Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • The Real Matt Dunn
    • By The Real Matt Dunn 8th Aug 18, 9:44 AM
    • 6Posts
    • 0Thanks
    The Real Matt Dunn
    Life insurance when insolvent and intestate
    • #1
    • 8th Aug 18, 9:44 AM
    Life insurance when insolvent and intestate 8th Aug 18 at 9:44 AM
    About two months ago, my father in law died. He left behind no will, and the estate is very much insolvent.

    Wisely and understandably, my wife and sister-in-law have chosen not to apply for Letters of Administration due to the financial circumstances of the estate, and it is extremely unlikely that anyone else will be willing to take this on. However, from a investigation into his affairs, a life insurance policy was found, which after contacting to inform of the situation, promptly paid out directly into to my wife's bank account.

    My question is this: given that my wife and sister-in-law are merely beneficiaries of the life insurance policy, and do not hold Letters of Administration, would the proceeds of this policy be deemed part of the estate, and hence required to pay off a proportion of the outstanding debts? If this is likely to be the case, and nobody is willing to take on the burden of administering the estate, how would this realistically unravel itself now that the money has been paid out?
Page 1
    • Dox
    • By Dox 8th Aug 18, 11:36 AM
    • 856 Posts
    • 645 Thanks
    Dox
    • #2
    • 8th Aug 18, 11:36 AM
    • #2
    • 8th Aug 18, 11:36 AM
    Depends on the policy - but it may be a moot point regardless.

    If nobody is prepared to take on the administration of the estate (any creditor could do so, but why would they?), and the insurer has helpfully paid out to your wife's bank account, you need do nothing.
    • Malthusian
    • By Malthusian 8th Aug 18, 1:00 PM
    • 4,483 Posts
    • 7,140 Thanks
    Malthusian
    • #3
    • 8th Aug 18, 1:00 PM
    • #3
    • 8th Aug 18, 1:00 PM
    Was the policy written in trust? If so then it is not part of FIL's estate.

    Was your wife - his daughter - a joint policy holder? (Unusual but theoretically possible.) If so the policy now belongs to her and is not part of his estate.

    If the policy was not written in trust and FIL was the sole policy holder, then the money belongs to his estate and needs to be distributed accordingly - with the creditors having first claim.

    If you haven't yet established whether it's part of the estate or not and your wife is (wisely) trying to walk away from the insolvent estate, why on earth did she ask the insurer to pay it out to her? It is not as if they did so without asking her because she must have given them her bank details.

    Depends on the policy - but it may be a moot point regardless.
    It is hardly a moot point. If the insurer has screwed up and the proceeds actually belonged to the estate, there is every chance that the creditors will want the money, unless the amount of the life insurance was trivial.
    Last edited by Malthusian; 08-08-2018 at 1:02 PM.
    • Dox
    • By Dox 8th Aug 18, 1:37 PM
    • 856 Posts
    • 645 Thanks
    Dox
    • #4
    • 8th Aug 18, 1:37 PM
    • #4
    • 8th Aug 18, 1:37 PM

    It is hardly a moot point. If the insurer has screwed up and the proceeds actually belonged to the estate, there is every chance that the creditors will want the money, unless the amount of the life insurance was trivial.
    Originally posted by Malthusian
    But if nobody comes forward to administer the estate, the creditors won't be able to claim anything until someone does decide to take on the task. That isn't likely to happen, so it's a moot point!
    • Brynsam
    • By Brynsam 8th Aug 18, 3:54 PM
    • 1,439 Posts
    • 1,032 Thanks
    Brynsam
    • #5
    • 8th Aug 18, 3:54 PM
    • #5
    • 8th Aug 18, 3:54 PM

    If the policy was not written in trust and FIL was the sole policy holder, then the money belongs to his estate and needs to be distributed accordingly - with the creditors having first claim.
    Originally posted by Malthusian
    The creditors' claims are against the estate - and if nobody comes forward to wind it up, they will never be able to access the proceeds (always assuming the money does indeed belong to the estate) because there will be nobody to authorise payment to them.
    • Malthusian
    • By Malthusian 10th Aug 18, 9:48 AM
    • 4,483 Posts
    • 7,140 Thanks
    Malthusian
    • #6
    • 10th Aug 18, 9:48 AM
    • #6
    • 10th Aug 18, 9:48 AM
    But if nobody comes forward to administer the estate, the creditors won't be able to claim anything until someone does decide to take on the task. That isn't likely to happen, so it's a moot point!
    Originally posted by Dox
    How do you know it's unlikely? We don't know how much the debts are or how much the life insurance is. If both are significant - life insurance proceeds are often hundreds of thousands of pounds - then one or more of the creditors may decide it is worth petitioning for an insolvency practitioner to administer the estate.

    If, in the event that the proceeds actually belonged to the estate (which we don't currently know until the OP confirms who owned the policy and whether it was in trust), the advice on offer here is to "keep your mouth shut and you might get away with it", then I have nothing to say on that front.
    • Keep pedalling
    • By Keep pedalling 10th Aug 18, 12:48 PM
    • 5,306 Posts
    • 5,930 Thanks
    Keep pedalling
    • #7
    • 10th Aug 18, 12:48 PM
    • #7
    • 10th Aug 18, 12:48 PM
    How do you know it's unlikely? We don't know how much the debts are or how much the life insurance is. If both are significant - life insurance proceeds are often hundreds of thousands of pounds - then one or more of the creditors may decide it is worth petitioning for an insolvency practitioner to administer the estate.

    If, in the event that the proceeds actually belonged to the estate (which we don't currently know until the OP confirms who owned the policy and whether it was in trust), the advice on offer here is to "keep your mouth shut and you might get away with it", then I have nothing to say on that front.
    Originally posted by Malthusian
    If the insurance payment belongs to the estate then hanging on to the money and keeping quiet about it, would be theft. If the OP want to sleep at night they need to ignore such advice. Financial institution do share information so it would be a huge risk to take.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

166Posts Today

1,532Users online

Martin's Twitter
  • Ta ta... for now. This August, as I try and do every few yrs, I'm lucky enough to be taking a sabbatical. No work,? https://t.co/Xx4R3eLhFG

  • RT @lethalbrignull: @MartinSLewis I've been sitting here for a good while trying to decide my answer to this, feeling grateful for living i?

  • Early days but currently it's exactly 50 50 in liberality v democracy, with younger people more liberal, older more? https://t.co/YwJr4izuIj

  • Follow Martin