The Death Notification Service makes it easier to inform multiple financial institutions by providing the following information just once:
- The full name of the deceased;
- The details of the person acting as executor or administrator, if known;
- Details of the deceased’s bank or building society accounts and sort codes and account numbers (these are not mandatory but help the financial institution/s to quickly confirm whether they hold open accounts for the deceased);
- The date of birth of the deceased;
- The date of death;
- The last address of the deceased; and
- The Death Certificate number is also known as the ‘System Number’ and is located at the bottom left-hand side of the death certificate.
Registering with the Death Notification Service means that you’ll receive a confirmation when the relevant banks and building societies have been notified. You can update the number of organisations that the deceased had an account with if you discover more at a later date.
At the time of writing, the following financial institutions were part of the Death Notification Service:
- Bank of Scotland;
- Birmingham Midshires;
- Clerical Medical;
- First Direct;
- IDEM Servicing;
- Leeds Building Society – excluding Leeds Permanent Building Society accounts;
- Lloyds Bank;
- M&S Bank;
- Marcus by Goldman Sachs;
- Moorgate Loan Servicing;
- Nationwide Building Society;
- Royal Bank of Scotland;
- Saga Savings by Goldman Sachs;
- Scottish Widows;
- Shepherds Friendly;
- St James’s Place Bank;
- The Mortgage Works; and
- UCB Home Loans Ltd.
Having gone through the financial information left by the deceased, you need to ascertain whether other institutions and companies or banks and building societies in addition to those listed above, need to be informed of the situation.
These could include loan and mortgage providers, landlords, pension companies, insurance firms including life insurers, utility companies, companies in which the deceased held shares, the local authority, healthcare providers and employers.
It’s important to contact all the organisations you discover and close any relevant accounts to ensure that you meet your responsibilities as executor, retrieve any money which is owed to the estate, and stop any charges that are still being paid.
Why you need to contact specific institutions
Bank or building societies need to be contacted to close accounts, withdraw money held in accounts, pay any outstanding debts, and cancel standing orders and direct debits.
Mortgage providers or other lenders need to be contacted to close the account and pay any outstanding debts.
Insurance companies first and foremost need to be contacted to claim on any life insurance or payment protection insurance (PPI). In addition, you may need to cancel policies such as vehicle, travel and medical insurance once you are sure it is not needed, if the deceased died in any circumstances which might be covered by the policy.
A surviving spouse or civil partner might still need the provision of a home insurance policy which was taken out in the deceased’s name, and it should be relatively simple to contact the provider and have the policy switched to their name.
Student loan companies need to be contacted to cancel any outstanding student loans since repayments end when the recipient of a student loan dies.
Utility companies such as gas, water and electricity suppliers, need to be contacted in order to close the accounts, clear any debts and reclaim any money owed in credit. If there is a someone continuing to live at the same address as the deceased, they need to contact the utility company to have the ongoing accounts switched to their name.
Landlord or local authority need to be contacted to stop rent payments being taken if the deceased rented a property and, in some cases, to reclaim a deposit that can be added to the estate. The local authority will also need to deal with any council tax which is outstanding or the transfer of the account into the name of anyone still living at the property.
Land Registry need to be contacted if the property was held jointly, and in such a way that it passes by survivorship.
Employers need to be informed in order to ascertain whether the deceased was covered by death-in-service insurance or any other policy linked to their employment which the estate may now be able to claim on.
Set up an estate bank account
It’s usually possible to open up an executor’s bank account so that you’ve got somewhere prepared for assets to be transferred into when the time comes.
Although none of the funds held in the deceased’s bank accounts will be released until probate has been completed and the grant of representation has been issued (unless the funds were held by providers who do not require a grant of representation), it’s preferable to deal with this relatively simple part of the probate process as promptly as possible. Ideally, if there is more than more than one executor, the bank account should require the signature of at least two executors, to withdraw monies.
Pay off any debts
Any debts owing when the deceased dies have to be paid, providing there are sufficient funds in the estate. These could include a mortgage, credit and store cards, loans taken out by the deceased and hire purchase agreements.
It should be noted that only the estate of the deceased is responsible for debts in their name, not surviving family members. If there is only enough money left to pay a percentage of the debts then the estate will be considered insolvent. If an estate is insolvent and there is not sufficient money to pay all the debts, you should consider seeking legal advice because it makes the settlement of debts much more complicated. Strict laws state who should be paid; the proportion of any payments; and the order of payment.
In some cases, the assets of the deceased will pass straight to their surviving spouse or civil partner, leaving insufficient funds in the estate to pay outstanding debts. When this happens, creditors have the right to apply for an ‘insolvency administration order’ within five years of the date of death.
If this order is granted, then creditors can force any property or assets automatically inherited by the spouse or civil partner to be sold and the proceeds divided amongst the creditors. For this reason alone, the wisest course of action is for the executor to negotiate with any creditors in order to come to a voluntary arrangement.
Value the estate
Once debts and taxes have been dealt with, it should be possible to value the remaining estate. Valuing the estate means pulling together everything that the deceased had in savings, pensions, bank accounts, investments, and other assets, including life insurance payments and property value.
Although it’s possible to estimate the value a property yourself, it’s probably wise to seek an independent valuation from an estate agent or surveyor in order to avoid any disputes with HMRC on the issue of IHT.
As well as assets such as property, land, business interests, personal items such as jewellery, art, motor vehicles etc, the value of the estate may also include some insurance pay-outs made after death. You must check with the insurance provider, if the payment falls within the estate, or outside of it. In addition, gifts that the deceased made within seven years of their death may have to be included in the estate’s overall value and this could have an impact on any tax payable to HMRC.
Complete an IHT form
An IHT return will have to be filled in, even if, as the executor or administrator, you’re sure that the estate is too small for any IHT to be due. If the estate is worth more than the current £325,000 tax threshold (known as the Nil Rate Band allowance), then the form which has to be filled in is IHT 400. If the value is lower than £325,000 then it is from IHT 205. Both of these forms can be filed online.
Anyone claiming the additional residence nil rate band (RNRB) – an additional IHT allowance which applies to the estate of an individual left to direct descendants – must complete an IHT400 and IHT435.
If IHT is due, it is currently charged at 40% of any value of the estate above £325,000. IHT normally has to be paid before a grant of representation can be issued and within six months of the month in which the death of the person took place. After this time, penalties and interest will be charged by HMRC.
If there is sufficient money to cover the IHT in the deceased’s bank accounts, then it should be possible to arrange a direct transfer to HMRC. Some specific taxes can be deferred and paid in instalments, such as those owed on assets including land, the value of business interests and some types of shares. If there is only sufficient money to part pay the IHT, it is worth doing this, to minimise the penalties and interest which will be charged by HMRC. To do so, an IHT reference number will need to be obtained and then, money can be paid on account of the anticipated IHT.
If there is insufficient money in the accounts to pay the IHT, then the executor/administrator will have to make the payment themselves if possible and recoup the amount after the grant of probate has been received and the assets of the estate released.
It is also possible to take out a loan to meet the IHT bill, although it should be noted that if the main value in the estate rests in the family home, it may be necessary to sell or mortgage the home to pay back the money owed.