My feed
Premium

Please
or
to access all these features

Mumsnet has not checked the qualifications of anyone posting here. If you have any legal concerns we suggest you consult a solicitor.

Legal matters

Loan Agreement question - can anybody advise me please?

3 replies

Tranquilidade · 17/01/2012 21:54

I am helping a friend by loaning him some money. He is struggling with large debts but cannot take any action to resolve the situation properly until his divorce financial settlement is sorted. His solicitor has advised signing a loan agreement to make it clear that this is a short term loan to tide him over and not a gift that becomes part of whatever is being split IYSWIM.

A kind MNetter has shared a loan agreement she has used (checked over by another solicitor MNetter) but I have a question and hope somebody can advise.

I know he will repay the money under normal circumstances but my only concern is in the event of his death (obviously unlikely but still possible). If there are no assets at all would debts be paid out of insurance/death in service payout or would all that go to the named beneficiaries and the debts just have to be written off. If there are no assets to secure the loan against is there a clause needed in the loan agreement to cover this and if so, what? Or, conversely, is there no way around it and the money just lost if the worst happened.

Thanks in advance

OP posts:
Report
Seabright · 18/01/2012 20:05

If there are no assets at all, you wouldn't get repaid - it would be an insolvent estate.

However, if ther was an insurance payout, death in service benefit these would be assets of the estate (unless they were "written in trust" to keep them outside the estate) and you'd be paid from that.

Report
piebaldpony · 18/01/2012 20:58

Seabright is correct if there are no assets you won't get paid. However, think it very unlikely you would be paid from any death in service benefits as the way these are set up they are paid direct to beneficiaries and only paid to the deceased's estate as a last resort/if there are no beneficiaries to whom they can be paid.

Report
Tranquilidade · 19/01/2012 00:47

Thanks for the replies. I think from my extensive googling (although I'm aware that combined with my lack of legal knowledge it may not be 100% accurate) it seems that if insurance or death in service benefit is for named beneficiaries then it is outside the estate so it looks like I'll just have to take a chance.

OP posts:
Report
Please create an account

To comment on this thread you need to create a Mumsnet account.