When someone dies, it is naturally up to someone else to take charge of that person’s assets and financial affairs but given the number of different options that we have available to us, it can be confusing as to who sorts out what and why. Here are some tips to try and make the process a little easier:
Is there a will or not?
If there is a will then the named person, the “executor” carries out the deceased’s wishes and if there is no will then the deceased’s next of kin takes responsibility and is known as the ‘administrator’. You may need to apply for a grant of probate to prove your status as either executor or administrator. It is common for Institutions such as banks to only accept instructions from the executor or administrator of the will. If inheritance tax is due, then most large banks will directly pay HMRC from the deceased’s bank account. You have 6 months to pay the full balance but you must make a contribution towards it before your grant can be issued. Once you have successfully applied to deal with the estate, you will have ‘obtained probate’ (the term for when someone successfully applies to deal with the estate)
Once you have obtained probate, as the executor or administrator, it is your responsibility to recover any debts, sort out official affairs and distribute any assets. The process can be a tedious one however, it is imperative that you remain organised and focused throughout as this will save you a lot of heartache further on down the road. Whilst it will only be yourself that will have access to confidential financial information in relation to the deceased, the amount of administration and paperwork can become quite overwhelming, depending on the deceased’s affairs and so if you can delegate some tasks out to family and friends, that should take the pressure off you at this difficult time. In order to fulfil your responsibilities, get back any money owed and ensure no more charges are taken, you will need to contact all utility companies, government bodies and financial corporations that the deceased liaised with. If there is a second debit or credit card on a joint account this will automatically be frozen once the bank learns of the death. Ask the bank for the account name to be changed solely to the next of kin’s name. To ensue you don’t miss anything, go through all documents, paperwork or internet bookmarks to check for any financial details you may need.
Paying Debts & Managing Liabilities
Remember that debts and tax need to be paid before any money, possessions and property can go to inheritors. Naturally, this is only going to apply if the deceased had money left over and should cover hire purchase agreements, store cards, credit cards, loans, mortgages and any other commercial debt. It is important to note that the deceased’s family is not liable for any debt, their estate is. If the money left behind doesn’t cover the total net debt amount then the first priority is to pay off secured debts such as mortgages while the second priority should be funeral costs and lastly any other debts such as taxes.
Please note that this is a simplified summary of financial regulations and usual procedures. Kindly be aware that the law is complex and further guidance should be sought from a solicitor or Citizens Advice on the specific rules and regulations where there are not sufficient funds available to pay off debts owed.