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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 £300,000 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
£300,000 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.
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