A practical guide for beneficiaries

Published: 12 October 2018

The lasting emotional impact of losing a family member or friend can often be compounded by having to manage their financial affairs.

It helps if the deceased set out their wishes in a Will. Even then, however, those tasked with executing the Will or who have been named as beneficiaries may feel they face a potentially daunting challenge ahead of them.

This is often the case for Executors in particular, who will be charged with tasks ranging from locating important documents and obtaining copies of the death certificate to accounting for any debts left behind and dealing with any tax issues.

Having a sense of what needs to be done and what support is available can make an upsetting and time-consuming job a little bit easier. To help, here’s just a few of the basics and what may be involved:

Organise certificates

The first thing to do - and the only real legal requirement - is to obtain a medical certificate and register the death (which must be done within five days in England, Wales and Northern Ireland and eight days in Scotland). You’ll then get a death certificate. You’ll almost certainly need several copies of this, because most organisations holding the deceased person’s money will need a copy of the certificate before they can release funds. The medical certificate and the death registration are free, but there may be a small fee for copies of the death certificate (depending on where you are in the UK).

Where there’s a Will

Things will likely be a lot easier. It sets out who gets what and also names the Executor(s) responsible for sorting out the estate left behind. If the individual died ‘intestate’ (without a Will) it is likely to be harder to distribute the estate. There are still rules in place that dictate what happens to various assets and who is responsible for sorting things out. But while this helps, the outcome may not be in line with anyone’s wishes. The Money Advice Service has useful information on what to do when a Will is in place and when there isn’t one.

Sort out the paperwork

Apart from the funeral, you can deal with most other issues in your own time. If the estate is substantial the Executor should apply for a legal document - probate (grant of confirmation in Scotland) - that gives them the right to distribute the estate as set out in the Will. A solicitor can help with this.

You’ll also need to contact organisations like banks, pension providers, utility providers (if the individual was the account holder) and government organisations like the Department for Work and Pensions (if there are state pension and/or welfare payments to stop), the DVLA (to cancel any driving license, car registration papers and car tax) and their local authority.

In England, Wales and Scotland the Tell Us Once service lets you report a death to most government organisations in one go. You should be given details of this service and of your unique reference number when you register the death.

Get financial facts and tie up loose ends

Funds may need to be set aside from the estate to pay off debts (such as mortgages and credit cards) and fees (such as solicitor’s costs). These generally have to be paid before the estate can be distributed to beneficiaries, but the debts aren’t passed onto the surviving family should the estate be insufficient.

There could also be outstanding payments to collect and you’ll need to get details for any financial products in their name, including bank accounts, insurance contracts, pension funds and investment products. Ask each provider to confirm how much money was held when the individual died and how much income (if any) had been paid in the last tax year.

Pensions might be the hardest to trace, especially if the individual had worked for a number of different organisations. There’s a free Pension Tracing Service that you may find helpful.

Check if tax needs to be paid

The amount that goes to beneficiaries may depend on whether inheritance tax (IHT) is liable on the estate. This is charged at 40% on the amount of the estate that sits above the nil rate band, currently set at £325,000. The need to find out whether IHT is due is why HM Revenue & Customs is on the list of organisations to be contacted after the death. They’ll also tell you whether the individual owed any income tax (or indeed if they were due a refund).

Get help

We’ve covered only the basics here. The task of tidying up someone’s financial affairs once they’ve passed can be a complex one, with many rules in place and often a lot of paperwork to locate and understand. Free sources of information include Citizens Advice, the Money Advice Service and bereavement charity Cruse, while solicitors and professional financial advisers can help make a challenging period just a little bit easier. If you receive an inheritance from the estate a financial adviser should also be able to help you make the most of it.

Important information

This is provided for general information only and takes no account of personal circumstances. It is not a recommendation to buy or sell. It is provided solely to support you in making your own investment decisions. If you have any doubts as to their suitability you should seek expert advice. Alliance Trust Savings does not give financial or investment advice.

Laws and tax rules may change in the future without notice.

Please be aware that the value of investments can fall as well as rise so you could get back less than you invest.

Making the most of a lump sum

Inheriting money can mark a turning point in life beyond the loss of a loved one. You may have the opportunity to improve your financial security and make a long lasting, positive impact on your wealth. Our Guide to making the most of a lump sum is here to help.

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