My 27-year-old daughter has been diagnosed with cancer. Nine months ago she, and her partner, took out a mortgage to buy a house as “tenants in common” (50% each).
Along with this, they took out death and serious illness insurance cover. She has now been told the insurance will be paid in full.
I regard this as compensation for her life-changing diagnosis and I’m assuming they will pay off the mortgage with the money.
My question is about what would happen if they split. Would she be able to keep the value of the compensation if they sold the house or would it have to be split equally?
Would it make any difference if they were married ?
JB, London
There’s no easy answer. When life cover is linked to a joint mortgage it’s normally assumed that any proceeds would also be jointly owned (unless a document is signed stating otherwise) and be used towards the whole mortgage, not just the half share of one party.
John Darnton and Alice Mathams, at Bircham Dyson Bell solicitors, reckon that if the payment has to be used to pay off the mortgage – not all lender policies insist on this – the couple should agree to adjust their respective shares in the property to reflect your daughter’s greater financial contribution.
If they were married, and then divorced, the court is required to consider each party’s needs, and the contributions each has made.
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