At Wells Gibson we believe it’s important to talk about dying, death and bereavement with clients. In fact, when creating financial plans for clients we consider mortality so we can help clients to live the life that’s important to them without the fear of running out of money before they die. Furthermore, some financial planners would say it’s better to run out of life than to run out of money!
It’s also important to think about dealing with the financial affairs of someone who has died. New research carried out by insurer Royal London has found that one in three of us have dealt with the financial affairs of someone who has died. However, only 23% have their own comprehensive file of financial information, designed to help loved ones administer things in the event of their death.
In order to help your loved ones deal with your personal finances after you die, there are some important steps you can take today.
Planning for the financial impact of dying starts with writing a will. Despite the importance of these legal documents, Royal London found that 60% of adults don’t have a will in place. If you die without a valid will, you die ‘intestate’ and your financial assets are distributed in accordance with government rules, and not in line with your own wishes. This can result in your money going to people you might not have wanted to receive it. Don’t assume that your partner will inherit your wealth when you die if you don’t have a will in place, especially if you cohabit; there’s a good chance they won’t receive a penny.
You can write your own will using a DIY pack available from some retailers, but for peace of mind it’s worth engaging with a solicitor or professional will writer to get the job done properly. Once your will is in place, you should think about the impact of your death on your children. This means appointing guardians to care for them after you’ve gone. The Royal London research found that only 58% of parents with children under 18 haven’t appointed guardians should they die. You can appoint guardians for your children in your will, so getting your will written is an opportunity to tick two important items off your death planning list in one go.
Planning to put your loved ones in a less difficult position when you die is a case of clearly communicating what you have and what should be done with it. With more than one in 10 adults admitting it would be difficult for anyone to handle their financial affairs after they died, according to the research, it could be worth writing a ‘when I’m gone list’ to help demystify your financial affairs. This can be as simple as listing all of your financial policies on a single page of paper, or asking your financial adviser to produce a statement showing all of your policies in one place. Keep this list with a copy of your will and any other important documents, and don’t forget to tell your loved ones where they can find this information, in the event of your death. We encourage our clients to place one of our business cards, with a note saying ‘call me in the event of x’s death’, so we can help their loved ones take care of everything at this difficult time.
Death means a funeral, so you need to have a plan in place to pay for this. According to Royal London, it costs an average of £3,800 to pay for a funeral, which can be a financial burden many will struggle to meet. Putting in place a plan to pay for your funeral removes a potentially difficult financial challenge for your loved ones at what will already be a difficult time.
Finally, and perhaps most importantly, you should talk to your partner and family about your wishes. This means your wishes are clearly understood when you’re gone, rather than your loved ones needing to guess or interpret vague suggestions. Royal London’s research found that two in five people who had to arrange a funeral were not left any instructions from the deceased. A conversation with your family about death can extend beyond funeral wishes, but clearly it’s important to discuss these too.
Louise Eaton-Terry, funeral expert at Royal London, said:
“Talking about death isn’t always easy, but having plans in place will lessen the financial impact and make things a little bit easier for those you leave behind. While planning can seem daunting, you can start by simply having a conversation with your loved ones about your last wishes.”
What steps could you take today to help your loved ones manage your financial affairs more easily in the event of your death?