10 Tips to help you navigate life after bereavement

1st Mar 2023 Life

Sometimes known as "sadmin", the paperwork you have to go through after a loved one dies can be overwhelming. Simon Hodges shares advice for life after bereavement

Losing a loved one is a difficult time in anyone’s life. When you’re dealing with loss, grief and shock it’s hard to make even the simplest decisions. But this is precisely when you will be faced with handling your loved one’s financial affairs, tax liabilities and legal paperwork.

"When you’re dealing with loss, grief and shock it’s hard to make even the simplest decisions"

Most people will never have dealt with a deceased person’s "estate" before. This article helps you make sense of what’s involved and explains some of the terms you will come across.

1. Who do I need to inform?

When someone passes away, you are required to register their death within five days. You can do this online. You will also need to inform banks, building societies, utility companies and other service providers. There are a number of online services that help you to do this.

You can register someone's death online

You can inform most branches of government through the Tell Us Once service. The Death Notification Service enables you to inform many banks and building societies, while Settld and Life Ledger cover many other insurers, pension providers, utilities, social media and household service providers.

2. Who decides what happens to the estate?

If there is a will, it will identify one or more executors. These are the people responsible for carrying out the wishes of the deceased and administering their estate. If there is no will, the closest living relative can apply to be the administrator of the estate.

3. What is an estate?

An estate is the money, property, possessions and valuables of the deceased, as well as any debts they may have.

4. What is probate?

Probate is the legal right to deal with someone’s estate when they die. To gain control of the assets (sell a house, cash-in assets or pay debts) the executors or administrators will need to have a "grant of probate" or "letters of administration".

5. How do I get probate?

Firstly, check if you need it. Not all banks and financial institutions require it. In England and Wales, there is usually no need to apply for probate if the estate is worth less than £5,000.

"Not all banks and financial institutions require probate"

You also may not need to apply for probate if the person:

Owned shares or money with others—this automatically passes to the surviving owners, unless they’ve agreed otherwise.
Owned land or property as "joint tenants" with others. Such property automatically passes to the surviving owners.

If you do need to apply for probate, you will need to estimate the value of the person’s estate. You can apply for probate online.

6. How do I calculate the value of the estate?

The value of the estate is the assets (what the person owned) minus any liabilities (what they owed), such as:

Mortgages
Loans
Credit cards
Overdraft
Any kind of debt

Your loved one’s personal papers and any electronic records will help you find out what they owned. Their last income tax return is also a useful source of information.

You will need to calculate the value of your loved one's estate

When calculating the estate, you will need to include the value of:

Everything the person owned (their assets) on the day they died,
Any gifts they gave, such as cash or items of value, in the seven years before they died, and
The value of any trusts where the person had a beneficial interest.

To start with, you will only need enough information to decide if you need to pay inheritance tax. If you do, His Majesty’s Revenue and Customs (HMRC) may ask for more details.

7. What is inheritance tax?

A 40 per cent tax on an estate (property, money and possessions), which is charged when you die.

8. How much will I have to pay?

In most cases, you only have to pay inheritance tax if the estate is worth more than £325,000. However, even when the estate is worth more than this, most people don’t pay inheritance tax because they leave everything above the £325,000 threshold to their spouse, civil partner or a qualifying charitable cause.

9. When do I have to pay it?

Inheritance tax is paid once the estate has been valued. It is best to pay within six months to avoid accruing any interest.

10. Do I need a professional advisor to administer an estate?

It depends on your circumstances. More complicated estates, such as those involving second marriages or blended families, can be harder to deal with yourself.

"More complicated estates can be harder to deal with yourself"

In these cases, it makes sense to consult an independent, qualified professional who can help everyone navigate the decisions that need to be made.

You’re not alone

If all this seems overwhelming, don’t worry. Professional help is readily available to support you through the legal and financial processes. For professional advice from a specialist, you can find a STEP member in your area who is qualified as a Trust and Estate Practitioner (TEP). The Society of Trust and Estate Planners (STEP), is a global professional body, comprising lawyers, accountants, trustees and other practitioners that help families plan for their futures.

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