Money: Financial steps after a death

Clifford German on how to avoid further worry when a relative dies

A death in the family brings financial worries at a time when most families are ill equipped to cope with them. But if you make note of a few simple procedures you will avoid the pitfalls and minimise extra anxiety.

First, report the death to the local Registrar of Births, Marriages and Deaths within 48 hours. Banks and building societies must be notified so that the dead person's accounts can be frozen. Joint accounts can still be used by the surviving partner.

If the dead person was receiving a pension, the administrators have to be told. Any money due for the month the pensioner died is usually paid in full. Claim a pension for the surviving spouse at the same time.

The local benefits agency (the new consumer-friendly face of the DSS), whose number is in the local phone book, handles any claims for death benefits, income support, widows' pensions or other allowances. A tax- free grant of pounds 1,000 is available to help widows under 60 with immediate financial needs.

The next task is to obtain probate, which is the High Court's permission to distribute assets to the beneficiaries of the will. Obtaining probate is the task of the executors, who are named in the will, or the administrator (usually a relative who volunteers if there are no appointed executors). Anyone can be an executor or administrator provided they are at least 18 and follow a few simple rules.

The first step is to find the probate office (from the phone book or library) and obtain the appropriate forms. These are an application form, PA1, and either IHT205, if the estate is worth less than pounds 200,000, or IHT44, if it is worth more. IHT37 needs to be completed if the deceased owned property, IHT40 if there were any stocks and shares or unit trusts, and a spouse's contribution form, PA5, if the home was in the sole name of the deceased. A leaflet, PA2, is available to help with filling in the forms.

The executor/administrator must list all the assets of the deceased including the value of all property and belongings. Any money due to the estate and any outstanding debts (including mortgages) should be listed. If the total value of the assets falls well short of the threshold for paying inheritance tax (currently pounds 231,000), this is a relatively simple procedure. The closer you come to the threshold, the more precise the Probate Office expects you to be - so you may need professional help with valuations.

Completed forms plus the death certificate and will should be sent to the Probate Registry, and the executor/administrator then has to arrange an interview with the probate office.

The Inland Revenue must also be informed and any tax due, including inheritance tax, has to be paid before probate is granted. Inheritance tax is not payable on assets left to a surviving spouse, but if assets exceeding pounds 231,000 are left to anyone else, including children, IHT will have to be paid. If the first spouse has already died, all assets have to be included in the estate, including any sizeable gifts made in the last seven years of the deceased's life.

Once probate has been obtained, the assets can be transferred to the beneficiaries of the will. If there is no will, the distribution of assets follows a formula laid down by the courts. This allots all assets up to pounds 125,000 to the spouse (but not an unmarried partner).

If the task of obtaining probate sounds too daunting, banks and solicitors can act as executors and take on all the hassle in return for a fee of up to 3 per cent of the net proceeds of the estate. But they may well take literally their instructions to "call in" the assets of the estate and try to sell up. It is important to lay down precise instructions if assets are to be transferred rather than cashed and sold.

Some individuals give specific instructions in their will that all their assets are to be sold and the proceeds distributed among their heirs. This avoids any wrangling over who gets what.

If there is only one beneficiary it makes sense to transfer assets such as shares and bank and building society accounts directly into his or her name in order to eliminate dealing costs and to maintain the continuity of the investment. It would be a shame to lose a possible future windfall from a building society by allowing an existing account to be closed rather than transferred.

Stocks and shares can be transferred free of charge simply by writing to the registrar. Bank and building society accounts can be transferred by contacting the branch where they are held, and National Savings can be transferred by writing to the Registry at Lytham St Annes.


NP45: a guide to widows' benefits. From benefits agencies and most post offices.

"How to sort out someone's will: a straightforward guide to coping with probate". Which, Freepost, Hertford XG14 1LH.

IR45: income tax, capital gains tax, inheritance tax: what happens when someone dies. IHT3: an introduction to inheritance tax. Both available free from the local tax office.

"Making Your Will": factsheet no7; "Probate: dealing with someone's estate": factsheet no14, both from Age Concern. Call 0800 009966.

Suggested Topics
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Mick Jagger performing at Glastonbury
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
ebookA unique anthology of reporting and analysis of a crucial period of history
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice