as administrator of your late husband's estate)?

If the latter, you can use it to pay off reasonable essential funeral expenses (but not things like flowers or a post-funeral reception), but not the rent you paid after your husband died. You simply become another unsecured creditor, along with any other debts, I'm afraid. You certainly can't use it to pay off any of the mortgage.

You say you had a 'joint' property - held as 'joint tenants' (which does indeed mean you automatically 'inherit' his half) or tenants in common?

it is the latter and we were joint tenants. The insurers require grant of probale, so I am confident is part of the estate

Thank you for all your replies