Arranging your finances after the death of your partner
If your partner dies, it's unlikely to be at the top of your mind, but tackling the financial side of things is important. You could ask a family member or a friend to help you, to ease the pressure, especially when talking to account and product providers.
Life insurance payout upon death
If your partner had a life insurance policy, notifying the provider on their death should be a priority. If the payout is passing to you, in full or part, it can cover some of the debts and expenses that you could encounter as well as the day to day cost of living.
If you can find your partner's policy number this will help, but all you really need to know is the provider name to inform them of the death. If you don't know the provider of the life insurance policy, try Policy Detective or Experian's Unclaimed Assets Register both of which are free to use. Once you have traced the life insurance provider, they should add their payout to the deceased's estate ahead of the administration of the will.
Meeting your commitments and debts
You should try to review your income and expenditure, assets and liabilities to make sure you are still able to meet all of your financial commitments:
- Depending on the value of your partner's estate, you may have to pay Inheritance Tax. Read our guide: paying Inheritance Tax
- Debts in joint names will now be your sole responsibility as the surviving partner
- You do not need to pay debts that are solely in your partner's name, as these are taken from the estate of the deceased. You will still need to meet joint debt commitments though.
- If you think you might struggle to meet your mortgage or rent payments, contact your mortgage lender or landlord as soon as you can to talk about your options and negotiate a repayment plan.
- The same is true for other debts: contact the lender as soon as possible if you don’t feel confident that you can continue to meet your commitments. They should be understanding and willing to help you find a solution.
- If you have debts, prioritise them according to importance. Priority debts are usually those with the most severe consequences if you don’t pay, such as your mortgage or rent, any other loans secured on your home, and some utility bills.
If you don’t feel confident approaching lenders on your own, or if you’re struggling with debt, there are local and national debt charities who may be able to help you for free.
If your home is no longer manageable, you may want to consider downsizing.
You may also be entitled to receive certain benefits on the death of a partner. These could include:
- Bereavement payment – a one-off tax-free lump sum of £2,000 based on your partner's National Insurance contributions. To receive this benefit, you must be under the State Pension age when your partner passes away.
- Bereavement allowance – a taxable benefit payable for up to 52 weeks from the date your spouse died. Payments are based on their National Insurance contributions, and you must be over 45 but under the state pension age when they died. Claim within three months of their death to make sure you get what you are entitled to.
- Widowed parent’s allowance – a taxable benefit payable if you have dependent children and your partner had enough National Insurance contributions to qualify. You must be under the state pension age and receiving or eligible for child benefit for at least one child.
Remember that if you start receiving any of these benefits, it could affect your entitlement to other benefits you may be already receiving. For more information, visit Gov.uk's Death and Benefits section.
Your partner’s pension
You may be entitled to some of your partner’s state pension. To check your entitlement, visit the UK pensions website.
In April 2015, the 55% tax on inherited pension pots was abolished. If your partner paid into a pension scheme, you will now be able to inherit it tax-free but you do still have to pay income tax on anything you withdraw from it. If you're under 55, you won't be able to withdraw anything from the pension until you reach that age.
Reviewing your savings and investments
After a lifetime together, you may have joint savings and investments. When your partner passes away, reviewing these is an important part of maintaining control over your finances:
- Assess your situation – pull together all the paperwork you can find, and make a list of account numbers, bank or building society names, the amount you have saved or invested in each account, and the returns you're receiving. Once you’ve worked out exactly what you have, you can start to think about your options.
- Think about your needs – have they changed? Add up your income and outgoings, and decide whether you need to cash in some of your savings to cover short-term expenses. You can then consider your long-term goals. Do you want to be mortgage-free, pay for your own long-term care, or help your children to get on the property ladder?
- Next you can decide whether there are any of your investments that don’t currently meet your needs and goals. Are you going to need access to the money in the short term or would you benefit from a higher rate, longer term savings account? Do you need to reassess your attitude to risk?
Things to bear in mind:
- Before you close or move any accounts, contact the provider to check whether doing so will incur any penalties.
- Although family and friends have good intentions, their advice about your investments may not always be correct – consider taking professional financial advice.
- There are scams and companies who may either break the law or expose loopholes to try to take advantage of your situation. These firms often use pressure selling techniques and cold calling, so be wary of uninvited offers of products and services.
Last updated: 02 June 2015