Understanding property and insurance after the owner's death
By Alan Boswell Group
Dealing with the estate of a deceased family member or close friend can be difficult, as you’re likely to be faced with a number of practical issues that need taking care of in addition to the emotions you’re going through.
We’ve put the following guide together to help reduce that stress slightly by helping you understand the process you need to go through to insure a property as you work your way through probate.
Understanding probate and property issues after death
Probate is the legal process of administering the estate of a deceased person, including their assets such as property, money, and possessions, collectively known as their estate, which need to be distributed as described in their will, or the laws of intestacy if there is no valid will.
This process can be complex, time-consuming, and involve legal and financial considerations, meaning that executors or administrators often seek the assistance of a solicitor or probate specialist.
There are several steps to the probate process, but the first is to obtain a Grant of Probate or Letters of Administration, depending on whether the deceased left a will. These legal documents authorise the executor (if there is a will) or the administrator (if there is no will) to handle the estate.
How do you deal with property when someone dies?
We should all consider our estate planning needs, as although it might sound like a morbid subject, it will make things much easier for our loved ones at the appropriate time. When someone dies, three common situations will occur in relation to their property:
The deceased’s spouse or partner intends to continue living in the property
The property is occupied by dependents of the deceased or future beneficiaries
The property is unoccupied
Whichever situation applies, it is important to contact the current home insurer to advise and ensure there aren’t any conditions you need to comply with for the insurance to be valid (which are likely if the property is unoccupied). Bear in mind the buildings and contents insurance could be with different providers.
What happens when a joint owner of a property dies?
If a joint property owner dies, the surviving owner’s legal position will depend on the type of joint ownership, which will generally fall into one of two categories:
Joint Tenancy: if two or more individuals own a property as joint tenants, they have an equal and undivided share in the property. Therefore, when one joint tenant passes away, their share automatically passes to the surviving joint tenant(s), and the deceased joint tenant's share does not form part of their estate and is not subject to probate. In this situation, the surviving joint tenant(s) continues to own the property.
Tenancy in Common: is where each owner has a distinct share in the property. In this instance, when one owner dies, their share will form part of their estate and is subject to probate and should be distributed according to their will or the laws of intestacy. The surviving owner(s) retain their share in the property but may become tenants in common with the deceased owner's beneficiaries if they inherit a share.
The form of ownership should be stated in the property’s legal documentation, but if not, it is generally assumed to be a joint tenancy.
Does a house have to be sold when someone dies?
In short, no. It is up to the estate’s beneficiaries to decide what happens to a property upon death, and they may decide to sell it, but equally, they may decide to retain it and rent it out or move into it themselves.
How long do you have to sell a house after someone dies?
There is no time limit on selling a property after someone dies. However, it’s important to know that while you can put a property on the market before you have a grant of probate, you can’t complete the sale until you do.
Can I clear a house before probate?
While you might want to start informally considering what to do with any possessions that aren’t specifically allocated to named beneficiaries in the deceased’s will, you cannot clear a property until you have the grant of probate.
How long does probate take?
After you have applied for probate, the Government will aim to send you the grant of probate within 16 weeks. However, this will take longer if you need to supply additional information and, in some cases, can take up to a year.
Navigating insurance issues after death
It’s important to keep the home insurer in the loop when someone has died to ensure that you don’t invalidate the insurance and maintain the safety and security of the property. The ownership status of the property will need to be considered, as it will impact the action you need to take.
Can I insure a house in probate?
Yes, you can insure a house during probate, and it is also the duty of the executor/s to protect the assets of the deceased’s estate, so arranging appropriate insurance is essential. The deceased is likely to have had some form of insurance on the property already, so it’s a good idea to speak to the insurer before arranging anything else.
What is probate house insurance?
Probate house insurance is normally only required if the property is unoccupied. Most standard home insurance policies will not provide cover if the property is empty for more than 30 days, so probate house insurance will provide cover, with some conditions that must be met. For example, most probate home insurance policies will require executors to periodically inspect the property for damage and break-ins, often on a weekly or fortnightly basis, and there may be other requirements, such as maintaining the property at a minimum temperature over winter to prevent pipes from bursting.
Who needs to organise insurance for the empty house?
The deceased’s existing policy can usually be transferred into the names of executors until they have the grant of probate, although the policy may need to be amended if the property will be unoccupied during this period. Once the estate has been finalised, the beneficiary (new owner) can insure it in their name.
Who pays house insurance when someone dies?
