5 things to prepare for if the worst should happen
As part of our GetAdvised campaign, we’re looking at ways professional advice can help you evaluate, develop and implement a solid plan to support your future.
Think for the best, prepare for the worst. And the simple reality is that by doing some careful financial planning, you can create a safety net to reduce future concerns and uncertainty for you and your family.
To help you, we’ve compiled a list of five important things you should take care of, just in case.
1. Write a will
Let’s get the most awful bit out of the way first… Planning for your death. If you do just one thing to plan for your death, make it writing a will. If you leave no will, the state decides who inherits your estate. Not only does this mean that your money may not go to the person or people you want, but you could leave your loved ones without a penny.
Here’s an idea of what is likely to happen if you die intestate:
- If you’re married or in a civil partnership and your estate is worth less than £250,000 (including your property), your spouse will inherit it all.
- If your estate is worth more, the first £250,000 will go to your spouse, and the rest will be shared among your children.
- Your spouse will also inherit a life interest in half of the remaining estate. This means that your spouse cannot get rid of or spend that part of the estate but can have the benefit of it during their lifetime.
- If you don’t have children, your parents or siblings may be entitled to a share.
- If you’re not married, your estate will be shared among your children (an unmarried partner is not entitled to anything).
- If you have no children, it may go to your parents, siblings, grandparents or uncles and aunts.
- And if you have no close relatives then your entire estate will go to the crown!
2. Put your life insurance money in trust
Did you know that endowment and life assurance policies can be subject to inheritance tax (IHT) on death? If you want your life insurance to go to your heirs rather than the state, make sure your policy is placed under trust. If you do so, your policy can be paid out before probate is granted, ensuring it’s paid more promptly. To find out how you do this, it’s best to speak to a financial adviser.
“The simple reality is that by doing some careful financial planning, you can create a safety net to reduce future concerns and uncertainty for you and your family”
3. Set up a Wealth Preservation Family Trust
A Wealth Preservation Family Trust protects your assets during your lifetime, and ensures they are passed on completely to your spouse, children, grandchildren and any other named beneficiary after your death.
If you wish, you can specify how old your beneficiaries must be to receive the trust assets, or any circumstances in which you would want them withheld. You can also choose to set up a trust while you are alive, or state in your will that you want it to take effect after you have died.
As well as helping to minimise inheritance tax, Wealth Preservation Family Trusts can also have income tax and capital gains tax (CGT) benefits.
There are many different types of Wealth Preservation Family Trusts to choose from. To decide which one is right for you and your family situation, it’s best to seek out some good financial planning advice.
4. Make a personal crisis checklist
A crisis can strike at the worst time or when you least expect it. It is important to be well-prepared and to ensure that your loved ones have access to all the information they would need to manage the situation. Such times are stressful by their very nature and any forward planning done to minimise confusion will be welcomed by those involved at the time.
Create a schedule of your important information and contacts in case of emergency. It should contain details of where important documents are kept, contact numbers of your professional advisers such as your lawyer, accountant and financial planner as well as bank and building society accounts.
Information that your loved ones would need to have would also include home and car insurance details, passport and birth certificate as well as basics such as your household utility suppliers. Such an important document should be saved securely with only your closest family being advised of the details.
5. Make an end of life plan
It’s not just the financial side of things you need to prepare for. Creating an end-of-life plan can help ensure your needs are met and wishes are carried out exactly as you want them, and saves your family from having to make painful and difficult decisions on your behalf.
An end of life plan can include:
- Stating what care you want in your final days, and who will speak for you
- Whether you wish to donate your organs
- Who you want to be informed of your death
- Key decisions on your funeral – what type you want, any songs you wish to be included, and who to invite.
No one likes to think about the worst happening – least of to themselves or their loved ones. But by getting good financial planning advice, you can ensure that you can continue taking care of your family.
Find out more about the GetAdvised campaign.
About the author
Alan Smith is the director of Capital Asset Management. He works with some of the UK’s leading financial services practitioners, and has amassed a wealth of experience in the key areas including retirement planning strategies, investment management and creative tax planning for private clients.