Question about death and debt

Thanks Stu. We didn't know Dad owed 50k to credit cards!!
Got too much for my brother and I that we had to consult a solicitor.
Fortunately he had life insurance, but it all had to go to pay off the debt.
Mum was left with nothing. These things happen I suppose
Thanks for your kind words

Originally Posted by dawn07

Thanks Stu. We didn't know Dad owed 50k to credit cards!!
Got too much for my brother and I that we had to consult a solicitor.
Fortunately he had life insurance, but it all had to go to pay off the debt.
Mum was left with nothing. These things happen I suppose
Thanks for your kind words

But the point here is that there were assets in the estate, namely the life policy.

[Stu]

Originally Posted by Ed

But the point here is that there were assets in the estate, namely the life policy.

So, I don't want to upset Dawn, but with proper estate planning - say from a solictor - it could have been arranged prior to death that the life assurance went directly to a particular heir, be kept out of the estate and the debts are just w/o?

Originally Posted by Stu

So, I don't want to upset Dawn, but with proper estate planning - say from a solictor - it could have been arranged prior to death that the life assurance went directly to a particular heir, be kept out of the estate and the debts are just w/o?

Er possibly. There are two issues here. First is that the living need to be careful that they are not party to defrauding creditors. However if you don't know about the creditors (as in Dawn's case) then the position is rather different. Second is that if you out assets beyond reach voluntarily (ie for no consideration), then the creditors can force the PRs to reopen the deal, and can apply to the court if necessary to have themselves appointed as PRs and then bring a transfer at undervalue action.

[Stu]

Originally Posted by Ed

Er possibly. There are two issues here. First is that the living need to be careful that they are not party to defrauding creditors. However if you don't know about the creditors (as in Dawn's case) then the position is rather different. Second is that if you out assets beyond reach voluntarily (ie for no consideration), then the creditors can force the PRs to reopen the deal, and can apply to the court if necessary to have themselves appointed as PRs and then bring a transfer at undervalue action.

I was thinking with life assurance that it could go to someone specifically instead of first into your Estate. Thereby avoiding inheritance tax as well as creditors?
Or is that not possible

Originally Posted by Stu

I was thinking with life assurance that it could go to someone specifically instead of first into your Estate. Thereby avoiding inheritance tax as well as creditors?
Or is that not possible

Yes of course it is, it's frequently done. The policy would be written in trust. It's a perfectly acceptable form of estate planning. But if you arrange things purely so as to avoid creditors, the creds mightn't be too pleased.