Thousands of people in the UK die without a will, and even where a will exists, loved ones can struggle to locate it. Research suggests many couples and family members would not know where to find key documents when someone dies.
Not knowing where important documents are kept can lead to delays and additional complexity in administering an estate. Executors and personal representatives must identify and gather information about assets, including wills, pensions, life insurance, debts and other financial agreements, before they can carry out their duties.
Why does this matter?
When someone dies, their personal representatives (executors or administrators) are legally responsible for dealing with the deceased’s money, property and possessions (“the estate”) and for reporting certain information to HM Revenue & Customs (HMRC) and the Probate Registry. This includes identifying assets and paying any tax due before distributing the estate to beneficiaries.
One important change on the horizon affects how pensions are treated for inheritance tax purposes:
From 6 April 2027, most unused pension funds and pension death benefits will be treated as part of the deceased’s estate for Inheritance Tax (IHT) purposes. This means personal representatives will need to include pension savings and certain death benefits when calculating the estate’s value, and may be liable for reporting and paying IHT to HMRC.
A key point: death in service benefits from registered pension schemes will remain outside the estate for IHT purposes even after April 2027, in line with the government’s published policy.
This change marks a departure from existing rules where pensions were often exempt from IHT and could pass to beneficiaries tax-free in many cases. It does not mean pensions automatically become taxable, IHT will still only arise if the total estate value exceeds the applicable thresholds.
What should people do to prevent problems?
The easiest way for people to support their families when they are no longer here is to:
- Create and regularly update a valid will and ensure it is stored in a known location.
- Keep an up-to-date list of all key assets, pension policies, life insurance, bank accounts, deeds, debts, tax records, digital accounts, and any relevant passwords and share it with trusted individuals.
- Discuss intentions and document locations with executors, family members or trusted advisors so that locating everything is straightforward during an already difficult time.
Leaving clear instructions can help executors manage the estate efficiently and avoid unnecessary delays or costs.
Disclaimer: The information provided in this article is intended for general guidance only and does not constitute legal or tax advice. The treatment of wills, pensions, inheritance tax and estate administration can vary depending on individual circumstances and changes in legislation. While every effort has been made to ensure accuracy at the time of publication, readers should not act solely on this information. For tailored advice specific to your situation, please contact a qualified tax advisor, solicitor or other professional adviser.