MoneyMagpie

Jul 05

What information to leave your loved ones

Everyone is going to kick the bucket sooner or later. A grave fact of life it may be, but one we need to plan for nevertheless. An important part of preparing for that inevitable final exit is getting ready the information to leave your loved ones, from your financial details to your last will and testament.

 

Financial details

Family meeting with lawyer

The biggest part of this is where you get all the boring bits of 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
  • 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, then we suggest you print out some 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 go through all the legal wrangling that lawyers are so fond of. So if you are the breadwinner of your family and you die, your partner can still make use of your money to pay the day-to-day bills without needing to justify it to a court.

Setting up ‘power of attorney’ is also 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.

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, handing a friend your car keys can make the final stretch less stressful for all involved. However, this must be done before you’ve lost the last of your marbles – 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 the court may not appoint the person you would have preferred.

 

Last will and testament

Last Will and Testement

Any specific desires about what happens to your stuff once you’ve popped your clogs? Well, where there’s a will there’s a way.

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 more than a single mouldy sock, or perhaps your man-eating pet rhinoceros – but 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.

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 your mad uncle who lives up a tree in Croatia is all well and good, but if nobody has his telephone number then it is unlikely he will ever be able to collect. Including phone numbers and addresses in the conglomeration of information to leave your loved ones – and updating them every so often – is therefore a fantastic idea.

 

Record of gifts

Woman meeting with lawyer

Anyone with an estate worth over £325,000 will have to pay Inheritance Tax (IHT). That’s right – even after your death, the government will still find ways of taxing you.

IHT currently stands at 40%, and is charged on the part of your estate that stands above the £325,000-threshold. This can cost your friends and family thousands of pounds, so any way to reduce it is great. Sadly, this means 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.

However, the thing about gifts is that they must have been given 3-7 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, which you can read about on this link 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 that weren’t for a special occasion e.g. a wedding. The law is quite complicated, and for a full understanding you may want to check out that link just above.

You will need to record what you gave, to whom, its value, and the date it was given. Maybe you’ll die in a week and it won’t matter, but maybe you’ll die in 7 years and don’t want your friends to have to pay for your generosity.

For more information and some frequently-asked questions about IHT, check out our article here.

 

What to do with it all

Sealed will scroll

Once you’ve managed to get everything together, your family will need to know where to find it. Make sure to tell your executor where it is, write it down, and draw a treasure map with X marking the spot to frame on your wall. 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 usually be stored in their archives for free, or for a fee if you didn’t write it with their help.
  • 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.
  • 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 ever be able to read it.

As for everything else, you could:

  • Create a physical folder on your shelf 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.

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.

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Jenny Chase

As a professional Will writer I have to commend Teresa on this article. She covers the subject superbly. This is a fabulous guide of all you need to know about a subject we don’t like to think about yet we really should.

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