UK Bereavement: Financial Checklist When Someone Dies

Losing a loved one is devastating, and the financial administration that follows can feel overwhelming. This guide provides a clear, step-by-step checklist of the financial actions you need to take when someone dies in the UK. It is designed for UK-based residents and focuses on the financial and administrative tasks required.

Note: This article is for informational purposes only and does not constitute legal or financial advice. For complex estates, always seek professional guidance.

Immediate Actions: The First Week

In the immediate aftermath of a death, certain financial actions should be prioritised.

1. Obtain Death Certificates: Contact the registrar of births, deaths, and marriages to register the death and obtain death certificates. Each copy costs £11. It is wise to get multiple copies (at least 5-6) as many organisations will require an original certificate.
2. Notify Banks and Building Societies: Inform the deceased’s bank or building society as soon as possible. They will freeze the accounts to prevent fraud. For joint accounts, the surviving account holder should contact their bank.
3. Cancel Direct Debits and Standing Orders: Review the deceased’s bank statements and cancel any regular outgoing payments that are no longer needed, such as subscriptions or utilities. Contact the service providers directly.
4. Check for Life Insurance: Look for any life insurance policies. The policy documents will be needed to make a claim.
5. Contact the Employer: If the deceased was employed, notify their employer. They will handle final salary payments, pension contributions, and may have a death-in-service benefit.

Benefits and Pensions: Notify the Department for Work and Pensions (DWP)

The DWP needs to be informed to stop or adjust state benefits. You can report a death to the DWP by calling the Bereavement Service helpline on 0800 731 0469.

Key benefits and pensions to consider:

• State Pension: The State Pension stops being paid on the date of death. However, the deceased’s spouse or civil partner may be entitled to a higher pension based on their late partner’s record.
• Attendance Allowance & Personal Independence Payment (PIP): These benefits stop on the date of death.
• Bereavement Support Payment: If the deceased’s spouse or civil partner is under the State Pension age, they may be eligible for this payment. It consists of a lump sum of £3,500 and monthly payments of £350 for 18 months.
• Funeral Expenses Payment: If the person arranging the funeral is on a qualifying benefit (like Pension Credit, Housing Benefit, or income-based Jobseeker’s Allowance), they may be able to get up to £1,000 towards funeral costs from the Social Fund.

Bank Accounts

How bank accounts are handled depends on whether they are held jointly or solely.

• Joint Accounts: The account usually passes automatically to the surviving account holder. The bank will need to be notified and will update the account details.
• Single Accounts: These are frozen until probate is granted (or letters of administration). The bank may allow access to funds to cover funeral expenses or Inheritance Tax, at their discretion, up to a limit of £5,000.

Life Insurance

Contact the insurance company as soon as possible to start the claims process. You will need the death certificate and policy details. Life insurance policies usually pay out within 30 days of a valid claim. Check if the deceased’s employer had a death-in-service benefit, which is a separate policy that pays out if an employee dies while in their employment.

Pension Death Benefits

Pension death benefits depend on the type of pension scheme.

• Defined Contribution Pension (e.g., Personal Pension, Workplace Pension): The death benefit is typically a lump sum, often 2 to 4 times the member’s annual salary. It can be paid to any nominated beneficiary.
• Defined Benefit Pension (Final Salary Pension): Usually provides a pension for the surviving spouse or civil partner, which is often 50% of the member’s pension. It is crucial to ensure the pension scheme’s nomination form is up to date.

Tax Considerations

• Inheritance Tax (IHT): Transfers of assets between UK-domiciled spouses or civil partners are exempt from IHT. For other beneficiaries, IHT is only payable on the part of the estate valued above the nil-rate band. The current nil-rate band is £325,000, or £500,000 if the deceased’s home is passed to a direct descendant.
• Capital Gains Tax (CGT): Transfers of assets between spouses or civil partners are exempt from CGT.

Probate

Probate is the legal process of dealing with someone’s estate. You may need to apply for a grant of probate (or letters of administration if there is no will) to deal with the estate.

• When is it needed? If the estate is worth more than £5,000.
• How to apply: Apply to the Probate Registry. The fee is £273.
• What it does: It gives you the legal authority to access the deceased’s assets, pay off debts, and distribute the estate according to the will or the rules of intestacy.

Digital Assets

Don’t forget about the deceased’s digital footprint.

• Email and Social Media: Close or memorialise accounts.
• Subscriptions: Cancel any online subscriptions (e.g., streaming services, magazines).
• Online Banking: Ensure online access is disabled after notifying the bank.

Worked Example: The Smith Family

John, age 62, dies. His widow, Mary, is 58. They own a house jointly worth £400,000 (mortgage-free). John has a personal pension worth £180,000, savings of £50,000, and life insurance of £100,000.

Mary’s Financial Actions:

1. Immediate Actions: Mary gets multiple death certificates and notifies all banks, the pension provider, and the life insurer.
2. Life Insurance: She makes a claim on John’s life insurance policy and receives £100,000. This can be used immediately.
3. Bereavement Support Payment: As Mary is under State Pension age, she claims £3,500 as a lump sum and will receive £350 per month for 18 months, totalling £9,800.
4. Pension: She claims the death benefit from John’s pension, which could be a lump sum of £180,000 (depending on the scheme rules). She should also check her eligibility for a higher State Pension based on John’s record.
5. House: The house passes to Mary automatically as a joint owner. No IHT is due due to the spouse exemption.
6. IHT: The rest of the estate (savings, pension) is left to Mary. As the transfer is between spouses, no IHT is due.

Tips and Further Help

• Keep Detailed Records: Keep copies of all correspondence, receipts, and documents related to the death and the administration of the estate.
• Get Multiple Death Certificates: As mentioned, order several copies from the registrar.
• Seek Legal Advice: For complex estates or if there is a dispute, it is wise to consult a solicitor.
• Citizens Advice: Provides free, confidential information and advice on a wide range of topics, including bereavement and money. Visit their website or call their helpline.
• MoneyHelper: Offers free, impartial money guidance. Their website has detailed information on what to do when someone dies.
• Age UK: Provides support and advice for older people and their families.
• Bereavement Support Groups: Organisations like Cruse Bereavement Care offer emotional support, which can be invaluable during this difficult time.

Resources:

• GOV.UK - What to do when someone dies
• MoneyHelper - What to do when someone dies
• Citizens Advice - When someone dies
• Age UK - What to do after a death