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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.
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 £312,000 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 £312,000
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 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.
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