A Work out for your Affairs

With the pandemic crisis still with us, now is the time to sort out your financial affairs, which does not simply mean the money that you hold in various accounts or savings, but also to prepare for the eventual passing.

Below is perhaps a short list of the things that you should consider to resolve and put in order:

Sort Out Your Will.

Check that your will is still relative, especially if you have divorced, married or have grandchildren since you wrote it. Are you still in touch with your executors?

If you plan to leave between 4 and 10% of your net estate to charity, consider lifting it to 10%. At this level, it triggers a drop in your Inheritance Tax rate from 40% to 36%. Allow me to crunch the numbers, leave 5% of £100,000 net estate to charity, and your other beneficiaries receive £57,000 after Inheritance Tax (IHT). Leave 10% and they get £57,600.

You can probably speak to a professional, even with the lockdown easing, sorting the necessary witness signatures may just about be manageable. If not, put this near the top of your post-lockdown job list. An up to date will is the only way of ensuring that your estate goes where you want it to.

Set Up Last Powers of Attorney.

Lasting Powers of Attorney identify and empower loved ones or trusted professionals to make financial and health decisions on your behalf if you are incapacitated. This is not just for the elderly, the forms need to be completed when you are of sound mind, as incapacity can strike at any age and in many ways. Be careful about choosing only peers as trustees. It is unwise to have an attorney that is older than yourself.

As with wills, you need witness signatures, and we would obviously suggest you seek independent legal advice to ensure that your Powers of Attorney have been completed properly, and registered with The Office of Public Guardians.

Expression of Wishes Forms.

If you wish to deal with some minor matters regarding items you wish to pass to family, then you can create what is known as a ‘Memorandum of Wishes’. This is a simple list in letter form, that simply has to be signed and dated by you, it does not have to witnessed, but it sets out some of the minor issues that you wish to be dealt with by your executors.

It does not have a legal authority, but most executors would take on board your wishes after you pass.

Pensions normally fall outside your estate for tax purposes, so you must tell your pension provider who you nominate to benefit from these assets on your death. This can often be done easily enough through providers websites, or requesting the appropriate forms from the provider.

Reassess your Insurance Needs.

Review your Life Insurance, Home Protection and any other policies you require, particularly if you wish to nominate somebody to receive any benefit under these insurances.

Think About Inheritance Tax and Giving Regularly.

The simplest way to avoid Inheritance Tax (IHT) is to give your money away (or spend it) before you die, but you must ensure you have enough to live on before then, and that any giving is sustainable.

You should keep a record of the donations incase challenged by HM Revenue and Customs. If you are going to give on regular basis, then it is a good idea to simply set up a direct debit through your bank account.

Sort Out your Financial Paperwork.

It is not uncommon to struggle to find documentation after somebody has passes, and family members are certain that certain assets exist where no records can be found.

You should save your executors a lot of effort and confusion by shredding unnecessary and obsolete financial paperwork from clogging up your filing cabinet. Produce a summary of assets, where to find them, bank account numbers and passwords etc, then place it somewhere secure.

Use Your Tax Allowances.

Each of us has a number of Tax Allowances in a year (ISA’s, Pensions, Tax Relief, Capital Gains). It is important to make the best use of them.

If you require help in connection with any of these matters, please do not hesitate to contact us.