The thing is that most of us neither like to think or talk about death, and we certainly don’t plan for it.
Franklin famously said, ‘…nothing is certain except death and taxes.’ And 233 years later, it still stands true. Yet, many of us continue to avoid the subject.
Being financially organised is something that many people want. But what exactly does it mean?
There are many viewpoints, but I believe that planning should be crisis avoidance, not crisis management.
Sometimes things happen that we’re not prepared for, but our eventual demise is something we can plan to ease the administrative burden on those left behind.
Having the following in hand goes a long way towards meeting this common planning objective.
1 – Make a Will
The modern family unit can often look very different from what we might have experienced or remember when growing up. Step-families, unmarried couples and divorcees are all commonplace.
However, intestacy rules – the rules that dictate what happens to your wealth/possessions if you die without a valid Will – are still primarily based on the traditional family unit.
You might want your assets to pass to someone other than your technical ‘next of kin’, but without a Will, this may not happen.
We always recommend using an advocate. The potential financial and emotional cost of getting your Will wrong is too great not to use a suitably qualified expert.
2 – Make a Power of Attorney
An advocate can assist in drafting Enduring Powers of Attorney, often at the same time as preparing a Will. Completing these together can keep costs down.
If you become unable to look after your financial affairs, if perhaps you lose mental capacity, a power of attorney can be invaluable.
Permitting a loved one to act on your behalf can save many admin battles at a challenging time.
3 – Beneficiary nominations
Pensions and life bonds are often structured so that they do not operate under your Will.
It’s essential to make sure that you keep your “beneficiary nomination” up to date. If you move house, change contact details, or your beneficiaries do so, you should tell your product providers.
4 – Assets held in joint names
For couples, it may be beneficial to hold assets jointly (as joint tenants).
In this case, ownership passes to the surviving spouse on the first death, usually on receipt of a certified copy of a death certificate.
It’s wise to seek professional advice here, especially for more significant assets, to establish the best way of holding them for your circumstances.
This approach also applies to other non-financial accounts such as utilities, etc. Having bills in joint names can save much hassle down the line.
5 – Probate
Holding assets jointly means probate is not usually required on the first death.
Probate is usually required for assets held in sole names where that person dies. Probate is the bank or investment provider’s proof that the person claiming the investment is legally entitled to it.
Probate is generally required from the courts of the jurisdiction where the asset is based.
When using UK, Channel Islands or Dublin based providers, consider this. It may be worth asking your product providers what their position is on this if they are based outside of the Isle of Man.
6 – Record keeping
One of the biggest challenges faced by those dealing with an estate is knowing exactly what assets there are to deal with.
We often meet people who have forgotten about small investments/accounts that they may have taken out 20 or 30 years ago. With that in mind, you can imagine the difficulties a spouse or child of the deceased may have. Keeping a record of your assets can assist greatly.
Our Financial Passport template is a valuable tool. There is also space to record any financial gifts made during life which may be helpful if UK Inheritance Tax or care fees funding becomes relevant.
7 – Talk more
There are so many more interesting topics to discuss with your loved ones, but avoiding having these crucial conversations will not save anyone from facing the administrative nightmare that could follow.
Losing a loved one is probably the most difficult thing we will ever deal with, and at this time, the focus should be solely on self-care and family, not paperwork and admin.
Although potentially upsetting to think about, having these conversations now could be the most valuable thing you leave behind.