Funeral arrangements: What do I need to consider when arranging the funeral?
When a person dies, there are many things to consider. One being who will pay for the funeral. There may be a prepaid funeral plan in place, so you should check the deceased’s paperwork to see if they made and paid for funeral arrangements when they were alive.
They may have taken out an insurance policy to pay out after their death to cover the cost of the funeral. You should speak to the insurance provider before making any arrangements.
If not, the responsibility to pay for the funeral falls on the deceased’s estate. In other words, if the person who died has any money in the bank or investments or a property, the costs will be met by the person who has died. By presenting the funeral invoice at the bank, they will arrange for a payment to be made directly to the funeral director.
It should be the executor or the administrator who makes the funeral arrangements and it should be their name on the invoice. The bank or place where the money is held will have procedures that you must follow, usually they require the death certificate, the funeral invoice and proof of your identity.
In some cases, the person who died did not make any prepaid funeral arrangements and does not have any insurance or other assets to pay for a funeral. When this happens, if there are no friends or family to make the arrangements, the local council will pay for a very basic funeral. The date and time is set by the local council and it is usually a cremation; you will be allowed to attend.
If you are in receipt of certain benefits, you may be eligible for a Funeral Payment from the government, which is usually repaid from any money the person who died has in the bank. The Funeral Payment covers two thirds of the cost of the funeral, so you may still have to contribute to the cost.
BLM’s team of experts can advise you on the best approach to take to help fund the funeral, we can help you to release money from any bank accounts and guide you through any insurance policy processes you may need to go through to release funds.
What is the estate?
The estate refers to all of the possessions, bank accounts, property and anything else that belonged to the person who has passed away. The gross value of the estate can include the value of the person’s interest in a trust and jointly owned assets. The net value of the estate is the value of the gross value of the estate, less anything owned jointly, any interests in trusts and any liabilities of the estate. We only value what the deceased solely owned and actually had when they died. The cost of the funeral is also deducted when the net estate is calculated.
What is an excepted estate?
If an estate meets certain criteria, it can be ‘excepted’, or excused, from having to provide a full financial statement to HM Revenue and Customs (HMRC).
If any of the following criteria are met, then it may be possible to complete a shorter inheritance tax account to explain the position to the Court, an IHT 205 form:
- Where the estate is valued at less than £325,000; or
- The Estate is passing to a spouse or civil partner and is valued at less than £1,000,000; or
- The Estate is valued at less than £650,000 and is eligible for a double Nil Rate Band.
The completed IHT 205 form provides the Court with a financial snapshot of the deceased’s estate at the date of death; showing that no inheritance tax is payable and HMRC do not need to be notified or involved in the estate.
There will be occasions where initially, it looks like the estate meets the criteria for an IHT205, but on completion of the form it transpires that an account needs to be sent to HMRC. This can happen when the deceased was, for example, a beneficiary of a trust or made lifetime gifts exceeding £150,000, or had assets in another country. There are many other reasons why the Court may not accept the IHT205 and instead an account must be submitted to HMRC first and professional advice should be taken.
Our team of expert solicitors have significant experience of handling technical probate and estate administration matters. If you need advice with a loved one’s estate, please get in touch using the form below or call us on 0203 507 1609.
DEMYSTIFYING THE ESTATE ADMINISTRATION PROCESS
Our team is experienced in helping clients to deal effectively with the complexities of administering an estate. If you have a loved one who has passed away, James Beresford, Head of the Probate and Estate Administration team looks to demystify this complex and confusing area of law in our series of vlogs here.
"James is knowledgeable but imparts this knowledge in a non-technical fashion. He is very approachable and open-minded to all potential solutions to assist a client."
Chambers HNW 2017