Dealing with the financial affairs of someone who has died
Everything owned by a person who has died is known as their estate. The estate may be made up of:
- money, both cash and money in a bank or building society account. This could include money paid out on a life insurance policy
- money owed to the person who has died
- property, for example, their home
- personal possessions, for example, their car or jewellery.
If the person who died owes money to other people, for example, on a credit card, for fuel, for rent or a mortgage, this comes out of the estate.
The estate of the person who has died is usually passed to surviving relatives and friends, either according to instructions in the will, or if the person dies without leaving a will, according to certain legal rules called the rules of intestacy.
For information about wills, see Wills.
For information about the rules of intestacy, see Who can inherit if there is no will – the rules of intestacy.
The person dealing with the estate of the person who has died is called an executor or an administrator. An executor is someone who is named in the will as responsible for dealing with the estate. An executor may have to apply for a special legal authority before they can deal with the estate. This is called probate.
An administrator is someone who is responsible for dealing with an estate under certain circumstances, for example, if there is no will or the named executors aren't willing to act. An administrator has to apply for letters of administration before they can deal with an estate.
Although there are some exceptions, it is usually against the law for you to start sharing out the estate or to get money from the estate, until you have probate or letters of administration.
The executor or administrator (also called the personal representative) takes responsibility for dealing with all of the estate. This involves:
- finding all the financial documentation belonging to the person who died
- sending a copy of the death certificate to the organisations that hold the money of the person who has died. Ask them for confirmation of the value of the money held at the date of death and the amount of income received during the last tax year up to the date of death. Also ask them to freeze the bank accounts so no one can take money out without the correct legal authority
- opening a bank account on behalf of the estate
- finding out details of money owed to the estate
- finding out details of money owed by the person who has died
- preparing a detailed list of the property, money and possessions and debts in the estate
- working out the amount of inheritance tax due and arranging to pay it
- preparing and sending off the documents required by the probate registry and HM Revenue and Customs
- when probate or letters of administration has been granted, collecting in money belonging to the estate from banks, insurance companies, pension funds and building societies
- paying debts, expenses and fees, such as solicitors' fees and probate fees
- sharing out the estate, as set out in the will or according to the rules of intestacy.
If it appears that there are not enough assets in the estate to cover outstanding tax, expenses, bills and other liabilities, you should seek the advice of a solicitor. Administering an insolvent estate can be complicated.
When someone dies, it's important to sort out their benefits, tax and National Insurance as soon as possible. There may be tax to pay, or their estate might be owed some tax back.
You need to tell the tax office, and each government office that was paying benefits to the person who has died, about their death. You need to do this as soon as possible after the death.
Depending where the person who has died was living, you may be able to tell several government services about the death in one contact by using the Tell Us Once Service. For more information about this service, see What to do after a death.
If you need to report the death to the Department for Work and Pensions (DWP), you can telephone the DWP Bereavement Service. They can deal with all the DWP benefits that were being paid to the person who died. They can also check whether the next of kin is entitled to any benefits. For more information about this service, see What to do after a death.
The person who has died may have left debts, for example, an overdraft on their account or a credit agreement that has not been paid off.
When someone dies you should try to contact all their creditors. You should place a notice in The Gazette on their website, the official public record of legal notices in the UK. This will tell creditors they can make a claim against the estate to pay off the debt. If you don't place a notice and creditors come forward after you've paid out the estate, you might have to pay off the rest of the debt with your own money.
In general, if there is not enough money in the estate of the person who has died to pay their debts their creditors cannot recover the amount still owed from anyone else, including that person's surviving relatives. You should check whether that person had any kind of insurance policy that would pay off any of their debts on their death, for example, a payment protection insurance policy taken out at the same time as a loan.
In some cases the debt may have been a joint one, for example, an overdraft on a joint account or an amount owed on a credit agreement taken out in joint names. If this is the case, the debt can still be recovered from the surviving person. In addition, if you lived with someone who has died you may still be liable for debts that relate to the property, such as council tax or water bills.
If you are named in someone's will as an executor, you may have to apply for probate. This is a legal document which gives you the authority to share out the estate of the person who has died according to the instructions in the will. You do not always need probate to be able to deal with the estate.
If you have been named in a will as an executor, you don't have to act if you don't want to.
