More than half a million Britons die each
year and many of these people will have put in place arrangements
for dealing with their funerals, belongings and assets
after they have gone.
But death is also a subject about which most people do
not like to think, so there are plenty of people who put
off writing a will until it is too late. This can be a
problem as it can cause hardship and difficulties to those
left behind.
Unexpected deaths, accidents or the deaths of younger
people also mean that families and friends can have responsibilities
thrust upon them at a time of acute personal distress.
The decisions that bereaved people have to make can be
complicated and technical but this guide aims to offer
practical help and advice to those suffering bereavement.
While
there is much that bereaved individuals can organise for
themselves - indeed some people find being busy with the
practicalities of a death a helpful and necessary part
of the grieving process - the guide also explains where
to go for expert technical help.
First steps
Most people die in hospital. The required paperwork and
official involvement depends on the cause of death and
where it occurs, whether in Britain or abroad, and whether
the individual was in care or not.
The standard formalities are that a doctor must provide
relatives with a certificate giving the cause of the death,
and the death must then be registered within five days
at the Registry of Births, Deaths and Marriages in the
locality where the death occurred. The local registrar
will require a range of personal information including
the birth certificate of the deceased, medical card and
National Insurance details.
Importantly the registrar will issue a Death Certificate,
which is a copy of the entry in the death register. This
certificate - and it's worth getting a few original copies
at the same time - may be needed for bank, building society,
life assurance and pension claims and in many cases originals
will be required. The registrar will charge for these
extra copies, but fees are lower than if you apply for
them later on.
The registrar should also be able to give you a free and
useful government booklet 'What to do after a death in
England and Wales' (D49), or 'What to do after a death
in Scotland' which are also available from local offices
of the Department of Work and Pensions or Citizens Advice
Bureaux.
Funerals
First, check the death does not have to be reported to
a coroner - which may delay the funeral. Then find out
if there is a will and whether the deceased had any special
requests for their funeral. Funeral requests, however,
are not binding and generally the nearest relative, executor
or administrator (see below) will decide whether the body
is to be cremated or buried.
Most funerals are arranged by a funeral director, although
they don't have to be. The deceased may even have made
arrangements in advance with a particular firm or with
a special policy to cover the costs. Check the papers
of the person who has died for details of any prepaid
plan; if they had a financial adviser, they may have details
of any policies and other investments.
The only legal requirements governing the disposal of
a body in Britain are that the death has been certified
and registered, and the body is properly taken care of
by burying or cremation.
If you do use a funeral director it is worth comparing
costs. Today, funerals generally cost in excess of £1,000
but if there are problems paying for the funeral, the
government's Social Fund may help out. In particular,
if your husband or wife dies and you are claiming a means
tested benefit, such as Minimum Income Guarantee, you
may be able to get help with the costs.
Wills
Wills allow someone to formally leave instructions for
the distribution of their assets and often for their funeral
intentions - and to communicate these wishes without the
potential distress or difficulties of discussing them
directly with relatives. It is important that wills are
updated as the individual's wishes change. Wills also
allow provision to be made for people who perhaps wouldn't
otherwise benefit.
If there is a will, the named executors need to seek what
is known as probate from the Inland Revenue. Once granted,
the executors can deal with the deceased's estate. Everyone
should make a will and then tell somebody else where it
is kept. If you believe that there is a will but can't
find it, contact solicitors or banks the deceased may
have used.
If someone dies without a will, their assets are distributed
according to the rules of intestacy. This could mean assets
and money going to people the deceased had not wanted
to benefit. It could also lead to people who the deceased
wanted looked after - unmarried partners, for example
- not inheriting, and even unnecessary problems with inheritance
tax.
Executors
When a person dies, someone has to sort out their estate
- the money, property and other possessions they have
left. There may be money owed to the deceased that needs
collecting as well as debts and tax to be paid before
the remainder of the estate can be distributed to the
surviving family and other people who are entitled to
it.
If there is a will, executors should be named. If there
is no will, this person, who is normally the next of kin,
is termed an administrator or personal representative.
Sometimes the deceased will have designated a solicitor
or even their bank as executors of the will as well as
a relative. Personal executors can also employ a solicitor,
bank or other financial firm which offers a probate or
estate administration service to help. Executors have
important and time-consuming responsibilities. They will
need to produce full financial records of the estate,
and they are under a duty to ensure that the estate's
assets are paid to the correct beneficiaries. If assets
are distributed without all debts having been paid, they
may be held personally responsible.
To protect themselves, they may need to advertise the
death in a newspaper for formal notices with a request
that creditors submit their claims by a date at least
two months after the notice appears.
