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Inheritance tax and life insurance

Can someone help? I have filled in an IHT form which is below the threshold. There was life insurance which paid out just after mum died. We used the insurance to pay for funeral and other things ie I lived and still do live in the property so we got some things done around the house which mum wanted. There was no will so I am applying for letters of administration. There is an outstanding balance on the mortgage of £32,000 the value of the property is £90,000. After filling in the IHT form I have gone into a huge panic incase I’ve not done the correct thing with the life insurance. I also think I’ve completed the IHT form incorrectly. The process I thought it would take is apply to probate for letters of administration, granted letters of administration, get a mortgage for £33,000. 

Comments

  • xylophone
    xylophone Posts: 45,733 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 8 May 2020 at 12:24PM
    There was life insurance which paid out just after mum died. 

    It is quite possible that the policy was written in trust and was therefore never part of your mother's estate. In such cases, the money is paid direct to the beneficiary(ies). 

    Were you the named beneficiary?

    Your mother was the sole owner of the property? Have you advised the mortgagee?

    https://www.landc.co.uk/insight/2015/01/who-is-responsible-for-a-mortgage-after-death/

    Are you your mother's sole heir?

    https://www.gov.uk/inherits-someone-dies-without-will

  • Dox
    Dox Posts: 3,116 Forumite
    1,000 Posts Third Anniversary Name Dropper
    Easy to panic, but there's really no need, even if you have got things wrong. Honest mistakes can be a pain to sort out, but they aren't anything like deliberate fraud/utter negligence, which are the things which could trip you up.
  • kris80
    kris80 Posts: 68 Forumite
    10 Posts Name Dropper
    Thanks for your help. IHT is now closed as there is no tact to pay so just waiting for probate to grant letter of administration. 
    My intention is to get a mortgage on the property to pay of outstanding balance but with the current situation it’s a little tricker. I am just hoping the mums mortgage will be patient and understanding as this is my home where I’ve lived with mum all my life and my children’s home.
    the life insurance was paid out directly to me so not sure if that makes me the sole beneficiary?
    ye I have advised the mortgage who have froze the account until June but this isn’t very far away? The whole situation has been so stressful we didn’t expect mum to die and how she died was horrific and degrading so it’s been a real trauma.

  • xylophone
    xylophone Posts: 45,733 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Keep in touch with the mortgagee - have you discussed taking out your mortgage with the same mortgagee?
  • kris80
    kris80 Posts: 68 Forumite
    10 Posts Name Dropper
    I have kept in touch with them but I’ve not asked them incase it was declined I thought they might enforce sale quicker.
  • xylophone
    xylophone Posts: 45,733 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I thought they might enforce sale quicker.

    You are intending to remain in the property?

    The mortgagee will know that there cannot be any transfer of ownership until you have Letters of Administration.

    If you are in a position to take out a mortgage loan, there seems little harm in your exploring this with the mortgagee?

  • Keep_pedalling
    Keep_pedalling Posts: 21,432 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    kris80 said:
    I have kept in touch with them but I’ve not asked them incase it was declined I thought they might enforce sale quicker.
    That is unlikely, they cant do anything until you have probate, and forcing a sale would be a last resort for them. Now is the time to approach them, and it might be a good idea to talk to a mortgage broker about other possible lenders as well. If you can get an offer lined up now you will be all set to go once you have probate in place.
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