We are often very touched by the level of trust that you, our clients, place in us. We manage your money; we work by your side on fashioning a roadmap to your financial freedom and do everything we can to help you stick to it. We are there to support you and give you advice when it comes to the fun and rewarding things in life – purchasing a second home, preparing for retirement or gifting money to your children. But after two decades, we have found that clients also turn to us in times of strife or upheaval. Bereavement is one such upheaval.
Many of our clients find that they have been appointed executor of their deceased spouse's estate. And at a time when they are the least emotionally equipped to deal with all of that that entails, they are required to navigate a path through a complicated, jargon-ridden process.
There are plenty of opportunities to slip up along the way. So, we thought we would put together a brief overview of the things that you need to look at when somebody close to you dies.
Register the death
The very first thing you have to do is register the death with your local register office, and you should do so within five days. You will need either a medical certificate from a GP or permission from the coroner.
You will then need to inform key bodies and organisations – including government ones.
Tell Us Once is a useful service for reporting a death to most government organisations – all in one go. You will need the reference number that the registrar gave you, together with the date of birth of the deceased, their passport and details of any benefits, tax credits or pensions they were getting.
Once you have registered it, you will receive the death certificate. People often find that numerous death certificates are requested by various organisations, so it is a good idea to get as many copies as you need. Copies cost £11 each.
You will also be given a certificate for burial or cremation.
Locate the will
Determine whether the will of the person who has died is indeed their very last will.
Sometimes it is a good idea to check for the will with law firms or banks where the deceased held accounts. You will most likely need to present the death certificate (together with proof of your right to discuss the will).
If you are unable to find the will, or if you think that a newer version might exist, you can contact the National Will Register or the Law Society. They will be able to conduct searches for you. Insert a link...
Arrange the funeral
Only once the death has been registered can you arrange the funeral. As the executor, arranging the funeral will be your responsibility. A key thing to remember – particularly at a time when emotions are inevitably running high – is that funeral costs can be paid for via the undertakers using money from the deceased's estate. This includes everything from flowers and catering… to the service itself.
You will also need to inform any places of work, banks, utility companies, mortgage lenders and private pension providers, as well as any other relevant organisations.
Get it valued
The next step is to determine the worth of the deceased's assets so that any inheritance tax can be paid. Finances for the previous seven years need to be taken into consideration. HMRC allows payment of inheritance tax to be staggered over up to ten years.
Get a surveyor or an estate agent to value the property.
Bank accounts and pensions
You will need to find out exactly how much money the deceased had in their bank accounts when they died. You should also include any income that they have earned, but not yet received.
We can help you determine the value of their investments or shareholdings on the date that they died, and advise you in working out the value of any business interests or other income.
Some of the deceased's possessions will no doubt be distributed among family members. Items such as jewellery may need to be valued by a professional. Cars, on the other hand, will not need professional valuations: details of their worth should be publicly available.
Settle inheritance tax due
Banks, building societies and National Savings & Investments from the deceased person’s accounts can be used to pay some or all of the inheritance tax. The UK government refers to this as the Direct Payment Scheme.
As the executor, you are personally responsible for paying inheritance tax, so you may wish to enlist the services of a specialist to help you prepare the accounts. Needless to say, any legal costs you incur can be deducted from the estate if required.
You have six months from the end of the month during which the deceased died in order to pay inheritance tax. Interest will be charged on any tax that remains unpaid after this period. For properties, inheritance tax may be paid over ten years (plus interest).
Do you need a grant of probate?
Applying for probate is the process whereby you obtain the legal right to deal with somebody's property, money and possessions when they die.
If the deceased's estate includes property, then you usually require probate. If they have not left a will (or if you cannot locate it), you can apply for letters of administration and follow the same steps as applying for probate.
You might not need probate if the deceased had only joint land, property, shares or money (these will automatically pass to the surviving joint-owners), or if they only had savings or premium bonds.
Apply for the grant of probate
If you are the executor, then you can apply for probate yourself. Alternatively, you can use a solicitor or appoint somebody who is licensed to provide probate services.
If inheritance tax is due, then at least some of it must be paid before you can be granted probate.
As a general rule, you will receive the grant of probate within four weeks of your application.
Apply for probate online
You can apply for probate online, provided you have the original will and death certificate from the coroner and have already reported the estate's value for inheritance tax purposes to HMRC.
Once you have submitted your application online, you will still be required to send in the original will by post. No additional copies of the will are required.
Apply for probate by post
If you are applying for probate by post, use form PA1P if the deceased had a will, or Form PA1A if the deceased did not leave a will. Once you have completed them, send them in alongside the death certificate and the original will.
Deceased estates notice
As executor, you are responsible for handling any claims that might be made against the deceased's estate. Sometimes, executors place deceased estates notices in the local newspaper – essentially advertisements containing details of a deceased person and the executor. The aim is to locate any creditors who might be owed money by the estate and encourage them to come forward.
Doing this demonstrates that attempts have been made to locate any creditors before an estate is distributed to its beneficiaries. This way, the executor will not be held personally responsible for any money owed.
If you do not place a notice and a creditor comes forward once the estate has been distributed, you may have to pay the creditor yourself.
To place a deceased estates notice, you will need either the grant of probate, the letter of administration or the death certificate. Once you have placed the notice, creditors will have two months and one day to make a claim against the estate.
Finalising the estate
Collect the assets
If you are an executor, it’s sensible to open a bank account specifically for the estate. You can then start to collect the money and property from the estate in it.
Banks will only transfer money from the deceased’s bank account into the executor’s account once a grant of probate has been issued. This is one part of the overall process that can sometimes take some time to unravel.
Pay any debts and taxes
There is an order of priority for paying off debts. Start with funeral expenses (if these have not already been paid for), followed by any taxes. Then pay creditors (loans, mortgages and any other outstanding debts). Then finally, if no further unpaid creditors have come forward, beneficiaries can be paid.
Keep a record of all accounts
The executive should prepare the final estate accounts. These should include a summary of the value of the assets on the date that the person died, how much they owed, any income received between their death and the distribution of the estate, any changes in asset value (a property may have appreciated, for example), the administrative expenses during the period of administration and who has inherited what.
Each of the main beneficiaries should then be sent a copy of the final accounts.
Distribute the estate
Once all debts and taxes have been paid, the estate can be distributed in accordance with the instructions specified in the will – provided that it has been two months and one day since you published a deceased estates notice and at least six months since you applied for probate – to make sure any inheritance claims haven’t been made.
Bereavement is one of the hardest things we ever experience in life. But it is the price we pay for a life well lived. So it is a good idea to prepare for it, as well as for our own passing.
Remember – we are never more than a phone call away should you wish to discuss any of the points raised in this article. You can take the first steps today by making sure that all your important paperwork – wills, property deeds, insurance contracts, policy documents, valuations and statements are safe, secure and accessible (the IQ Wealth app has a facility for storing such documents). And for the next steps, we will give you the help, support and guidance you need.
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