Can utility refunds be used for estate costs before probate is granted?

[mrsconradfisher]

Before I start, just want to make it clear I’m not trying to do any illegally. I’m just really confused and could do with some advice.

My Dad passed away 3 weeks ago, I’m the only child of only child parents. I’m joint executor of his will along with my husband and I’m the sole beneficiary apart from a nominal amount of money to each of my 2 children.

He had savings of around £130,000 and a small property which is in a very bad state of disrepair. We are awaiting EA valuations next week but we anticipate it to be worth £100-£125,000 so the total is below IHT thresholds. It obviously needs to go through probate. Bank won’t release any funds at all not even for the funeral so we’ve paid for everything so far.

My question is, I’ve cancelled some utilities(phone bill, council tax) and also got a refund from TV licence and RAC membership as he literally did them the week before he died. He didn’t pay anything by card, it was all cash so nothing can be paid into his bank account therefore they have either sent me cheques payable to me or paid it into my bank account. It’s not a massive amount of money, about £500 however I could really do with using that money to pay for a house clearance and cleaner. I’ve done as much as I can myself but it needs a professional to do it properly. Am I allowed to use that money or do I need to declare it on the probate form? Do they even check for refunds etc?

Like I said, please don’t think I’m trying to swindle anyone. Every penny that Dad had will come to me, I just cannot afford another £500 to try and sort the house out so I’m trying to use a tiny bit of the money to get things sorted.

The bank can - and should - release funds to pay for the funeral but when I did this they were a right pain and insisted they send them direct to the funeral director.

You can use estate funds for necessary expense - cost of applying for probate, funeral costs, property maintenance, although not relevant here paying tax to HMRC. You will need to keep good records and declare everything to HMRC if necessary for IHT..

Unless there are other relatives who might potentially have a claim on the estate who is there to question it anyway?

https://www.stevens-bolton.com/insights/102ktm1/releasing-funds-before-a-grant-of-probate-a-help-or-a-hindrance/

I agree that the funeral costs should have been paid directly by the bank to the relevant people.
i would absolutely hold off doing anything to the house in terms of clearing and cleaning until probate has been granted. I’ve sold 2 houses and didn’t do anything until probate allowed funds to be released, then I had the house cleared and cleaned.

It’s a health hazard, like genuinely cannot let people view it like that. I’ve done as much as I can but it’s got about 10 years worth of dirt and clutter.
Plus we’ve been advised to put it up for sale before probate is granted so that it can complete immediately afterwards.

It’s fine to use it. The money is yours - there’s no IHT due. You can put it down on the form and account for it - although it won’t make any difference re IHT. I was a joint signatory to my mum’s bank account and was able to use the funds for expenses from that when she died. It was still part of her estate but was ok to use it for expenses.

I ran a separate bank account for my mums expenses and income. Just keep a good spreadsheet! And yes the bank should pay for the funeral. Barclays refunded the funeral the venue and the food. But I had to pay some myself first.

I paid for food and venue first

The bank should pay the funeral bill, some will insist on paying the funeral director directly but they should pay that bill

Thank you. That’s kind of my point, is it checked in anyway? If not then who is even going to care that I use it. I absolutely understand that legally it should be declared but seeing as it’s far below the IHT threshold then it shouldn’t matter.

I promise there will be absolutely no relatives who will have any claim on the estate. Both my parents were only children so there is only me left. I’m fairly certain (as much as anyone can be) that my Dad had no secret children anywhere.

Bank were absolutely useless.The chap on the bereavement team just couldn’t care less. We couldn’t contact them immediately as it had to go to an inquest (which they did as an open/close inquest the same day so relatively quick). We booked the funeral early on as my son was due to start Uni and needed to fit around that so paid the money in the meantime assuming the bank would release the funds. But like you said they will only release them to the funeral directors and we had already paid. So now we are several thousand pounds down, plus having to pay Uni accommodation fees and I just cannot find the extra money to sort the house out.

Yes, they would have paid them direct. But we had already paid assuming they would just release that amount of funds to us on proof of receipt. They won’t release any funds at all except direct to the funeral director but they don’t need the money now as we’ve already paid it. It’s totally my fault, I researched if they would release funds but didn’t anticipate them only paying the funeral directors not us.

