End of life plans: Breaking the ice

The past 18 months have shown us that we can’t afford to take things for granted.

Thinking about death isn’t pleasant, but it is necessary – especially when it comes to wealth management and making provisions for the loved ones we leave behind. They say that nothing in life is certain except death and taxes. So, it makes sense to plan for both.

Dying intestate* can have lasting negative effects on your nearest and dearest. Whatever your age, your assets, or your future plans, it’s only prudent to explore your options when it comes to end of life planning.  

When should you make your will?

Too many of us assume that we don’t need to think about making a will until we’re on the other side of middle age. But the truth is that if you have assets, and you have people you care about, you have enough incentive to consider making a will. There’s no correct time or age.  

Your last will and testament is a fundamental part of your end of life planning. It details how your assets will be divided when you’ve passed on. Although there are lots of “Do It Yourself” kits available for making a will, many prefer to engage a financial planner and solicitor to ensure that their will facilitates their desired outcomes after death. 

A will typically includes: 

  • An outline of your assets (Property, bank accounts, savings, vehicles, business assets etc.)  
  • Details of the testator (the person making the will) 
  • Nomination of beneficiaries (the people you want to leave your assets to) 
  • Nomination of an executor (the person who sees that your will is enforced) 
  • How you would like your assets to be divided 
  • Any specific requirements you have for your funeral

Will trusts vs lifetime trusts: What’s the difference?

Your will is the cornerstone of your end-of-life financial planning. But you may want to supplement it with a trust. These ensure that your beneficiaries maintain entitlement to your assets, even though they are not yet the legal owners of those assets.  

Trusts typically fall into two camps – will trusts and lifetime trusts.  

Will trusts are created as part of your will. Your will outlines the conditions of the trust, and the trust is activated after you die. They are often used to ring-fence your share of your home from your spouse’s care home assessments. So, if you die and your partner needs care, only their share of your home’s value will be assessed by your local authority.  

Lifetime trusts, on the other hand, are activated while you are still alive. Your home and other assets are gifted to the trust, although you will continue to enjoy the use of them.  

There are significant tax implications for this option. For instance, if your property’s value is above the nil-rate band of £325,000 you will face an immediate balance of 20% of anything over this amount. So, if your property is worth £330,000 you will face an immediate tax liability of £1,000. 

Re-evaluating your life insurance

Finally, many of us take out a life insurance policy when taking on a mortgage to protect our spouses in the event of our death. This is designed to replace lost income and allow them to retain the property after we’ve gone.  

However, present conditions may not be the same as they were when you first took out your policy. Which is why end of life planning should include re-evaluating your life insurance policy and ensuring that it still offers sufficient coverage. 

If you would like to talk to a member of the team here at gpfm, please don’t hesitate to get in touch over email at enquiries@gpfm.co.uk or call 01992500261.  

This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested. 

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About gpfm 

gpfm are an independent financial planning company dedicated to the provision of personal, professional, and objective-driven advice for our clients. We have been awarded the Chartered Financial Planners title by the Chartered Insurance Institute for offering high quality, independent and informed advice that meets the needs of our clients.