In my divorce settlement, the FMH is being signed over to me together with the endowment policy. The endowment is not worth much - around £25,000. My legal fees are just under this amount. Will I be forced to sell this to repay my legal fees or can I repay it monthly or have a charge on my property and repay it later?
The LSC cannot force you to sell your assets to pay the Statutory Charge.
It is possible to defer the Statutory Charge against your property by allowing the LSC to register a legal charge. However, the final court order must specify this by stating that the property has been recovered or preserved for use by the assisted person (and dependants if appropriate).
I believe that you are expected to pay a minimum amount per month (around £25) towards repayment of the Charge but you can make payments when you like. It is wise to make payment as soon as possibly as the Charge currently accrues simple interest at 8% per annum. Any payments you make pay off the interest first before reducing the principal sum.
Found out today that the LSC can force me to sell my endowment to pay off my legal costs. I am not against repaying the fees, it''s just that I really needed the money to get some much needed repair work done on the house and I won''t be able to do that now.
My impression was that the LSC cannot force you to sell policies but they can apply value of the policies to the calculation of the Statutory Charge.
If the policies are sold as part of a court order - where the proceeds are usually shared between the parties - the Statutory Charge acts as a first charge on the cash therefore you have to use this to pay towards the Statutory Charge.
If this is not the case, who has told you that you must sell the policy?