Death is a subject that not many of like to think about or discuss, yet planning ahead is more important than ever to ensure your affairs are in order before your passing. Planning ahead will not only help your affairs be more easy to deal with, but you could be able to leave a lot more to your loved ones
Regardless of your age, wealth, health or status, planning for your future can ensure that your loved ones know your wishes and can assist in providing them with the best financial outcome. Taking the necessary steps and precautions during your lifetime can also eliminate any unnecessary stress that your loved ones may face when administering your estate when the times comes.
If you want to make sure the people you love are provided for after you’re gone, you’ll need to plan ahead. In this short article you’ll find some basic steps to help you get started.
If you’d like to discuss more around pensions, estate planning or financial planning in general then please get in touch with us for a chat on how we may be able to help.
Planning what happens to your money and possessions when you die ensures that:
• your money goes to the people whom you want to give it to
• you reduce or eliminate inheritance tax to leave more to those you love
• your wishes are carried out without unnecessary expense or delay
This might sound simple, but managing the transfer of your money and possessions after you’re gone is a complicated area with many financial and legal hurdles. The best way to avoid unwanted consequences is to start planning as soon as you can.
Do you know that if you don’t have a will, then your estate will be shared according to set rules which may be different from your wishes? The consequences can be devastating for those you leave behind. If you’ve already made a will, that’s great. Please just make sure it’s kept up to date. A change in family circumstances, changes in inheritance tax rules and wider legislation can all affect your will. It’s recommended that you review your will at least every five years.
Sometimes people wrongly think because they have a will they don’t need a Power of Attorney (POA), but this isn’t true. The POA lets you appoint someone you trust to make financial and/or medical decisions for you if you’re not able to do so, for example, if you become ill. It might help to think of a will as something that helps your loved ones after you die, whereas a POA is designed to help you while you’re still living. Another common mistake people make is thinking that the POA means you’ve automatically handed over control to someone else, but again this simply isn’t true. It can start immediately or you can opt for it to kick in when you’re no longer able to act in your own best interests.
It’s a strange anomaly, but your will doesn’t decide who inherits your pension.
Most pensions in the UK are set up under a discretionary trust. When this is the case, it means that the pension trustees have the right to choose who ultimately receives anything that is payable from the pension on your death. This is why it’s particularly important to complete and submit a nomination form (often referred to as an “expression of wish” form) which allows you to tell the scheme administrator who you would like them to pay death benefits to. The scheme administrator doesn’t have to follow your wishes although generally they will.
If you have completed a nomination form, the people you list on that form will normally inherit your pension when you die. Over the years, it can be easy to forget who you’ve nominated to inherit your pension, or if you have filled out the form at all. This information can also change and quickly becomes out of date if your circumstances have changed. If you’re not sure who inherits your pension, your adviser can help and can also update your nomination form if needed.
This is often the step that’s forgotten about. It’s really important to have these documents and keep them up to date, but it’s even more important your loved ones know how to get hold of them when they’re needed. By letting your loved ones know in advance you’ve done this important planning, it can make it a lot easier on them at what could be a very difficult time.
The 5 basic steps to help you get started planning for what you leave behind for your family: