Probate and Life Insurance

garrabane

Hi,

Father has just died and I am trying to sort out his affairs - this is reasonably straightforward as he was very organised.

However we are trying to work out what to do with a whole life insurance policy which was taken out on his life.

The policy was taken out on him by my mother (who died 5 years previously) for a moderate amount - the last payments to it were made at some point in the 1990s

Received a letter today from the insurers saying that the amount forms part of my mothers estate.

They have requested details of my mothers executors (which was my father) - my sister and I are my fathers executors. 

All money and assets belonging to my mother passed to my father upon her death in 2016.

What I don't understand is whether this life insurance amount forms part of my fathers estate  - and if it should be listed on the IHT410 as he was her executor and it now forms part of his estate? 

Or does it just pass to the next of Kin (my sister and I) and doesn't need to go on the IHT forms?

You'd think this was a reasonably common scenario but I couldn't find anything via Google - maybe I wasn't using the correct terms - or maybe it's obvious to everyone expect me?

Thanks for any help!

Mojisola

I had this problem - the insurance company insisted that they would only pay out to Mum's estate but we didn't need probate for Mum because everything was jointly owned/inherited by Dad so didn't have any records to show them.

Our solicitor managed to get them to pay out eventually but it caused months of delay.

Keep_pedalling

As the executors of your father’s estate then you now have the authority to handle any outstanding issues with her estate so you should not have too much problem with getting them to deal with you.

I am assuming that your mother was the sole beneficiary and that no contingent beneficiaries were named on the policy. This means the insurance company will pay to your father’s estate once you have probate, and you will need to declare it on the IHT forms. 

Had you and your sister been named as contingency beneficiaries it would have been paid to you and not formed part of his estate.

garrabane

Thanks both for your comments. My mother was named as the sole beneficiary so I assume everything will go to my father's estate, and I therefore need to declare it on the IHT410. Hopefully that will be enough for the probate office and the prudential will play along nicely (although I'm not hopeful!)

There is an amount (just over £1000) declared on the original documents. I assume this has not gone up with inflation as nothing is mentioned in the documentation - so I will put this down on the forms, the prudential aren't being very quick in their responses. 

Thanks again

Keep_pedalling

It is perfectly acceptable to submit the forms with estimated values. You only need to update HMRC if the actual amount changes the amount of IHT that has to be paid.