'Nothing Is Certain But Death And Taxes'
- AuthorAnnaliese Barber
The first use of this saying was by Daniel Defoe in ‘The Political History of the Devil’ way back in 1726. However, the more familiar form is attributed to Benjamin Franklin, US President, in a letter to Jean-Baptiste Leroy in 1817, when he said -
‘In this world nothing can be said to be certain, except death and taxes’
The average cost of dying, according to SunLife.co.uk, a life insurance website, is £8,802, which consists of a basic funeral, send off (i.e. flowers, memorial stone, wake etc.) and estate administration.
However, with a little bit of forward thinking, planning for what happens when you die can be made a lot easier, both for you and the loved ones that you leave behind.
Here are my top tips -
First of all, think about, which may be stating the completely obvious…
Making A Will
Making a Will can make dealing with your affairs when you have gone a whole lot easier for those left behind.
There are lots of reasons why you should make a Will if you don’t already have one. Funeral wishes can be written into a Will so that your Executors know exactly what you would want.
You are never too young to make a Will, as long as you are over 18 years old (16 years old in some very exceptional circumstances) then you can make a Will. My colleague Joanne Tillotson has recently written a very informative article about this.
If you are a co-habiting couple, and especially a co-habiting couple with children, then you most certainly should make a Will. There is a common misconception that once a couple have lived together that they are common-law spouses and everything will pass to the common-law spouse on death. This is not the case; there is no such legal concept as common-law spouses in English law.
If you have young children, then although you may think that you don’t have a lot to leave anyone, a Will is especially important to appoint guardians for your children. If you are a single parent then it cannot be stressed enough the importance of making a Will to appoint guardians of your choice to look after your small people.
A Will is important if you have children who have a disability. Trust arrangements can be included in your Will to ensure that they are looked after once you are gone and that they are not taken advantage of. Trust arrangements can be used in a Will as a protective measure, such as the previous example, but also where children may have drug/alcohol/gambling problems or simply going through a divorce.
Even if you have already made a Will, it is important to make sure that it is updated as and when required. An out of date Will can have almost as catastrophic consequences as having no Will at all.
There has been a rise in Contentious Probate claims in the last few years, largely down to people not making Wills who should have made Wills, such as co-habitees or badly drafted (usually home-made) Wills making the post-death situation far more complicated than it should have been.
It can be a false economy making a badly written home-made Will as the consequences can be far reaching and expensive to correct. A Testator may think that they are saving money by not having the Will professionally drafted, but it can quite often have the opposite effect, which is where my colleagues who deal with Contentious Probate issues can be involved. Issues can arise such as partners being left out of Wills or getting no provision if no Will has been left.
We often say in the Private Client department that Wills are the easiest document to get wrong if not drafted correctly and can have devastating consequences.
Amongst the examples (and I have seen too many to mention!) seen over the years are a Testator signing several home-made Wills on the same day as they misunderstood the instructions in the Will making pack and thought that all of the pre-printed forms had to be completed. As all of the Wills had been dated on the same day, it was impossible to tell which Will was the last Will. It took a number of months of to-ing and fro-ing with the Probate Registry to sort the matter out.
Ironically, the Will/s was/were very straightforward, but the client thought that they were saving a bit of money by doing it themselves.
Tilly Bailey & Irvine’s Private Client department has just been awarded the Law Society’s Wills and Inheritance Quality Scheme (WIQS) which is the best practice quality mark for Wills and Estate Administration. Therefore, you can be sure that you are getting the best advice and assistance possible.
Talking of administration leads me to my next tip….
Keeping Your Paperwork
Tilly Bailey & Irvine have a Digital Assets Keepsafe which can be downloaded from our website here. In this day and age, most of us have a substantial on-line presence, so completing the Digital Assets Keepsafe is a very wise idea.
However, if you are a little more old school and have lots of paper documents, it is advisable to keep all of your important documents in one place and tell your nearest and dearest where to find them. You don’t need to keep everything, usually the most recent and relevant documents.
If you have made your Will with Tilly Bailey & Irvine, then once you have signed your Will, you are provided with a Personal Assets Log which also incorporates the Digital Assets Keepsafe. My advice would be to complete the document and place a copy with your Will. You can then update the document as many times as you wish.
Keeping paperwork is very important but even more so when thinking about…
Forward planning in respect of Inheritance Tax is currently a hot topic, with the introduction of the Residence Nil Rate Band which I have recently written about.
It is possible to give away assets during your lifetime to qualify as Potentially Exempt Transfers (PET’s) in order to reduce your Inheritance Tax liability, but it is strongly advised that professional advice be sought before doing so. It is also possible to make gifts out of surplus income, but in order to satisfy the requirements of HM Revenue and Customs, careful records need to be kept, hence why it is vital to keep clear records of gifts so that your Executors can complete any tax forms correctly.
Insurance policies can be taken out in order to meet any potential Inheritance Tax liability.
Finally, thinking about funerals….
In my time in the Private Client department of Tilly Bailey & Irvine, I have had to organise quite a number of funerals as have my colleagues. This was not something that I ever thought I would end up having to do when I was at law school and certainly never mentioned in my classes!
Life Cover For Funeral Costs
Lots of clients worry about how their funerals are going to be paid and don’t wish their family to be out of pocket. Many companies offer life insurance which can assist towards funeral costs. Some companies have an option whereby payment can be made directly to a funeral director.
Quite often clients will have life insurance which they have had for many years, such as ‘penny policies’ from the Prudential, Co-op and the like. However, most of the time the amounts payable from these policies are far from sufficient to settle any funeral accounts in full.
Many funeral directors will ask for some payment up front when a funeral is arranged to cover disbursements such as cremation fees, doctors certificate fees and the like.
Another option is…..
Pre-Paid Funeral Plan
It is possible to have a funeral plan, whereby you have made arrangements in respect of your funeral and have pre-paid for it.
However, when choosing a funeral plan, look carefully at what is actually covered by the payments being made and how the payments are to be made, for example, a lump sum or in instalments.