Coronavirus – Protecting Your Family

March 2020
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These are worrying times for all of us. At such a time it is natural for us to think first of our loved ones and to want to protect them.  In this blog we have highlighted some things that you may wish to consider. 

Is your will up to date?

If not, or you have not got round to making one yet, you may not be able to get a face to face appointment with a solicitor but you could use our Bionic Will Service. It enables a will to be arranged with the help of a solicitor over the internet and telephone.

If you are not sure whether you need a will or not, look at our blog Why it’s vital to have an up to date will

What happens to pension savings if you were to die? 

Savings in pension pots can be left to the individuals you choose to nominate. This will not be determined by your will as pension plans do not form part of your estate.  This is usually achieved by completing a simple form, available from your pension provider or trustee. They are not obliged to follow your wishes but will usually take them into account. It is important to keep your nominations up to date.  This also applies to lump sums payable from any death in service scheme which your employer may provide. 

Who gets a pension from an employer’s defined benefit (final salary) scheme if the member dies? 

This depends upon the scheme rules and may vary depending upon whether you have already started drawing a pension or not. Each scheme has its own rules and definitions of who is eligible. Ask the scheme for the scheme booklet and rules and ensure that you understand what it provides. 

Who would look after your savings and investments, pay bills and transfer money between accounts if you could not do this yourself due to an accident or illness? 

If someone is incapable of managing their own affairs, either temporarily or permanently, no one else will be able to act for them unless they are appointed power of attorney. Without a power of attorney  savings and bank accounts are frozen during the period of incapacity.

The Court of Protection is responsible for looking after the assets of vulnerable people and will appoint a Deputy to manage the affairs of those who have not appointed their own power of attorney. This can lead to lengthy delays before any action can be taken and is more costly. While no one wishes to contemplate having to rely on an attorney, it is a sensible precaution to arrange one just in case. Powers of attorney can also be provided online and with the help of a solicitor via our Bionic Will Service. 

Would loved ones know where your money is invested and which savings accounts and debts you have?  

To help you to keep on top of your finances we have designed an app, Hummingbird.  It enables all your bank accounts, savings, pensions, and debts to be at your fingertips, so that you need never lose track of where your money is. It’s ideal for setting budgets, and savings goals, tracking your spending and planning your long-term future. It could be a useful tool in getting your affairs in order so you can communicate to your loved ones about the accounts, plans and policies you have in place.   

If the worst happened would your family be financially secure? 

No one wants to leave their family facing financial difficulty in the wake of a bereavement. As a bare minimum outstanding debts and mortgages should be protected with life and ill health cover, and ideally an ongoing source of income provided, so that family members can continue to enjoy a reasonable standard of living. Our Bionic Life and Critical Illness Service can help you access appropriate insurance from a wide range of insurers and a simple online application. 

Have you made provision for inheritance tax payable on your estate? 

Inheritance tax is payable by UK residents who leave an estate of more than £325,000, including any potentially exempt gifts made in the previous 7 years. Where the estate includes a  main residence they may also pass on up to £150,000 (£175,000 from 6 April 2020) to a direct descendent tax free, unless their estate exceeds £2 million, when this additional allowance is reduced. Any assets in the estate which are not otherwise exempt from inheritance tax will be taxed at 40%.  Planning for inheritance tax can enable the eventual tax bill to be reduced, by taking advantage of a variety of exemptions which may be available. Your usual LEBC contact will be able to help you consider your options. 

Kay Ingram
Director of Public Policy

Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. The contents of this blog are for information purposes only and do not constitute individual advice. A pension is a long-term investment. The fund value may fluctuate and can go down. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.  If you are unsure of the suitability of any investment or product for your circumstances, please contact an adviser. All information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation, are subject to change. The Financial Conduct Authority does not regulate estate planning, tax advice, wills or trusts.

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