Outstanding debt upon death

[Haven'taclue]

Anyone know how debts are prioritised when someone dies?

My husband I and separated over two years ago, when he left to live with someone else. We are still legally married and the house where we (me and the kids) live is still in joint names with a joint mortgage. He pays sufficient maintenance each month to cover the mortgage.
The woman he lives with now owns her own home outright so he has not entered into any financial arrangements with her.
He's now got a bad form of cancer, and the future doesn't look bright. Because he had an existing health condition (not linked in any way to this cancer), he couldn't get life insurance, so, should he die, I would stand to get around �50k 'death in service' benefit. While he's been away, he's run up �20k in credit card bills. Does anyone know whether I would have to clear these before paying anything off his share of the mortgage, or, if his girfriend would have any claim on this money? I will seek legal advice eventually, but it's all a bit of a shock at the moment and I just want an idea of whether I'll have to sell the house or not. Thanks.

[dzug]

You need to seek expert advice (try the Citizens Advice Bureau, but very roughly:

things like the funeral bill, probate fees, some unpaid taxes, employees' wages, take priority

the mortgage also takes priority

the credit card is last in line along with other unsecured debts

Unless he makes a will in her favour, the girl friend has no rights at all. Even if he does make a will in her favour, the debts have to be paid before she gets anything.

I am slightly worried as to whether the death in service benefit belongs to you, directly, as his wife, or forms part of his estate and would go to whoever he willed it to or was eligible under the intestacy rules. You need to check this out.

[Gmcd01]

The Government comes first and they take anything they're owed...of course ;-(

[themas]

Normally a death in service benefit is arranged to be outside the estate of the deceased and payable to whoever the deceased has nominated. You need to check (if you don't already know) that he has nominated you, and also check that the employer's policy does pay this out outside the estate. If that is the case then it is yours to do with as you wish and his debts will have to be paid out of whatever else he leaves.

[dzug]

The Government comes first and they take anything they're owed...of course ;-(

Nice wisecrack gmcd01 - but not true. Depends on what tax it is that is unpaid. Most they are in the same boat as any other creditor.

[12bore]

The priority of creditors [people who are owed money] is set out in the Insolvency Act and remains the same whether the debtor is alive or not; a deceased's estate can be administered in bankruptcy.
The best place to get advise is the Official Receivers' office which can be found in your local telephone directory. They are very helpful and provide literature on different aspects of insolvency.