Afterthoughts - Planning

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SURVEY SHOWS PESSIMISTIC VIEW OF LIFE EXPECTANCY

Over a quarter of (29%) all Brits surveyed think their lives will end by the age of 75, according a new survey.

The shocking results reveal a big gap between personal estimates and Government figures which show the average age of death in the UK is currently 81.

The YouGov poll, conducted by the funeral planning company Safe Hands, goes on to show that 15% think they will die before 70 years, whilst 36% think they will live longer than 85 years. Just three per cent believe they will be getting a telegram from The Queen for reaching 100.

The unemployed are least optimistic with just over half (52%) thinking they will not live beyond 75. This compares with 32% of those in full time work.

The figures show a marked difference between gender, age and region. A quarter of all 25 to 34-year-olds (25%) think their lives will end before they are 70, whilst those living in Scotland are the most pessimistic with 23% believing they will not make it past 70. This contrasts strongly with the estimates of Londoners at 12%.

Men are more conservative than women, it appears, with 18% believing 70 is their upper limit, compared with 13%of women.

When asked what they thought would be the main cause of their death, 26% of GB adults cited heart disease or stroke whilst 22% thought believed they would die from cancer.

In reality, the biggest cause of death in the UK is heart disease for men and dementia and Alzheimer’s for women. Only five per cent of men and six per cent of women questioned thought they would die from dementia.

Despite the UK’s high death rate from COVID-19, only one per cent believed they would die from the virus. An identical percentage thought they would from an accident.

Tom Gormanly, CEO of Safe Hands, commented: “Despite what people think, the truth is that we can all expect to live long lives with one in three new born females, and one in five males, estimated to live beyond 90.  Although buying a pre-paid funeral plan now may seem a little early, you will benefit from locking the price in at today’s costs.”

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DEALING WITH A WILL- ADMINISTRATORS AND EXECUTORS

Are you worried about being named as an executor in someone’s will? Have you been named an executor, or are you unsure what an administrator or executor would need to do? In fact, what is the difference is between an administrator and an executor?

This quick guide to administrators and executors will help you.

Who administrates your estate?

Usually, the person who’ll be looking after or managing your affairs when you die is someone you knew. It’s known as ‘administering your estate’, but there is a difference between an administrator and an executor.

  • An executor is a person, nominated in a will, to oversee the managing of someone’s estate after they die. Usually, an executor will know they’ve been nominated in advance. You can nominate anyone who’s suitable and over the age of 18, or more than one person if you prefer, and your solicitor or will-maker will ask you to confirm it’s an appropriate choice.
  • An administrator is responsible for managing the estate when there is no will, or when the will doesn’t name an executor or when an executor decides not to (or can’t) do the work. Then, an administrator takes up the executor’s responsibilities.

When does an administrator get chosen?

If a will doesn’t nominate an executor, then a close family member or a friend will have to ask permission to become an administrator. This can be done by applying for a letter of administration, which authorises the person to carry out all the work necessary.

The Intestacy Rules set out an order of priority of those relatives who are entitled to benefit from the Estate. Essentially these relatives are entitled to apply to be an Administrator and obtain a Grant of Letters of Administration, which would then enable them to deal with the administration. The order of priority is:

1.             Surviving spouse or civil partner

2.             Sons or daughters

3.             Parents

4.            Brothers and sisters

5.             More distant relatives

What do executors and administrators do?

The executors or administrators of a will are responsible for following the instructions in that document, as much as is appropriate and possible. Typically, this will include:

  • Sending copies of the death certificate to financial organisations  
  • Asking banks and building societies to freeze bank accounts so that no monies are paid without permission
  • Making sure money is paid where necessary – perhaps to pay household bills 
  • Opening a bank account to help administrate the estate
  • Making a list of all the estate’s assets and debts
  • Checking for signs of anyone who owes money to the estate
  • Finding out if there are any debtors to whom the estate owes money
  • Working out how much inheritance tax is due and arranging to pay it
  • Sending documents to HM Revenue and Customs and the Probate Registry
  • Distributing the estate, as per the will or according to the rules of intestacy (if the person didn’t make a will)

If you’re unhappy with an executor’s work…

Being an executor can be straightforward – or it may be time-consuming and involve handling complex aspects of someone’s finances. Most estates are handled well, but each one is unique.

If there’s a dispute about the will, or you’re unhappy with the way an estate is being handled, then there’s a formal process you need to follow.

First, ask the executor to make a record of the estate’s administration – confirming what’s been done to date. If you’re unsatisfied with what’s happened, then you can apply to the courts for a substitute executor. For that to happen, the court will need to substantiate their decision. Likely reasons would include inaccurate accounting, not obeying a court order, or removing money from the estate without a reason.   

And if you don’t want to be an executor…

It can happen. Sometimes, a person will nominate an individual to be the executor of their estate – and that person doesn’t feel able to act in that role. There’s no obligation. All you have to do, is to complete a ‘Form of Renunciation’ form and send it to your local Probate Registry along with a copy of the will. Alternatively, you can name someone else as the executor on your behalf. In that case, you’ll need to send a copy of the person’s details to the Probate Registry (and a copy of the will) along with form PA1.   

