Everyone is going to kick the bucket sooner or later. A grave fact of life it may be, but it is one we need to plan for nevertheless. An important part of preparing for that inevitable final exit is preparing the information that you’re going to leave your loved ones, from your financial details to your last will and testament. You might think you’ll do it ‘when you’re older’ – but it’s essential for adults of every age to have a will.
However important it is, though, it doesn’t mean that people are actually doing it. Around two-thirds of adults in the UK don’t have a will in place – and even more haven’t assigned power of attorney. More than that, most children don’t know where to access their parents’ essential information, bank account details, or title deeds. Without access, sorting a person’s estate after they die is very difficult indeed.
Clearly, this is worrying and is likely to cause a lot of hassle further down the line. Here, we’ll talk about how you can go about preparing for your death, and avoid leaving your loved ones with a big headache once you’re no longer around.
- Important Documents
- Power of Attorney
- Last Will and Testament
- Record of Gifts
- Passwords and Logins
- Getting the Information Together
- What Do the Experts Say?
The biggest part of this is where you get all the essential paperwork together. Kill me now, you’re probably thinking. Well, not until you’ve got this all sorted. To give you an idea, this should include:
- Bank statements and account details (including passwords)
- Tax certificates, such as your P60
- Mortgage information
- Outstanding bills
- Pre-paid funeral plan details, if applicable
- Insurance policies
- National Insurance number
- Credit card statements
- Property deeds
- Birth, marriage and divorce certificates
- Passport, driving licence and other ID
- Details of savings and investments, for example share certificates, Premium Bonds and pension plan statements
If you use online banking, print out copies of the relevant information.
Another way to make life easier (or rather, to make death easier) is to set up joint accounts, for example with your husband, wife, or someone else you trust. This means that if you die, money can still be taken from your account without having to wait for probate to be granted. So if you are the breadwinner and you die, your partner can still make use of your money to pay the day-to-day bills without needing to wait months for the money to be released.
Setting up ‘power of attorney’ is a good idea if you’re expecting a long period where you are unable to make decisions yourself, for example if you’re suffering from a degenerative terminal illness or you know that dementia runs in your family.
Power of attorney is an official arrangement where you grant someone the formal ability to act on your behalf, and do things like set up accounts or pay bills for you. When the end of the road is in sight, having someone you trust to deal with these things can make the final stretch less stressful for all involved. You must set up power of attorney whilst you’re still in a sound mental state – otherwise, someone trying to take care of you will need to apply to court to be appointed as a deputy. This can be expensive and drawn-out, and is something you want to avoid.
One of the most important documents you need to get sorted out is your will.
Your will is how you divide up your estate (which is everything you own that has economic value, from your money to your house to your car) in the way that you want, rather than the way the court decides. For example, if your arch-enemy also happens to be your twin sister then it is likely that you might want to leave her nothing. However, the courts may award her everything you owned if you didn’t leave a will telling them not to, simply because she was a close relative.
This is, obviously, among the most important pieces of information to leave your loved ones. As well as saying which beneficiaries get what, you also need to make clear a few things.
what exactly is going to each person?
Maybe, instead of easily countable sums of money, you want to bequeath a diamond-encrusted tortoise to your aunt. She throws her arms up in confusion – WHICH diamond-encrusted tortoise? (This would be a rather satisfying problem to have.) An easy way to avoid confusion is to add in photos of the individual gifts to your will.
Who is the executor?
Nope, this isn’t the guy who administers your lethal injection. You need to nominate between one to four executors of your will, who are in charge of making sure all the stuff you wanted to happen happens. These might be friends, family members, or solicitors who will charge for their services.
what plans do you have for your children?
If your children are under 18 years of age and your partner is unable to care for them, then there are several options open which you will need to think through carefully. We recommend you seek advice on this from a solicitor, who will be able to guide you on what you need to do.
How can your executor contact all your beneficiaries?
It’s easy enough to ring up a charity and make a donation. On the other hand, leaving a mansion to a distant niece is all well and good, but if nobody has her contact details then it is unlikely she will ever be able to collect. Including phone numbers and addresses in the conglomeration of information to leave your loved ones – and letting them know that they’ll inherit – is a sensible idea.
