We’re all going to die …. (one day)

About ten years ago, whilst doing some DIY building work, in the evening after a hard day in the office, I was unfortunate enough to overexert and under-hydrate myself, and woke up on the floor, to find my poor old “Her Indoors”, and an Ambulance man, standing over me. Now, I understand the medical rule is … find a fat man on the floor unconscious it must be his heart, so off I was whisked to the local hospital.

As we arrived and the doctor stood over me listening to the paramedic, I overheard the nurse say

“Taxi Driver?”

“Don’t know. Looks like a builder I think?” replied the doctor.

Well they were all wrong, it was an accountant who should have known better, and my heart was fine, however, I had to take the nurse to task later and ask her about her comment.

“Oh, I don’t know about national statistics but in this hospital taxi drivers do not have a good history where heart attacks are concerned. Too much stress and not enough exercise”.

I thanked her and left pretty sharpish, but I did remember that experience well enough to make me think about my own mortality and what would have happened if that was IT, the big D. Well I would be past caring but at that moment in time what position would my wife and kids be in?

The truth is that most of us don’t want to think about it but guess what, we all have to be grown-ups and think about those left behind, what would happen to our families if we should die?

Many people assume that their family will automatically inherit any assets on their death. Or they think that writing a Will is actually unlucky, or even worse, accept that it is important but they will do it later. The truth is, no one knows when they will die and making a Will is an essential part of planning for the future.

You should always talk to an accountant about tax planning for life or death, but there are also inheritance specialists who work with them. I spoke to Derek Lindsey of The Moneta Partnership, who is such a specialist and I heard some scary stuff …

Without a Will married couples or civil partners will not necessarily inherit all their partner’s estate (if you have any children your partner will only inherit the first £125,000 of your estate plus any assets owned jointly, e.g. family home or a bank account). There was a case recently where a mother had to sue her two toddlers for a share of her husband’s estate because he died without making a Will.

Some, other not very well-known facts about dying intestate:

  • unmarried partners will certainly not automatically inherit any of their partner’s estate
  • if you have separated but are not yet divorced, your partner will be entitled to a share of your estate
  • if you have given a child up for adoption he/she will not be entitled to any of your estate.

Writing a Will ensures that your loved ones or your favourite charities will inherit exactly what you want them to. You may have been watching the recent BBC television series “Heir Hunters”, where Probate Investigators search for the heirs of people who die without making a Will and, as a result of not leaving a Will, friends and family of the deceased lose out on what they might have had a reasonable expectation of receiving.

But Wills are not only useful for passing your estate to your loved ones. Wills can be used to reduce Inheritance Tax. Financial and tax advisers all recommend having the Will as the first step in Inheritance Tax Planning.

If you have been self-employed for more than two years you can pass your business on free of Inheritance Tax. But what will your family do with the business and are they able to run it? If they sell it they will lose the Inheritance Tax exemption. Passing a business on via a trust in your Will can maintain the Inheritance Tax exemption for years after it has been sold.

Wills can also be used to protect the home against the cost of long-term care. It is estimated that about 70,000 houses are sold each year to pay for care fees. Proper planning and the use of a trust in a Will can protect your house in the event that you or your partner ends up in a care home.

“OK Gary” I hear you say, “But that’s just for millionaires, not for normal hardworking guys like us.”

However, regardless of the size of your estate, if you have children under the age of 18, have you ever considered who will look after them if they are orphaned? Your Will can appoint Guardians and Trustees for your children. Without a Will the social services will decide who looks after them.

And once you have written your Will, where will you keep it and who knows where it is? If it can’t be found then haven’t got a Will. Keeping your Will safe is essential and most Will writers will be able to store it for you.

After you have died your Executors must carry out Probate correctly and keep good records. This is essential if a surviving spouse/civil partner is to claim any unused Inheritance Tax allowance on their death. Appointing a professional Probate firm will ensure the correct procedures are followed.

Finally, who will look after your affairs if you can’t, say because of senility, Alzheimer’s or being in a coma? Your family do not have automatic rights to do this, especially with your financial affairs. In fact, joint bank accounts could be frozen in this situation. By writing a Lasting Power of Attorney (you can write separate ones for finances and welfare) while you have the mental capacity to do so you can appoint loved ones to look after your affairs should you not be able to make decisions at some point in the future, without the need to go to the Court of Protection to ask for permission.

Well there you have it, not a pleasant subject, but as I said before, we are all grownups and these things have to be dealt with.

Safe driving.