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Zoom67
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3 Posts

Posted - 18 May 2020 :  20:31:11  Show Profile  Reply with Quote
Can anyone give clear advice on this? - Live in SCOTLAND
A friend of mine recently passed away and she and her husband had sepertate trust deeds arranged over 5years to protect their joint property.
Before the end of the trust deed period she passed away and had a few Insurance policies and pensions in her name.
With the death of a partner is the money from pensions and insurance of that partner required to clear off the debt , fees and interest from the trust deed that has not seen its full term?
If so does the monies from poicies go direct to the trustee?

Better to ask !

Kevin Mapstone
Trust Deed Expert



3851 Posts

Posted - 18 May 2020 :  22:50:19  Show Profile  Reply with Quote
Hi zoom67. I'm sorry about your friend.

Any estate that your friend leaves behind, including policies etc, will require to be gathered in by the trustee in order to repay creditors. It isn't really any different from the situation if there wasn't a trust deed in place, where the executor must use any a available funds from the deceased's estate to settle any debts first.
Having said that, if the named beneficiary of the policy or pension is someone else, eg a spouse, then the funds become their's rather than forming part of the estate.

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TDA (Debt Adviser)
Trust Deed Expert



13361 Posts

Posted - 19 May 2020 :  09:14:46  Show Profile  Reply with Quote
Welcome to the forum Zoom67. Sorry to hear about the loss of your friend.

In addition to Kevin's comment, if the named beneficiary of any policy is your friend's husband then he may be required to contribute those funds into his trust deed to help repay his creditors.

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Zoom67
New Member

3 Posts

Posted - 19 May 2020 :  13:00:16  Show Profile  Reply with Quote
quote:
[i]Originally posted by TDA (Debt Adviser)[/i]
[br]Welcome to the forum Zoom67. Sorry to hear about the loss of your friend.

In addition to Kevin's comment, if the named beneficiary of any policy is your friend's husband then he may be required to contribute those funds into his trust deed to help repay his creditors.


Thank you to yourself and Kevin for your kind words and advice.
My understanding from this is detailed below.
Any monies from policies or pensions paid on death are paid into the deceased's estate unless the policy has a named beneficiary. The beneficiary may then be asked to pay more towards their own trust deed resulting from their increased income or estate.
WHAT ABOUT SOLE PLACE OF RESIDENCE??
With the property in joint names and the deceased no longer paying to their outstanding trust deed can the trustee seek to recover the balance plus interest and costs from the spouse by forcing the sale of the property?
Thank You once again.

Better to ask !
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TDA (Debt Adviser)
Trust Deed Expert



13361 Posts

Posted - 19 May 2020 :  13:27:35  Show Profile  Reply with Quote
Hi Zoom67.

We can give some pointers and general information here, but your friend's husband might be well advised to get legal advice so that he can be sure of his position. If he hasn't already, he should also talk to his trustee to get their advice on the current situation.

Regarding the house, the question will be whether her share of the house equity has now formed part of her estate. Alternatively (and perhaps more likely) her share of the house equity may have automatically passed to her husband when she died.

Anything that's in her estate might be used to cover the debts/interest/fees associated with her debts and trust deed.

Anything that's come into the possession of her husband might be used to cover the debts/interest/fees associated with his debts and trust deed.

We don't know enough about the detail here to offer a view on whether there is a risk of a forced sale of a home. This is not common however and would always be a very last resort.

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Kevin Mapstone
Trust Deed Expert



3851 Posts

Posted - 19 May 2020 :  13:29:06  Show Profile  Reply with Quote
There will have been a formal agreement between your friend and the Trustee as to how much was required to be paid in to "buy out" the Trustee's interest in their share of the property, signed by both parties at the start of the Trust Deed. I'm guessing it equates to one extra year's payments, as you have said that the Trust Deed was to run for 5 years rather than the usual 4.

If it isn't possible to keep to this agreement then it the Trustee could potentially look to force the sale of the property. However, the scenario could likely be avoided if the agreed amount could be paid in by another party instead, such as a friend or family member.

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Zoom67
New Member

3 Posts

Posted - 19 May 2020 :  16:28:51  Show Profile  Reply with Quote
Many thanks for your help.

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Paul McDougall
Trust Deed Expert



60 Posts

Posted - 20 May 2020 :  10:15:24  Show Profile  Reply with Quote
Morning Zoom

Sorry to hear about the loss of your friend. The Trustee will want to act sympathetically in this matter.

This is a complex matter

I will try and summarise and to illustrate this, Client A is the deceased and Client B is the surviving partner.

Life Policy and Pension:

Whether the Trustee has an interest in the life policy is dependent on whether a beneficiary was named on the policy and if so, who that beneficiary was.

Basically, the trustee would only have the same rights over assets that Client A would have and interest in or their deceased estate.

If a beneficiary was named on the life policy proceeds, then that creates a trust and the trustee would not have an interest in these proceeds.
I suspect Client B is named as the beneficiary and if so, the trustee would have an interest in these funds for Client Bís Trust Deed to benefit Client Bís creditors.

If Client B or Clientís A estate is not mentioned as a beneficiary and other parties are, then that would not be conveyed to the trustee in either Client A or Bís estate. In this instance, the trustee would not have an interest in the proceeds.

Heritable Property:

This further complicates matters. If the property was jointly owned, then there is a high probability that there is a survivorship clause. This means that if either party dies, the surviving party inherits the property share of the deceased. This is an automatic right.


The surviving partner is however burdened by the debt of the deceased partner but only to the value of the debt of the deceased.

For example, if the property equity were £20k then both parties would be entitled to £10k equity. If a survivor ship clause exists, Client B would inherit the half share of £10k. If the debt level of Client A was £30k, then Client B liability to Client Aís debt would be £10k (capped at the equity)

In summary :

As you can appreciate, the answer to the question is dependent on many answers to the above question. It may be appropriate for your friend to speak to the trustee and then a solicitor to ensure your friend has been independently advised.

I am happy to speak with your friend and guide her in the right direction.



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Edited by - Paul McDougall on 20 May 2020 10:16:41
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