The month of January sees the highest monthly death rate in the UK, so if you are keen to face up to your responsibilities now is perhaps the best time to plan ahead for your own death. End of Life Planning really can help your family at a very difficult time and it isn’t just about writing a will. Here are our 10 tips for End of Life Planning:
- Tidy Up Your Financial Records
Make a record of all your capital assets and debts, include all your property, general contents, vehicles, bank accounts, savings accounts, shares, premium bonds etc. Don’t forget to include debts such as credit card balances, outstanding mortgage accounts and car loan agreements. A spreadsheet is a good option; you only need to fill in all the details once, and then update on a regular basis – it will help your executors establish roughly what inheritance tax may be payable, if any. It will also help them identify outstanding debts and ensure that no accounts or paperwork are missed. It is also worth including your regular direct debits, insurances (including life insurances), funeral plans and key contacts like solicitors or accountants on a separate page.All Digital and Banking Passwords should be stored separately from your financial documents either with a solicitor, trusted executor or family member.
- Keep a record of your Email Facebook, i-tunes,Twitter and Linked-in Passwords
So many of us now maintain a personal presence on the internet through social networking sites, blogs and webpages. It is vitally important to keep a list of passwords and usernames so that your executors can close these accounts down after your death and protect your online identity. With the increasing problems arising from password security there are now a number of online sites that will securely hold all your passwords on an encrypted database while others will create and hold randomly generated passwords for multiple sites to prevent your personal accounts from being hacked.
- Choose Your Beneficiaries
Once you have established what your total estate is worth decide who you want to benefit after your death. If your estate is worth over £325,000, inheritance tax may be due. The estate will have to pay 40% IHT on anything above this amount unless your main beneficiary is your spouse – so this is an ideal time to think about saving inheritance tax on your estate with gifts to relatives and friends or charitable donations. Any financial gifts that total £3,000 (in one year) are exempt from tax. If you make a larger financial gift and die within seven years the beneficiaries may have to pay inheritance tax on the gift but if you survive for longer than seven years no inheritance tax will be due regardless of the value of the estate or the gift. In addition if you leave 10 per cent of your estate to charity any inheritance tax is paid at a reduced rate of 36 per cent. From April 2017 a new form of property inheritance tax relief, known as the Residence Nil Rate Band, will be introduced, however this new form of tax relief only applies to your main family residence and only if it is passed to a direct descendant such as your son, daughter or grandchild.
- Choose Your Executors
An executor is the person who holds the legal responsibility of distributing your estate after your death. You can choose more than one executor and they can also be a beneficiary of the estate. Whoever you choose should be someone you trust and they should be capable of handling complex paperwork and legal procedures. People often ask a close relative or friend and it is a good idea to make sure that they are happy to accept the role before you write your will. You should make them aware of the legal responsibilities and liabilities that they will be exposed to – the liabilities are unlimited so it is worth suggesting that they take out executors insurance once they take on the role. The insurance premium can be re-couped from the estate as part of reasonable costs. If your estate is particularly complex it may be preferable to use a professional executor such as a solicitor or bank but they will charge a fee – anything from 2% of the value of the estate upwards, which will be paid out of the estate – so you need to take this into consideration.
- Write a will
So many of us put this job off but it is essential to write a legally binding will which details who you want to leave your assets to. There are a number of options. DIY wills, which can be bought from stationers, are low cost but there is always potential for errors that could invalidate your will. Will writers generally offer a cheaper service than solicitors but it is worth bearing in mind that they are currently unregulated. If you use a solicitor they provide a legally binding will and costs are relatively low starting at just over £100. However you decide to proceed, ensure that you store your will safely (many people will choose to do this with their bank or solicitor), always provide your executor with a copy – and don’t forget to let them know where the original document is kept.
- Consider appointing someone with Power of Attorney
In case you become seriously ill or incapacitated prior to your death it is worth looking at granting a power of attorney to a trusted friend or relative. A Lasting Power of Attorney (LPA) is a legal document which allows you to appoint people (known as ‘attorneys’) to make decisions on your behalf. There are two types of attorney, one for health and welfare decisions and the other for property and financial decisions but you can appoint one person to carry out both roles. You can only make an LPA if you are over 18 and have the mental capacity to make your own decisions.
- Living Wills, Advance Statements and Decisions and Organ Donations
‘An Advance Statement’ gives you the chance to explain what medical treatment you would like to have, if any, should you be admitted to hospital with serious medical problems and are unconscious or incapable. It is a really good idea to discuss your ‘Advanced Statement’ with your doctor and sign it. In the event of serious illness or accident, medical staff must take an ‘Advanced Statement’ into consideration when they are deciding on treatment but they can override your statement if they consider it is not in your interests. An Advance Statement shouldn’t be confused with an Advance Decision or Living Will, which is legally binding, and relates specifically to whether you want any life sustaining treatment – an Advance decision must be signed and witnessed to be valid.If you would like to donate your organs to help someone after your death, let your relatives and executor know and then register your details on the NHS Organ Donation Site.
- Sort Out Your Paperwork
Make a list of where all your paper records are kept and either give this to your solicitor or executor. This is an opportunity to put your house in order, make a list of your utility suppliers, throw out old invalid documents and re-organise your most important records.
- Plan Your Funeral
Think about what sort of funeral you would like and write it down. A plan in black and white, can be a tremendous relief for bereaved relatives – it can prevent family arguments and help people carry out your wishes exactly as you want. If you write your own funeral plan you can include as much detail as you want – anything from whether you want your body to be cremated, buried or donated to science to the type of service you would like.
- Set Aside Funds for Your Funeral
People often underestimate the amount a funeral, cremation or burial can cost (average costs stand at between £3,000-4,000) so set aside money to ensure that this is covered after your death. Make sure your executors can access this particular fund as quickly as possible – so they don’t have to take out a loan to bury you. Funeral plans can help but you need to make sure that any scheme is going to keep pace with inflation. Alternatively make regular contributions to an easily accessible savings account.