Coping with bereavement financially
The financial implications of coping with bereavment.
Bereavement is one of the hardest times in a person’s life, yet it is inevitable. What makes matters worse is that it puts a lot of pressure on everyone close to the deceased when they need it least. The financial implications of someone’s passing can be overwhelming, but with organisation, planning and good advice they need not take away from the important process of grieving.
Preparation for your own passing is the most important way to protect your loved ones from undue stress and financial loss should the worst happen. Making a Will, to set out who will benefit from your estate when you are gone, makes the process much quicker and simpler.
A Will ensures you decide the beneficiaries from your estate after your death, if no will is in place then the law decides. It is also essential if you are in an unmarried relationship and wish to provide for a partner.
You are allowed to draw up your own will and there are websites out there that will help you do just that but it advisable to see a solicitor as there are certain legal formalities to ensure the validity of the document. A solicitor will also be able to help with issues surrounding inheritance tax and more complicated affairs.
It is in the will that the executor is named, the person who is to carry out the instructions of the will. This could be a solicitor or someone close to you. Many people instruct solicitors to act as executor to insure that the process runs smoothly.
As a relative of the deceased there are many things that need to be done to settle the estate but organisation will make the process easier. For a start, when registering the death with the local authority it is recommended that several office copies of the death certificate are obtained, as many financial institutions will require an original. This is of little extra expense and will save time in the long run.
When a person dies bank accounts become frozen. If it is a joint account then it is likely that the bank will pass over control to the other account owner on the presentation of the death certificate. If it is not a joint account then it will be necessary to inform all suppliers of services to delay their charges until the Grant of Probate or Letters of Administration are received. These are documents that prove the executor’s right to distribute the estate.
Inheritance tax may need to be paid on the estate before the estate is finalized as the government do not want to risk not getting their money. In many cases this means that the executor will have to seek a loan to pay this money. Favourable rates can usually be found through the solicitor. If the estate is to pass straight to a husband, wife or civil partner then there is no inheritance tax, as long as both partners are domiciled in the UK. There are other exemptions to inheritance tax such as gifting over seven years; these should be discussed with the solicitor.
If the deceased had debts then they do not die with them. Some creditors will attempt to get the money out of relatives as soon as they can. Although the debt is payable, it is payable out of the estate only after the probate has gone through. If there is not enough money in the estate to pay all the debts, then it becomes insolvent. An insolvent estate would mean that no legacies could be paid.
When the deceased provided for young children and the salary has stopped then a life insurance policy can be invaluable. Life insurance policies will usually pay out before the probate. A life insurance policy is an important consideration when making plans for the future.
If there is no Will then matters are somewhat more complicated. When there is no Will then a person is said to have died intestate. If this is the case then the law will decide who inherits the estate and there are various rules that show who will benefit.
If an estate is intestate then it is strongly recommended that you consult your solicitor, resolving an intestate estate can be complex, in some extreme cases it can take months and even years.
To become the administrator of an intestate estate then you will require a Grant of Letters of Administration from the probate registry; your solicitor again will help you make the application. On receipt of the grant you will be given access to the deceased’s bank and property and will have permission to distribute their funds.
As executor or administrator, in any situation, it is important that accounts are kept of all the financial actions that take, right down to the interest made on any assets since the death. All the beneficiaries of the estate have a right to have a copy of this.
The solicitor will be able to help face to face when a loved one dies. A death is a deeply challenging time for a family as there are other arrangements to make, beside those listed here, such as organising the funeral. These add to the pressure on those responsible.
With a bit of careful planning and personal responsibility it is possible to save your family and friends a great deal of trouble and additional stress in their hour of need. Although an uncomfortable subject you should discuss with your partner, family or friends what is to be done in the event of your death. Then with the peace of mind that comes with knowing all is taken care of you can get on with enjoying your life.
