looking for help regarding insurance policy for dead family member

elantan

Hi all, 

Wonder if anyone can help me, I am looking for a bit of help or advice. 

My husband and myself used to help his parents support an old relative, my husbands parents had power of attorney and helped the relative with all aspects of life, we would visit two or three times a week and help his parents with whatever they needed help with in regards to this relative. 

The relative sadly passed approx 2 and a half years ago, they didn't have much at all, they lived on benefits and had very  little in the way of assets, my husband and one of his parents were executors for the will, as there wasn't much to sort out we closed down the accounts and gave the proceeds to where they were meant to go. 

Fast forward to 6 weeks ago and a letter arrived at the inlaws house, in the name of the relative that died, they were looking to find out if the relative had lived at a certain address at any time, I didnt know if they did and neither did the inlaw, I sent them a copy of the death certificate and have received a reply.

There is a substantial amount of money for a person with the same name as the relative and the same date of birth, the insurance company believe it to be our relative they have asked for a letter of probate so that they can release the money to the executors of the will. However, there is also a person whose estate the money would go to if they died, but if they don't die and we have probate then we can surrender the policy and divide the money according to the wishes in the will. We cant seem to think where this policy has came from as the relative didn't have much money at all, very little money in fact.

We have contacted the solicitor that dealt with the drawing up for the will and the power of attorney for the relative, and have been asked many questions. The solicitor seemed to think the other person named on the policy was the partner of the relative but they were not, we do not know who the other person is and cant think of anyone I could be, although the surname is correct. The lawyer seems helpful and we have no problem paying their fees, but we want to try and keep ourselves right and ensure we can afford it. 

We have been told that we need to pay inheritance tax upfront, we do not have that kind've money lying around. There is also interest to pay on the inheritance tax as the person died a while ago.  But they will not release the funds until the tax is paid, at this stage we don't even know if the policy will pay out to the relatives estate or not and it is a huge risk to take. 

But it is also a chance to change lives if it does pay out. 

Can anyone suggest any direction to go? Anything you can suggest I ask the insurance company, I have phoned them several times now and I am reluctant to keep phoning them, If I had a bunch of questions I could ask i think it would help, I don't fully understand probate or anything like that, and inheritance tax is way over my head, who do I contact etc regarding that ?

Any help would be gratefully appreciated

Thanks 

El

sheramber

However, there is also a person whose estate the money would go to if they died, but if they don't die and we have probate then we can surrender the policy and divide the money according to the wishes in the will. 

What does that mean?

What person and if who dies?

elantan

sheramber said:

However, there is also a person whose estate the money would go to if they died, but if they don't die and we have probate then we can surrender the policy and divide the money according to the wishes in the will. 

What does that mean?

What person and if who dies?

There is a second person that is named in some way for life insurance, however, the relative that has passed took the policy out and it has a surrender value, so they could have surrendered this policy when they were alive and got the money that is due, i believe if it is the relative then they had forgotten about it and lost any paper work for it as it is not anything we had heard of until very recently, the other person named on the policy is not entitled to anything unless they die and then it would go to their estate, this was how it was explained to me by the insurance company and i am going to be honest and say i didnt fully understand the situation at all 

Hoenir

elantan said:

 The lawyer seems helpful and we have no problem paying their fees, but we want to try and keep ourselves right and ensure we can afford it. 

I'd suggest that you will better guided by them than random strangers on the internet. Not least as there's a significant amount of money involved. 

elantan

Hoenir said:

elantan said:

 The lawyer seems helpful and we have no problem paying their fees, but we want to try and keep ourselves right and ensure we can afford it. 

I'd suggest that you will better guided by them than random strangers on the internet. Not least as there's a significant amount of money involved. 

absolutely, however, the lawyer has so far spoken about investigators to find if the other person is dead and also their fees have now changed ( due to the tax man they say) 

and they say we need to pay the tax man up front, where as when I looked on the Gov website, it does say the tax money would come from the estate. I don't think they are up to anything but I also think it is a good idea to just run it by others so that I might have an idea about questions etc I should maybe ask

sheramber

so the relative took out insurance on the life of X.

This policy has not been claimed/surrendered. 

Inheritance tax is due to be paid by the end of 6 months after the date of death which will be why the solicitor is saying it need to be paid ‘up front’. 

It may be possible for the insurance company to pay the amount direct.

This link explains your options 
https://www.gov.uk/guidance/applying-for-a-grant-on-credit-for-inheritance-tax

You may get more information about paying the inheritance tax on the cutting tax board.

elantan

sheramber said:

so the relative took out insurance on the life of X.

This policy has not been claimed/surrendered. 

Inheritance tax is due to be paid by the end of 6 months after the date of death which will be why the solicitor is saying it need to be paid ‘up front’. 

It may be possible for the insurance company to pay the amount direct.

This link explains your options 
https://www.gov.uk/guidance/applying-for-a-grant-on-credit-for-inheritance-tax

You may get more information about paying the inheritance tax on the cutting tax board.

thank you that is very helpful