In some circumstances, someone who wants to deal with the estate of someone who has died will have to apply for letters of administration, rather than probate. This person is called an administrator. You have to apply for letters of administration if:
- there is no will
- a will is not valid
- there are no executors named in the will
- the executors cannot or are unwilling to act.
There are strict rules about who can be an administrator. If there is a valid will, you can apply for letters of administration if:
- the person who died left all of their estate to you in the will, and
- the executors are not named, or cannot or are unwilling to act.
If there is no valid will, and you are the next-of-kin, you can apply to be an administrator in the following order of priority:
- you are the married partner or civil partner of the person who has died
- you are the child of the person who has died
- you are the grandchild of the person who has died
- you are the parent of the person who has died
- you are the brother or sister of the person who has died
- you are the nephew or niece of the person who has died
- you are another relative of the person who has died.
An unmarried partner, or same-sex partner who has not registered a civil partnership and who has not been named in a will as an executor will not usually be able to act as an administrator.
You do not always need letters of administration to be able to deal with the estate of someone who has died.
You usually need probate or letters of administration to deal with an estate if it includes property such as a flat or a house. Otherwise, you may not need probate or letters of administration if:
- the estate is just made up of cash (that is, bank notes and coins) and personal possessions such as a car, furniture, and jewellery
- all the property in the estate is owned as beneficial joint tenants This property automatically becomes wholly owned by the other owner
- you had a joint bank account
- the amount of money is small
- you discover that the estate is insolvent, that is, there is not enough money in the estate to pay all the debts, taxes and expenses
- there are certain life insurance policies and pension benefits in the estate.
Couples may jointly own their home. There are two different ways of jointly owning a home. These are beneficial joint tenancies and tenancies in common.
If the partners were beneficial joint tenants at the time of the death, the surviving partner will automatically inherit the other partner's share of the property. There is no need for probate or letters of administration unless there are other assets that are not jointly owned. The property might have a mortgage.
However, if the partners are tenants in common, the surviving partner does not automatically inherit the other person's share. Probate or letters of administration will be needed so the personal representative can pass it whoever will inherit the share of the property, according to the will or the rules of intestacy. The property might have a mortgage.
For more information about beneficial joint tenancies and tenancies in common, see Buying with someone else in Buying a home. For more information about the rules of intestacy, see Who can inherit if there is no will – the rules of intestacy.
If the property is to be inherited by someone and there is still an outstanding mortgage on it, the mortgage company will either require the mortgage to be paid immediately, or ask the person who inherits the property to take over the mortgage.
If there is a mortgage on the property, there might be a life insurance policy, an endowment policy, or mortgage protection policy which will pay the outstanding mortgage if the person with the mortgage dies. In this case, you should write to the company, asking for a final statement.
If the property is to be sold, the mortgage will be paid out of the sale of the property.
Couples may also have joint bank or building society accounts. If one dies, all the money will go to the surviving partner without the need for probate or letters of administration. The bank may need the see the death certificate in order to transfer the money to the other joint owner.
Probate or letters of administration may still be needed if there are other assets that are not jointly owned.
The estate may be made up of a relatively small amount of money held:
- in a bank or building society account
- in a pension fund
- by an insurance company.
If, after the funeral expenses have been paid, the amount of money held by the organisation is under a certain amount, they might be prepared to release it to you without you having to apply for probate or letters of administration. This amount may vary from one organisation to another, so you will need to check with each one.
Some banks and building societies will release quite large amounts without the need for probate or letters of administration. Also some banks and building societies will release money needed to pay for a funeral, probate fees and inheritance tax but nothing else until you have been granted probate or letters of administration.
This depends entirely on the policy of the organisation in question. They do not have to release anything, however small the amount of money. If the organisation refuses to release money without probate or letters of administration, you must apply for probate or letters of administration even if it is not otherwise needed.
Many executors and administrators act without a solicitor. However, if the estate is complicated, it is best to get legal advice. You should always get legal advice if, for example:
- the terms of a will are not clear
- part of the estate is to pass to children under the age of 18
- the person who died has left money or property in a trust
- the person who died owned land or property abroad
- the person who died owned a business
- anyone is likely to dispute the will.
The legal fees can be paid for from the estate.
