Credit card debt

Hello Mrs Smirf,

Thanks for getting in touch. I’m sorry to hear about your Mum’s diagnosis, sounds like there is a lot going on for you and your family.  

Debts taken out in someone’s sole name won’t be passed on, and no-one else will need to repay them. If someone dies and still owes money in their own name (such as a credit card or loan) the executor of the will, or person organising the estate will need to pay back any debts from the estate before distributing the money left behind. The deceased person’s estate is made up of anything in their sole name such as their home, savings accounts, shares, or jewellery, it can also include a jointly owned property.

If there isn’t enough money left to pay the debts, banks/building societies involved may choose to ‘write off’ the money owed to them. Most of them will do this unless the estate is large, in which case, they may choose to pursue the debt.

This can be a complicated area and you can get further information here;

https://www.stepchange.org/debt-info/bereavement-and-debt.aspx

Dealing with the debts of someone who has died | MoneyHelper

You can also contact The Insolvency Service on 0300 678 0015 (9am to 5pm Monday to Friday). They should be able to advise you on where your dad would stand regarding the property you mentioned. 

Separately, when it comes to an insurance pay out this may be counted as funds in the estate. You would have to check if either the policy is written in trust or if it’s a joint policy. If it’s not a joint policy or a single policy written in trust, then it may form part of your mum’s estate.

It’s possible to have most life insurance policies written in trust. By using one, on death, the proceeds of the policy are paid out quickly to chosen beneficiaries – usually the spouse, partner or children – without the need to wait for the estate to be sorted out (a process that can sometimes take months to complete).

The life assurance provider should be able to advise if it’s already in trust and if not, they should be able to explain which trust is most appropriate and explain how the policy being in trust might affect any future claims. Most insurers will arrange a suitable trust at no extra charge.

There may be other benefits included in the policy, if you would like to explore the insurance in more detail you can give us a call on 0808 808 0000. To reach the Financial Guidance team just select options 1 then 2 then 1 again. Our team are available Monday to Friday 8am – 6pm.

Just to clarify, the Financial Guidance Service can provide information and guidance on all aspects of your personal finances to help you make informed decisions in the following areas;

Pensions and retirement options

Questions about insurance policies

Mortgages and money management

Arranging wills and trusts to protect your family

General financial planning questions

If there is anything further from the above list that you would like to discuss, please reply to this message, or speak to us directly on the same number.

Kind regards.


Chris H
Financial Guide