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The death of a loved one is one of the most difficult situations anyone will ever have to deal with and, sadly, finding yourself in debt as a result of a family member passing away is more common than most people would think. With the average cost of a funeral in the UK today reaching as much as £1,000, if money has not been set aside for this purpose, it can lead to a heavy burden of debt on top of the emotional difficulties being faced. Many people simply do not have this amount of cash lying around and are therefore forced to resort to paying for a funeral by credit card and then spending a long time paying it back with added interest.
When faced with the death of a loved one it is important to establish whether any financial preparations had been made by the deceased person to cover the costs of funeral expenses. Before initiating funeral proceedings, it would be advisable to find out whether your loved one had taken out a life insurance policy which includes cover for funeral expenses or had a savings plan in place specifically for the purpose of assisting with the costs of their funeral. Sometimes older people will choose not to put money away in a bank account but will instead have a money box hidden away in a special place to take care of things once they have passed away. Even where no preparations have been made by your loved one, it is possible to have a simple funeral to pay your last respects without putting yourself at risk of excessive debt as a result.
A common misconception in the UK is that if you die, all your debts will be written off. This is certainly not the case and in fact, when someone dies, almost any debt they have accrued must still be paid back in some way. If the deceased had made a will, the executor of the estate will bundle up all of the person's assets (the estate) and use these to pay off any outstanding debts, beginning with mortgage debt. Although it is sometimes assumed that a surviving spouse or partner would become liable for the debts, this is not necessarily the case. Only where loans had been taken out jointly by the couple, or the spouse was acting as a guarantor for the decease's debt, will a surviving partner inherit responsibility for a debt.
For those who wish to make preparations today to protect their own loved ones from financial difficulty after they pass away, there are a number of steps you can take. Firstly, it helps if families are open with each other about what outstanding debts they have, the value of them and where they keep important paperwork. This should make it a little easier for your loved ones to deal with your finances after you die. If you do not already have one, it might also be worth making a will to record your wishes of how you want your estate to be dealt with when you are no longer around. Another option you might want to consider, particularly if you have children, is some kind of life insurance policy. There are a great range of products available and, thanks to the internet, you can compare and contrast the costs and benefits of different policies quite easily and find something that suits you.
