The quiet gift of death cleaning
In the Nordic countries, particularly Sweden, there is a well-established concept known as death cleaning. It refers to the practice of putting one’s affairs in order during life, to reduce the administrative and financial burden to executors, friends and family that arises after death. It sounds off-puttingly stark, but the underlying aim is practical and considerate.
The concept is said to reflect long-standing Nordic values of order, self-sufficiency and personal responsibility. For example, Nordic societies have traditionally placed importance on avoiding unnecessary administrative complexity, particularly in later life. Death cleaning is about individuals organising their personal and financial affairs while they are still able to do so.
Death cleaning is based on the concept that well-ordered affairs during life can significantly reduce delay, cost and uncertainty post-death and during the estate administration.
When someone dies without clear records of their assets, executors are required to piece together financial information, often with no idea what they are looking for or where to look for it. This can involve back and forth correspondence with a multitude of banks and investment institutions, reviewing historic paperwork and, in some cases, instructing asset-tracing services. Sometimes it also involves investigating whether any property is held abroad. It can be somewhat of a needle in a haystack exercise.
This search for assets is not only time consuming, but costly. Professional fees increase, as more time is spent identifying, valuing and verifying assets. Where specialist asset-tracing services are required, these have to be purchased by the estate. Estate administration is delayed and matters that could have been dealt with early on are pushed to the back of the action list. In many cases, assets are only identified at a very late stage.
In the UK, inheritance tax is payable six months after the end of the month in which the death occurs. Where assets are discovered after this deadline, interest becomes payable to HMRC. So if an asset is discovered late in the estate administration process, the added interest can materially increase the overall liability of the estate.
One of the most effective and straightforward preventative steps is to prepare a clear, high-level list of assets. This document does not need to contain confidential information such as account numbers, passwords or online access details. Its purpose is to record what assets exist and where they are held.
The list might include bank accounts, investment portfolios, pensions, insurance policies, property interests and business assets. It should identify the relevant institution or provider, the country in which the asset is located and any useful reference or policy number. This level of information alone can drastically reduce the time and cost involved in estate administration.
The document should be stored securely but accessibly. It could be kept in a home safe if there is one, stored with the will, stored with a solicitor, or provided immediately to an executor. What matters is that those responsible for administering the estate are aware that the document exists and know how to locate it!
Where executors have access to this clear asset summary, they are able to act promptly. Institutions can be contacted without delay, valuations obtained earlier and inheritance tax calculations dealt with more efficiently. Overall this results in a smoother and more cost-effective administration process.
Death cleaning is not a morbid exercise. It is a practical exercise in organisation and risk management. A relatively modest amount of planning during life can prevent avoidable cost, delay and complexity after death.