Does a creditor have any rights/access to a Life Insurance once they have Judgment

[Toots111]

Hello, I'm hoping this will reach all those who have previously helped me,

and that I will receive some speedy advice/help.

 

 

If the people who have previously been kind enough to help me are not as knowledgeable on the following questions,

 

 

PLEASE can you direct this post to people who can advise me asap? Thank you.

 

I haven't been around for a while due to illness, (everything got too much for my already fragile brain).

 

My questions here now may be better on a new thread,

but as I can't fathom out how I open a whole new thread/topic/whatever,

I'm hoping that if this is in the wrong place, somebody can move it for me please??

 

I'm on the verge of receiving at least 2 CCJ's, as I lost the ability to fight anymore and so admitted the debts.

 

My first burning question is

 

 

once the CCJ's are awarded,

does a creditor have any rights/access to a life insurance policy that is held in trust please??

 

 

I have read somewhere, (not on here),

that they can use the CCJ's to attach to the trust while I'm alive

and that after I've snuffed it,

they have a certain amount of time to file a claim against my estate?

 

 

The policy in question has no monetary value until I die, no cash-in value etc, it's just a pure level term life insurance policy.

 

 

I took it out purely to try and ensure that my funeral costs can be met

and that my two daughters will have a (small) amount of money from me when I die, as I have nothing else to leave them.

 

How could creditors find out about the policy please and can they do the above ?

 

Secondly, and this might be yet another different thread requirement ,

 

 

the policy mentioned above was put into trust at the time it was taken out, on the advice of the insurance company.

I didn't know the first thing about trusts and probably still don't,

even though I am driving myself half mad again in trying to research the subject!!

 

 

From what I can gather the trust the policy was put into is a 'revocable trust',

and if I'm right, this is the worst kind of trust if you have CCJ's??

 

 

So, I'm trying to find out whether I need to change the trust from revocable to irrevocable please,

(in the hope that an irrevocable trust would give total protection of the policy, both whilst I'm alive and after I've died)??

 

 

If so, how do I go about this, without it costing anything please, as I have no way of affording to seek legal help?

 

I was under the impression at the time of putting the policy into trust that in doing so,

the proceeds of the policy would not form part of my estate,

therefore bypass probate, and most importantly to me at the time,

ensure my daughters would receive the money quickly.

 

 

It's not something I've given any thought to since, but now that I'm in this huge financial mess,

I must understand what could happen/ what I can or should do, if anything.

 

MANY THANKS to anybody who can give me some clear advise on the questions above.

 

 

I'm expecting the CCJ's any day now,

so if there's anything I need to do quickly,

I'm hoping to hear from some of you soon.

Thanks again.

[AndyOrch]

New thread created in General Legal Issues.

 

Regards

 

Andy

[BankFodder]

If the debtor is the trustee then the trust property would not be available to his/her creditors

[Toots111]

If the debtor is the trustee then the trust property would not be available to his/her creditors

Many thanks for your reply BankFodder.

Does that still apply if the debtor plus two family members are the Trustees please?

What about revocable versus irrevocable - any more protection with one than the other please?

[Toots111]

If the debtor is the trustee then the trust property would not be available to his/her creditors

 

Hello again, I was just hoping that you could reply to the message I sent back to you a couple of days ago please BankFodder?

 

I'm very grateful that you took the time to respond, but I'm still a bit up in the air with my understanding of things.

 

Ta very much.

[SADIE DE RUE]

The key difference between a revocable trust and an irrevocable trust is that an irrevocable trust cannot be modified or terminated without permission of the beneficiary, whereas, a revocable trust can be modified or terminated by the settlor.

 

Once the grantor transfers the assets into the irrevocable trust, he or she removes all rights of ownership to the trust and assets, therefore, creditors cannot liquidate assets held in irrevocable trust as they are not legally owned by debtor.

 

You have the power and entitlement to alter the revocable trust, so simply change it to an irrevocable trust with your children named as trustees & beneficiaries of it, this type of trust will fall outside your Estate assets for IHT/probate purposes.

 

Sadie

[SADIE DE RUE]

Contact the insurance company and inform them of your wish to change the trust to an irrevocable trust and request they send you the necessary paperwork/forms without delay in order to make this alteration.

 

Sadie

[SADIE DE RUE]

if insurance company try to talk you out of it or mess you around by delay tactics, simply terminate revocable trust and set up new irrevocable trust for your children elsewhere.

 

sadie

[Toots111]

if insurance company try to talk you out of it or mess you around by delay tactics, simply terminate revocable trust and set up new irrevocable trust for your children elsewhere.

 

sadie

 

Hello Sadie,

 

Thank you SO much for your informative replies.

 

The insurance company will not get involved in the changing of the trust - it was the intermediary company who provided the trust docs, and when I contacted them to ask if they could help with changing the trust to an irrevocable one, they said that they only dealt with the type of trust they supplied the docs for.

 

I cannot afford to pay somebody to arrange a new trust for me and I can't find a free service for this anywhere?

