Dealing with the estate
In legal terms, an estate is a person's net worth at any point, including money, property, possessions and debts.
Who deals with someone's estate?
If the person who died left a will, this explains what should happen to their estate. The will should specify who the executors are – the people who should sort out the estate.
Find a Probate Registry
The executors need to apply for a grant of representation at the local Probate Registry to give them the legal right to deal with the estate. The right to deal with an estate is known as ‘probate’.
What if someone dies without a will?
If there is no will, the person is said to have died ‘intestate’ and there are different rules (known as the rules of intestacy).
In general, the spouse or civil partner automatically inherits all their personal possessions and the first £270,000 of their estate. The spouse or civil partner is also entitled to half of the remaining estate, with the other half of this remainder divided equally between any surviving children.
However the rules of intestacy are complex, and you should take advice if you’re dealing with the estate.
What happens if they had debts?
As the executor, you have a legal responsibility to pay off any debts or outstanding payments before distributing the estate.
You can use money from the estate to pay any fees as part of the probate process.
If the estate is very small – usually less than £5,000 – probate isn’t usually needed. In this case, you should write to the bank, building society, or the organisation holding the money.
Who pays inheritance tax?
Inheritance Tax may have to be paid on the estate if it’s over a certain amount. The current tax-free allowance is £325,000, known as the nil band rate. Anything over that amount is taxed at 40%.
If the home is left to children or grandchildren, the tax-free allowance increases to £425,000. This is a complicated area, so seek advice.
There is no Inheritance Tax to pay on estates left to a spouse or civil partner. Gifts to charity are also exempt from Inheritance Tax.
If a person dies and their estate doesn’t use all of their available tax-free allowances, then any unused allowance can be transferred to the estate of their surviving spouse or civil partner.
Further useful information on the Age UK website