Dealing with the loss of a family member or somebody close is unimaginable. Even when that loss is expected, nothing quite prepares you for the finality of it. At a time when you are coming to terms with your loss, as well as perhaps being a support to others, there are the practicalities to deal with when someone dies.
Registering the death
If you are the next of kin, or the executor named in the will, it is likely to fall to you to register the death. This has to be done within five days of death and you will be asked a series of questions in order for the death certificate to be produced. Since the start of Covid, this process is completed over the telephone which helps hugely if you are not geographically close to the person who died. You are then able to order copies of the death certificate – remember that often the original certificate is needed by banks, financial institutions and other organisations so it is sensible to obtain quite a few copies – this can add up as each copy costs £11.50 currently. Following this, registration papers are sent to the Funeral Director so that the funeral can be arranged.
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Arranging the Funeral
Anyone who has had to arrange a funeral without knowledge of what the deceased would have wanted, will relate to this. The funeral Director will ask you many questions and many people feel overwhelmed and find it difficult to make these decisions at a highly emotional time. The Funeral Directors I have worked with are incredible – calm, compassionate and highly experienced and professional which does help, but ultimately, decisions need to be made. It however really helps if your loved one has left detailed instructions, spoke to you about their thoughts and wishes or better still, took out a funeral plan. Funeral plans sometimes get bad press but there are some excellent, reputable firms providing this service and I will cover this in a future blog.
Where there’s a will
In this blog, I am only talking generally about the administration of an estate where the person who died, left a valid will. I will cover off what happens if no will is left in a later blog. The named Executor(s) should undertake all activities in administering the estate. If someone else gets involved, for example in repaying a debt, this is classed as intermeddling and must be avoided. The Executor(s) are able to appoint a professional firm or Attorney to act for them if they are time poor or lack the confidence or knowledge to complete all the tasks and paperwork.
Practicalities and Inheritance Tax
If the deceased lived alone, it’s vital that the home insurers are contacted as soon as possible to notify them of the death so that the policy can reflect the vacant property. All valuable items should be removed and stored somewhere safely. It’s the responsibility of the Executor(s) to ensure all of the assets are valued correctly and all debts are determined accurately. Once a full picture has been established, the appropriate HMRC form(s) should be completed and sent off for approval. If there is inheritance tax to pay, this must be settled before the Grant of Probate is issued. Many banks participate in the Direct Payment scheme which makes things a lot easier if there are sufficient funds in the bank or building society to pay the tax.
If all assets are illiquid (property for example), the inheritance tax still has to be paid before the Grant is issued, but property cannot be sold until the tax has been paid. This can be worrying and problematic for Executor(s) but there are specialist companies who can offer bridging finance – advice should always be sought. The Probate Application can be sent off at the same time as the HMRC form(s) and HMRC will confirm they are happy for probate to be granted. Remember again, that the various Financial Providers will require an original Grant of Probate so to avoid delays in sending one off at a time and waiting for it to come back, sufficient copies should be ordered. The cost is £1.50 per copy currently.
Grant of Probate
Once the Grant has been issued, the Executor(s) should arrange for all debts to be settled. They should also ensure that all beneficiaries named in the will can be located. It is prudent to wait for a six month period from the date of the Grant before distributing the estate to the beneficiaries, in case a claim is made by an eligible person under the Inheritance (Provision for Families and Dependents) Act 1975. An eligible claimant has six months to register their claim – after this time, the court can approve an extension but there would need to be exceptional circumstances. I will cover off I(PFD)A 1975 claims in a later blog.
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As long as the assets in the estate are sufficient to cover the funeral, testamentary expenses and debts, the estate is solvent. This may mean, however, that there are insufficient funds to pay all of the legacies in the will. There are specific rules on the order of ‘abatement’ and I will cover this in a later blog. If there are sufficient funds in the estate, the Executor(s) should communicate with the various financial organisations, sending them the Grant of Probate and arranging for the funds to be paid into an ‘Executor Account’ and then should distribute the estate in accordance with the will.
This blog by Ally Ilott of Heritage Estate Planning, looks at a very straightforward situation, where there is a will and no complications. Of course, matters are not always like this when someone dies.
Areas such as Minor beneficiaries, Trusts, where there is no will and Claims against the estate are more complex, so do not hesitate to go through these scenarios with Ally and her team to ensure that you have things in place for your loved ones.
Please reach out to us for help if someone dies and you have been appointed as an Executor and you are not sure where to start, or if you are lacking time to organise everything.
If you are struggling to come to terms with the loss of a loved one take a look in The Hug Directory to find someone who can help you to deal with this very difficult situation.