Tomorrow People

Funeral Guide: Understanding Inheritance Tax and the Financial Issues Associated with Death

Blog post   •   Jul 30, 2012 09:32 BST

The last thing you want to think about after the death of a loved one is sorting out their financial affairs.  But sooner or later the practicalities need to be dealt with and many bereaved partners and dependants are ill-prepared for both the costs associated with death and managing the financial situation afterwards.

Amongst the financial aspects to be dealt with are:

  1. Informing pension, savings and investment providers of the death
  2. Establishing whether any benefits are payable as a result of the death - for example, proceeds of life assurance policies, or spouse’s benefits from pensions
  3. Establishing entitlement to benefits or allowances and preparing relevant applications
  4. Informing the Inland Revenue and dealing with the tax forms which will be sent
  5. Establishing whether there is a will, or if not, how the estate will be distributed under “intestacy” rules which dictate how will-less estates are dealt with
  6. Assessing whether Inheritance Tax will apply - estates over a certain value (£325,000 in the year 2012/2013) may be subject to Inheritance Tax.  In certain circumstances it may be possible to “re-arrange” the deceased’s affairs for a more beneficial tax outcome
  7. Assess whether any gifts of capital have been made within the last 7 years – if so, they may be brought back into the Estate for Inheritance Tax purposes
  8. Calculating any Inheritance Tax due and preparing the relevant returns for HMRC
  9. Applying for probate - which allows you to deal with the affairs of the deceased.  This involves collecting all the money from savings and investments, paying any outstanding debts, and distributing the estate to the individuals entitled to it.  
  10. Dealing with closing or transferring accounts and investments and reinvesting the proceeds
  11. Establishing whether the beneficiaries of the estate have any tax issues arising as a result of their inheritance

There will almost inevitably be loose ends to tidy up following a death. Some situations can be complicated and emotionally draining. Unexpected issues may even arise for years after a person’s death.

Pen-Life Chartered Financial Planners have been established for over 25 years, and have helped hundreds of clients put their financial affairs in order.  We were one of the first Financial Planners in the Yorkshire region to achieve “Chartered” status – the gold standard signifying the highest standard of professional excellence, ethics and integrity.  

We have specialist advisors in this area, who have many years’ experience in helping the bereaved sort out the financial affairs of their loved ones.  An initial meeting – at our expense - could help put your mind at rest.

For more great free advice, download our eGuide: ‘The bucket list – 10 things to do before you die’. It’s also got some really exciting stuff in it to do with dolphins and bungee jumping, so you really shouldn’t miss it.

Guest Post: Julie is the director of Pen-Life, financial planning practice which provides independent, no-nonsense financial advice from Yorkshire. We advise private, corporate and trustee clients throughout the country on insurance, investments, pensions, long term care and inheritance tax. You can also find her on Google+ and Twitter