The risks of not making a will
Dying without a will is known as dying ‘intestate’. The risks of dying intestate include:
- Your estate being divided in a way that you wouldn’t have wanted (if you’re not married to your partner, for example, they may inherit nothing)
- Disagreements between those who are expecting to inherit
- The inability to make it clear how any dependents will be cared for
- Losing the chance to leave assets to grandchildren (this isn’t possible without a will)
- Your family having to appoint an administrator, which adds delay and potential cost to the process
Anyone with an estate worth over £325,000 will have to pay Inheritance Tax (IHT). For married couples, the IHT threshold increases to £650,000, with an extra £150,000 for the main residence.
IHT currently stands at 40%, and is charged on the part of your estate that stands above the threshold. This can cost your friends and family thousands of pounds, so any way to reduce it is great. Sadly, this means more paperwork.
The main ways of reducing IHT are to:
- Leave everything to a spouse or civil partner
- Spend it
- Donate to charity
- Give it away
We’re going to talk about the giving-it-away option here. The first three will all be documented anyway, and so it is easy to prove to a court that they were carried out.
Gov.uk explains that:
“People you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.”
This means that gifts must have been given more than seven years before you died, or they will still be counted as part of your estate, and the recipient will be taxed accordingly. There are quite a few exceptions to the rule, so it’s best to read our full article about gifting money here.
The information to leave your loved ones in this case is a record of the gifts you have given with a value above £250. Stipulate if they were for a special occasion, such as a wedding, or if they fell within the permissible annual limit for family members. The law is quite complicated! You need to record what you gave, to whom, its value, and the date it was given.
For more information and some frequently-asked questions about IHT, check out our article here.
In a digital age, we all have several logins, online accounts, and social media channels that need managing. Without leaving these passwords for your loved ones, you’re opening up your accounts to fraud. You may also have recurring digital subscriptions, such as Netflix, Prime, or Spotify, that need to be cancelled.
Make a list of your passwords and login details. Tell someone you trust where it’s stored, and keep it VERY safe! A digital version is handy, but a printed copy is essential if you want to ensure someone can get into your accounts to close them. Otherwise you might find you’ve saved it on your computer… and forgotten to tell anyone your laptop password!
Once you’ve managed to get everything together, your family need to know where to find it. Make sure to tell your executor or executors where it is, preferably in writing. If nobody knows where your will is then it can be ignored, and your evil twin sister might be able to steal everything!
Where to store your will:
- If you made a will with a solicitor or a will writing service, then it can be stored in their archives (usually for a small fee).
- Deposit the will with the Probate Service. This costs £20 and is one of the most secure options, as only you can access it while you are alive.
- Keep a copy of it in your paperwork files at home – but make sure you’ve filed an official copy with a solicitor or probate service, too.
- You should NEVER store your will in a safety deposit box. This can only be accessed by you or those you nominate in your will – so if you’re dead and the will is inside the box, no one will be able to read it (and that’s assuming they know where it is in the first place).
As for everything else, you could:
- Create a physical folder full of all the printed documents and certificates.
- Create a computer file with all the important documents scanned in or in PDF form, with directions to the location of the physical counterparts.
Some law firms offer document storage as well as will storage, so this could also be something to look into.
Something important to note is that you should never attach anything to your will with staples, paperclips or anything similar, as this can raise questions about whether the will is complete or if there are any missing pages.
Ultimately, going for several options is the safest route. Keep the original will somewhere safe and official, such as with your solicitors. However, also keep a copy with you at home with your other documents, and have an online file for backup.
So, what do the experts say?
Sarah Coles, personal finance analyst at Hargreaves Lansdown, emphasises the importance of being fully prepared. Sarah says that passing away without key documents in place “can cause horrible problems” for those you leave behind.
She adds that, aside from the will, “There are lesser-known things that can be invaluable, like a letter of wishes explaining your will or passing on a lasting message – or a register of assets which reduces the seemingly endless admin that comes with tying up an estate. These are only produced by a small minority of people – meaning more stress and upset for the vast majority of people left behind.
“One in ten people say their parents haven’t made any preparations – leaving them with a potential nightmare after their death. And one in seven have no idea where they stand, so the full horror could only become clear after their parents pass away – which is already a horrible time.”
Have you got any advice on preparing your estate documents in later life? We’d love to know about your experience – feel free to share your story over on the forums.
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