We are all going to do it, but most of us don’t like to think about it, let alone make preparations.
But while we hate to consider our own demise, we might want to make things easier for those we leave behind. The pain of bereavement is only made worse if our demise means financial problems for our loved ones. A little planning can make things very much easier for them when the time comes.
At Continuum we are looking at what we need to do to prepare for the inevitable, even if it is still many years away.
Why you need to plan ahead
Our financial affairs don’t simply vanish with us. Debts, investments, standing orders and other arrangements will all have to be dealt with by those we leave behind.
Unless we have made suitable arrangements to help them understand and take over our financial affairs, we could be leaving them with months of headaches and detective work that they are simply not going to be able to deal with.
The confusion could be coupled with financial hardship if it means they are unable to find funds, claim on insurance policies they do not know about, or cancel arrangements like standing orders which are no longer relevant.
At the very least, you should make sure that you have had a conversation about money with your loved ones. But there are also a number of practical things that you can do which will make things easier for them.
Write a “when I’m gone” list
Most of us would admit that it would be very difficult for anyone to handle our financial affairs after our death. We know what and where the accounts are. Nobody else has that information. Pulling together all your personal and financial information into one simple document can really help your loved ones when you’re gone. Include account numbers and notes of your arrangements such as standing orders and things like passwords and access details. You can keep it safe and secure from prying eyes simply by putting it in a sealed envelope – or leave it in the care of your solicitors.
Write a will
A will is vital for everyone. We may all put it off because we hope we will live forever, but we know we will not and if we die without a will, described as ‘Intestate’, the UK law decides what happens to our money. Everything is handled according to dated government rules, which means that your property could be handed to the wrong people and your family could face expensive legal disputes that eat away at the money you want them to have.
A will is the key to providing your loved ones with the help they will need when you are no longer there to provide for them.
Think about the children
If you have children under 18, they need to have a guardian appointed in the case of your death. A guardian is simply someone you have named as the person you would like to be responsible for your children if they are orphaned. A close relative such as an aunt or uncle might be a natural choice, but it is important that whoever you appoint would be prepared to take on the responsibility. They will be taking care of your children’s finances, so you might want to appoint another trustee such as a solicitor or accountant to provide objectivity and guard against conflicts of interest.
Talk to a financial expert
It is easy to think that with a properly written and witnessed will you have made all the preparation you need. It is true that it is an important step, but it may not be enough.
The problem is inheritance tax, or IHT.
It is easy to imagine that IHT only affects rich people. But the threshold for Inheritance Tax is currently just £325,000. Go past that figure –easily done thanks to high property prices and large pension pots – and your estate becomes taxable. If we don’t take the right precautions while we are alive, the taxman can help himself to 40% of everything above the threshold, leaving your loved ones much worse off.
The good news is that there are ways to stop him.
At Continuum we are experts in estate planning – which means we know the ways to keep the wealth you have built up in your lifetime safe from the taxman, and in the hands of the people who you want to have it.
At Continuum we have answers to questions of inheritance tax. A call to us could help you find the best way to ensure your loved ones get the benefit of your wealth, not the taxman.
Whatever the answer you need for when you are thinking about the future for your loved ones, getting expert advice, and getting it as soon as possible will help give you peace of mind. Simply call us at Continuum for the advice you need.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable inheritance tax strategy, you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate estate planning, wills, tax and trust advice.
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