How to...Manage a loved one's financial affairs after their death
The passing of a loved one can be a difficult time
for family and friends.
This infographic guide is intended to help you make that time somewhat easier, by taking you through the steps involved
in managing their financial issues.
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The financial affairs of your loved one and their property are often referred to as their ‘estate’
At least one person needs to be appointed
to deal with the estate, so that is can be distributed properly. The people dealing with the deceased’s estate may need to apply to the court. This is to ensure that the estate is dealt with properly and according to the law. After they have applied to the court, they will be known as the ‘personal representatives’
of the estate.
Usually, the personal representatives will be relatives of the deceased or a friend. However, solicitors and other professionals may have been appointed
by the deceased, especially if the estate involves businesses or large amounts of money.
The people who receive a gift from an estate are called 'beneficiaries'
What if they have left a will?
If a will has been made, the law says that it must meet certain requirements to be valid
. This is to make sure the will can be followed properly, and that there was no foul-play when it was written
. A qualified solicitor can advise you on whether a will is valid or not.
The will should appoint someone to put the deceased’s affairs in order and deal with the will itself
. This person will be called an ‘executor’
. If you are appointed to be an executor, you may choose to accept or decline the role.
If there are no living, capable executors named in the will who are willing to do the job, the will can still be valid.
What if they haven't left a will?
If a valid will can’t be found, the deceased is said to have ‘died intestate’
. If this is the case, the intestacy laws apply
. These dictate how the deceased’s estate will be managed, and by whom. This can quickly become very complicated
. The person who deals with the estate is called an ‘administrator’.
In almost all cases, it is strongly recommended that you leave a will
. Dying intestate can often leave certain people out. For example children won’t inherit anything if you’re married
and leave an estate smaller than £250,000.
Applying to the court
In most circumstances, you will need to apply to the court for:
- ‘Grants of probate’ where there is a will
- ‘Letters of administration’ where there is no valid will, or in the will there are no valid executors.
These documents allow you to take control of the deceased’s estate
and distribute it to the beneficiaries.
You will not need to apply to the court when:
- The deceased has left less than £5,000 in total
- The deceased owned everything jointly with someone else
- The estate does not cover the deceased’s debts, taxes and expenses
What happens next?
You may have to attend an interview
at the probate registry. Usually the grants of probate or letters of administration will be approved by the court and then as the personal representative, you can take control of the estate.
You will need to begin by paying off the bills and debts
of the deceased before giving away the estate according to the will or the intestacy laws.
It can sometimes take a year or more
to deal with an estate. Problems may arise in situations such as the personal representatives disagreeing, or arguments between beneficiaries and those who won’t receive anything.
In all circumstances, HM Revenue and Customs
must be informed of the death. If the estate is worth more than £325,000
, the estate will have to pay inheritance tax.
Dealing with the costs
In most cases the costs of dealing with the estate, such as the court fees and legal costs, will be paid for from the estate
. It is also important to note that it is unlikely that any of the deceased’s debts will pass on to anyone else.