Death and taxes are both inevitable. It, therefore, makes sense to prepare for both. Unlike filing taxes, preparing for your death can have its interesting side. In particular, you get to plan your own funeral. You also get the satisfaction of knowing that you’ve made life easier for those you’ve left behind. Here are some points to consider.
Make a will
If there’s one, single action that can make life easier for those you leave behind, making a will is arguably it. Specifically, you need to make a fully-legal will. That means it’s generally best to do so with professional advice.
You should also remember that wills are very rarely “one-and-done” documents. In general, you should review your will at least once a year. You should definitely review it before any significant life changes.
It may be helpful to remember that wills, by default, are annulled upon marriage. The law assumes that your marriage effectively updates your will in favour of your new spouse. If, however, the will was clearly made with the marriage in mind, it remains valid after the wedding.
This can be key information for people who’re marrying and who have children from a previous relationship. You can update your will to state that it remains in your children’s favour even though you have a new spouse. Provided your will clearly shows that you have planned for your marriage (and your new spouse’s welfare), it should remain valid.
Keep on top of your life insurance
Life insurance isn’t just for people who have young children. It’s for anybody who has dependents, including informal ones. Speak to an advisor to find the right advice for you and your circumstances.
There are three keys to getting the right life insurance for your needs. Firstly, you need to decide between a whole-life policy and term cover. Both types of policy are essentially what their names suggest. A whole-life policy covers you for as long as you live, provided that you keep paying the premiums. A term policy covers you for a certain period of time.
Secondly, you need to determine how much cover you need. This can vary over time. You don’t want to buy significantly more cover than you need because you’ll effectively be wasting your money. On the other hand, it’s generally best to err on the side of caution. This is particularly true now with inflation in its current state.
Thirdly, you need to make sure that your payout instructions always reflect your wishes. As with your will, it’s advisable to review this at least once a year. Definitely review it if you have any significant life changes. In general, it’s best to have life insurance paid into a trust. This separates it from your main estate (and hence its Inheritance Tax bill). It can also give you more control over how your money is used.
Death clean your finances
The Swedish concept of death cleaning has been steadily gaining in popularity in other parts of the world. It essentially means slowly and mindfully cleaning out your possessions in preparation for your death. It can also be applied to your finances.
Actively close off any accounts you’re not actually using. Likewise, cancel any recurring payments unless you really do need or want the product or service. Make sure any payments you do make are clearly recorded. Keep these records together with your key financial and legal paperwork.
In particular, make a list of any online accounts you hold and what they are for. Your executor won’t need your login details. They will, however, need to know whom to inform of your death.
Please speak to us about finalising your wishes.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
Will writing is not part of The Openwork Partnership offering and is offered in our own right. The Openwork Partnership accept no responsibility for this aspect of our business. These products are not regulated by the Financial Conduct Authority.
