Dealing with the financial affairs of someone who has died in 2022

How to deal with the estate of a deceased person

Anything owned by a deceased person is known as an estate. The property may include:

  • Money, both cash and money in a bank or building society account. This may include cash paid on a life insurance policy.
  • Money owed to a deceased person
  • Shares
  • Property, for example, their house
  • Personal property, for example, their car or jewelry.

If the deceased owes money to other people, such as credit cards, gas, rent or mortgages, this will come out of the estate.

A deceased person’s property is usually passed on to surviving relatives and friends, either according to the instructions in the will, or if the person dies without leaving a will, under certain statutory laws called intestate laws.

For information about wills, see Wills.

For information about leniency laws, see Who Can Inherit Without a Will – Prison Laws.

The person who deals with the property of a dead person is called Executor or one Administrator. An executor is a person who is given responsibility in relation to the estate in the will. An executor must apply to a special legal authority before dealing with the property. This is called probate.

An administrator is a person responsible for dealing with an estate in certain circumstances, such as when there is no will or the named executors are unwilling to act. An administrator must apply for letters of administration before dealing with the property.

Although there are some exceptions, it is usually prohibited by law to start dividing the property, or to get money from the property, unless you have a court or letter of administration.

What does the executor or administrator do?

The executor or administrator (also called a personal representative) is responsible for handling all of the estate. This includes:

  • Access to all financial documents belonging to the deceased
  • Sending a copy of the death certificate to the organizations holding the deceased person’s money. Ask for proof of the amount withheld on the date of death and the amount of income received in the last tax year up to the date of death. Also, ask them to freeze the bank accounts so that no one can withdraw money without proper legal authority
  • Opening a bank account in lieu of property
  • Get details of the money owed on the property
  • Find out the details of the money owed by the deceased
  • Prepare a detailed list of the property, cash and assets and liabilities in the estate
  • Working out the amount of inheritance tax to be paid and making arrangements to pay it
  • Prepare and send documents required by the Probate Registry and HM Revenue and Customs
  • Collecting money belonging to the estate from banks, insurance companies, pension funds and building societies when letters of probate or administration are issued.
  • Payment of debts, costs and charges, such as solicitors’ fees and costs
  • Distribute the property as stated in the will or according to the laws of intestacy.

If there are insufficient assets in the estate to cover unpaid taxes, expenses, bills and other debts, you should consult an attorney. Managing an unpaid estate can be complicated.

Taxes and benefits

When someone dies it is important to sort out benefits, tax and National Insurance as soon as possible. There may be taxes to pay, or their property may be subject to a certain tax refund.

You must tell the government office that paid the deceased person’s benefits and every other government office about their death. You need to do this as soon as possible after death.

Depending on where the deceased lived, you can tell multiple government services using the Tell Us One service about the deceased in one contact. For more information about this service, see What to do after death.

If you want to report a death to the Department for Work and Pensions (DWP), you can call the DWP Bereavement Service. They can deal with all the DWP benefits that were paid to the deceased. You can also check whether the next of kin is entitled to any benefits. For more information about this service, see What to do after death.

Information about tax and benefits can be found on the HMRC website at www.hmrc.gov.uk or on the GOV.UK website at www.gov.uk.

Debts

The deceased may have left debts, for example, overdrafts on their accounts or unpaid loan agreements.

When someone dies, you should try to contact all their creditors. You must place a notice on their website in their newspaper, which is the official public register of legal notices in the UK. This tells creditors that they can make a claim on the property to pay off the debt. If you don’t file a notice and pay off the property, if creditors come forward, you may have to pay the rest of the debt with your own money.

Generally, if there is not enough money in a deceased person’s estate, their creditors cannot recover money owed to them by anyone else, including surviving relatives. You should check that the person has any insurance policy that will cover any of their debts in the event of their death, for example, a payment protection insurance policy taken out at the same time as the loan.

In some cases, the debt may be joint, for example, an overdraft on a joint account or a debt on a loan agreement taken out in the joint name. If this is the case, the debt can be recovered from the survivor. Additionally, if you lived with the deceased you may still be liable for debts relating to the property, such as council tax or water bills.

Probate and letters of administration

Probate

If you are named as executor in someone’s will, you may need to apply for probate. This is a legal document that gives authority to distribute the property of a deceased person according to the instructions given in the will. You don’t always need probation to deal with the property.

If an executor is named in the will, you don’t have to act if you don’t want to.

Administrative letters

In some cases, a person who wants to deal with a deceased person’s estate may need to apply for letters of administration instead of probate. This person is called A Administrator. You should apply for a letter of administration if:

There are strict rules on who can be a manager. If there is a valid will, you can apply for letters of administration if:

  • The deceased person left all their property to you in their will, and
  • Executors not named, or unable or unwilling to act.

If there is no valid will and you are a close relative, you can apply to be an administrator in the following order of precedence.

  1. You are the spouse or civil partner of the deceased
  2. You are the son of a dead man
  3. You are the grandson of a dead man
  4. You are the parent of the dead person
  5. You are the brother or sister of the dead person
  6. You are the niece or nephew of the deceased
  7. You are another relative of the dead person.

An unmarried spouse or same-sex partner whose civil partnership is not registered and is not named in a will as an executor usually cannot act as an administrator.

You don’t always need a letter of administration to deal with a deceased person’s estate.

Do you always need a probate or letter of administration?

If it involves real estate, such as an apartment or house, you usually need a letter of probate or administration to deal with an estate. Alternatively, you may not need a probate or letters of administration if:

  • Wealth is made up of cash (ie, banknotes and coins) and personal property such as cars, furniture, and jewelry.
  • All property in the estate is owned as beneficial joint tenants and this property automatically becomes fully owned by the other.
  • You had a joint bank account
  • The amount of money is small
  • You realize that the property is not rentable, that is, there is not enough money in the property to pay all debts, taxes and expenses.
  • There are certain life insurance policies and pension benefits in the property.

Common property

A couple may own their home jointly. There are two different ways to own a home together. These are joint tenancies and tenants in common.

If the partners were beneficially joint tenants at the time of death, the surviving partner automatically inherits the other partner’s share of the property. No probate or letters of administration are required unless there are other assets that are not joint property. The property may have a mortgage.

However, if the partners are tenants in common, the surviving partner does not automatically inherit the other person’s share. A personal representative who inherits a share of the estate under the laws of will or will may pass probate or letters of administration are required. The property may have a mortgage.

Example: Ayodele and Olujimi are not married. They have one grown daughter named Ife. Ayodele and Olujimi share their house as tenants. Ayodele dies without leaving a will. Olujimi does not have the right to apply for letters of administration but Ife does. She inherits half of the house under the laws of infidelity. Olujimi owns half the share.

For more information about joint tenants and tenants in common, see Buying a Home with Someone Else. For more information about leniency laws, see Who Can Inherit Without a Will – Prison Laws.

If there is a loan on the property

If the person inheriting the property and there…

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