If there are any problems with the way that executors or administrators deal with the estate, for example, if there is unreasonable delay or if the executors or administrators misuse their legal powers, you will need legal advice.
The time it takes to get probate or letters of administration varies according to the circumstances. It may only take three to five weeks if there are no complications, inheritance tax is not payable, the estate is straightforward and all forms are filled in properly. However, in more complicated cases, it may take much longer.
To apply for probate or letters of administration, you need to fill in a number of forms. You always need to fill in form PA1. This form asks for details about the person who has died, their surviving relatives, the personal representative and some details about the will, if there is one.
You will also need to fill in other forms depending on what is in the estate and how much it is worth.
You can obtain the forms and further advice by telephoning the HMRC Probate and Inheritance Tax Helpline on 0300 123 1072. The Welsh language helpline is 0845 302 1489.
PA1 and other forms can be found on GOV.UK at www.gov.uk.
You will have to go for an interview at a probate registry when you have sent in the forms, so return the forms to the probate registry where you would like to go for the interview. With the forms, you also have to send:
- the original will (if there is one) and three copies
- the death certificate
- the inheritance tax forms
- the probate fee.
Make sure you keep copies of the forms and anything else you have had to send with the forms.
The fee for applying for probate or letters of administration depends on the value of the estate. There is no fee where the value of the estate is less than £5,000. The fee for an estate valued at £5,000 or more is £215.
You can apply to pay a reduced fee, or no fee, if you are on a low income or face financial hardship. You can apply online or download a form to print off on GOV.UK at www.gov.uk.
Going to the interview at the probate registry
When they have looked at your forms, the probate registry will send you details of how to arrange an interview at the probate registry to swear the oath.
You need to take all relevant documents and letters with you, for example, bank books, share certificates and details of any debts of the person who has died. You also need to take identification with you, for example, your passport or driving licence.
The probate registry will have transferred all the details onto the official legal papers by the time of the interview. You should read these very carefully and check all the details. You are legally responsible for making sure the documents are correct and you have to confirm on oath that the details are accurate.
If it is inconvenient for you to go to a probate registry you may be able to confirm the oath at a local solicitor's office that also offers a 'commissioner for oaths' service. There will be a small charge for this. If you want to do this you should write 'solicitor's office' in the box labelled 'interview venue' on the PA1 form. This option is not available in all cases.
Whether or not probate or letters of administration is needed, you have to inform HM Revenue and Customs (HMRC) of the death, in case inheritance tax is payable.
Inheritance tax may have to be paid if the estate is valued at more than £325,000. There are some exceptions to this rule, for example, if the husband, wife or civil partner inherits the estate.
If inheritance tax has to be paid, some of the tax must be paid before probate or letters of administration is granted. Once probate or letters of administration has been has been granted, the final tax bill will be sorted out.
See GOV.UK for more about inheritance tax.
After the interview, you will get a letter saying how much inheritance tax is still left to pay.
Once this has been paid, probate or letters of administration will be sent to you in the post. It includes details of the gross and net estate, that is, the value of the estate before and after debts have been deducted. A photocopy of the will, stamped to prove it is an official copy, is also sent. Both the probate/letters of administration and the will are public documents and can be examined by anyone who wants to see them.
Once you have got probate or letters of administration, you can begin to deal with the estate and share out the property. You can find out what to do after you get probate (also called a grant of representation) on GOV.UK.
Even if you have been named as an executor in someone's will, you may not wish to, or be able to, act. You can appoint someone else to apply for probate on your behalf. To do this, fill in their details on form PA1. The other person will then be sent a form to sign.
You may not want to appoint someone else to act for you. You can still refuse to act, as long as the person who made the will has died and you have not already started to deal with the estate. This is called renouncing.
This means that someone else could then apply for letters of administration.
The GOV.UK website has a useful checklist of what to do when someone dies. You can find this online at www.gov.uk.
HM Courts and Tribunals Service produces a useful guide for people who are applying for probate or letters of administration. It is called How to obtain probate - A guide for people acting without a solicitor. You can download the leaflet from their website at www.justice.gov.uk.
Cruse Bereavement Care supports people who are bereaved and produces useful information and advice. Go to their website at: www.cruse.org.uk.