Paying bills before probate in the UK – Before the executor named in the will of a person who has died can take care of the deceased’s estate, they need to apply for a legal right known as a Grant of Probate. Unfortunately, this can be a lengthy process. This means paying bills before probate in the UK isn’t uncommon.
This can be difficult for the executor. Because, as well as their assets such as property and money, a person’s estate may include the debts they owe. The deceased person’s estate may also need to pay taxes, such as Inheritance Tax.
All of this can be challenging for the executor named in a will (or the administrator of an estate if a person died intestate, without a will) to understand. Here’s where to start:
What Debts Are Owed?
One of the first tasks of an executor or administrator will be to assess the value of the deceased’s estate. This might include money in their bank accounts, any investments they’ve made, any money they are owed (such as rent from a property they are the landlord of), and the value of any property.
However, it can also include locating any debts they owe. This might include things like:
- Mortgage, rent, and utility bills
- Formal debts they owe, loan repayments, and the like
- Insurance bills of all kinds, including home insurance (life insurance may actually pay out upon death – worth investigating to cover other costs)
- Funeral costs (though there may be a prepaid plan in existence)
- Credit card debts
All of these debts need to be located by the executor or administrator of an estate. It is their responsibility to find these debts and make sure they are paid by the estate. In fact, this legally needs to be done before the estate is distributed to the beneficiaries named in the will
However, in the event that the deceased has a surviving spouse or other (often co-habiting) partner that is a joint partner on any bills or debts, the survivor may automatically have to take responsibility for settling those debts.
Who Are The Creditors Of The Estate?
Unfortunately, the responsibility of an executor to find out what debts the deceased is owed isn’t always straightforward to fulfil. The task usually involves a lot of looking through paperwork and other records.
As an executor or administrator of an estate, you can then make a comprehensive list of the estate’s creditors and make plans to contact them.
How Do You Get In Touch With Creditors After A Death?
Ideally, as an estate’s executor or administrator, you will have made a neat list of all creditors and can get in touch with them after a death.
This is normally a simple case of writing to them and requesting a statement of how much is owed. This notification should be enough to stop them taking any more regular payments from an account.
There is also a legal duty to make sure as many people as possible are told the sad news about the person’s passing and are given fair opportunity to notify you of any claims. Strange as it may sound these days, this is done through one specific newspaper:
1. Place a notice in The Gazette – first published in 1665, The Gazette is arguably Britain’s oldest newspaper. It is also one of the official government journals of record (this is what “official gazette” means) and the place where various statutory notices are posted. Use the paper’s website to place a notice of the death in The Gazette.
2. Check editions – The Gazette consists of several original newspapers that are these days broadly treated as one. Yet there are separate editions for The London Gazette, The Belfast Gazette, and The Edinburgh Gazette. Make sure you publish the notice in the relevant paper to where the deceased did business or had personal links.
3. Place a notice locally – in the event that the deceased owned property, you should also publish a notice in a paper in their local area.
4. Wait for claims – there is a period of two months and one day from the date that the notification of death was published for any claimants to come forward.
Can You Use Money In The Estate To Pay For Funeral Expenses?
Yes, it’s normal for the money in the deceased’s estate to pay for funeral expenses. Even if the executor has not yet been granted probate, most banks will allow this one type of payment to be made using the money in the accounts of a deceased person.
If you have opened an executor bank account (a wise move for most executors), again funeral expenses can usually be paid from it before the Grant of Probate arrives.
Do be aware that if the estate cannot pay for some reason, the person who signed for the funeral service is likely to have to cover it.
What Is The Order Of Priority For Debts?
There is a specific order of priority for debts paid by the estate of someone who has died:
- Debt secured against a specific asset (for example, a mortgage on a house)
- Funeral expenses
- Testamentary expenses (administration costs of running the estate and protecting it)
- Priority debts (generally tax bills)
- Unsecured debts (credit card and utility bills and the like)
As the executor, it is your responsibility to ensure that any debts are paid in this order. If the estate runs out of money before all debts are settled, anyone paid in the incorrect order may be able to claim against you to cover what they are owed.
When Do I Have To Notify HMRC And Pay Inheritance Tax?
It’s a smart move to notify HMRC regarding a death and pay Inheritance Tax as soon as possible. This is because some (usually all) Inheritance Tax needs to be paid before a Grant of Probate (or Grant of Letters of Administration in the event the deceased died without a will) will be issued.
In short, you cannot administer the estate and distribute inheritances to beneficiaries before HMRC is notified and Inheritance Tax is paid.
In most parts of the UK, you can use the Tell Us Once service to notify all official bodies you need to about a death in one go.
Discuss Paying Bills Before Probate With A Specialist
Not sure when or how to pay bills before probate in the UK? Talk to an expert about it.
Solicitors Near Me will find you just the right friendly, approachable probate solicitor for free and with no obligation. Contact us today to talk through your specific situation.