Debt, Wills & The Importance Of Life Insurance And Assurance


Leaving behind debts after you die can cause serious complications for your loved ones if the proper arrangements are not made.

Nur Al-Zubeydi, Trainee Solicitor, explains what kind of things you can expect to occur if you pass away with debt and how having a Will, Life Insurance and/or Assurance can benefit you.

What Happens When A Person Dies With Debt?

When a person dies, their debts are paid from their estate. A person’s estate is all his belongings and properties including his home, investments and monies. A person’s estate will also be used to cover the funeral bill if prior arrangements have not been made.

If your property is in your sole name or even joint names, and you have debts like a mortgage, for instance, your partner might find themselves forced to sell your home to cover these.

Can Life Insurance Be Of Any Help?

A life insurance plan can help your loved ones by giving them a lump sum payout in the event of your death, provided you pass away during the term of the contract. This lump sum can be used to pay off your debts and thus relinquishing the need to sell the home.

Another way to help loved ones with a pay-out is a life assurance plan. Although this tends to be more expensive, it is a long-term policy where your family is guaranteed a payout at the end, rather than in the eventuality where you pass away during the term of the contract.

A good life insurance or assurance policy can ensure that your loved ones do not find themselves in a distressing situation but it is not the solution to all the issues that may arise. It is crucial to have a robust plan in place to ease the burden off your loved ones.

It also goes without saying how imperative it is to have a legally valid Will, written by a trained solicitor. Decisions that may follow your passing may not be straightforward, and while ensuring that your family receive a pay-out on your death is certainly beneficial, a carefully written Will goes a further step in ensuring there are no problems with the distribution of your assets after you are gone.

What Benefits Can A Will Have Even If I Don’t Have Debt?

Making a will also means your family will avoid intestacy when you die. Intestacy is the process of the government deciding what is to be done with your assets after you die and must follow a very strict set of rules, which ultimately may not reflect how you would have liked things to be handled.

Some other benefits of making a Will are:

  • The ability to choose your executors. Executors are the people who have the responsibility of handling your estate, paying your debts and distributing your assets;
  •  The ability to choose who benefits from your Will and in what proportion;  
  • To appoint guardians for your children and make arrangements for the welfare of your children and dependents; and
  • Get advice on the best way forward in terms of the liability of your estate for Inheritance Tax.

What If My Circumstances Change After Making A Will?

We advise our Clients to review their Wills every 3 years, if their personal circumstances change or if there is a major change in the law. Although you may alter a Will by what is known as a 'codicil', it is strongly advised that you make a new Will altogether, especially if the changes are substantial. The new Will should contain a clause that explains it revokes the previous Will.

Get Your Will Written Today

It's never too early to plan for the inventible. Writing a Will can give you and your family the peace of mind that after you are gone your assets will be properly disposed of.

Our Wills Solicitors have an excellent track record and years of experience. Contact us today, either on our freephone number or by using our online enquiry form.

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