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Recovering Funeral Costs

How do I recover funeral costs?

The briefing issued by the commons library declare that reasonable funeral expenses are payable from out of the deceased’s estate with priority over payments to unsecured debts and other similar liabilities. When considering what is reasonable, the size of the estate, the wishes of the deceased and the pervading circumstances are all taken into account.
With the arrival of funeral plans on the market, some of the costs will be met by these, some such plans are independent of funeral director and the money can be used to pay the chosen service provider. It’s prudent to remember that the person who instigates arrangements with a funeral director is ultimately liable for the costs and is considered to have a binding contract with them. If there is insufficient funds within the estate of the departed then any remaining balance will have to be paid for out your own pocket.

What happens to the estate of a person when they die?

After death, someone appointed as administrator or executor must deal with their money and property. They have to pay the deceased person’s debt and taxes and then distribute remaining monies, property and possessions to those who are entitled to it.
If the deceased person left a will, they usually nominate one or more persons to be an executor. In the case that an invalid will or perhaps no will at all, the court will appoint an administrator to deal with the deceased person’s estate.

Accessing property, money and other assets

When large sums are left (usually over £10,000) in a person’s estate, the executor or administrator will most likely have to apply for a grant of representation to gain access to the money. The grant application is made to the probate registry. In cases where there is a valid will, probate registry will grant probate of the will.

What is probate?

Probate is a name given to the legal process operated by a court whereby a will is proven to be a valid public document expressing a true testament (the last) of the deceased.

Specific advice for relating to citizens of England & Wales

Personal debt is only transferred from the deceased when it has been guaranteed by a third party and secondly if money was gifted to a recipient in a short duration before their death (this could be construed as a means of avoiding creditor account payment). Joint liabilities, for example a mortgage that feature both partner names upon it will then become the responsibility of the surviving partner.

If the deceased has left a will, no money can be allocated to the named recipient (beneficiary) if there are remaining outstanding debts. If the property was rented, it is much better to clear the house and regular household items to avoid further outgoings.

Any vehicles or jewellery should not be administered to the beneficiaries as they might have to be sold to generate funds towards debt settlement.

Is there a particular order for the settlement of funeral debts?

Secured creditors – Debt will be recovered from the sale of the asset, when only part of the debt is settled by the asset liquidation, the remainder goes into the unsecured creditor category.

Funeral expenses – Extras bought for a funeral such as a gravestone are generally not considered part of a funeral, the cost of a funeral in terms of fund recovery is considered in its proportion to the overall size of the estate.

Administrative costs – These include travel expenses, postage and occasionally accommodation for long distance visiting when the estate is being distributed and organised.

Preferential debts – This only usually applies when the deceased employed a carer and may have been receiving direct payments to be able to afford the care.

Unsecured Creditors – mobile phone contracts, water and energy suppliers, local government (council tax), bank loans along with credit card and store card debts.

Interest outstanding on unsecured loans.

Deferred debts – personal loans (informal) between family members.

The settlement of debts from an estate must be in the order set out as above, when a situation exists that there is insufficient funds to settle the debt in one category the funds must be split into amounts based on the proportion of debt owed within that category.
It is common for people to have multiple bank accounts including savings, current, credit and loans. If the accounts are all under one bank then the remaining balance from the addition and subtraction of accounts will be realised. When this is done, money can be used from the overall final balance to pay for funeral expenses.

What happens if the deceased person’s estate is insolvent (more debt than assets and or money) ? 

Personal debt cannot usually be passed on (inherited) if the name of the deceased was the sole name on the debt agreement with the exception of the 3rd party guarantor or that money was gifted in a period shortly before death.
If you agree to be the appointed administrator, please be absolutely meticulous about the distribution and procedures of estate management. If you are named as an executor within a will, you are still at liberty to refuse the role if you so desire. Unless procedure is seen to be followed accurately, creditors and organisations may attempt to hold the estate administrator personally responsible for outstanding debts.

Free Funeral Plan

If you would like to make use of our free funeral plan i.e. the funeral wishes form, please click on the button. As a result this will download a pdf copy to complete and print for your own records.