IN the second part of our New Year’s resolutions (the first was on debt management), I’ll cover some of the broader financial planning tips.
As with all New Year’s resolutions, to give yourself the greatest chance of success, trying to do too much is a recipe for disaster. A hill too far. Better to pick one or two that will really make the biggest difference to your family, and enjoy the moment they are ticked off.
Invariably the best new year’s resolution will be the toad you’ve been putting off eating - the toad that’s been sitting on the mantel piece all year staring at you. Resolve to have a clean mantlepiece by tackling those one or two key items and celebrate on their achievement. As with most matters, being in control is much less stressful than being reactionary.
Make a will. It’s not nice to talk about, but if you don’t decide who should benefit on your passing, someone else will.
Currently, surviving (married) partners, children only have entitlement to the first £250,000 of the estate and half the remainder if they haven’t made a will. This is called dying intestate. You should look it up if you need a motivation to make a will.
Aside from the complications of your hard-earned assets not going where you would have preferred to, the legal cost of dealing with an estate where someone has died intestate is going to be more penal.
Remember, a will set up badly could be invalid, and an invalid will is treated the same as a person without a will under the laws of intestacy.
Take out a power of attorney. This allows a trusted individual to act for your estate if you were unable to. An accident such as a head injury or an illness, could leave someone without the ability to make their own decisions. By appointing a power of attorney (in advance), they will be able to speak to banks, mortgage companies, utility companies and sort all matters for you.
Aside from its benefit for you, consider the stress of a surviving friend watching a family’s estate diminish, whilst trying to speak to a call centre in the back end of nowhere, being passed from pillar to post to still get to ‘computer says no’. It might be a great New Year’s party chat to make a dual agreement with friends to be each other’s power of attorney!
Introduce your independent financial adviser (IFA) to your children. At least by doing so there is less likely to be any bickering. The family will all be cohesive at a pretty stressful time, and will then respect the wishes of the will.
Make sure your life policies are in trust. By selecting a simple form, you can ensure your life insurance doesn’t even go into your estate, and instead goes direct to the beneficiaries, free of administrative costs and inheritance tax. There are similar forms you can set up with your pension benefits and also company insurance death benefits. They are virtually free and very simple to achieve and could save tens of thousands.
Take independent financial advice if you done so. There are very few ‘tied agents’ of one company still in existence, their lack of competitiveness nailing their coffin, but there are still some around.
An independent financial adviser will scan the financial world to ensure you have access to the entire market and of course, because they are not paid by commission are not motivated financially.
:: Peter McGahan is chief executive of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. If you have a financial question, call Darren McKeever on 028 6863 2692, email info@wwfp.net or visit www.wwfp.net
