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ThePiltdownMan

Is It Possible To Sell The Rights To A Will?

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Say for example a man just turned 40 has no dependents and some assets. He has about 1/500 chance of dying that year, gradually rising to 1/250 in 10 years when he is 50.

For the course of that year the value of the will to the beneficiary will be about 1/500 th of his net assets after inheritance taxes and other costs. Is there any way to sell the rights (renewable on an annual basis) so as to provide an income?

I know there is a concept of equity release but this is different as there is no claim on this assets if he survives the year.

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There was a traditional French mortgage that I believe worked like this, though I don't think it is really very common these days. I tried googling but without luck , and I don't really know if it was of help so I gave up., but came upon a "reverse mortgage" which may be similar.

http://en.wikipedia.org/wiki/Reverse_mortgage

(I think the french thing was just called a "mortgage". A modern french property loan is called a "hypotheque")

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Someone I know has a trust fund where the beneficiary receives all the assets on death of the person who set the fund up ( i.e. original owner of the assets). They original owner of the assets is claiming the income of the trust fund up until their death. Presumably something like this could be set up.

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Say for example a man just turned 40 has no dependents and some assets. He has about 1/500 chance of dying that year, gradually rising to 1/250 in 10 years when he is 50.

For the course of that year the value of the will to the beneficiary will be about 1/500 th of his net assets after inheritance taxes and other costs. Is there any way to sell the rights (renewable on an annual basis) so as to provide an income?

I know there is a concept of equity release but this is different as there is no claim on this assets if he survives the year.

This is an interesting question (for an actuary). Essentially you want to enjoy your assets until you die but generate a living income from them in the meantime? You want to have your cake and eat it too?

This is a problem facing many ageing societies - and Singapore is looking into fairly radical proposals for oldies to monetise their Govt owned leasehold flats - the problem everyone has is determining the required duration with increasing life expectancy.

What you are proposing is actually similar to a sale and leaseback arrangement, but in this case the sale is for $0 (in the future) and the lease is for an indeterminate period - AND - in lieu of zero cash changing hands on effective transfer of ownership today you receive net cash flows from the investor - the living income you seek AND you continue to enjoy the asset.

If you flip it on its head, you could sell up everything now for cash and then invest the cash in an annuity - from which you need to fund other assets to live in etc. To get an investor interested in your proposal, he would be paying you a lot less than any annuity you could currently get from the invested cash (assuming you can even agree on present value). Unless he knows something you don't about your specific mortality, why would he be interested?

So there is the problem that he would have a vested interest in seeing you off. (Perhaps a product could be pooled to maintain confidentiality and reduce this risk?)

Sorry for the jumbled thoughts, it's not a trivial question at all.

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Since complexity has entered this thread ...

My suggestions were serious:

1. Bookies will bet on anything. The bet in this case is that you die within a year, and it bets your estate against ... whatever odds they'll offer you. Survive the year and they lose, so be very suspicious if they offer too much :ph34r:

2. Insurance thought experiment. Take out conventional life insurance: you pay a premium, they pay out on your death. Then sell the policy on: someone else pays you for the right to that payout on your death. Now cancel the original policy and get your premium back. That's defrauding the person you sold the benefits to, so because you're acting in good faith, you substitute the proceeds of your estate, which are not less than the value of the policy.

A lot of employers include life insurance as a part of a pay package, and won't let you negotiate it away. I wonder if there's a viable business in paying people with no dependants a modest sum to assign to you the value of such payouts. Any lawyers around?

Or is that the very business idea you're thinking about?

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I think there is a market for it. You could be on to something with the life insurance reselling, in that its got a precise value that can be determined and verified without the need for some valuation. I expect for most people the costs of getting their estate valued would outweigh any potential income so it would only have appeal to asset rich people.

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I think there is a market for it. You could be on to something with the life insurance reselling, in that its got a precise value that can be determined and verified without the need for some valuation. I expect for most people the costs of getting their estate valued would outweigh any potential income so it would only have appeal to asset rich people.

You need to slice and dice your Will with lots of other sub-prime Wills to monetise them properly.

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