How to deal with a loved one’s finances after death?

When someone close to you passes away, it is natural for a variety of emotions to strike. Several factors can make death incredibly overwhelming. Suppose the death was unexpected. Perhaps you also find yourself as the sole proprietor of getting the deceased individual’s affairs in order. There can be little time and space to actually grieve the loss. Understanding the bureaucratic steps can help streamline the process so that you can shift your energy towards having the time to mourning appropriately.  

In particular, finance and asset management can be a stressful endeavour following an unexpected passing. If you have found yourself in this challenging position, the following guidance’s may be helpful in your understanding of what you must do to proceed. 

What happens with the deceased person’s financial items?  

Everything owned by the person who has passed is referred to as their “estate.” An estate can comprise many things, including: 

• Money, both cash and any money in a bank
• Any finances paid out on a life insurance policy.
• Money owed to the person who has passed away.
• Shares
• Property 
• Personal possessions (i.e. material objects such as jewellery, automobiles, etc.)

 Often, the person who has passed will have given instructions in an official will regarding what should happen with their estate. Common recipients of the estate include close relatives or friends, as well as philanthropic causes that were important to the individual. 

 Who carries out the distribution of the estate? How do you obtain this role? 

The deceased person will have typically specified who has the legal authority to distribute the estate in their will. This person is referred to as the executor. There are cases where the executor may have to apply for legal authority before dealing with the estate. This process is called probate. 

A probate is a legal document giving the executor the control to share the estate of the person who has died. This document is often necessary, even if the steps are outlined in the will. An application can be made online here or sent in by post at the address here. If the value of the estate is less than £5,000, there is no fee. If the estate exceeds that sum, the cost is £215.  

It’s important to note that nobody is required to take on the role of executor, even if named in the will. 

In the case that the death was unexpected and no one had been pre-specified, the person who takes over financial matters is referred to as an administrator. Similar to a probate application, an administrator must often apply for letters of administration before they can deal with an estate. This process includes proving closeness or relation to the deceased. Letters of administration can only be applied for by post at this address. You must apply for letters of administration if: 

1.  There is no will
2. The will is not valid
3. There are no executors named in the will
4. The named executors cannot carry out the role 

You can only apply to obtain letters of administration under two conditions. First, the person who passed left their entire estate to you in the will. Second, the named executors are absent or will not act. In the case of no will, you can apply to be an administrator if:

1. You are the married or civil partner
2. You are the child
3. You are the grandchild
4. You are the parent
5. You are the sibling
6. You are the nephew or niece
7. You are another relative

An application for probate or letters of administration is not always required. Often, these legal documents are only needed if the estate includes property assets, such as a flat or a house. If the following are all true, you may not need to apply for these rights: 

• If the estate is solely made up of cash and personal possessions
• All of the property is owned as a beneficial joint tenant (i.e. co-owned by a partner, close family member, etc.)
• All bank accounts are joint.
• The overall amount of financial asset is minimal (any sum greater than £5,000 often requires an application)
• The estate is insolvent (there is not enough money to pay all the debts, taxes, and expenses)
• There are specific life insurance policies and pension benefits in the estate. 

What does an executor or administrator do? 

Taking on the responsibility of executor or administrator is a big responsibility. There are a broad number of related duties which can take months to absolve depending on how large the estate is. 

 Examples of critical responsibilities include: 

• Locating all appropriate financial documentation belonging to the person who has passed
• Sending a copy of the death certificate to the organisations that hold the money of whoever has passed
• Opening a bank account on behalf of the estate
• Finding out details of money owed to the estate and following up to ensure that money is paid in full
• Finding out details of the money owed by the person who has passed
• Preparing a detailed list of the property, money, possessions and debts related to the estate
• Working out the amount of inheritance tax (if applicable)
• Preparing and sending off the documents required by the probate registry
• Paying any debts, fees, expenses from the overall financial gain of the estate
• Sharing the estate and distributing the assets, as listed in the will (or according to the rules of intestacy if not specified in the will)

How do I know if I should call a solicitor?  

It is not uncommon for estates to be entirely handled without the need for a solicitor. However, there is an equal number of cases where a solicitor is helpful at many steps along the process. If you are currently trying to decide whether or not you need a solicitor, see if any of these apply to you: 

1. Do you need help estimating the estate’s value and reporting it to HM Revenue & Customs?
2. Are the terms of the will unclear?  
3. Are there guidance’s to pass part or all of the estate to children under 18?
4. Has the person who has died left money or property in a trust?
5. Does part of the estate include property or assets abroad?
6. Do you need guidance on whether or not your situation requires a probate application?
7. Do you need someone to fill out the application as your representative?
8.  Is anyone likely to dispute the will?
9. Would it be helpful for someone to ensure the estate is distributed accurately?

In most cases, the legal fees can all be paid for from the estate, so it may be worth soliciting professional advice.  

Key Takeaway

The death of a loved one can be one of the most painful human experiences. If the instructions for the estate are straightforward and clearly stated, the process may be uncomplicated. However, if you have found yourself in a confusing situation and need guidance, be sure to reach out to a probate solicitor immediately. Be sure to take care of your mental health!