Putting your affairs in order
โPutting your affairs in orderโ sounds like something from a Dickens novel. It conjures images of counting pennies, dusty lawyersโ offices and melodrama.
It is actually an important part of caring for your loved ones. At Continuum we are looking at why, and how to go about it.
Helping your family manage without you
Making our wishes clear about how we want our worldly goods to be distributed will make things much easier for those we leave behind. This is why a will is essential.
A will can define who will receive what, from property to investments. It can help keep more of those assets away from the taxman โ who is keen to claim a share through inheritance tax.
But your will is just a document. Your executor, the person charged with distributing the wealth you leave behind needs to put it into action. To do this, he or she will need to find your assets, and documents relating to them. This is more difficult than it was for Dickensโ characters โ and not simply because we have a wider range of financial assets than they did.
In Scroogeโs counting house every investment, asset and account would be followed by a paper trail. At some point statements would arrive in the post, alerting executors to the existence of otherwise unsuspected investments.
These days, statements are electronic or have moved to the digital world, where they are inaccessible to executors. Some, such as bitcoin, are entirely virtual.
To put your affairs in order, you need a list of all your assets, with everything your executor needs to find and distribute them. It should not just list assets and account numbers, it should have certificates, passwords, URLs and contact numbers.
It could be entirely electronic, which would make updating simple โ but it might be a sound idea to have a real-world backup with a folder and printouts. It is a good idea to ensure that this information is kept in a safe and secure place and only accessible to those who are required to have sight of it.
So, what should you include?
Bank (and other) accounts
Once a bank knows that the account holder has died the account may be frozen. The executor will need to deal with the bank directly, and full details of all accounts will save time. However, many banks will be prepared to pay bills, or even release money for the funeral, if they are given proof. Including details of all your other accounts, utility suppliers, internet providers, car and house insurance, bank details and so on will also make this easier.
Savings and investments
Your folder should contain an up-to-date list of what you own and where it is. Share certificates are a thing of the past, but details of online brokers and logon details will make it simpler to access electronic wealth.
Physical assets
Own a collectable car? An original painting? Jewellery? Listing them with original receipts or insurance valuations will save the executors time โ meaning your wealth can be shared out faster.
Pensions
Whether or not you have started to draw on your pension, you need to list the funds which hold your pension pot. Think about past employers with pension schemes you paid into and ensure that there are contact details.
Make sure you have included details of nominated beneficiaries.
The rules on inheriting retirement savings were relaxed in April 2015, but how your heirs benefit depends on what type of pension you have and your age when you die. Expert advice will be essential.
The Chancellor in her Autumn 2024 Budget announced some significant changes, which include, amongst others, changes to Agricultural and Business Property relief, current Inheritance tax thresholds to be frozen until 2030, and unspent pension funds now subject to inheritance tax from 2027. All of which may impact how you plan for the future.
Debts
You should also list any debts that you have such as credit cards, mortgages and car loan. These will need to be repaid before the estate administration can be finalised.
Your will
Including a copy of your will, the name of your lasting power of attorney (if you have one) and any trusts that you have created is a good idea.
Ensure that those trusts have at least two trustees who are capable of acting following your death. If they havenโt, then take action to appoint new trustees.
Copies of any trusts you are a beneficiary of, or details of the trustees, will be valuable as your executors will need to provide details of those trusts when completing the forms necessary to administer your estate.
Getting some help
Its never too early to organise your financial affairs. Having a clear view of your wealth can help you now, as well as those you will eventually leave it all to.
For help with the task of tracking down pensions, logging your assets, and looking at ways to make sure it is your loved ones rather than the taxman who benefit from your wealth when you no longer need it, call us at Continuum.
Budget 2024 summary: Key points from Rachel Reevesโs speech - BBC News
What are the changes to agricultural property relief? - GOV.UK
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate taxation and trust advice or will writing.
Levels, bases and reliefs from taxation are subject to individual circumstances and may be subject to change.
A pension is a long-term investment; the fund value can go down as well as up and this can impact the level of pension benefits available. Pension Income could also be affected by interest rates at the time benefits are taken. Pension savings are at risk of being eroded by inflation.
The value and returns of an investment are not guaranteed, investors may lose some or all of their investment. When investing Capital is at risk.