Payment of accounts after death of a loved one

Losing a loved one can be an emotional and difficult time, particularly if there is concern about outstanding bills.

A deceased person’s bank accounts will be frozen shortly after death, although the bank does make an exception and will pay the funeral account directly if there are funds available.

There is no requirement to pay Estate accounts until funds have been received from the Estate.  However, sometimes Executors may wish to pay some accounts directly and then be reimbursed from the Estate.

Ongoing Accounts

If there are ongoing accounts (such as phone or utility bills), you should notify the organisation of the person’s death, so they are aware that payment may be delayed, most organisations have systems in place to wait for the payments once probate is granted.

House Insurance

If the deceased person owned a house (or other assets such as a car that need to be insured), a current insurance policy will generally continue to be valid for a very short period after the date of death, but it is important that the insurance company is notified of the person’s death, particularly as the house may now be vacant.

If an insurer is not advised that the property is vacant, then the insurance company can deem the policy to be void, which could have disastrous consequences for the Estate if a loss occurred.

Generally, the insurance premium will increase after the death of the home owner (particularly as the house is now likely vacant), however in some circumstances the insurance company will transfer the policy to the Executor without increasing the premium.

If an Executor fails to have adequate insurance and a loss occurs, then the Executor can be personally liable for the loss. Although an insurer may require a copy of the death certificate before they amend the policy, it is still worthwhile contacting the insurer as soon as possible, and ensuring the company have noted on the file that the death has been reported.

Unknown Creditors

If the deceased person left very good records it might be easy to identify what accounts are owing, however sometimes it can be very difficult to ascertain exactly what is owing and to whom.

As an Executor, it is very important to identify these questions, therefore there is the ability to lodge an advertisement for potential creditors in newspapers and online. This advertisement is not common, but in certain circumstances is highly recommended.

If you have recently lost a loved one and need assistance to administer the Estate and ascertain what liabilities need to be paid, our experienced Wills and Estates team at OFRM can guide you through the process. For more information you can book an appointment online via our website, or call Madeleine Debono on 5445 1063.