The Lemon Fool

Hi,

I'm a single male, not married, no dependents, no will in place, parents still together and alive and kicking. My house is mortgaged. My total net worth would definately be below the £325k IHT amount so i presume they wouldn't have to worry about that?

If I were to die tomorrow what would happen to the house? Ideally my parents would want to pay off the outstanding mortgage making it 100% theirs and then sell it.

Also what would happen to my savings / investments which are in a handful of different accounts? Presumably my parents would get it but how would they find out about them given they have no idea what / where my bank accounts are with.

Thanks

Andy46 wrote:Hi,

I'm a single male, not married, no dependents, no will in place, parents still together and alive and kicking. My house is mortgaged. My total net worth would definately be below the £325k IHT amount so i presume they wouldn't have to worry about that?

If I were to die tomorrow what would happen to the house? Ideally my parents would want to pay off the outstanding mortgage making it 100% theirs and then sell it.

Also what would happen to my savings / investments which are in a handful of different accounts? Presumably my parents would get it but how would they find out about them given they have no idea what / where my bank accounts are with.

Thanks

Would they really not be able to find evidence of your accounts? Passbooks, statements, correspondence and so on.

- K

IANAL...

I think whatever else a very simple wil will ensure that there are few hiccoughs in the situation of your death. Leave your house and everything to your parents, job done. (im sure there are nuances about half of the house to each etc but somebody/a solicitor can advise etc)

Other than that i also presume as the house is mortgaged you must have life insurance such that when you die, the insurance pays out and that pays off the outstanding mortgage. AIUI this is a requirement of "every" mortgage. So your parents won;t have to pay the mortgage off, the insurance will do that for them. they just inherit the house to do with as they feel fit.

WRT the bank accounts - surely its as simple as gathering all the bank books and/or details together in one place (loose leaf file/box etc ) and labelling it appropriately. Even telling your mum and dad where the collated box and stuff is.


didds

Unless things have changed again, I doubt life assurance is compulsory these days. Like taking the mortgage provider's home insurance, I'm sure it loosened up a good few years ago.

I would even suggest that life assurance to cover the mortgage is pointless in the situation the OP describes, unless he specifically wants to leave his house to his parents for them to live in, which appears not to be the case here. Its money wasted, IMHO, though not a huge amount in the scheme of things.

I agree about a basic will though; it simplifies things.

Staffordian

With no will, your estate will be shared out according to the rules of intestacy. If you live in England and Wales, have no spouse or civil partner, have no children, grandchildren, etc, and at least one of your parents is alive when you die, that will result in all of your estate going to your surviving parents, split equally if they're both still alive. For other cases, see https://www.gov.uk/inherits-someone-dies-without-will.

If you want to change that, you need to make a will. Even if you don't want to change it, you can make life simpler for those who have to deal with the situation by making a will. For example, by naming an executor or executors in a will, you can resolve the question of who deals with the estate (provided they agree to the appointment when the time comes - executors don't have to accept appointment by the will). Leaving a will dated on a particular date means that the executors it appoints only have to worry about the possibility that there may be a more recent will - they don't have to investigate the possibility that you left a will with solicitors in a town you lived in years (or even decades) before, etc. Leaving a will that makes its bequests to specific people means that they don't have to worry about the possibility that there may be people they don't know about who have a higher-priority claim under the intestacy rules - you might know for certain that you haven't fathered any children, but do they?

As regards knowing what bank accounts, etc, you have, if you make a will you can make life a lot easier for your executors by leaving a letter to them with it, listing the accounts you have as of such-and-such a date - then they only have to look for any you might have opened since. Generally keeping your financial records in order will help as well, and I would personally keep at least minimal records in paper form, to avoid problems with computer passwords, etc. Note that they can be very minimal - e.g. a single sheet of paper, kept up to date and just listing all of your account providers without details of account numbers, etc, will still be a tremendous help to whoever deals with your estate in tracking down all of your assets and liabilities.

Gengulphus

Andy46 wrote:Hi, ... If I were to die tomorrow what would happen ...

More generally, you may also find this "Dying Tidily Log" of assistance:

http://boards.fool.co.uk/hi-i-normally- ... 77253.aspx

The whole thread was saved here on 16 November 2016:

https://web.archive.org/web/20161116130 ... sort=whole

Andy46 wrote:If I were to die tomorrow what would happen to the house? Ideally my parents would want to pay off the outstanding mortgage making it 100% theirs and then sell it.

