How can you make life simpler for your family when the inevitable happens and you are no longer there to help? Here are some practical suggestions.
The death of a loved one is undeniably a very difficult time, and Estates vary significantly in respect of both value and complexity. It does not, however, follow that if an estate is low in value it is straightforward.
There are several issues that arise time and time again which can cause additional distress and worry for the deceased’s family and, whilst none of us wish to consider our own mortality, there are certain practical elements of planning for the future that can help to ease the pain for your family when you have died.
1. Insurance - it never fails to amaze me how many people die without valid buildings insurance in place. The difficulty and cost of arranging such policies once a person has died, and therefore typically the property is unoccupied, is astounding. Personal Representatives (PRs) of an estate have a duty to the beneficiaries to ensure that assets are insured. By having up-to-date buildings insurance in place at all times you prevent your PRs from having to deal with this issue immediately on your death and often at cost to them initially as access to your own funds cannot be obtained once the banks are informed of your death. Such policies are generally far more expensive than a typical buildings insurance policy.
2. Funeral payment – many people opt to pre-plan and pre-pay for their funeral which is perfectly fine. If you do not wish to pay and plan your funeral in advance, again that is perfectly fine but ensure that your personal representatives can easily access sufficient funds to pay the invoice in good time. The major banks and building societies are able to release payment from your account to pay a funeral invoice prior to obtaining a Grant of Probate or Letters of Administration. You simply need to ensure there are sufficient funds in such an account to meet such a payment.
3. Inheritance Tax – As with funeral payments, it is important to plan how your PRs can pay potential Inheritance Tax (IHT) liability on death and ensure that funds are easily available. The most stressful estates to deal with are where there is an IHT liability but the investment of the deceased’s assets is such that no money can be released to pay the tax. Without payment of tax, no Grant of Probate or Letters of Administration can be granted and the estate administration grinds to a halt, meaning assets cannot be sold and beneficiaries cannot get paid what is due to them. In such instances, PRs are forced to obtain a loan (often at a high interest rate) to pay tax to get the ball rolling. Careful estate planning can avoid such a necessity.
4. Lifetime gifting – people often gift substantial amounts to their loved ones without keeping details of when such gifts were made. This leads to problems when the person has died, as any gifts made within the last seven years have to be reported to HMRC. Simple notes of lifetime gifts made can be kept with your will, making your PRs’ reporting duties to HMRC far easier and quicker.
5. Organisation of assets – again, estates are often complicated when PRs are unaware of where assets are held and have no details of shareholdings, banks, pension holders, life insurance policies and other investments. Simple lists of assets (not necessarily with valuations) held with your wills can provide invaluable assistance to your PRs and help to avoid delay in the administration of your estate.
Author: Elaine Lightfoot
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to McCormicks Solicitors directly.
Published on 24th March 2015
(Last updated 28th March 2018)