Bereavement and finances: a step-by-step guide to managing financial affairs after a loss

When a loved one dies, it’s natural for practical matters to fall by the wayside as we try to cope with this massive life event. But it’s not always possible to give in fully to this emotional time, as responsibilities eventually come to the forefront. Once the death is registered, the funeral has taken place and normality is supposed to return, money matters are suddenly high on the list of things to consider. Because it’s a difficult time, it’s wise to be aware of the basic steps in advance so expenditure of mental energy can be minimised.

Here’s an overview of what to consider when sorting out a loved one’s financial affairs.

Contact government departments

One of the first jobs is to let the government know of the death. Their ‘Tell Us Once’ service means it can all happen in one go. You’ll need information like the executor of the estate (this is the person who is dealing with the estate – they are either named in the will, or next of kin) and the reference number given by the registrar who registered the death. Among other things, this will cancel benefits like pensions or housing benefits, and cancel official documents like their passport and driving licence. It will also remove their name from the electoral register.

Consider any changes in your tax and benefit

If it’s your partner who has died, your financial circumstances are likely to change. This may affect how much tax you pay or benefits you’re owed. The gov.uk site has good information to help you work this out.

Notify relevant organisations

As soon as possible, you’ll need to tell the most important parties, like their employer, their landlord or mortgage provider and their utility companies. If you’re not sure who these companies are, finding their credit report will shed light. Between the three main credit reference agencies Experian (whose basic report is free), Equifax and TransUnion, the reports lay out much of someone’s regular financial outgoings. If you report a death to Experian, they can informally let providers know. This can ease the burden – but if you don’t hear from the providers, you’ll still need to contact them individually to ensure they’ve taken the right actions.

To contact credit reference agencies about a loved one, you will either need to be an executor of the will or have probate to obtain these reports.

So… Apply for probate

If the person left a will and you’re the executor of their estate, or if they didn’t leave a will and you’re next of kin, you might need to apply for probate. This is the legal right to deal with someone’s property, money and possessions when they die. Before you can apply for probate, you’ll need to know the value of the estate. At gov.uk you can use the helpful online inheritance tax checker and register for probate.

Close accounts and pay off any debts

The last job is to go through the remaining organisations that your loved one had an account or contract with, collect or pay back any balances and close the accounts. Having a priority order helps. Consider banks, credit companies, insurance companies (if they had life insurance, don’t forget to start the claim), pension companies and subscription services. Of course, it’s only possible to start this when you have the headspace, but tackling it sooner rather than later can avoid unhelpful pressure from unaware companies, and it reduces the risk of identity theft.

Debts can be one of the most alarming aspects of dealing with a person’s affairs after they have passed. Remember, you are not usually responsible for paying a deceased person’s debts from your own pocket. Money Helper has some good advice here:

“When someone dies, their debts become a liability on their estate. The executor of the estate, or the administrator if no will has been left, is responsible for paying any outstanding debts from the estate. If there isn’t enough in money or assets in the estate to pay off all the debts, the debts would be paid in priority order until the money or assets run out. Any remaining debts are likely to be written off. If no estate is left, then there’s no money to pay off the debts and the debts will usually die with them. Surviving relatives won’t usually be responsible for paying off any outstanding debts, unless they acted as a guarantor or are a co-signatory of the debt“

Planning in advance

No one wants to think about the idea of ‘getting our affairs in order’ in case we get ill or die. But if we don’t, our loved ones are faced with avoidable red tape at a challenging time. Here are three steps to make money matters easier.

1. Get lasting power of attorney This is a legal document that allows other people to make decisions about your affairs on your behalf. It’s needed if you lose the ability to make decisions for yourself. There are two types: one document for health and wellbeing decisions, and one about property and finance. The forms are a little complicated to fill out, but it’s a key document to have and worth the effort. See gov.uk to register.
2. Make a will The single best thing anyone can do in advance is make a will. This lays out your wishes on how your property, money and possessions are divided up when you die, and names the executor of your will. It can take just 30 minutes, and can be done using free online tools.
3. Record all of your financial information in one place It will save your executor time and stress if all your financial information is laid out in one place. This can include things like bank accounts, income streams (including pensions), outgoings, continuing contracts and insurance policies. You can find most of these in your credit report, so it can be worth including a copy of this alongside your will. However you present it, ensure it’s kept up to date every year or two.

Helpful links

• cruse.org.uk A bereavement support charity with a free helpline and support
• sueryder.org A bereavement charity that offers online support
• gov.uk/browse/benefits/bereavement Benefits for the bereaved to help with costs and funeral expenses
• moneyhelper.org.uk An arm’s-length body sponsored by the Department for Work and Pensions
• citizensadvice.org.uk Citizens Advice Bureau gives advice on dealing with the financial affairs of loved ones
• Bereavement Advice Centre A free helpline and digital information service from Co-op Legal Services

To learn more, visit experian.co.uk or download their free app.