Generally speaking, there would be no need to split it up into those separate steps. A mortgaged house can be sold without first paying off the mortgage, because the mortgage lender has a 'charge' on the house - which basically means that they have first claim on the sales proceeds, which cannot be handed over to the seller until the mortgage debt has been paid off from them. I.e. the mortgage debt is paid off by the sale, rather than before it.

That of course doesn't work if the house is in negative equity - i.e. if the plausible sales proceeds are less than the outstanding mortgage debt. If so, the mortgage lender's agreement would be needed for the sale and they'll generally expect the estate to pay off the difference from its other assets. (Or if the estate doesn't have enough other assets, they'll need to be convinced that the house is being sold at as high a price as is achievable. Though in that case, the estate is bankrupt, having more liabilities than assets, and there's nothing for the beneficiaries under the will or intestacy - and anyone appointed as executor by the will or thinking of applying for administration of the intestacy would be well-advised to steer well clear and leave the administration of the estate to the mortgage lender...)

Other arrangements might also have to be made if any beneficiary actually wants to end up owning the house.

Gengulphus

staffordian wrote:Unless things have changed again, I doubt life assurance is compulsory these days. Like taking the mortgage provider's home insurance, I'm sure it loosened up a good few years ago.


Staffordian

Well I took out my mortgage in 1994 and have never had to pay for any insurance protection of any sort. They tried to add it in of course but I wouldn't pay it. It looked like a shocking rip-off at the time.

- K

k333 wrote:

staffordian wrote:Unless things have changed again, I doubt life assurance is compulsory these days. Like taking the mortgage provider's home insurance, I'm sure it loosened up a good few years ago.

Well I took out my mortgage in 1994 and have never had to pay for any insurance protection of any sort.

Surely you were required to take out building insurance? So that if the house burned down there would not be a huge loss that could take the residual value (the land) below the amount of the mortgage?

But life insurance was never necessary as far as I recall, although endowment mortgages used to be popular which included life cover.

Lootman wrote:Surely you were required to take out building insurance? So that if the house burned down there would not be a huge loss that could take the residual value (the land) below the amount of the mortgage?

But life insurance was never necessary as far as I recall, although endowment mortgages used to be popular which included life cover.

Yes, the point I was making was that life assurance wasn't necessarily compulsory , even if at one time it might have been, and I allied that to the point that although most lenders insist that buildings insurance is in place, for obvious reasons, they have not forced the borrower to buy their policies for quite some time.

Staffordian

staffordian wrote:

Lootman wrote:Surely you were required to take out building insurance? So that if the house burned down there would not be a huge loss that could take the residual value (the land) below the amount of the mortgage?

But life insurance was never necessary as far as I recall, although endowment mortgages used to be popular which included life cover.

Yes, the point I was making was that life assurance wasn't necessarily compulsory , even if at one time it might have been, and I allied that to the point that although most lenders insist that buildings insurance is in place, for obvious reasons, they have not forced the borrower to buy their policies for quite some time.

Yes, agreed, my comment was to k333, where he said that he "never had to pay for any insurance protection of any sort".

Sorry if that wasn't clear.

Spend £100 and write a will. Do it via a solicitor.

1) no you don't have to have life insurance for a mortgage, nor for any reason other than if you wish to - I have never had any sort of life insurance.
2) yes mortgage companies insist you take buildings insurance to the rebuild value of the property, but they are not allowed to insist or suggest it has to be via them.
3) good luck finding a solicitor to write a will for £100! Last time I phoned round for quotes the lowest I got was £600 for a straightforward will, no special trusts etc (just some funds 'held in trust' for minors), under the IHT threshold - in the end I used a will-writer who charged £250 for mine and OH

But, I agree it is far better to have one to simplify things and help those who end up dealing with it.

Mel

lootman wrote:Yes, agreed, my comment was to k333, where he said that he "never had to pay for any insurance protection of any sort".

In a leasehold property the buildings insurance is covered by the freeholder, well I know of two situations where that's been the case.

kempiejon wrote:

lootman wrote:Yes, agreed, my comment was to k333, where he said that he "never had to pay for any insurance protection of any sort".

In a leasehold property the buildings insurance is covered by the freeholder, well I know of two situations where that's been the case.

I only owned one leasehold home but, as I recall, I still had to have some form of buildings cover. Essentially the freeholder had a policy from "my walls out" and I had a policy from "my walls in". Which policy applied depended on the nature and location of the problem.

