How to handle an estate after a death?
When a person dies, unfortunately there exists no great machine that sets in motion doing everything on their behalf, to resolve matters of the heart and finance. This is left to the Executor of the Estate to handle. A person nominated in a will to deal the deceased's affairs. Their main role is to ensure all part of the estate are handled correctly and distributed as per the wishes of the will.
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What Is An Estate? An estate is everything a person leaves behind that has both material and non-material worth. Homes or chain of properties. Investments and shares. Money, whether cash in bank accounts, both savings and currents or money tied up in life insurance or other deals and business partnerships.
What Happens To A Person's Estate When They Die?
Paperwork is usually the least of people's worries when a person dies but there are two very important documents to have. The Death certificate and then a Certificate of Probate. The first proves the person dies, the second allows a nominated person to handle the finances and belongings of that person.
In a host of occasions, a person who dies has debts. They may be small or large, no matter the sum, the Executor should ensure these are paid and settled up. These may be mortgages, taxes, loans, rent arrears or credit card bills, electricity, gas, internet and water payments. These need settling before an account is divided between the named beneficiaries by an Executor or Administrator of a Will.
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Do You Need To Inform The Government Of The Death?
As an Administrator or Executor of a Will there are several Government agencies you should inform when a person dies. This is to ensure no money gets sent while accounts are being closed and to ensure affairs are all tidied up. You may have to send a copy of the Certificate of Probate or Letter of Administration as proof of death.
You should inform the following:
- (HMRC) HM Revenue and Customs
- (DWP) Department for Work and Pensions
- (DVLA) Driver and Vehicle Licensing Agency
- Local council
- Public sector or armed forces pension offices
- UK Passport Office
You may well find that Government agencies find out before you contact them. Either because a payment was sent to the deceased and the bank account returned a notice stating the reason for the decline. Or you may have used a service such as Tell Us Once. It works in most areas of the UK and the department forwards the notice of death to all relevant departments on your behalf. A service much recommended.
Is The Debt Against Estate Higher Than The Value?
An element that tends to cause a ripple in proceedings is that if there are any debts against the person's estate. You will need to inform credit card companies and banks and building societies of the death so they can arrange how much money is outstanding and present this to you, the Executor. If you are both the Benefactor and Executor and the payments are small, you can choose to pay these off yourself.
However in instances where the debt and arrears is more than the entire value of the Estate, the properties and accounts will need to be collected to pay off the debts. Any debts remaining after an Estate has been sold on is not the responsibility of family members, the remaining debt dies with the person. Unless any debts with in joint accounts, or shared council tax and utility bills.
Joint Bank Account And Joint Property
Please check with the Probate office with regards to sums over a certain amount, but bank accounts and building societies which are jointly held should see remaining balances transferred to the joint account holder. Proof of death should be supplied to ensure this occurs. Property on the other hand is a bit more complicated.
There are two terms of property ownership. A 'Beneficial Joint Tenancy' whereby two or more people own a property together. The property simply passes to the joint signatory. If a death is known in advance due to illness, this person may ask you to be added to such a document or take possession of the property beforehand. You should consult your solicitor but speaking of my situation, it is wholly wise to accept irrespective of how feel about it.
However with 'Tenancies In Common' this is very much a divisible asset that should be first adhered to by reading the Will and wishes within. In most situations the remaining joint holder of this tenancy in common will be left the property. In other situations it may be divided up in proportions to Children. A Letter of Administration, agreements of probate will solve this allocation.
Estates That Involve Mortgaged Property
When a property is not owned outright or a form of tenancy is not governed by a local council, then a mortgage company will step in to assert their rights over a property. They do this in three ways, ensuring any debt is paid and they will transfer the property to the person declared in the will. Or they will take the property via the courts. In the UK most people have prepared for this eventuality.
Life insurance may have been taken out to ensure that any remaining portion of a mortgage is paid off in the event of their death, leaving the property mortgage free. This may not account for all debts against an estate however. Likewise an Endowment Mortgage or Mortgage Protection Policy will offer similar avenues to make good the balance. If a Benefactor is taking over the mortgage, and are fit to pay monthly payments then this can continue under a new arrangement, or the benefactor can sell the property, paying off the mortgage and retaining the proceeds from the sale.
Dealing With Low Value Estates
At the beginning we learned that two documents matter. The Death Certificate and the Certificate of Probate. Now all instances require the revealing of Probate. If sums in a bank or building society account are small. The Death Certificate alone maybe proof enough to release monies. Also if you need money quickly to pay for a funeral or urgent debts, a prepaid funeral may be an option, alternatively, small amounts may be withdrawn before you attain probate.
This is purely on an individual basis though. Attaining Probate is not time consuming but again is on an individual case by case basis. It is possible to travel from abroad and apply for the Certificate of Probate in 24 hours and received it within a few hours. For others it may take longer. It depends on any unforeseeable complications and value of the estate.