Morbid Question

[northumbrian69]

Sadly I have attended 4 funerals in the last 3 months, all friends of similar age to me.
My wife and I are almost 2 years into a joint IVA, these recent events have raised the very real question, what happens if I die[?][?]
1. Would my part of the IVA die with me or would my wife become liable
2. Mortgage protection insurance would pay off the house, could my wife be forced to sell the house to satisfy 100% of the joint debt
3. In the event of my death our joint income would reduce considerably, would my wife still be expected to pay the current IVA payments
4. Are lump sum life insurance payments classed as windfalls

These recent events have had a profound effect on me, if the unexpected were to happen I don't have any contingency plans in place.
I did ask the question, what happens if I die? when we were proposing our IVA, I was told it dies with you, unfortunately I don't have anything in writing to substantiate this.

Sorry for the morbid post but these recent events have brought it home to me that although I have adequate life insurance and a company pension with good death in service benefits, I don't understand what would happen to this money in the event of my death.

I would appreciate any advice the forum experts could provide

[David Mond]

Sorry to hear about your friends - yes I also lost not so long ago a very dear friend and colleaque of over 50 years:

I think the position is as follows:

1. Your sole debts die with you subject to any of your equity in your home attributable to you - hence your estate would have a debt to your sole and joint creditors as what was agreed under the IVA.
2. Not forced to sell but might have to re-mortgage to accomodate paying your creditors.
3. Only her portion not yours.
4. Yes

My suggestion is to review the position with your Supervisor and maybe suggest a variation to cover your death and as to what happens, This is only pertinent because there will be equity in your home.

[MelanieGiles]

You could also look at taking out an insurance policy to cover all of your debts in the event of your death. Life insurance cover is still relatively cheap, compared to the cost of having to sell assets to cover unpaid debts.

[David Mond]

Provided you have DI to cover the premiums without affecting your quality of life and your commitments.

[northumbrian69]

I already have a life insurance policy which would comfortably cover the total joint debts, plus my 'death in service' company pension would provide a lump sum of 3 times annual salary (this would pay off the house) plus my wife would receive a regular monthly pension.
If I am understanding the experts answers correctly, if I die my pension and life insurance will be used to pay off 100% of the total joint debt plus supervisors fees, also the house would be paid off and my wife would be left with a small pot of money and a modest pension.
I suppose the good news is she will be debt free and own the house outright.
Would you recommend amending my will or would my solicitor acting as executor be obliged to settle the IVA before paying the balance to my wife??
Sorry for labouring the point but I need to get my facts right

You could also look at taking out an insurance policy to cover all of your debts in the event of your death. Life insurance cover is still relatively cheap, compared to the cost of having to sell assets to cover unpaid debts.

[MelanieGiles]

I would definately look to see if the life insurance policies are assigned to your wife - if they are they will avoid your estate and be paid to your wife and therefore become a windfall in her estate. This may not be such a problem if there would be enough money in each estate to clear all creditors in full.

I would also ask your IP for specific advice on this point, as the experts on this site can only be general given that we do not have detailed knowledge of your case.

[northumbrian69]

Thanks for the advice, I will do as you suggest and contact my IP.
it would appear I'm worth a damn site more dead than alive, what a comforting thought[:)][:)][:)]

[David Mond]

Or assign the policies to your children in Trust - which might save a bit. Proper legal advice should be sought though once you explain all the facts and figures to an expert.