It’s not easy to think about what will happen to your assets and your family after you die. But if you die without having put your affairs in order, the impact is both stressful and potentially heart-breaking.
So how do you avoid this? The answer is simple – the ‘death’ file. It’s not the most elegant of names but something I am increasingly helping people with. It normally only takes two to three hours.
It is one of the best gifts you can leave your family. By planning ahead, you can ease their burden. With a death file you can also then start to discuss how you can maximise your estate to take care of yourself and how to hand it to your beneficiaries in the most tax efficient way.
When starting out I concentrate on these key areas:
- Prepare a will and keep it up to date. Nearly 60% of people haven’t made a will, so their estate is left to the mercy of intestate rules. If you do have a will, keep it up to date otherwise your estate might end up going to an unintended beneficiary. You could leave your close family unable to manage your affairs, without what you considered your joint assets or paying a hefty inheritance tax bill leaving them in a perilous financial situation.
Your Bank and Other Financial Accounts
- Have clear instructions on how your finances work. What accounts you have and how your income and expenditure is managed.
- Set up a joint bank account to pay important bills, so basic living arrangements continue as normal. All your sole accounts will be frozen and, apart from funeral and estate expenses, funds may not become available until after probate has been granted which usually takes between 6 – 9 months at a minimum. Joint accounts will transfer across to the other party automatically so regular payments can continue.
Your Documents, Affairs and Passwords
- Make it easy to find your important papers. There is so much paperwork needed when you die; not just to register the death but to finalise tax affairs and as proof when settling and closing accounts. Creating a one-page document which tells people where they can find birth certificates, national insurance numbers, tax reference numbers etc. will save a lot of stress.
- Make sure your family have key information and contacts. Cancelling memberships, subscriptions, mobile phone contracts and medical services such as dentists and opticians is extremely time consuming and made even more complicated by our lives moving online. Make sure your key contacts have this information in a simple form. ‘Tell us Once’ is offered by most local authorities so you can contact all government bodies in one go.
- Keep you online passwords in a safe place and make sure someone can access them. Last Pass is an example of an online vault service where you could store all your passwords and key information under one master password.
- Introduce your estate management team to one another! Make sure your accountant, solicitor, executors, lasting power of attorney (LPAs) know who each other is so they know who to talk to about different aspects of your estate. Even better – have a planning meeting so they are all clear as to your wishes.
- Tell your family what you have put in place and who they can turn to for help.
Leaving your affairs in a muddle not only causes stress for your family, but it also causes delays and sometimes, unnecessary extra financial and legal fees. We never know when our time is up but your ‘death’ file could be one of the greatest acts of love you ever do.
Finally, if you are struggling to know where to begin then seek some professional advice whether that be your solicitor, your accountant or a professional organiser to help you create your important reference documents.