It’s a subject nobody likes to talk or think about, but we should all take a moment to ask ourselves …
… will my family have enough money if the worst were to happen to me?
… who do I want to inherit my assets when I'm gone?
… do I know what will happen to my pensions?
It’s so important to discuss your thoughts and wishes with your loved ones, and often with a professional such as a solicitor or a financial adviser.
It’s certainly a depressing topic to talk about and even write about. But if we care about what happens to our assets once we’re gone and if we care about our family and close friends, we would all prepare for this eventuality as best we could.
Let’s start by looking at the formalities the next-of-kin needs to go through in the event of their loved one’s death and then we can work backwards to consider what could be done, before it's too late, to make that process smoother.
1. When someone dies, the first thing that needs to be done is to get a doctor’s certificate confirming the cause of death. Next of kin and other family members will also need to be informed.
2. A doctor’s or medical certificate will be needed to register the death. This is a legal requirement and once registered the registrar will be able to provide as many certified copies of the death certificate as needed.
3. The family of the deceased will need to check for a will. It may be stored in a safe place in the deceased’s home or stored with a solicitor. If you make a will through a solicitor, who then offers to store it for you, make sure you let at least one other person (preferably two) know which solicitor your will is with.
Never underestimate the importance in writing a will. Without a valid will in place, your estate will be subject to intestacy rules, which distribute assets to relatives in a certain order and makes no consideration for any specific wishes you may have had. This can add delay to the distribution of your assets, as well as complications.
Therefore, if you want to ensure that your estate is distributed to those whom you want to benefit, in the proportions that you specify and with minimum complication it’s crucial that you write a will and keep it updated*.
*There are certain situations where a Will could be deemed invalid, such as one written before marriage.
I would always suggest using a will writer or a solicitor to draft your will for you. They will talk to you about your wishes and ask you what assets you have that are to be left to your family, friends or charities. The will writer or solicitor will have the knowledge and experience to guide you through the process and may come up with some points to consider or scenarios that you hadn’t thought of, to ensure all bases are covered.
Writing a will gives you peace of mind in knowing that your assets and personal possessions will be distributed in accordance with your wishes, you can also specify who you would want to take over custody of any children you have in the event of your death before they reach adulthood, or even who you’d like to take care of the cat!
4. Certified copies of the death certificate will need to be sent to:
· The deceased’s bank
· Mortgage provider
· Any life insurance company with whom the deceased was insured
· Savings and investment providers
· Pension companies
If you’ve appointed a solicitor to execute the estate, or if the deceased had a financial adviser, they will be able to help with informing the various banks, building societies, investment companies, pension and insurance providers.
This is where it’s really useful if there are records of all accounts and policies that they hold, such as a simple list. If the deceased had a financial adviser, they should hold this information. It eases the burden on the next of kin and ensures that all policies are known about … you wouldn’t want your loved ones to miss out on a life insurance pay-out!
I recently read an article that estimates that £230.2bn worth of life insurance benefits could go unclaimed. That’s a staggering amount that may not end up in the hands of the people who need it most and for whom it was intended!
The same article on www.gocompare.com from 27th October 2021 states:
“Our recent survey found that 18% of life insurance holders haven’t told their family members that they have a policy. As well as this, 35% said that their family doesn’t know how to access their policy documents. Meanwhile, a further 71% stated that the policy isn’t detailed in their will.”
The key takeaway from reading this is that it is so important to keep an up-to-date record of what policies you have and ensure that your policy documents are accessible. Noting your various accounts and life insurance policies within your will is also a good idea.
5. At the same time, you’ll also need to start making funeral arrangements. Get in touch with a local funeral director and they’ll be able to guide you through the process, although it will really help if you have details of any specific wishes or instructions from the deceased.
Again, this is where your organisation and thoughts for your own funeral can really help those you love when the time comes to plan and pay for your funeral. Any little steps you make now, no matter how small it may seem, can make a massive difference to your loved ones and ease the stress at what will undoubtedly be an upsetting time. Perhaps you know what songs you’d like played, and what hymns you’d like sung?... write it all down and keep it somewhere to be found.
The average cost of a funeral varies by region, with no surprises for guessing that London is the most expensive place to die! The average cost of a basic funeral in the UK is £4,056. Cremation tends to be cheaper with an average cost of £3,765, whilst a burial tends to be in the region of £4,927 (source: www.over50choices.co.uk - 16th June 2022).
Your family or executor of your estate will be responsible for paying the funeral expenses, but they can claim this back from your estate once settled. Depending on whether you think your family could comfortably afford to pay for your funeral from their own pocket before being able to claim back from your estate, you may wish to consider making some provision for this. Paying into a funeral expense plan is one option to consider.
6. Probate needs to be granted before assets can be distributed to the intended beneficiaries.
Probate refers to the process of dealing with the deceased’s estate – clearing their debts and distributing their assets in accordance with their Will.
There are specific rules that set out how you notify the authorities and distribute the estate. For permission to manage this process, an individual, or professional such as a solicitor, will need to apply for grant of probate. Once the appropriate documentation has been submitted with a request for grant of probate, you may need to wait 8 to 14 weeks before the grant of probate is received and you’re able to start distributing assets.
Any policies that are held within a trust, can pass directly to the named beneficiaries, rather than having to wait for grant of probate. This can be a big help and speed up the process. For example, if the deceased had an Inheritance Tax liability, this would normally have to be settled before probate can be granted and within 6 months of the date of death, but the beneficiaries of the estate may not have the capital easily accessible to settle the liability. Writing a life assurance policy in trust means that the proceeds can pass directly, and quickly, to the intended beneficiaries, enabling them to settle any liability.
A financial adviser can help with setting up a life assurance policy and give advice on whether it should be placed in trust or not.
My other articles ‘Inheritance Tax Planning’ and ‘Inheritance Tax Planning – What Are Your Options?’ provide an overview of Inheritance Tax and the options available to you if Inheritance Tax is of concern.
Being organised now, keeping records and ensuring your finances are reviewed regularly can help reduce the stress on your loved ones after you’ve gone.
If you feel you’re in need of a financial review, or if you’d like to discuss any points raised within this article, please do get in touch.
Charlotte Owen
Independent Financial Adviser
Grosvenor Consultancy Limited
c.owen@grosvenorconsultancy.co.uk
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