MoneyMagpie

Apr 02

Prepare Your Finances and Will for Peace of Mind

Reading Time: 7 mins

Prepare your finances and will so you can rest assured that your loved ones are covered should the worst happen.

It’s not a fun subject, and no one wants to think about the possibility of death at the best of times. But, apparently, will solicitors have seen a 30% uptick in will writing and amendments since coronavirus hit the headlines.

The first thing is never to panic, but to take the NHS advice very seriously. Coronavirus has made almost everything in life more complicated, and wills and finances are no different. Read on for advice on will writing, inheritance tax, and more.

 

Prepare your finances and have a will written

prepare your finances for coronavirus

Having a will is always a good idea. Even if you think you don’t have enough assets worth passing on, this could change in the future. You’ll certainly want to amend your will as time goes on and your situation changes, but getting something prepared now is always wise.

We’ve already got an easy guide to writing your will, which is a great place to start. Note that advice about meeting solicitors in person, etc. won’t be applicable while the UK is practicing social distancing. But, it’s not impossible to get a will written or amended right now.

To start, you can get in touch with solicitors specialising in will writing over the phone. They’ll be happy to guide you through the process and should be able to answer any questions. Before writing the will, they’ll ask about your financial situation and who you may choose to leave your estate to.

Naturally, this is important business and you may find talking over the phone less efficient. But many will solicitors are turning to video link during the lockdown, which you may find better.

Unfortunately, when wills are signed, they require a third-party witness. This still isn’t impossible during our social distancing times! Your witnesses must not be related to you or beneficiaries of the will. So, your neighbours could be a good solution!

Ask them to watch you sign the document from a safe distance. Then, step back, and allow them to sign the document, too. Remember if you’re handling anything physical, including documents, pens, etc., to practice excellent hygiene even when not meeting people directly face-to-face. Wear disposable gloves and wash your hands afterwards.

 

Practical steps: Give someone access!

will writing advice

Once the will is written and finalised, you’ll need to make sure a trusted family member can access it should the worst happen. Many solicitors provide safe storage for the documents for a small fee, which is an excellent idea. In the unlikely event of a fire, flood, or other damage to your home, this means the will is still safe.

You should also leave instructions so someone can access your digital services. For example, if you manage stocks and shares online or invest in cryptocurrency. Be sure to ask your solicitor about the best way to store these. It may be a case of telling someone you trust where the information is stored. Ideally, this would be an offsite location (e.g. a document held for safekeeping by the solicitor). Even things like passwords for your email account can be helpful for those dealing with your affairs after you die.

This means that in the event of your death, your loved ones won’t have the added struggle of trying to access these without your passwords.

 

Prepare your finances for your children

prepare finances for your children

Naturally, if you have children then they’ll be your primary concern when writing a will. This is especially true if they’re under 18.

Your solicitor will talk you through this if you do have kids. It’s important to be specific about who will get your money and the share of your estate. You have the right to leave whatever you like to whoever you like. Family situations may mean leaving more to one child than another, or appointing a trusted friend rather than your sibling as the guardian (providing the friend agrees, of course).

In any case, get it all included in the will and have it checked over by the solicitor. If you don’t have a will, the rule of intestacy applies. This is the default provision, but it might not be in line with your wishes. For example, perhaps you want to leave money to a partner you’re not married to.

Also, your chosen guardian might be denied by a court if you don’t have a will. So it really is vital you have one if you have a certain person in mind to be the guardian. Some restrictions still apply. For example, it’s not always possible for your child to be sent to live with a guardian abroad depending on immigration controls. But, including specific instructions gives the best chance your wishes will be carried out.

All in all, this means you really do need to prepare your finances and get a will written.

 

Planning funeral payments

preparing finances coronavirus

Aside from deciding who your money goes to, a will can also include instructions on what happens to your body when you die.

Depending on your preferences, you may want a cremation or burial. You may also have specific requests about what happens at your funeral, including music choice.

It’s important to note that funeral arrangements in a will are not legally binding, but they can help direct family members. Ideally, you’ll agree everything in advance with a trusted person, such as a partner, relative, or friend, as well as including instructions in your will. If, for example, the coronavirus pandemic gets seriously out-of-hand, some types of funeral (religious requirements excepted) may be banned. Burials, for example, may be replaced for cremations. However, this is only in extreme circumstances – so assume that your wishes will be followed wherever possible.

Setting up a funeral plan means your loved ones won’t have to worry about the added burden should the worst happen. Plus, if it’s all paid upfront, it means less money comes off your estate when the will is executed. Alternatively, you can state in your will that the money does come out of your estate.

Funeral plans are especially important if you have quite specific ideas about your funeral, such as expensive headstones, coffins, or any other aspect.

 

Check out inheritance tax rules

inheritance tax advice

At time of writing, inheritance tax is payable if your estate is worth more than £325,000. The threshold is doubled for married couples: the first £325,000 allowance is added on to the surviving spouse’s allowance. That means a married couple (or civil partners) can leave up to £650,000 between them before IHT is due.

There are ways to legally avoid paying more than you need to, meaning more of your money goes to your loved ones. For example, the threshold increases to £475,000 in regards to your home if you leave it to your children. This is true only if the estate is worth less than £2 million. And you won’t pay any inheritance tax on your home if you leave it to your husband, wife, or civil partner. Make sure you get your will written to ensure it goes to the person you want it to.

You can also start giving your money away while you’re still alive as tax-free gifts. The limit is £3,000 per tax year (6th April to 5th April the next year). Some people with illnesses such as terminal cancer may do this to lessen the amount of inheritance tax paid when they do die.

 

Should you write your own will when you prepare your finances?

will writing advice

Usually, the answer to this question is no.

Silly mistakes like spelling and grammar errors could void clauses in a will. If you have a lot of assets, this leaves too much to chance.

On the other hand, if you have relatively small assets (say, under £5,000), it might be okay to write your own will. You could order a good-quality DIY pack online and follow the instructions carefully. This would be better than not writing a will at all, but doing it professionally gives more security and peace of mind.

Remember, as coronavirus is so prevalent right now and appears to live on surfaces, to be extra safe you should dispose of outer packaging and wash your hands thoroughly when getting anything through the post.

Remember that a self-written will still needs to be witnessed. This may be challenging while maintaining social distancing. This Which? article has advice on witnessing a will while self-isolating, and the Money Advice Service has more info on DIY wills.

Check out our article on what inheritance tax is, and more info on the inheritance tax threshold.

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Joanne
Joanne
1 month ago

Agree this is a good idea.

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