Welcome to the forum jmorr.

I'm very sorry to hear about your wife's diagnosis.

Your trustee might require you to hand over the funds so that they can ensure enough remains available to clear everything.

It's also possible that the insurer will undertake an insolvency check and forward the funds directly to your trustee.

If the sum of money involved easily covers the debts/interest/costs/fees then the trustee may return some of the surplus to you at an early stage.

Our insurance company hasn't mentioned anything about an insolvency check and has also stated they can only pay into the account of a 'trustee' for which myself and my wife are both listed as the 'trustee's'.

There has been no mention on our policy or to us by our insurance company about the trust deed.

If there is a sufficient amount which there will be more than enough and it comes to us, can we just request a settlement figure from the company who we make our trust deed payments to and then transfer them the amount?

You'll need to contact your trustee and obtain their advice on this if the money comes directly to you. It will be their decision what then happens.

Insolvency checks tend to be a final stage when financial institutions are making large payments to people. We've seen this quite a bit with PPI where people have been told large sums will be going their way, then at the final stage it is sent to the trustee instead.

Thankyou so much for your reply.

Hi jmorr,

Sorry to hear about your wife’s diagnosis.

A Trustee will be nervous about allowing a client to retain such as large sum of money in case it is spent or disappears before being paid to the Trust Deed. I’m not suggesting this will happen in your case but it has happened in the past in cases.

Normal procedure would be for the Trustee to receive the funds directly from the insurer and for a settlement figure to be calculated to clear off the client’s Trust Deed and then any surplus funds would be returned to the client.

I know that the insurer hasn’t advised they will carry out an insolvency check but it’s more than likely that they will. As TDA has advised normally this is done at the final stages.

The best course of action would be to contact the Trustee and advise them of the situation and they can work with you to find a solution that works for all parties involved.

From a Trustees perspective it would make me nervous if a client hadn’t disclosed a life insurance policy and then failed to disclose a change in circumstances and a possible 5 or 6 figure insurance pay out.

I’m positive there will be a solution that works for everyone and I wish your wife the best of luck with treatment.

I totally understand how this can make those handling our Trust Deed nervous. I think for myself we have struggled along for so long that this would be a silver lining at the end of a long dark tunnel for us and our family. It makes me nervous that they would have possession of a much larger sum of money than what we will ever owe them.

My concern is on reading other posts is the delays and times it takes for these companies to release any ‘excess’ funds which can take months and months. This is a horrible and worrying thought.

I suppose my the next questions I have are:

Has anyone on the forum been in this situation at all?

If so which insurer were they with?

Also, if this has happened how long did it take to release the funds?

Also, did they have to continue making monthly payments even though the trustee was holding the lump sum?

Anyone who may be reading this and have experienced this I would like to hear your thoughts and experiences.

Hi jmorr.

Hopefully someone with personal experience will step forwards and share their experience with you.

If the sum of money is very clearly much more than will be needed you could make a good argument for at least some of it to be returned to you. This argument would be stronger if you could identify reasons why it is needed. In these circumstances I doubt you'd be asked to continue making monthly payments.

Certainly we have had similar situations in the past where we have authorised the release of a significant sum straightaway and then released any remaining funds once all loose ends have been tied up.

If the Trustee is holding more funds than will be required for full settlement then there is no reason they should insist on monthly income contributions continuing while they sort out closing the Trust Deed down.