The responsibilities of inheriting family finances

Organising the inheritance of family finances can be complex, confusing, and time-consuming, and this is exacerbated by the emotional strain of dealing with a recent bereavement. 

Make the process as straightforward as possible by understanding the responsibilities involved in inheriting family finances and the role you play in paying beneficiaries.

Death and finance

In the UK, the financial matters relating to death are handled via linked legal processes. 

UK residents with significant finances are advised to make a will during their lifetime. This should include details of your ‘estate’ (collection of assets as a whole) and how it should be handled after your death. Your estate includes money – savings and debt, assets such as shares, property, and personal belongings that are precious and/or valuable such as a car or art.

In your will, you must name an executor to manage the settlement of your finances upon your death. You can appoint up to four executors, but it’s typical to choose one trusted family member either named independently or with a solicitor. When you die, the executor(s) is responsible for organising the release and distribution of your estate.

Those who die without a will are described as having died intestate, and their assets will be shared in line with intestacy laws as executed in a court of law. 

Handling the estate

If you have been named as an executor in a family member’s will, here’s how to go about handling the estate.

1) Assess the financial situation

Begin with a review of the deceased’s assets to assess their financial situation. If you were granted power of attorney during their lifetime, you should have access to bank accounts and investment portfolios which will give you an idea of their savings and any unpaid debts/bills.

You can also request the release of the will to evaluate the larger assets such as properties.

2) Fulfil your legal obligations

There are many legalities surrounding the management and receipt of a family member’s estate. 

One often overlooked is the tax on the estate which is termed inheritance tax. You might find it beneficial to seek financial advice regarding inheritance tax because this can be complex, especially for larger estates where the surviving spouse is not the only recipient.

You will also need to apply for probate – the legal right to deal with someone’s estate when they die. You can do this yourself or via a solicitor, but you’ll need an idea of inheritance tax first. Probate must be secured before you make any financial plans such as selling property.

3) Communicate with beneficiaries

Once you have probate, you’re in a position to sort out the estate in accordance with the will. Communicate with the named beneficiaries to let them know what they might expect and when they can expect to inherit. Be transparent to mitigate misunderstandings and potential conflicts, holding a family meeting to discuss the arrangements in person if possible.

Remember that the family will be grieving during this time and be respectful of the different experiences of grief which do not match your own.