No one likes to think about planning for old age, illness and death. But when the time comes, having everything in order can save your loved ones a lot of worry and additional stress. We’ve compiled a list of simple steps you can take to help prepare your financial affairs.
It might be an uncomfortable topic, but a key part of planning for the future is preparing what you’ll leave behind for your loved ones. Getting your finances sorted ahead of time will not only help to make sure that your wishes are fulfilled, but it’ll also help to ease the burden on your family and friends.
Whether your financial affairs are simple or complex, a good starting point is to gather all of your financial information and documents together in one place.
If your loved ones can quickly and easily find out where your bank accounts and pension(s) are held, together with information about utilities and service providers, this will make it much easier for them to administer your affairs. For security reasons, it’s advised that you don’t list passwords along with this information.
Keeping a list of your incomings and outgoings can also help them to keep track of any salary or savings payments to watch out for, and any bills or contracts that need to be settled or suspended.
If you’re not sure where to start, Age UK’s LifeBook – available for free in print or by email – provides a useful template.
To make sure your money and possessions go to the right people after you pass away, it’s crucial to compose a will. Although it might be a daunting or expensive exercise, preparing a will is often much easier than it seems.
Before you visit a solicitor or purchase a will kit, it’s wise to take a moment to decide how you’d like your assets to be shared out. Items may include savings and investments, property, pension(s) and precious or sentimental items such as jewellery, furniture and family heirlooms.
Some people may have a very straightforward will, leaving everything to their spouse, for example. Others may have multiple beneficiaries and have more complicated financial affairs. Either way, it is easy to access professional will-writing advice if needed. In fact, every October and March in the UK is Free Wills Month and over 55s who register for the scheme are able to have a will written up by a solicitor free of charge.
The process of writing a will, and calculating the total value of your estate, should also help you to find out whether you need to undertake any inheritance tax planning.
To find out the latest information around inheritance tax, it’s worth checking on the Government's website which gives you an overview of when you need to pay inheritance tax and what the current rates of tax are. You’ll also find details of any upcoming changes that are to be implemented in the future which could affect your individual situation.
However, the ins and outs of inheritance tax planning aren’t necessarily straightforward, so if you are in any doubt about whether this applies to you, seek professional advice from a tax specialist.
Within your will, you might also want to specify how you’d like your funeral to be conducted. If you prefer, you can always have a separate document that outlines your funeral wishes – although it is best to keep this alongside your will and update both of them regularly.
An important part of outlining how you want your life to be celebrated is planning how to cover funeral expenses. In 2016, a basic funeral costs around £3,897*.
Pre-paid funeral plans are one way to help cover funeral costs, helping to minimise the financial strain on your loved ones. These packages typically cost several thousand pounds and provide peace of mind that the financial, and usually the practical side of your funeral will be taken care of.
Life insurance is another way to cover funeral costs, including over-50s life plans. It is important to check the terms and conditions however, to make sure that all your wishes will be fulfilled.
Putting away savings specifically to cover funeral costs in a dedicated savings account is another option – and allows you to keep control of how much and when you pay in.
Other important financial decisions to take ahead of time include how illness might affect your ability to manage your own money - and how much you will be able to leave behind for your loved ones.
Consider setting up a Power of Attorney in case, at some point in the future, you no longer feel able to make financial decisions for yourself. Also take the time to evaluate the costs of long-term care, and how you might pay for this out of your estate.
Finally, set aside a moment to talk with your loved ones about your financial plans. Being well prepared will help to put everyone’s mind at rest.
If you’re worried about how your loved ones might cope with bereavement, we have dedicated specialists who are trained to take you through everything you need to think about from a financial point-of-view. You can arrange to meet with a bereavement specialist by visiting your local Lloyds Bank branch or calling us on 0800 015 0012.
Scottish Widows has a simple guide to looking for inheritance tax planning.
The Citizen’s Advice provides information for those looking to make a will for the first time.
Visit Dying Matters for help talking more openly about dying, death and bereavement, as well as making end of life plans.
The Money Advice Service can help you prepare financially for illness and death.
*This figure is sourced from the How much does a funeral cost in the UK today article carried out by Sun Life Insurers.