If you’re married and you’re the one who tends to handle the finances, you may be worried about what might happen to your surviving spouse on your death.
Will they be OK financially? Will they know what to do? Will your children get their inheritance?
This article will explain how to get financially prepared so everything is easy for your spouse if the worst was to happen.
Will your family be OK after your death?
A few months back I wrote an article on how to deal with your finances after your partner’s death.
I’ve seen first hand what can happen when even very wealthy families really struggle to manage the family finances after the death of the person who was usually in charge.
If you are the person in your family who looks after the money, knows where everything is, what it’s invested in and what it’s invested for, then ask yourself this……
Does your partner know where everything is if something happened to you?
Would they be OK managing your family wealth? Do they know the appropriate investment risk they should be taking?
What about your children’s inheritance? Is it protected in case your partner re-marries after you’ve gone?
So whilst my article a few months back helps those that have already lost their partner I thought it was right to do a follow up piece because there’s lots more you can do now to be financially prepared for you death before it’s too late.
What to do to prepare for your death
#1 – Understand your position
An obvious place to start but there may be a couple of things you haven’t thought about.
How would your household income be affected if you were no longer around?
What type of pensions do you have?
If you are already receiving pension income by way of an Annuity or Final Salary pension then check to see if the pension deal includes a continued income for your surviving spouse.
If you are not yet receiving your State Pension then get a forecast so you know where each of you stand.
A misconception is that the surviving spouse automatically receives their deceased partners State Pension. This is not the case and in fact you or they may get nothing.
#2 – Insurance
After looking at your household income on the basis one of you is no longer around, you may find the only way to protect it is through insurance.
Preserving your investments for your children or paying off a mortgage may also be reasons you need to consider insurance.
Admittedly, insurance is not likely to be cheap if you are at retirement age but it could still be money well spent to know your family are going to be OK.
#3 – Get your Will up to date
When was the last time you reviewed your Will?
Make sure you know where it is and that it still reflects your wishes. Pay close attention to the Executors listed as these will be the people that look after, administer and distribute your money after you’ve gone.
Will they work quickly and in your partner’s best interest?
Also, if you haven’t already, get Lasting Powers of Attorney forms in place for you and your partner as these documents ensure that you nominate a trusted person to look after your finances if you are no longer able to due to an accident or sickness.
You may also want to consider more robust estate planning rather than just creating a simple Will. Setting up Trusts can ensure that your wealth stays within the family bloodline rather than passing to the new partner of your surviving spouse after they re-marry once you’ve gone!
#4 – Get your pensions and investments in order
Do you have pensions and investments with lots of different providers, using lots of different strategies?
You may feel confident looking after everything and even enjoy the ups and downs of the stock market but will your partner after you’ve gone?
Now could be the time to get everything consolidated onto one platform so the administration is easy and paperwork is kept to a minimum.
#5 – Keep it simple
Following on from point 4, the more complex your pension and investment arrangements, the more in fees you will probably pay.
As you get to the withdrawal phase of your life, costs become even more important as every pound taken away from you in fees is a pound you or your partner can’t spend enjoying your retirement.
Having lots of different accounts can also make it difficult for your surviving partner to know where to take money from when they need it. Perhaps they might incur a capital gain and end up paying Capital Gains Tax when they didn’t need to.
#6 – Ensure easy access to cash
In the article I wrote a few months ago I explained how someone I knew, had lots of money but it was all invested. When their husband died she didn’t know how to access the money to pay for his funeral. As it was invested it took longer to sell down the assets and release the cash than it would if you had cash sitting in a bank account.
So keep a cash account topped up for emergencies like this and make it a joint account where possible, as anything in individual names are locked on death until probate has been completed.
#7 – Consider downsizing
You may find that even after the loss of your income, your partner would survive financially by using equity in your home.
The problem is it takes time to release equity from a home whether that’s through a sale or via an Equity Release product.
It might be better to consider downsizing your home now so the cash is more easily accessible.
#8 – Split your wealth evenly
Try where possible to even your wealth out between you and your partner e.g. so you both have the same amount in ISAs, investments and cash.
This not only helps with Inheritance Tax planning but also ensures your surviving partner has access to their own funds whilst probate is going on.
#9 – Consider using a money management software
If you are tech savvy you may find a money dashboard like Moneyhub useful for storing all your financial accounts in one place.
A money dashboard will link in with all your online accounts and download the information into a central portal.
This means your surviving partner and family can find out where the family wealth is stored.
Also really handy when valuing assets for probate.
#10 – Work with a professional adviser
Last but not least, when you’re gone, even the best laid plans will no longer be able to be influenced by you. Your surviving partner will still be left alone to manage the family wealth.
This could be a massive weight on their shoulder at what will already be a distressing time coping with grief.
Why not spend the time now both getting to know a professional Independent Financial Adviser who you can build a relationship with and who you know will take care of your family after you’ve gone.
QUESTION: Does your partner know how to access all your savings and investments?
Risk warning:
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.
