Guide to benefits and money after a death
When someone dies you may have a lot to deal with during a time when you are likely to be grieving, so it's worth knowing what payments are necessary and if you're entitled to benefits.
Dealing with finances after a death
You may have to sort through financial matters such as the deceased's estate (property, possessions, money and investments) and pay tax. Or, you may be entitled to a particular payment like Bereavement Allowance.
When someone dies the 'executor' (if there is a will) or 'administrator' (if there is no will) normally sorts out the deceased person's finances and then distributes what's left according to the will or the laws of intestacy.
In certain cases, such as where there is a small estate, or where the only property in the estate is jointly owned and the spouse or civil partner survives, it may not be necessary to appoint an executor or an administrator.
Help with costs
Funeral Payment can help towards the cost of arranging a funeral. Some or all of it might have to be repaid from the estate of the person who died.
If your husband or wife has died you may be able to claim Bereavement Payment, a one-off, lump-sum payment of £2,000 that's tax-free.
If you have been widowed you may be able to get Bereavement Allowance. This is a taxable weekly benefit paid to you for up to 52 weeks from the date of death of your husband, wife or partner.
Widowed Parent's Allowance
If you're a widowed parent and you have dependent children (under 16, or under 19 if still in full-time secondary education), you may be able to claim Widowed Parent's Allowance (WPA).
Dealing with a deceased person's money and property
After a person dies, someone (called the deceased person's 'executor' or 'administrator') must deal with their money and property (the deceased person's 'estate'). They need to pay the deceased person's taxes and debts, and distribute his or her money and property to the people entitled to it.
Sorting out someone's tax affairs after they die
When someone dies it's important to sort out their tax and National Insurance as soon as possible. There may be tax to pay or a rebate due. The executor or administrator sorts out the deceased person's tax affairs, as well as the rest of the estate.
What happens to debts when someone dies?
When someone dies, any debts they leave are paid out of their 'estate' (the money and property they leave behind). You're only responsible for their debts if you had a joint loan or agreement or provided a loan guarantee – you aren't automatically responsible for a husband's, wife's or civil partner's debts.
Inheritance Tax is the tax that is paid on your 'estate'. Broadly speaking this is everything you own at the time of your death, less what you owe. It's also sometimes payable on assets you may have given away during your lifetime.
Assets include things like property, possessions, money and investments.
Paying Inheritance Tax
If you have been nominated as someone's personal representative you need to value all of the assets (property, possessions and money) that the deceased person owned, to work out whether any Inheritance Tax is due.
Inheritance Tax is only payable if a deceased person's estate is worth more than £325,000.
Valuing someone's estate for Inheritance Tax
When valuing a deceased person's estate you need to include assets (property, possessions and money) they owned at their death and certain assets they gave away during the seven years before they died.
The valuation must accurately reflect what those assets would reasonably fetch in the open market at the date of death.