 

Am I correct in thinking that a revocable trust becomes irrevocable upon the death of the settlor please, and if so, does that mean that the proceeds of the policy can only be passed to the beneficiaries

[Toots111]

Oops, I pressed 'post' by mistake, sorry!

 

Following on from the above, if what I've asked there is correct, would that make it safe to leave the policy in the revocable trust please? Could creditors attach a Ccj to the policy/trust before death and gain access to the proceeds that way please? If they can't, I'm thinking it may be okay to leave it as it is? NDL have stated that they've never heard of a creditor doing that, but I'm not confident that this means it can't be done.

 

If I could switch it to an irrevocable trust free of charge, I'd do so immediately, but if that's not an option, I'm trying to understand how safe the existing trust is. If it switches to irrevocable after the death of the ssettlor, presumably the proceeds would not form part of my Estate /have go to probate?

 

Eek, very confused, but desperate to understand whether it's at risk as it stands, if possible Sadie.

 

Many thanks once again,

 

Toots.

[steampowered]

As I understand it, under a revocable trust you are the 'trustee' and can revoke the policy up until your death. Since the policy can be revoked it is in theory available to creditors up until your death (but not afterwards). On the other hand, an irrevocable trust permanently passes ownership to the beneficiaries and hence is not available to creditors.

 

However, as I understand it, a revocable trust is still quite difficult for creditors to access. I am not an expert but imagine they would either need a court order, or would need to make you bankrupt (so that your affairs pass to the Official Receiver) to have the policy revoked. In practice I think it would be difficult or impossible for the creditors to actually find out about the policy.

 

So, you'd be better off with an irrevocable trust and it is worth changing if you can, but in reality probably still OK with the current arrangement.

 

Feel free to have a go at posting a scan of the revocable trust documents (with personal details covered up) if you want input on that ... it might be possible to do an amendment.

[Toots111]

As I understand it, under a revocable trust you are the 'trustee' and can revoke the policy up until your death. Since the policy can be revoked it is in theory available to creditors up until your death (but not afterwards). On the other hand, an irrevocable trust permanently passes ownership to the beneficiaries and hence is not available to creditors.

 

However, as I understand it, a revocable trust is still quite difficult for creditors to access. I am not an expert but imagine they would either need a court order, or would need to make you bankrupt (so that your affairs pass to the Official Receiver) to have the policy revoked. In practice I think it would be difficult or impossible for the creditors to actually find out about the policy.

 

So, you'd be better off with an irrevocable trust and it is worth changing if you can, but in reality probably still OK with the current arrangement.

 

Feel free to have a go at posting a scan of the revocable trust documents (with personal details covered up) if you want input on that ... it might be possible to do an amendment.

 

Thank you very much Steampowered.

 

My creditors will be aware that I have a life insurance policy, as it was shown on the budget sheet I had to submit with the court paperwork/admittance forms. It's just whether they'll want to look into it, and if so, whether they can do anything about it that's worrying me.

 

I can understand now that an irrevocable trust would be far better, but as I can't afford to pay for somebody to help me with that, I fear I'm stuck with this revocable one.

[steampowered]

Thank you very much Steampowered.

 

My creditors will be aware that I have a life insurance policy, as it was shown on the budget sheet I had to submit with the court paperwork/admittance forms. It's just whether they'll want to look into it, and if so, whether they can do anything about it that's worrying me.

 

I can understand now that an irrevocable trust would be far better, but as I can't afford to pay for somebody to help me with that, I fear I'm stuck with this revocable one.

If you want help on trust conversion, do you have access to a scanner or can someone help you to scan a .PDF of your trust documents?

[Toots111]

If you want help on trust conversion, do you have access to a scanner or can someone help you to scan a .PDF of your trust documents?

 

I can try and borrow a scanner Steam powered, but it may take a couple of days.However, if the insurance company and the intermediary are both saying that they can't help me to change the existing trust, I'm not sure what I can possibly do, even if I manage to scan the original trust docs on here?

 

Very grateful for your input

[steampowered]

I can try and borrow a scanner Steam powered, but it may take a couple of days.However, if the insurance company and the intermediary are both saying that they can't help me to change the existing trust, I'm not sure what I can possibly do, even if I manage to scan the original trust docs on here?

 

Very grateful for your input

You can declare an irrevocable trust. This would need to be properly documented and may need to be formally notified to the insurer. You might not need the consent of the insurance company or the broker to do this, but it sounds like you would have to prepare your own documentation.

[Toots111]

Thank you.

 

I have spoken to the insurance company again and they have said that I may be able to cancel the existing trust andoopen a 'bare' trust. Do you know what that is please??

[SADIE DE RUE]

Thank you.

 

I have spoken to the insurance company again and they have said that I may be able to cancel the existing trust andoopen a 'bare' trust. Do you know what that is please??

 

A bare trust is one where the person who benefits from it (referred to as the beneficiary) has an immediate and absolute right to the assets that are transferred to the trust and any income generated by them.

