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Life is precious and is no dying matter

The spread of the COVID-19 virus reminds us just how precious life is and have all seen the utter devastation the pandemic has wreaked on our society and day-to-day lives.

A Hand Putting A Pound Coin In To An Inheritance Fund

by
Alex Price

in Features

05.05.2020

We have come to realise that COVID-19 affects everyone and the spread’s effects are indiscriminate. We understand which people are more vulnerable and how our hospitals and support services are being pushed to the limit; with us all doing our bit to help by staying at home and caring for others as best we can.

Losing a loved one is always a difficult and stressful time no matter the circumstances and grief can often be compounded by financial issues. It’s not an easy thing to plan for but in the end, it can make a significant difference for you loved ones left behind.

Discussing how your assets will be dealt with when you pass away can be a difficult conversation to have with your family, as it is something you don’t want to think about. However, it can be one of the most important conversations you ever have as a family.  Putting your affairs in order not only gives you significant peace of mind but can also help your family sort out your affairs more quickly and ease the burden.

Often, we see couples where one partner doesn't deal with the finances as the other has always taken care of this aspect of their lives together. In these circumstances, good financial planning can help; a trusted adviser can assist you by helping your family understand your financial position, perhaps having been familiar with you and your affairs for many years.

Here are my 5 tips to help you and your family with inheritance

  1. Make a will – Make sure you have a legally valid will in place; enlisting a solicitor to ensure it is drafted correctly and your estate is inherited exactly according to your wishes. There is a saying ‘where there is a will there is a war,’ so it is advisable to discuss your will with your family so there are no surprises for your family and they understand where all your paperwork is kept.  Many people assume if you are married everything will pass to your spouse.  This is not the case if you have children and die without a will; this is known as dying intestate and can leave many problems for your family, as your spouse could only receive a proportion of the estate.
  2. Put together a summary of assets - Put together a document which summarises all of your assets is becoming increasingly more important as a lot of people now hold investments online and therefore do not receive postal communications to their home, meaning family members may not know about them.  Having a summary document is helpful for your executor and family, it means they know exactly what assets you hold and where to find them.  This can be a basic document stating the company you hold the asset with, the account number and who to contact.  Keep this in a safe place (perhaps with your will) and make your family aware of it.
  3. Set up a Lasting Power of Attorney (LPA) or Enduring Power of Attorney (EPA) - In the event of mental incapacity, without an LPA or EPA, no one can manage your financial affairs. Making an LPA whilst you are of sound mind allows you to plan ahead in anticipation that at a future date you may not have capacity. It gives you the chance to decide who would be best to deal with your financial interests and assets.  An LPA covers decisions about your financial affairs and/or your health and care.  An EPA only covers decisions about your property and financial affairs.  LPAs replaced EPAs in Oct 2007 in most of the UK however EPAs are currently the only option available in Northern Ireland.
  4. Inheritance Tax Planning - Inheritance tax (IHT) can be a tricky subject to discuss but with careful planning, you can significantly reduce the amount of tax you will have to pay. IHT is levied at 40% of the amount over your nil rate bands, therefore it can take a hefty bite out of the wealth you are hoping to pass on. Speaking to your advisor about how you can plan to reduce this tax can help you work through the options available, which include gifts to family, setting up trusts or indeed passing on your pension to your beneficiaries while using other assets to fund your retirement.
  5. Introduction to advisors - If you intend to pass on an inheritance to your family it is important, they continue to receive good financial advice, allowing them to plan for their future.  Introducing your family to your adviser allows them to build a relationship so they can continue to provide advice when you are gone. This should give you peace of mind, knowing the money you have worked hard for continues to be managed appropriately when you are no longer here.

 

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If you would like to speak with Alex to understand your current situation and the options available to you, arrange a free of charge consultation with no obligation.

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