That’s interesting. I actually had POA with my own bank cards etc so could have accessed his money anyway on the day that he died but obviously I didn’t. I pointed that out to the bank when I called because I didn’t know if that would make a difference to me being able to access the money for costs etc and they still said I couldn’t access anything.

So when you put it on the form, do you need to prove what you have received and where it is? I’ve popped it into a separate bank account for the moment.

I'd ask the funeral director if they can send the bill to the bank and then refund you. Some people are kind to the bereaved!

You probably wont need to report anything to anyone, but keep detailed records just in case there is more money than you think. https://www.gov.uk/valuing-estate-of-someone-who-died/check-type-of-estate I had a separate account and listed everything as I had siblings to report to.

I'm sorry for your loss.

In slightly different circumstances I had to clear and sell my father's house. I thought it was just full of tat and worthless junk but I chose a house clearance company who are also auctioneers. They sell as much as they can, donate items to charity and only take what's left to the tip. I was pleasantly surprised to find that people will buy anything! This meant the auction fees and cost of the clearance were covered and we even received some profits! The company were really good, checked in with me in case I wanted to keep any of the 'treasures' they found etc. I would recommend that route for house clearance.

I hope you get everything sorted without too much more stress.

we cleared both my grandmother's and mother's houses before the probate process was complete, both very small estates. We did keep a record and in the case of my grandmother, we did have to communicate with HMIT because she was owed pension. In both cases they were in rentals and we couldn't wait. Addtionally it was the case then and I believe it still is, that if there are health and safety issues....and this can be quite broad...then whoever is handling the estate can get it cleared before probate is issued provided some kind of valuation record is kept.

Just one other thing to think about. Are there likely to be any debts owed by the estate? Any pensions or benefits paid after he died that might need to be paid back?

Yes, there will be 2 weeks pension to be paid back as they wouldn’t stop the pension without me sending a death certificate and it went to inquest so had a 2 week delay. They haven’t asked for it yet so I’m assuming that won’t come through until after probate is sorted.

Thank you, that’s helpful. Honestly I have scrubbed as much as I can but it needs proper industrial cleaning and house clearance to remove furniture etc.

Have you checked whether there are any insurance policies? If so the proceeds can possibly be paid without probate.

If he paid RAC membership what have you done about his car? You'll need to check it's off road or taxed and insured. Fortunately I didnt have a car to sort out but his insurance will be invalid and you need to sort that out quickly.

If he had a private pension then he will have been paying tax and there will be a tax refund to claim. The bereavement helpline for HMRC is tel:03003229620 0300 322 9620. The refund is paid to the personal representative. You'll also need to contact his house and contents insurers, if he had cover. The insurance will be invalid after 30 days and if no-one visits you need uninhabited or probate cover, it's more expensive.

I'm sorry, this is a difficult time. You'll need a solicitor when you sell the property and the bank may release enough funds to them to cover the property insurance and house clearance/ cleaning.

Definitely no insurance policies apart from house insurance which we need to keep going at the moment, that’s next on my list to contact. But I have no idea who it’s with as it’s the one documentation I cannot find. No private pension either, he was a carpenter and had no spare money to pay into a pension when he was working, he got a very small lump sum (about £5000) when he retired. The house he was living in was my Grandparents house (transferred over to him officially), so the money that’s in the bank is from the sale of his old house (where I grew up).

He had a car, it’s 25 years old and is in the same state as the house. He literally drove it the day before he died. It’s taxed and mot’d but is in his garden currently. It’s being collected by an authorised scrap dealer this week and then we will let DVLA know it’s been scrapped and cancel insurance etc. They have said it’s worth about £150 in scrap value so that money can go into the bank as well and add it on to the probate. Appreciate we should have done it before but it was at the bottom of a very long list of things that needed doing.

As long as the car was off road it's fine, was just concerned about you being prosecuted or it being stolen before you got anything for it.

May still be worth looking into a tax refund as he probably paid tax on his savings. You could try asking the unhelpful bank if they can tell you which insurance company he paid. If you know which car insurance he had I'd check with them as he may have used the same company. Also they may let you have a few pounds back from the insurance being cancelled, you can hope.