Making sure that your finances are sorted before you die can be very helpful to your family, and it most importantly helps them to avoid any distress at such a difficult time.
This article explains five steps that will help you develop an estate plan.
Step 1: Make a Will
If you have not drafted a Will, now is the time to draft one. It is never too late or too early to draft a legal Will that helps your loved ones understand what happens to your estate after you die.
So, if you want to ensure that your money, property and possessions are going to people of your choice, then it is essential that you make it clear in a Will. Failing to do so passes the authority on to the UK government, and this is something you might not want.
Your Will clearly states the list of your executors – people you appoint to sort out your wealth and your Will after your death. You need to at least mention one to at the most four executors in your legal Will. Additionally, you can also appoint professional executors such as your solicitors or your trusted accountants. However, the fees should be paid in advance for availing their services. If you have any children under the age of 18, you can also mention their legal guardians in the Will.
In case you have already drafted your Will, then we suggest you to make sure that it is up-to-date. If not, you can make necessary changes to your existing Will or draft a new Will altogether. Changes to the Will should be carefully monitored and legally recognised.
Wondering how much does a will cost? The cost usually varies in accordance to the services you wish to avail and the complexity of your estate.
Step 2: Get Your Paperwork Together
Your executor won’t know where you keep all your important paperwork, whether it is in a file or your safety locker. So, it is essential that you tell them where you keep your important documents. These documents would include:
- Divorce papers
- Estate deeds
- Bank statements
- Outstanding bills
- Insurance policies
- Credit card statements
- Mortgage information
- Birth and marriage certificates
- Tax certificates
- Details of your investments and savings
If you mostly use online services to deal with your bills and bank accounts, it is always better to print out some copies of the transactions. Moreover, make it a habit to maintain a list of all the payments that would need cancellations after your death. These include:
- Magazine subscriptions
- Societies or club memberships
- Breakdown services
- Donations and charities
Step 3: Let Your Executor Know Where the Will Is
If your executors are unable to find the legal Will after your death, it will be ignored or considered invalid. Hence, it is very important that your family members and your executors know where to locate your Will whenever needed.
Step 4: Think About Clearing Your Unsecured Debts
If at all you have any pending debts, such as credit cards and loans that aren’t secured against your home, then if possible we suggest you to pay them off. This will help in simplifying things for your executors, eventually making it simpler for your beneficiaries to receive their shares.
Step 5: Get Some Help (If Needed)
In case you become physically or mentally incapable of making any big decisions, it is always best to think ahead about who should be making those decisions for you. It is certainly essential for you to gain access to your money whenever needed.
On the other hand, you can also make informal arrangements with your family and friends in order to manage finances on your behalf. However, we strongly suggest you to draft a formal agreement (known as a ‘power of attorney’).
Officially giving someone this power will only mean that they can:
- Set up accounts on your behalf
- Ensure that bills or care fees are paid without you having to worry about anything
There is no such restriction that power of attorney should be given only when you become mentally or physically incapable. It can also be given to someone whilst you have the mental capacity to do so
But if you have no one to take care of your finances, then the court appoints someone of their choice as a deputy. This approach is usually expensive and chances are that the court might not appoint the person of your choice to handle the responsibilities.