|
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.
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.
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 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.
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, canceling personal credit and debit cards; switching or canceling
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.
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
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 £325,000
of an estate is free of inheritance tax then the rest is taxed at an
eye watering 40%. For married
couples and registered civil partners it is currently £650,000,
as it is for widows or widowers where their deceased partner did not
use their nil rate band on death.
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
(£600,00 for married
couples and registered civil partners) inheritance tax exemption as transfers
between husband and wife have unlimited exemption.
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 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.
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.
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.
|