The start of a new year is a time for fresh beginnings, making new plans and hopefully following them through. I’ve lost count of the number of times I’ve made a new year’s resolution list and actually stuck to it; vowing to drink less, lose weight blah blah blah. I am, however proud to say I’ve managed to stick to dry January for the last 10 years! Yet, how many of us put into action a plan that really will have a long term benefit?
Start your plan in preparation for the inevitable
As professional financial planners, we develop strategies to help people achieve their financial goals and objectives. While we cannot influence geopolitical events we can develop procedures that can accommodate most eventualities.
The most important part of any plan is to make sure it’s adaptable, flexible and is reviewed regularly. Your finances are no different.
Our 2nd article this month is about how to be more efficient with your money, achieve your investment goals, retire early and so on. But it neglects one area. Something we don’t like to think about…
Death and who gets your assets when you die?
Benjamin Franklin famously quoted but there are only two certainties in life “Death and taxes”. As advisors, most of our planning revolves around BOTH these truisms.
Rather than just focusing on what you want to happen when you are alive, it’s also worth sorting out what you want to happen on your death. If like me, you have experienced the heartache of trying to wind up the estate of a much-loved family member and friend, you will know how difficult and time-consuming it can be!
We are here to help
Our helping hand is relevant irrespective of age, health or wealth. Personally I always put ‘health’ ahead of ‘wealth’ because if you’re in poor health it makes it very difficult to accumulate wealth.
What do you want to happen to your assets in the event of your death? Who will have your treasured possessions?
Both are things you need to think about. Valued items such as war medals or any objects owned by previous generations should be taken care of so they remain within the family and don’t fall into the unappreciative hands.
You may have benefited from a legacy thanks to a grandparent or were gifted an amount from a parent enabling you to get on the housing ladder. Maybe you used the money to pay off your remaining mortgage early? A similar gift for one of your children could be something you too are considering. Maybe you have already given friends or family gifts or even valuable possessions.
Keep it on record
Are you aware of how such gifts are treated in the event of your death? Do you keep an accurate record of all gifts made during your lifetime? Without doing so, it can become a bit of a muddle.
You might find this link (IHT403) HMRC DOC helpful.
This document is usually completed by your executors following your death. However, what it does provide is a format that can show accurately any gifts that you’ve made over the last seven years. So we suggest completing it as you go along to summarise any gifts you make. It would save an awful lot of time, and therefore expense when your estate passes through probate.
I have also found it a useful way of recording gifts made to my children so that a degree of equity and fairness can be displayed.
Make a will
Making a will is a great starting point for getting your house in order – if you don’t have a will get one!
I know it’s stating the obvious but plenty of our clients realise the importance of making or updating outdated wills but are never free when the solicitors are open. If this is the case we can help. Technology means face to face isn’t the only way to tick this job off! As the saying goes, “where there’s a will there’s a way!“
What I own and where I keep it
You may think your affairs are pretty straightforward so your will would be too. However, the will may not cover all areas of planning. While a will provides a lot of details relating to possessions and artifacts, there is a great deal of other information you may also want to leave for your executors and beneficiaries to sort out. Often time is wasted looking for this crucial information!
It would be really beneficial to keep a catalogue containing all your important stuff; like bank account details, shares, bonds and things you own, etc. Legal and Medical use a document called ‘What I own and where I keep it’. It’s not a legal document but it helps fill in some of the gaps and is a useful guide for those who are dealing with probate and other affairs of your estate.
Speaking from my own experience I can honestly say that this document saved a great deal of time and money following my dad‘s death. Just contact us if you would like us to forward a copy to you.
Your death is the most difficult part of anybody’s financial planning so this is why we are here to help and talk you through the completion of both forms. In an ideal world, we would also have a copy on file so that we are in the best position to help your dependents following your death.
Admittedly, this hasn’t been the most cheerful topic to start the year with, however, sorting out the difficult and painful part of your finances early will stand you in good stead – so you can get on and enjoy the rest of the year! Feel free to get in touch if you need help.
I will leave you with one last quote related to the probable success of your New Year’s resolutions in 2020.
“Whether you think you will, or you think you won’t – your probably right” corruption of a Henry Ford quote.
Let us know if you feel that the documents will be useful? Let us know by adding a comment below.