Losing a loved one is an emotional and challenging time for anyone. Along with notifying family members and planning a funeral, it is often down to the family to manage the deceased’s estate after death. For many of us, this process is largely unknown. And, while there are several corporations on hand to assist with this, it helps to have an understanding of what this means in the first instance. In this guide, we’ll walk you through everything you need to know.
What Is an Estate?
The term ‘estate’ brings about images of large stately homes. In fact, an individual’s estate is everything that is owned by them at the time of their passing. Some of this will be physical items, some will be financial. As the executor of a person’s will, you need to have an understanding of what falls within someone’s estate and the steps it takes to deal with these too. An estate can include:
- Physical money.
- Bank or building society accounts.
- Life insurance policies.
- Money that is owed to the deceased.
- Any stocks of shares.
- Personal possessions.
- Money owed (rent, mortgages, credit, etc).
It is the role of the executor to organise what happens with these physical belongings after the person has died. The first step is to inform the relevant authorities about the individual’s death.
Who Do You Need to Inform?
As the executor, you will be issued with probate or letters of administration. These are legal documents that allow you to manage and share out their estate, according to the instructions and desires layed out in their will. These authorities will include:
- The deceased local council.
- HM Revenue and Customs.
- Department for Work and Pensions.
- Passport Office.
- Relevant pensions schemes.
Certain services can take care of this notification process for you, including Tell us once.
What to Do When Money Is Owed?
In the event of outstanding credit card bills, mortgages, and other debts, you will need to inform the relevant organisations. They will then recover this debt from the deceased estate. The debts are paid off in priority order until both the money and/or the assets run out. It is not the responsibility of surviving relatives to pay off outstanding debts unless they are legally acting as a guarantor or a co-signatory of the debt.
In the event of a large estate, it is advisable to work with a solicitor or probate specialist to organise and clear these debts. More information about clearing outstanding debt after a person dies is available through the Money advice service here.
What Happens When Two or More People Own a Property?
Properties owned by couples are normally under Beneficial Joint Tenancies and Tenancies in common. For Beneficial Joint Tenancies, the surviving member of the agreement will automatically inherit the deceased share of the property. For Tenancies in Common, the remaining share of the property will be equally divided between those stated in the deceased will.
What Happens to an Outstanding Mortgage?
In the event that a property was owned by the deceased with an outstanding mortgage, this will be passed to the heir stated in the mortgage. If this individual is unable to take this burden, mortgage protection policies may be in place to cover it. Alternatively, if the property is sold, the mortgage must be paid once this process has been completed.
Handling an Estate Without a Will
In the event that the deceased has not written a will, they are said to have died ‘intestate. This means there is nobody allocated to automatically act as their executor or ‘Personal Representative’. In this instance, an individual must make an application to the Probate Registry and seek a Grant of letters of administration. This allows you to then manage the estate, as we have dictated above.
In order to receive this letter, you will need to meet specific criteria. This is ranked in order of priority through the relatives deemed most entitled to benefit from the estate. The order goes:
- Surviving spouse or civil partner.
- Son or daughter/s.
- Brother or sister/s.
- Distant relatives.
Depending on who succeeds the deceased will depend on who is granted the executor title. They will then be responsible for dividing out the estate in accordance with the above priority list. In this instance, it means that the closest living relative will receive an inheritance even if this is not wanted by the surviving family.
What to Do in the Event of a Low-Value Estate?
In some instances, the deceased has a very small or low-value estate. This may mean that they only have a small sum of money in their bank, pension fund, or in some form of insurance. Once the funeral or cremation expenses have been accounted for, the money can be released to the executor without the need for a probate or Letter of Administration.
It is the decision of the bank or building society as to what top value they allow these funds to be accessed at. If you are in this situation, the first port of call should be to speak to the relevant parties and understand the best route. You will not need a probate or Letter of Administration to withdraw funds for the funeral costs, inheritance tax, probate fees, or other expenses linked to the funeral or estate admin.
Here at Wallace Stuart Limited, we are dedicated to helping our families lay their loved ones to rest in the most respectful and appropriate ways. We recognise the needs of each family and hold them at the utmost importance in every case. Over the years, we have developed a bank of contacts within the funeral industry who are at your disposal. We’ll help you find the right contacts and organisations to help manage your loved one’s estate easily. And, we’re also there to ensure that the funeral or cremation you choose celebrates their life and pays true homage to who they once were.
We’re here to help. Get in touch if you need help or advice today.