It is only natural to want to ensure that when you die, your estate is in good order and that your loved ones are able to easily carry out your wishes, minimising stress at a difficult time. Fiona Higgott, Partner in the Wills, Estate & Tax Planning team at law firm Thomson Snell & Passmore outlines some key tips for ‘dying tidily’.
Write and regularly maintain a will
Have a will in place, which should have taken into account:
- Wishes for your funeral
- Appointing executors
- Appointing guardians to look after your minor children
- Making gifts of cash or personal possessions, as well as considering gifting to charity
- Providing for a spouse or partner – if you live with someone, but are not married or in a civil partnership, your partner will have no automatic rights to your property if you die. There is no such thing as a ‘common law’ husband or wife. Spouse and civil partners also benefit from spouse exemption for Inheritance Tax purposes but unmarried partners do not
- Providing for children, especially in terms of whether to pass assets to them outright or whether to hold assets in trust for them
- Considerations specific to blended families ensuring both asset protection and Inheritance Tax efficiency
- International assets and how they will pass on your death, bearing in mind that taxation and succession rules in other countries can be very different from the rules in this country
- Business interests, shareholdings and agricultural assets, including the tax reliefs that can apply to these assets and how to maximise or safeguard those reliefs.
It is important that any will is up to date and so should be reviewed regularly and especially in light of any of the below:
- Marriage or civil partnership – getting married or entering into a civil partnership will revoke any will you have in place already, unless the will makes specific provision for the marriage
- Changes to executors
- Changes to beneficiaries – this is especially true if you make a will and subsequently have children
- Acquiring or selling property or assets – ideally advice should be sought before the sale or purchase goes ahead
- Inheriting assets.
You may also want to include a letter of wishes to guide your executors and trustees, which can include details such as your funeral wishes, how you would like your personal items to be distributed and who you would like notified of your death.
How to get your paperwork in order in case of your death
Given the importance of your will, it should be kept in a fire-proof location, or stored safely with your solicitor. Make sure to let your loved ones and executors know where your will is kept, as well as the solicitors who you would like to deal with your estate.
If you own assets abroad, you may need a separate will for that country, depending on the local laws. If so, ensure that you leave details on where that will is stored and the lawyer who can be contacted to deal with your estate in that country.
Maintain a central summary of important information, for example a document which lists all your bank accounts and financial information (especially for online only accounts which can be hard to track down unless they are known about), details of and reference numbers for utility providers, details of all subscription services you have and details about your pensions and life insurance/death benefits.
It is also wise to utilise a master password app or compile a document which contains passwords to your social media and other digital assets as appropriate.
Consider regularly weeding your filing to remove reference to assets which you have not owned for a number of years so as to avoid confusion / additional work following your death.
Things you can do in your lifetime to ease the burden of dying
Take lifetime advice on Inheritance Tax mitigation, including utilisation of allowances and exemptions and, where relevant, lifetime gift planning and the use of trusts or companies for asset protection and tax planning.
Put in place Lasting Powers of Attorney which will allow your chosen attorneys to assist with financial and health matters prior to your death, especially if you have a long period of illness before you die.
Talk to your loved ones about your wishes, particularly in relation to matters such as end of life medical care and your funeral. Knowing they are doing what you wanted will ease the burden of making difficult decisions.
Carefully consider how your personal belongings, particularly items of sentimental value such as jewellery, photographs and family heirlooms, will pass. At an already emotive time disagreements about who is getting what can cause irreparable family damage which could be avoided by leaving clear instructions and avoiding misunderstandings. Managing expectations during lifetime can also go a long way here.
Comments from this article first appeared in The Daily Telegraph How to die without leaving a gigantic financial mess for your children (telegraph.co.uk).