Leaving Your Estate, and Not A Financial Burden

It is not a pleasant thought considering our own mortality, but something that we can guarantee, is death will occur.

Its often awkward talking about this occurrence and our finances, and its important to consider the finances, in the way you wish to leave matters behind you.

Often when bereavement occurs, families face an emotional crisis, and yet you have to be capable of dealing with these affairs before hand, if at all possible, to make their emotional stress less complicated.

So while we can’t help our family bare the pain of loosing us, we can take some sensible financial steps now, to avoid adding more stress to our loved ones.

  1. Make a Will

You might be thinking, surely my money will go to my nearest and dearest when I die, even if I don’t have a will?

Sadly, that is not always the case, in fact dying without a will could bring severe financial difficulties to your loved ones. A will is a legally binding document, and can be the foundation of your estate plan.

Writing a will means choosing who will benefit when the time comes, as well as how and when.

If you don’t write a valid will, your estate will be subject to the intestacy laws, which will determine who benefits. This could differ from your wishes. If you are not married to your partner for example, they might not inherit anything.


  1. Consider your Dependents

Your will is an opportunity for you to make it clear how any dependants are cared for. You should name a guardian to look after your dependents, if both parents were to die and the children are under the age of 18.

We recommend speaking to any potential guardians in advance, to make sure they are happy with the responsibility.

You might need to think about trusts, you might want to leave assets for children in trusts, so that they can be managed until they are old enough to inherit them.


  1. Make a Lasting Power of Attorney

Increasingly we see situations where Powers of Attorney should have been obtained, to avoid the financial stress and difficulties, as we all now live longer.

Our advice is to always make a Power of Attorney. There are two Powers of Attorney, one for Health and Welfare and one for Property and Financial affairs; you do not have to have both attorneys, some people just rely on having the one for property and financial affairs. But our advice is clear, when you do this you should make certain you have both attorneys created.

You might come to not be able to manage your own affairs later in life, so making Lasting Power of Attorney (LPA), to let someone carry out your wishes during your lifetime can help. This must be in place before you lose the ability to make your own decisions, failing which, your family will have to make an application to the Court of Protection for a Deputyship Order, and this is time consuming and costly.

As mentioned there are two types, one covers financial matters, such as paying bills, and the other health and welfare decisions like organising care. Completing an LPA does not mean someone will immediately control your life. They can come into play when needed, if you specify this, and they must act with your best interest in mind.

The benefit is you can choose who can act for you, if the time comes, but if you don’t appoint an attorney, your loved ones will have to apply to the Court of Protection if you lose the ability to make your own decisions. It should be pointed out that not only is this a slow and expensive process, it may well be that you will not necessarily be able to select your own attorney, or specify how you like your affairs to be managed.


  1. Simplify Things

The best way to make sure your family knows about all your assets, is to leave a detailed list and keep this list safely with your will. This should include all your accounts, investments, pensions, life assurances, debts, mortgages and any insurance that covers the mortgage. Increasingly in this modern technology age, you should also leave notes as to your passwords to any appropriate accounts, so that your executors can close these down, or have access to them if they need specific information.

It will also make it easier for your loved ones if they do not have to wade through several current accounts, old savings accounts and share certificates. Look at what you could potentially consolidate, without losing any valuable benefits, and consider an investment service, where you can keep different types of investments in one place.

Before transferring any investments, you should check that you will not have to pay any high exit fees, and make sure you won’t be giving up any valuable benefits or guarantees. If you want to ensure whether transferring is right for you, ask for advice.

You should also try to make it easier for them, by finding all your paperwork and accounts, and keeping them in a safe place. This includes account details and statements, but also paperwork like birth and marriage certificates, divorce decrees and name changes by deed pole. If you complete a tax return, the person named to administer your estate (our executor) will also need the information required to compete a return for the final year.

  1. Nominate Your Pension Beneficiaries

This is often overlooked, and we have had a number of sad cases, particularly where persons have passed with a lifetime partner, who was never married, and pension companies can be very difficult about paying out any entitlement which you may have thought would automatically pass to your loved one.

Normally, pensions fall outside the estate, and you can name as many beneficiaries as you like, and there is no IHT for them to pay. It is important to let your pension provider know who you would like to benefit from your pension, ask them if there are any particular forms or declarations that they have to have on file, and if so make sure you obtain these and fill them out and return them to the company, keeping a copy of that declaration with your paperwork.

You can also do this using an expression of wish form; your nomination is not legally binding, but is does make your intentions clear.

Currently if you die before 75 and your pensions are below the lifetime allowance, your beneficiaries can usually withdraw money from the pension without paying tax.

If you die age 75 or older, withdrawals will be taxed at the beneficiary’s rate of income tax. There are different rules in Scotland.

You can nominate beneficiaries of SIPP accounts in a few simple steps. You can change a nomination at any time, and should review it whenever your circumstances change.


  1. Think About Day-to-Day Money

While your estate goes through probate, your accounts will be frozen. So it’s worth making sure your loved ones have a reasonable sum of cash in their own name, so they have access to any cash they might need during the process. Many couples choose to have a joint account for this purpose, which then passes directly to the other account holder, before probate.

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