After a loved one passes away, they leave a lot behind and the loved ones that they leave behind have to deal with it. An important part of what remains is the deceased’s bank account, and it is important to know how to deal with it
Before you can deal with the deceased’s bank account, there are a few steps that must be taken before financial assets can be dealt with (aside from arranging a funeral that is):
- The death must be registered
- Probate must be applied for
- Banks, utility companies and insurers must be contacted
- Inheritance tax must be considered
The death must be registered
To begin with, you must first register the deceased’s death. Registering a death is the only way to get a death certificate, without the deceased’s death certificate, the bank accounts held by the deceased individual cannot be accessed. A death must be registered within 5 days if you live in England, Northern Ireland or Wales and within 8 days if you live in Scotland.
Probate must be applied for
After the death has been registered, probate must be applied for. But before we go into how to get probate, we should talk about what it is. Probate is the process for legally dealing with a deceased person’s estate. Although, it is worth noting that if the deceased’s estate was jointly owned with a spouse or civil partner, probate may not be required.
If the deceased had a will, they should have named an executor – an individual who is responsible for dealing with the estate. The executor must acquire the original copies of both the Will and death certificate, once acquired, probate can then be applied for. The Will and death certificate must be the original copies, photocopies are unacceptable and won’t enable you to get a “grant of probate”. If the deceased passed away without leaving a Will, you can still go through the application process, however, you will get “letters of administration” rather than a “grant of probate”.
You can use an online service like WillFinda to help find the original copies of lost of missing wills.
Banks, utility companies and insurers must be contacted
Now that you have acquired a grant of probate and all the documents that come with it (Will and death certificate) or have received letters of administration (in the event that a Will has not been made), relevant parties – such as banks, building societies and insurers – should be informed of the unfortunate departure of the deceased.
After you have informed the bank of the passing of the deceased, their bank account will be frozen, meaning that any in and out goings (such as direct debits) will be stopped. Once the account is frozen, the bank will contact you about the next steps for dealing with the bank account of the deceased. When dealing with the bank, it is likely that you will need 2 forms of ID (such as a passport and driving licence) and a copy of the Will and death certificate. This will be necessary so the bank can formally begin releasing money and closing the bank account. Now that the bank account is frozen, and all the formal processes have been completed by the bank, the executor can now withdraw money out of the account and distribute it to all the beneficiaries.
If you try to withdraw money from the bank account of the deceased before probate has been granted and the bank account been closed, most banks won’t allow it (unless you are the other person named on a joint account). Some banks may allow you to draw out some money if you need it to cover death related expenses (such as for the funeral or probate fees), however, this is usually capped between £15,000 and £50,000 depending on the bank.
It is also worth noting that if you are uncertain about the details of the deceased’s bank account, or if the details have been lost, there are tools online that can assist you in discovering lost accounts
Be aware of any debts the deceased may have had
It is important to note that before you can distribute the money to all the beneficiaries, the debts that the deceased has accumulated must be paid off – provided there is enough estate to pay off the debts. These are debts such as mortgages, credit cards and loans. If there is insufficient estate, some of the debts will be written off. In the UK, you do not inherit debts from the deceased, unless you have a loan in a joint name or something similar to that nature.
If there is still estate remaining after debts have been paid off, a notice must be put in The Gazette. The Gazette is the official public record of deceased estates. If you do not place a notice in The Gazette and a creditor later places a claim against the estate, you may personally become liable for that debt. If everything is clear for 2 months and 1 day after the notice has been posted, you can then distribute the estate.
Other things to consider
Open insurance policies must be closed. Unless a claim is made, insurance companies don’t pay out, so no money can be gotten back from payments that the deceased has made. Money can only be claimed from insurance companies if the deceased had some kind of life insurance.
State pension payments must be cancelled – if they were receiving them. Workplace pensions or personal pensions may be able to be claimed depending on the pension they had.
Inheritance tax must be considered
For inheritance tax, an estimate of the deceased’s estate must be reported to HMRC so they can decide whether inheritance tax is necessary. Inheritance tax won’t be charged if the estate is left to a spouse, civil partner, charity or amateur sports club. If this does not apply, tax will be charged on estates worth over £325,000. If the estate is left to children or grandchildren (including step and adopted children), the value at which tax can be charged increases to £500,000.
It is most common that the state will pay for inheritance tax, not the inheritor or executor.
We hope you have learned a little bit more about how to deal with the bank account of the deceased, and that your tough times will be made a little bit easier.
