Dying isn’t always an easy subject to discuss with your family, but it’s very important to try and minimise the financial impact and be clear about your wishes. Statistics show that one in three adults have had to deal with the financial affairs of someone who has died, and during an already difficult time. The research from Royal London also found that one in ten admit it would be very difficult for anyone to handle their financial affairs.
Making plans now could save a lot of stress, time and money when the worst happens, so here are our six ways you can help our loved ones before it’s too late:
1. Make a will
Making sure you have an up-to-date, valid will should be the first step in any planning. If you die without a will you will be subject to the rules of intestacy, where law dictates who in your family is entitled to what and in what proportion: You would have no influence in the decision at all.
In the first instance married and civil partners are entitled to your estate, children and immediate blood relatives after following in a specific order. The big problem is if you are unmarried, even if you are living with a long-term partner, they are not entitled to inheritance in this circumstance.
Not having a will complicates and lengthens the process of dividing your estate, so putting one in place won’t only ensure your family, friends and charities that you value most actually benefit, it will also be in the most stress-free way.
2. Consider guardians for your children
If you have children, it’s important to decide on guardians to take care of them. It is a huge decision to face and your initial decision is likely to be driven by emotion, rather than practical considerations. Think about who you would want to realistically step into this role, ensure they would be happy to take on such a big responsibility, and appoint them in your will
3. Plan for costs
In the grand scheme of things, the cost of your funeral may seem trivial, but they often run into thousands of pounds, adding unnecessary pressure on your grieving family. Typically, they will need to cover the cost of your funeral before your estate has been distributed. Ring-fencing a fund to cover funeral costs or having a protection policy in place for this specific reason, will minimise the stress of an already difficult situation.
4. Express your wishes
You’ve organised cover for the cost of your funeral, but what would you like to happen on the day? It’s much more than deciding between a burial or cremation; there are an increasing amount of personal options available. A growing number of bereaved families are rejecting traditional ceremonies and taking control themselves, often at the request of the deceased.
5. Nominate pension benefits
Since Pension Freedoms came in to effect in 2015 pension schemes are an attractive way of passing on your legacy, typically exempt of Inheritance Tax (IHT), if you ensure your death benefit nominations are made and remain relevant. You can nominate other generations, not just your spouse, enabling you to pass wealth to your children in the tax efficiency of a pension.
6. Make lifetime gifts
On the one hand, it’s a tax efficient way of passing on your legacy, on the other you’ll witness the people you care most about enjoying your generosity; moving up the property ladder or going on a holiday they would be unlikely to afford alone.
Small gifts to family and friends from your everyday income are not liable for IHT, neither are larger gifts to spouses or civil partners.
You can give away up to £3,000 a year without it being liable to IHT, which is known as your Annual Exemption, but potentially any value gift can be exempt from IHT if you don’t die within seven years of making it. If you die within seven years taxation works on a sliding scale, so please get in touch to discuss implications if you are intending to gift a large sum or asset such as property.
It’s quite a lot to consider and passing away can be a difficult subject to address in the first instance. At Boolers we take great pride in taking time to understand your personal circumstances and objectives, then helping you plan towards them.
As a firm of Chartered Financial Planners we will build a personal relationship for you; putting you first is core to our culture. If you feel your loved ones would benefit from forward planning, please get in touch with one of our team.
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