Liquidation has three phases (and one preliminary phase):
- draw up an inventory;
- pay off the debts.
Paying off the debts is the ultimate goal of the liquidation. If anything remains after that, it goes to the heirs. They may then divide this between themselves.
Preliminary phase: not everything needs to be done straight away
The law gives you time to draw up an inventory and liquidate the estate. Creditors must bide their time for the first 3 months after someone dies. You therefore have time to work out what bills are still coming in, go through the admin, and make a list of all the creditors.
What does have to be done urgently?
First, the funeral must be arranged. A funeral costs money. These costs may be paid from the estate. Bear in mind, however, that these costs must be proportionate to the deceased’s standard of living. Therefore, you must not arrange a very expensive funeral if the deceased lived frugally or if it is uncertain whether there is enough money to pay off all the deceased’s debts.
NB: the person who instructs the funeral director is responsible for paying the bill, even if there is not enough money in the estate.
The bank where the deceased had an account must be notified of the death. The account is then blocked. On the one hand this is safe, because no further withdrawals can be made, but on the other hand it can cause difficulties because, for example, the costs of the funeral must be paid immediately. Many banks are willing to allow the funeral director’s bill to be paid from the deceased’s account, even if that account has been blocked. But it may be that you have to advance the costs of the funeral.
It may be some time before you have full access to the deceased’s bank accounts. What you need to do to gain that access varies from bank to bank. Most banks have a dedicated page on their website for surviving relatives, where you can find the information you need.
Not allowing debts to increase further
It is also important that you do not allow the deceased’s debts to increase any further. This means cancelling all current contracts and subscriptions as soon as possible. Think of the internet, television and telephone, but also the rent.
If the deceased lived in a nursing home, you must usually vacate the room as soon as possible. Valuable items must be kept in a safe place; the rest may be disposed of or given to heirs. Make sure you can prove that any items disposed of were of no value. This can be done, for example, with a witness statement from someone at the nursing home, a reliable estate-clearing company, or an appraiser. It may also be useful to take photos of the items.
If the deceased lived in a rented home and there are no co-tenants, the rental contract must be terminated as soon as possible. The premises will therefore have to be vacated. Again, valuable items must be kept in a safe place; the rest may be disposed of or given to heirs.
Take any paperwork and admin away with you; you will need it to liquidate.