Paying bills and expenses after someone dies
When someone passes away, settling their estate involves discharging all outstanding debts and managing expenses related to their death – such as funeral costs. It’s important to ensure that a deceased person leaves behind a legacy of balance for those left behind.
When someone has died, their estate is liable for paying their outstanding debts. The estate executor or administrator is the person responsible for making sure that this is done.
What debts are owed after a death?
Making sure that all of a deceased’s financial obligations are taken care of is an essential part of the estate settlement process. An executor or administrator may need to comb through their paperwork for any outstanding debts, including utilities, taxes and credit cards – even those in joint names will often fall on the surviving debtor.
While checking through the papers, you should look to see whether the deceased had any life insurance or other policies that could be used to pay off debts. In particular, if they held an interest-only mortgage, they may have had an endowment policy in place to cover this. If there is a policy, you should notify the policyholder of the death and ask them what forms and evidence they need so that the policy can be encashed. The deceased may also have had a pre-paid funeral plan that could be used to pay the funeral expenses.
Dealing with creditors after a death
To ensure all debts are taken care of, it is important to inform the deceased’s creditors right away and request a full statement. This way, the estate can be given ample time to settle any outstanding payments due. Additionally, if there have been regular withdrawals from an account set up by the individual prior their death – those must cease immediately upon notification being sent out.
Paying funeral expenses after a death
The deceased’s funeral costs will generally be paid out of their estate, however the person who signed the agreement with the funeral director will be liable for settling the bill if the estate cannot pay.
Funeral costs can be difficult to cover for family members when a loved one passes away. However, if the deceased had money in a bank account at the time of death, banks may release funds to pay for their funeral expenses. All that is needed is an invoice from the funeral director and certified copy of the death certificate; however should no such ready funds exist then relatives are welcome to fund it temporarily until reimbursement comes through via estate proceedings down they line.
Order of priority for debts
If there is likely to be insufficient money in the estate to pay off all of the deceased’s debts, these should be cleared in priority order.
Funeral expenses generally take priority over all other claims against an estate, except where a debt has been secured against a particular asset, such as a car loan or mortgage.
To ensure the estate is properly attended to, testamentary expenses take priority. These cover any costs related to its administration. Afterwards, debts deemed higher in importance (such as tax and Council Tax bills) must be settled before moving onto unsecured ones like credit cards, store cards and utility bills – all of which are given equal footing at this stage.
Where there is a risk that there will not be enough money in the estate to cover all of the bills, the estate administrator needs to be very careful to pay creditors in the correct order as they could be held personally liable if a creditor should have been paid but is missed out.