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Without wanting to sound like a cliche, I've got a question regarding a friend... Actually my mother in law.

My Father in law died recently, leaving around £27K of personal unsecured debt. He died unexpectantly, intestate but with no substantial assets (no house, no savings).

My mother in law is understandably worried - at a time when she's going through great emotional stress she has also lost the household income (my father in law being the only breadwinner) and discovered sizeable debts of which she had no previous knowledge.

Whilst I don't believe she is personally liable for his debts, and there is no house for her to lose the concern is that any money she may receive from either death in service benefit payable by his employer or the proceeds of any lie insurance policies will be lost in paying off these debts, ata atime when she really needs the money to assure her future.

My question is really does the insurance (which was a joint policy naming each other as the sole benficiary on the death of the first) or the death in service qualify as part of the estate and therefore open to recovery by the creditors?

She won't see a solicitor (she is still grieving and doesn't want to face thie issue at present - I am therefore trying to understand the options now so that when she is able to face the issue she will be able to do so from a position of knowledge) and I am not authorised to act on her behalf presently.

Hi barbervi, hopefully someone more expert in this field will be along to advise further, but my understanding of this situation is that your mother in law would indeed be liable for the debts, and would have to repay them from the estate proceeds. Life insurance policies are often used to cover outstanding mortgages (or debts!) in the event of death, so the creditors would expect to be paid. It might be worth having an informal chat with a solicitor or the CAB.

Have done some research.

the spuse it seems is not liable for the deceased partner's debts. However the deceased partner's debts must be paid out of the estate in a set order (starting with mortgages).

If there are insufficient funds within (or no) estate then the debt is written off.

Death in service benefit is normally paid by the employer to a named beneficiary and does not form part of the estate.

Life Insurance/Assurance does normally form part of the estate unless it has been written into trust or if it is a joint policy that pays out to the survivor in the event of the first death and also would not then form part of the estate.

I will need to confirm, however it is my belief that the insurance policy is exactly that type of policy and consequently my father in law had no estate and all debt would need to be written off.

Interesting.

Presumably then, if you had joint debts with your partner, and they died, you would then become liable for the whole of the debt.

I understand you do become wholly liable for joint debt on the death of a partner, fortunately none of the debts are joint in this instance.

given that the life insurance has already paid out despite there not being a will or probate (or even letter of administration) this would strongly suggest that it is a joint policy that does not form part of the estate otherwise the insurance co. would be taking a significant risk paying out when there is legal uncertainty over who should benefit from the proceeds of the estate (not that there are any).