 

The assets transferred into a bare trust are known as “trust property” or the “trust fund”. The trust fund is held in the name of the trustee, who may (but doesn’t have to) be the person who sets the bare trust up. Usually, there are two trustees involved; often the person setting up the trust and one other.

 

A person setting up a bare trust can be certain that the assets they set aside for the beneficiary will go to that person because once the trust has been created, the beneficiary cannot be changed.

 

As the beneficiary has an immediate and absolute right to the trust fund, the trustees have no discretion over the trust fund and must simply follow the (lawful) instructions of the beneficiary in relation to it. The beneficiary can therefore instruct the trustees to transfer the trust fund into his name at any time. Until then however, the trust fund will remain in the name of the trustees.

 

On the death of the beneficiary, the trust fund will form part of his estate and will be distributed according to the terms of his will, or by the laws of intestacy if there is no will.

 

A bare trust is usually evidenced by a trust deed which will set out the parties involved (ie. the person setting the trust up, the trustees and the beneficiary) and what assets are being transferred into it. The trust deed is signed by the person setting the trust up and the trustees, but not by the beneficiary.

 

Sadie

[steampowered]

A bare trust is a type of irrevocable trust. That sounds like it might be a good idea.

[Toots111]

A bare trust is one where the person who benefits from it (referred to as the beneficiary) has an immediate and absolute right to the assets that are transferred to the trust and any income generated by them.

 

The assets transferred into a bare trust are known as “trust property” or the “trust fund”. The trust fund is held in the name of the trustee, who may (but doesn’t have to) be the person who sets the bare trust up. Usually, there are two trustees involved; often the person setting up the trust and one other.

 

A person setting up a bare trust can be certain that the assets they set aside for the beneficiary will go to that person because once the trust has been created, the beneficiary cannot be changed.

 

As the beneficiary has an immediate and absolute right to the trust fund, the trustees have no discretion over the trust fund and must simply follow the (lawful) instructions of the beneficiary in relation to it. The beneficiary can therefore instruct the trustees to transfer the trust fund into his name at any time. Until then however, the trust fund will remain in the name of the trustees.

 

On the death of the beneficiary, the trust fund will form part of his estate and will be distributed according to the terms of his will, or by the laws of intestacy if there is no will.

 

A bare trust is usually evidenced by a trust deed which will set out the parties involved (ie. the person setting the trust up, the trustees and the beneficiary) and what assets are being transferred into it. The trust deed is signed by the person setting the trust up and the trustees, but not by the beneficiary.

 

Sadie

 

Thanks very much Sadie.

 

It's all very confusing!! It sounds as though a bare trust is more like an irrevocable trust.

 

I'm going to try and borrow a scanner asap and see if I can fathom out how I can show the documents from the present trust on here. If I manage to work out how to do that, (I'm cracking on in life and pretty hopeless with computers!!), I'll keep everything crossed that yourself and 'steampowered' can find time have a look at them and confirm to me once and for all whether I really do need to change the type of trust. I've been reading through all the trust documents again a little while ago, and I can find the word 'revocable', as well as the word 'irrevocable', within the documents, so my brain is now in meltdown mode .!

 

Thank you so much once again Sadie, much appreciated,

 

Toots.

[Toots111]

A bare trust is a type of irrevocable trust. That sounds like it might be a good idea.

 

Thanks very much steampowered, much appreciated.

 

I've just sent a reply to Sadie, who is also helping me, in which I've stated that I am going to try my hardest over the coming days to attempt to fathom out how to scan and show my present trust documents on here, in the hope that you can have a look and advise please. I'm more confused than ever after re-reading them a little while ago, as both the words 'revocable' and 'irrevocable' appear all over the place, (which I hadn't noticed previously).

 

Fingers crossed that I can manage to work out how to show the trust docs on here!! I know how to email scanned docs, but I'll probably fail at getting them on here. I'll give it my best shot anyway.

 

Many thanks again,

 

Toots.

[honeybee13]

Hello there.

 

Rather than scanning, can you take digital photos of the documents? I'll find out whether this would be an alternative for you.

 

HB

[Toots111]

Hello there.

 

Rather than scanning, can you take digital photos of the documents? I'll find out whether this would be an alternative for you.

 

HB

 

Hello honeybee, thanks for trying to assist.

 

I must be more of a relic than I think, as I don't know what a digital photo is?! Do you mean a photo taken on a mobile phone?

[honeybee13]

Yes, that might work, or a photo done with the sort of camera that has a memory stick instead of film.

 

Hopefully someone techie will be along to confirm if my idea will work or not.

 

HB

[honeybee13]

Hello there.

 

I've removed a couple of posts. I don't know when you would be ready to email documents, but I can let you have my email address by PM if you like.

 

HB

[Toots111]

Hello there.

 

I've removed a couple of posts. I don't know when you would be ready to email documents, but I can let you have my email address by PM if you like.

 

HB

Oh, thank you HB!

 

Do you mean so that you can then post the docs on here, or do you mean that you will be able to peruse them and offer your own advice please?

 

I hope to be able to borrow a scanner by Monday or Tuesday.