The time immediately pre & post-death is often a very trying one for families (emotionally, physically & financially) as there may be numerous other additional bills relating to hospitals, medicines, travel, etc. So whilst budgeting should ideally be done in advance of a funeral this is not always possible or practical.
If done in advance it would ensure that the appropriate amount of money for you is spent without getting into serious debt at a vulnerable/emotional time and one where significant changes will take place in income & expenditures.
We would therefore suggest that even if you have never done so before that you create a budget which can help get your financial situation under control and get support should this be required.
tackling or avoiding debt
STEP 1 – Assess your situation
Collect financial documents. The Form from the ‘My Life’ page should be very helpful in ensuring that all relevant documents are pulled together.
Decide who needs to be contacted and if they require a copy of the death certificate.
Put off making any major financial decision: Do not rush to make any major financial decisions. If you feel you must do so, you should seek independent financial/ legal advice.
If you receive an insurance settlement or other payments, place them in the bank until you have time to look at your new situation and to inform yourself about your best options.
Check what bills you have to pay. If household bill accounts are in your spouse/partner’s name, you will need to change these into your own name.
If you and your spouse/partner had a joint account, you should open an account in your own name.
Don’t pay debts you don’t have to pay.
STEP 2 – Make out a Budget with the MABS Budgeting Tool
STEP 3 – Dealing with the estate. Incl personal arrears, loans, and credit debts
- The Estate On the death of a spouse/partner, the estate is placed in the hands of his/her personal representative (the executor or administrator). This representative has the duty to distribute the deceased’s money and property in accordance with the law, the will, if there is one, or, if there isn’t, with the laws of intestacy (the rules that apply when someone dies without a valid will).
- For your Personal Finances If your income falls with the death of your spouse/ partner, you will need to revisit any personal credit agreements or arrears arrangements you have – so that you can manage the repayments. Prioritise your debts into two categories: priority debts and secondary debts.
- Priority debts are rent, mortgage, electricity, gas, fines, tax, TV licence, etc. You need to pay these debts first.
- Secondary debts are unsecured debts owing to creditors/lenders, such as credit card debt, personal loans, etc.
With the help of MABS you will need to contact these creditors to make them an offer of payment that you can afford.
STEP 4 – Set up a Payment Plan
A common misconception is that if you die, all your debts will be written off. When someone dies, any debts they leave are paid out of their ‘estate’ (the money and property they leave behind). The bereaved person is only responsible for their debts if they had a joint loan or agreement or provided a loan guarantee – they are not automatically responsible for a husband’s, wife’s, or civil partner’s debts.
If there is any words you don’t understand as you go through the steps, please check both their and our ‘Glossary of Terms‘ page for an explanation.