While the estate is being finalised, the executors or their solicitor can arrange payment from the deceased’s estate or, if this is not possible, by a family member.
Can a beneficiary insure a house?
Yes, once the estate has been distributed and they have become the legal owner of the house, they can insure it in their name.
Does the insurance cover lapse when the policyholder dies?
The existing insurance cover won’t normally lapse, but the insurer will need to be advised as soon as possible as they may apply some conditions. Insurers view unoccupied properties as riskier, so they may want cover to be replaced after a short period if there won’t be anyone living in the property.
Is there a period of grace before cover lapses?
As with all insurance policies, this will depend on the insurer, the cover taken out, and how long it takes for probate to be granted and the estate to be finalised.
Can the insurance company transfer cover to the executor of the will?
The existing policy isn’t normally transferred as it can usually be amended into the executor’s name/s, for example, ‘The Executors of Mr John Smith’.
How to insure an empty house after the death of the owner
After the death of an owner, it’s important to maintain appropriate insurance cover for the property to ensure that it remains protected while the probate process is undertaken, prior to ownership being transferred to the estate’s beneficiaries.
What insurance is needed for an unoccupied home?
You will need unoccupied house insurance to cover potential damage to the building and contents insurance until the assets have been distributed to the beneficiaries. Remember, you can get separate renovation insurance if you decide to renovate a property before living in it, selling it, or renting it out. If you rent it out, you will need to take out landlord insurance; standard home insurance will not cover let properties.
Why do insurance companies treat unoccupied properties differently?
Unoccupied properties are more vulnerable to break-ins, theft, or attempted theft than properties which are lived in, so make sure you’re fully aware of the best methods of securing an empty house. Additionally, they are more susceptible to issues such as malicious damage and escape of water and can quickly fall into disrepair if they are not maintained and looked after properly.
What are the benefits of unoccupied insurance cover?
Buildings insurance for an unoccupied property ensures that your property, and financial asset, are protected should the worst happen. Policies have flexible lengths from 1 to 12 months, depending on the insurer.
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Financial responsibilities for an empty home
As well as arranging insurance for an empty property, the executor will have other financial obligations to fulfil, such as ensuring utility bills are paid, and unneeded contracts are cancelled.
Do you have to pay bills on an empty house?
When someone dies, any outstanding bills will be the estate’s responsibility, who must make arrangements for them to be paid. During the probate period, you’ll likely find that most services that incur future bills, such as broadband, phone and TV packages, can be cancelled. They may require a copy of the death certificate to cancel these services.
However, you’ll want to retain the electricity and gas supply, and any usage of these services will need to be paid for, although the cost will obviously be significantly lower compared with an occupied property.
You’re also likely to want to retain water and wastewater services, and it’s important to note that these essential services all incur a daily standing charge even if you don’t use them, with rates varying based on your service provider and the package you’ve signed up for.
Do you pay council tax on an empty property when someone dies?
If you’re responsible for a property after the owner has died, you don’t need to pay council tax until after you receive the grant of probate, as long as the property remains empty. Once probate has been granted, you may get a council tax exemption for another six months, but you should contact your local council to check.
If the property is lived in after the owner has passed by a sole occupier, you may be able to get a single-person council tax discount. You’ll need to speak to your local council to find out more.
Tips for insuring an empty house
You’ll need to conduct regular inspections of the house if it’s unoccupied, the frequency of which will depend on the conditions set out by the insurer.
Some insurers may also require certain security measures to be in place, like installing approved types of door and window locks.
Let the neighbours know that the property is vacant, as they can keep an eye out for any suspicious activity.
The house will need to be insured in the name of the estate, such as 'The Executors of 'Deceased Name'.
Make sure any contents cover is appropriate; for example, it may not cover high-value items such as art or jewellery.
Once the estate has been distributed, the beneficiary will need to either transfer the current policy into their name or cancel the policy and take out a new one in their name. You should take out unoccupied property insurance if it will still be empty. Alternatively, if the property is going to be occupied by the beneficiary, they can take out a standard house insurance policy. If the house is being let out, you will need to look at building insurance for landlords or holiday let insurance and also make sure you know all about paying tax on rental income.
Having the right home insurance in place when you’re responsible for a property after someone has died will not only give you peace of mind while you apply for the grant of probate but will also ensure that you fulfil your duty as an executor to protect the assets of the estate.
To speak to a team member about the different types of insurance and get advice on what you will need, contact us at 01603 649650.