my father-in-law recently passed away

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paul jason smith
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by paul jason smith » Mon Jan 25, 2010 8:39 am
my father-in-law recently passed away,he and his wife had an iva.the iva company are saying that they are having the life insurance money,is this right can they do this?

 

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newbeginings
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by newbeginings » Mon Jan 25, 2010 8:58 am
Hi sorry to hear about your loss it must be a difficult time for you. Regarding the life insurance it very much depends on how the plan is held. The misconception is that debts die with a person and this is not true they merely fall to the persons estate. It is only when there is no value in the estate that the debt can be said to have died. I work for a life company and i would suggest that you speak with a financial adviser to see in what basis the plan was taken out as this will determine who owns the plan. For example if he was the policy holder and life assured it will fall in his estate if however he is the life assured but someone else proposed the plan like a partner then the money will not fall into his estate. Hope this helps.

 

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Shining
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by Shining » Mon Jan 25, 2010 9:31 am
Hi Paul and welcome to the forum, firstly my condolences on the loss of your Father in Law, excellent advice above and hope that helps you. Any further queries/advice/support needed, we're always here and there are professional posters too who certainly know their stuff. All the best.

 

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paul jason smith
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by paul jason smith » Mon Jan 25, 2010 9:39 am
not really understanding the last bit,he was the policy holder and took the policy out himself

 

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newbeginings
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by newbeginings » Mon Jan 25, 2010 11:26 am
Hi to use an example. If you took out life insurance on my life and I died you own the plan and the proceeds and the money belongs to you and is in no way in my estate or claimable by anyone I owe money to. If I took out insurance on my own life the payout is made to my estate and as such would be available for distribution to cover debts and then the residual to beneficiaries if the will or if there is no will as per intestacy rules. It sounds like the policy has been set up as in the second example. A couple of things to check firstly is anyone else in the plan as a life assured or policy holder and secondly do you know if there are any trusts in place?

 

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Michael Peoples
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by Michael Peoples » Mon Jan 25, 2010 11:38 am
The fact that your mother in law also had an IVA means she has effectively received a windfall. She could try and propose a variation whereby creditors accept a lump sum as full and final and leave her enough to reduce her mortgage to an amount she can afford to maintain. She should arrange to have a long talk with her IP about the various options and hopefully she can get something resolved.

 

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paul jason smith
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by paul jason smith » Mon Jan 25, 2010 11:46 am
i dont think anybody else is on the policy and no trusts

 

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newbeginings
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by newbeginings » Mon Jan 25, 2010 2:02 pm
Michael this might not be the case. The money falls firstly to the estate and creditors will be able to claim 100p dividend, the surviving spouse will only have a windfall if firstly there is a balance left in the estate and ten only if the will or intestacy rules place the benefits to the spouse. His will might leave everything to the kids for example.

 

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Michael Peoples
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by Michael Peoples » Mon Jan 25, 2010 2:07 pm
I take your point Paul but if the money clears the mortgage which is normally the case, surely the spouse will have received a windfall. There have been cases here and we have had to take legal advice on things like joint tenancies and tenants in common so possibly the client should consider independent legal advice before she hands over the funds.

 

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newbeginings
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by newbeginings » Mon Jan 25, 2010 2:11 pm
Agree completely he would need to check out all aspects of the policy, will, tenancy basis etc. a meeting with a solicitor would be money well spent.

 

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paul jason smith
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by paul jason smith » Mon Jan 25, 2010 3:20 pm
newbeginings wrote:


Agree completely he would need to check out all aspects of the policy, will, tenancy basis etc. a meeting with a solicitor would be money well spent.
she doesn't have a morgage and is now living with us, so we can help care for her because she has parkisons disease.

 

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paul jason smith
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by paul jason smith » Mon Jan 25, 2010 4:03 pm
as i said earlier my mother in law did not have a morgage and is now living with us because she has parkinsons and we help care for her,the iva was only set up a short time ago whilst her late husband was also seriously ill. it just seems like they have been taken advantage of

 

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MelanieGiles
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by MelanieGiles » Mon Jan 25, 2010 5:44 pm
Brilliant advice from newbegginings - and great to have this sort of expertise on the site.

 

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newbeginings
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by newbeginings » Mon Jan 25, 2010 10:20 pm
Strictly speaking the money would be classed as a windfall. However we often forget the 'individual' part of IVA, given the situation your mother in law faces it may be possible to negotiate with creditors on the basis of the care needs etc.. Please ask to speak direct to the IP direct and see if there are
options for example a variation meeting could be called and remember they can only say no!

 

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newbeginings
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by newbeginings » Mon Jan 25, 2010 10:25 pm
Melanie thanks for your comments. You secured my IVA in May and things are going well, for me this is about giving something back and helping others, I have been busy at work for past few months hence lack of posts for a while.
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