It also depended on which flat had responsibility for which area, as prescribed in the lease, So in my case, I had the top flat and was stuck with responsibility for the roof. But the bottom flat was stuck with responsibility for the drains. In other cases, both would be shared by both units, but our lease wasn't written that way.

In any event, it's hard to imagine owning a home and having no insurance whatsoever, although if your mortgage was paid off and you are willing to accept the risk, then maybe so. But think about the potential liability amount of a slate falling off your roof and killing someone.

Lootman wrote:

kempiejon wrote:

lootman wrote:Yes, agreed, my comment was to k333, where he said that he "never had to pay for any insurance protection of any sort".

In a leasehold property the buildings insurance is covered by the freeholder, well I know of two situations where that's been the case.

I only owned one leasehold home but, as I recall, I still had to have some form of buildings cover. Essentially the freeholder had a policy from "my walls out" and I had a policy from "my walls in". Which policy applied depended on the nature and location of the problem.

It also depended on which flat had responsibility for which area, as prescribed in the lease, So in my case, I had the top flat and was stuck with responsibility for the roof. But the bottom flat was stuck with responsibility for the drains. In other cases, both would be shared by both units, but our lease wasn't written that way.

In any event, it's hard to imagine owning a home and having no insurance whatsoever, although if your mortgage was paid off and you are willing to accept the risk, then maybe so. But think about the potential liability amount of a slate falling off your roof and killing someone.

I had a leasehold flat and was specifically told I did not need to take buildings insurance.

Only slight issue was that the leaseholder no longer existed, so I felt I did have to try to find some, only to discover that no insurer would insure me as I was not the leaseholder..... No-one said anything about 'walls in' or 'walls out'.

If a slate falls off the roof what liability do you think you have? Do you mean if someone is injured? If it's a genuine accident/act of god then it's not like you can be held responsible. I guess if you are told there is a fault and you fail to repair and someone is injured than that is negligence....but I doubt your insurer would insure you against acting like an idiot anyway. So, don't act like an idiot. Problem solved.

Mel

melonfool wrote:No-one said anything about 'walls in' or 'walls out'.

It was the fairly simple idea that things like plumbing and electrics that were wholely within my flat had to be covered by insurance that I, the leaseholder held.

I don't recall the freeholder being responsible for much at all. All the expenses that we incurred in that 2-unit building were shared by the two leaseholders. The freeholder basically got his fifty quid a year for not very much at all.

I don't like leasehold arrangements.

melonfool wrote:If a slate falls off the roof what liability do you think you have? Do you mean if someone is injured? If it's a genuine accident/act of god then it's not like you can be held responsible.

I mentioned something falling off my house and actually killing someone. I don't know whether I could successfully be held responsible for that or not, but I notice that my current buildings policy covers me for £2 million in third party liability, so I'd assume there is some risk somewhere.

Lootman wrote:I mentioned something falling off my house and actually killing someone. I don't know whether I could successfully be held responsible for that or not, but I notice that my current buildings policy covers me for £2 million in third party liability, so I'd assume there is some risk somewhere.

A cynic might think that insurers provide such generous and cheap additional cover because there is little chance of them having to pay out on it

melonfool wrote:I had a leasehold flat and was specifically told I did not need to take buildings insurance.

Yup my experience too, well, in fact, I told them insurance would be covered covered by the freeholder, evidence was supplied to and excepted by the mortgage company.

melonfool wrote:I had a leasehold flat and was specifically told I did not need to take buildings insurance.

Leasehold flats should never be insured individually. It will (or should) be provided in every lease of a flat that the building as a whole is insured by the landlord / management company, who then recovers the premium pro rata from each leaseholder, either directly or via the service charge.

This is for the perfectly good reason that damage to a leasehold flat is virtually certain to cause damage to neighbouring flats, and the freeholder / manco can't therefore take the risk that any of the flats are not covered by insurance.

Also, because of the interdependence of flats if they were all individually insured there would be likely to be horrendous disputes between insurers as to which of them was responsible for damage.

Only slight issue was that the leaseholder no longer existed, so I felt I did have to try to find some, only to discover that no insurer would insure me as I was not the leaseholder.....

I don't understand this. I presume by the `leaseholder' you mean the freeholder, i.e. the owner of the land on which the flats were built. Whilst mancos do sometimes disappear it would be extremely unusual for a corporate owner of the freehold to do so, simply because the freehold is usually a valuable asset.