Estate planning: 3 crucial steps that could protect your later years
By Charles Smith
Estate planning is an important part of your financial plan. Not only does it ensure your assets are passed on to who you wish and considers areas like Inheritance Tax (IHT), but it could provide you with peace of mind about your future too.
Over the last few months, you’ve read about why estate planning matters, how to decide who to pass on assets to, and when you need to create a plan for IHT. Now, read on to find out what steps you could take to improve your own financial security in your later years.
While these three areas can be difficult to think about, they could safeguard your future.
1. Create a care plan
There are many reasons why someone may need care or additional support in later life, and it can take many different forms. Carehome estimates that almost half a million people live in care homes in the UK. Others may have care services provided in their home.
A care plan can help you set out what your preferences would be. For example, would you want to remain in your own home if possible? Is there a care home you’d prefer because of the facilities it provides or the location means it’s accessible for your family?
In many cases, if you need support, you will be liable to pay for at least a proportion of the costs. So, creating a care plan should also include how you would pay for care.
Carehome research suggests the average weekly cost of living in a residential care home is £760. This rises to £960 a week for a nursing home. The cost can vary significantly between care homes, so taking time to understand potential costs in your area is a must.
With an idea of the potential cost of care, you can earmark some of your assets to pay for it. Of course, you may not need to use your care fund at all but knowing that it’s there can provide peace of mind.
2. Name a Lasting Power of Attorney
If you were unable to make decisions, who would you want to make them on your behalf?
A Lasting Power of Attorney (LPA) gives someone you trust the ability to make decisions for you if you can’t due to an accident or illness. There are two types of LPA: the first covers health and care, and the second finances and property.
Even if you are married or in a civil partnership, your partner does not have the automatic right to make decisions for you. In fact, they could be locked out of financial accounts, including joint accounts, if you could not make decisions and they are not your LPA.
If you cannot make decisions and you don’t have an LPA, your loved ones may not be able to manage your affairs. They would have to apply to the courts to appoint someone to act on your behalf. This can be costly and time-consuming, and the courts may not choose the person you’d prefer to act for you. It’s a process that could leave you in a vulnerable position and be stressful for your loved ones.
Despite the importance of an LPA, research suggests it’s something many people overlook; according to Scottish Widows, only 37% of Brits have an LPA in place.
3. Make funeral arrangements
Thinking about passing away can be difficult, but it could ensure your wishes are carried out. It can also give your loved ones welcome guidance at a time when they’re grieving.
The cost of a funeral may also be something you consider. According to MoneyHelper, the average cost of a burial is £4,383 while the average cremation costs £3,290.
There are several different ways you could make funeral arrangements.
When writing a will, you could set out your preferences. This would not be legally binding, but your family may find it useful to understand what you’d prefer.
You may also choose to arrange and pay for your funeral while you’re still alive. This means you’d have control over the arrangements and your family doesn’t need to consider how to cover the costs.
Contact us to create an estate plan you can have confidence in
An estate plan should give you confidence about your future and what will happen when you pass away. We can work with you to create a plan that reflects your wishes and circumstances. Please contact us to arrange a meeting.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate or tax planning.