In addition, they will need to apply for Probate - the
legal process that gives the right to distribute the assets
to beneficiaries.
As a matter of priority the personal representative should
ensure any property or assets of the deceased are secure.
Personal representatives should inform the deceased's
bank, cancelling personal credit and debit cards; switching
or cancelling direct debits and standing orders; and transferring
joint bank accounts into sole accounts (if necessary).
If the deceased was a tenant, notify the landlord, council
or housing agency and - if required - give notice to end
the tenancy. If the deceased was living in a nursing or
residential home but died in hospital, give notice to
vacate the room in the home.
Other people to contact include the Department of Work
and Pensions if the deceased was receiving a state pension
or other benefits. The personal representative can claim
any arrears of benefits owed to the deceased for distribution
as part of the estate. The Department of Work and Pensions
(formerly the DSS) will also provide details of benefits
available to any surviving partner or dependent.
For tax, contact the Inland Revenue or the deceased's
accountant. A refund may be due to the estate or tax may
be due in the future.
At this stage it is also worth opening the deceased's
post as it may provide evidence of assets or debts that
might not otherwise be found.
Valuing the estate Determining the value of the estate is the
main responsibility of the executor or administrator.
Before you can apply for probate - the authority to distribute
the estate - you need to establish the deceased's total
assets and liabilities. If the deceased was an organised
person, there may be a file of all their financial and
legal paperwork. If the deceased had a financial adviser,
they may also have details. Otherwise you may need to
do some detective work.
You will need to get valuations at the time of death for
each asset.
The assets to be added up are:
any property
possessions
bank/building society accounts
shares and other investments
life assurance policies (except those
written under trust)
pensions
money owed from others
the deceased's share of jointly owned
assets.
Liabilities (which will need to be paid before dividing
up the estate) consist of:
unpaid bills
credit card debts
mortgages and other loans
funeral and cremation expenses
probate costs
Inheritance Tax
Executors are responsible for reporting the value of the
estate to the Inland Revenue if there is or could be inheritance
tax due. They are also required to report any gifts made
by the deceased of more than £3,000 in the seven
years up to the date of death.
The booming property market means that more and more estates
face inheritance tax - the first £255,000 of an
estate is free of inheritance tax then the rest is taxed
at an eye watering 40%.
For inheritance tax purposes, your estate is made up of
the value of all your assets and possessions at the time
of death, the proceeds of insurance policies paid to your
estate (other than 'in trust'), plus any 'Potentially
Exempt Transfers' the deceased may have made in the previous
7 years. Debts and reasonable funeral expenses are then
deducted (as are probate and other costs) to arrive at
the total of the estate.
Inheritance tax has been dubbed the 'avoidable tax' -
even after a death beneficiaries can rewrite a will to
reduce the inheritance tax bill. Wills can be 'varied'
- rewritten for up to two years after a death. A typical
use is to reallocate assets from a spouse to children
to make fuller use of the £255,000 inheritance tax
exemption as transfers between husband and wife have unlimited
exemption. The not-unusual practice of leaving everything
to the surviving spouse means the deceased's inheritance
tax-free exemption is not used and often simply postpones
a bigger inheritance tax problem until later on.
Inheritance tax is due to be paid within six months of
the end of the month in which the person died. Otherwise
interest is added. In most cases inheritance tax must
be paid before probate/administration is granted.
Probate
Probate gives executors the necessary authority to gather
in and distribute the deceased's assets. When you show
that probate has been granted to a bank, for example,
it will allow you to close a deceased person's account
and withdraw the funds.
Claiming Money Due
Most adults probably have some sort of life assurance
- whether as part of a pension scheme or in the form of
an endowment or other savings policy that includes such
cover. As an IFA, we will be able to help you claim the
payout quickly and efficiently and help you deal with
financial companies and, subsequently, to advise you on
what to do with money and investments you inherit. The
key advantage is that we can advise on products from any
company across the whole market and provide suitable advice
for you.
We can also put you in touch with a number of financial
organisations that can help track down old savings and
pensions, which you believe the deceased may have owned
but for which you cannot find the paperwork or other details.
Final Accounts
Once you have probate or letters of administration you
can collect and distribute the deceased's assets. The
personal representative must now produce final accounts
- including expenses - for the residuary beneficiaries
(those getting whatever is left once specific bequests
have been made).
Finally, it may be worth contacting a service called the
Bereavement Register. This removes the names and addresses
(and even telephone numbers), of people who have died,
from databases and mailing lists, so avoiding the upset
and distress of inappropriate junk mail or telemarketing.
The Bereavement Register Help Line can be
contacted on 01732 460000.