If you choose not the be the executor, then the Probate Registry will either appoint an alternative or wait to receive an application for letters of administration from someone connected to the estate.

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GOOD FUNERAL PLANNING MAKES GREAT FINANCIAL SENSE

The costs of a funeral are some of the few bills we can’t predict in our lifetime. Transparency is important – I can’t tell you how much your funeral will cost.

What we can all do, is decide how long our mortgages should last, and how much we’ll pay in interest. We can set our own retirement dates, and choose whether or not to draw down from our pensions. But we can’t tell when we’ll need to pay for a funeral and what it will actually cost.

That puts financial pressure on our families.

INEVITABLE EXPENSE

Nobody knows exactly how much a funeral will cost, in total, until the time comes. This is because it’s up to you and your family (and me, and mine), what kind of funeral we’d like.

Many families want to celebrate life in a unique or memorable way, and why not. The choices are greater than ever before. A funeral might involve elaborate planning to reflect a person’s life – a horse drawn carriage and personalised floral tributes for example, or catering and an event for a large number of people. Or a funeral may be very intimate and focused, perhaps with a burial that has a more modern feel to it. All of these choices involve what we call ‘discretionary costs’ – the personal touches that make it your family’s event, nobody else’s.

MAKING A PLAN

At both ends of the spectrum, some costs are almost unavoidable: a funeral director’s fees (covering the cost of an experienced team that helps your family make practical arrangements) and the disbursements (the unavoidable charges for being buried or cremated). That’s where funeral planning makes financial sense.

In the same way it makes sense to pay for a mortgage fee up-front, instead of adding it to your mortgage and paying interest on it over many years, it makes sense to pay for the most basic costs of a funeral today. This way, you’re investing in two firm guarantees that both give your family a financial advantage in the future.

FINANCIAL ADVANTAGES

The first guarantee is that, by making financial plans for a funeral in advance, there’s no need to worry about paying for the most basic parts of a traditional ceremony: the funeral director’s fees and the disbursements. This means your family has more money available to spend on the personal touches that matter so much.

The second guarantee is that, when the time comes, even if funeral directors’ costs have risen with inflation, those same costs can still be met. What’s more, by paying in advance using a funeral plan, your wishes are easier to understand and to share among your family.

Good financial advisers believe in holistic financial planning. They look at every aspect of clients’ lives and finances, what they think of risks, and what they’d like to achieve with their money over a specific period of time. I believe funeral planning should play just as an important part in that process. Funeral plans – any kind of end of life planning – can greatly reduce the risk of distress, and at the same time increase the amount available for your family to spend on personal touches.

End of life planning should always be part of life. I’d love to hear your views.

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TALKING TO PARENTS ABOUT END-OF-LIFE PLANNING

It’s never easy to talk about death and dying. But it is important. The trouble is, how on earth do you start that conversation? And what do you do, if your Mum and Dad really don’t want to talk about it? Every family is different. Here are three ways to start the conversation, that might just help.

“My plans are simple, but I don’t know what yours are?”
Talk about your own actions, about talking to financial advisers and making sensible plans for the future. The conversation can lead very naturally through the cost of saving for a home perhaps, arranging a mortgage, deciding on a pension – and then on into planning a funeral.
Say something like, “I was doing some paperwork, and it made me wonder what you would like to happen when you die. It would be good to know, so I can handle things the way you want me to.”

“Dad, I didn’t know about these costs – did you?”
Sharing a real-life experience can help, even if it’s a little bit imagined. For example, you might mention that you’ve read about the cost of funerals recently and had no idea there were bills to pay for a doctor to issue a death certificate.
Say something like, “I wouldn’t want anyone to worry about those costs. I know they’re only going to go up. I’m going to think about making a plan to cover those bills sooner, rather than later.”

“Mum, would you be willing to help me please?”
Appeal to your parent’s practical nature. ‘Can you help, please’ is a very simple thing to say. And it’s very natural for parents to want to help their children, even if they’re not comfy with the subject. Explain that you’re worried about not doing what Mum or Dad would want you to, simply because you don’t know what they want.
Say something like, “It worries me a bit. I’ll be upset anyway, but if we we haven’t talked about what you’d like to happen, it will be even harder – can we talk about some of the simple things, at least?”

“But…”
It’s very natural to hear an excuse or what’s called a ‘deflection’. Mum or Dad might say, “We can do that some other day,” or, “Why do you want to talk about this now?” It’s not unusual to hear, “Oh, I’ve sorted everything out already,” (even if they haven’t), or “Don’t talk like that, why do you want to be so morbid?” The one that’s hardest to deal with, is “I don’t care what happens, I’ll be dead.” But in some ways, that’s the easiest way to open up a conversation – because it does matter to you.

ASK A FRIEND TO LISTEN IN
If the subject is on your mind a lot, and you’re really struggling, it may be helpful to have a third party join the conversation. A good friend, or another trusted member of the family – someone who can gently confirm that end-of-life planning is nothing to be worried about, it’s all part of getting older – and that making funeral plans is all a natural part of life.

In fact, many people find that saying, “Mum, Dad, there’s something we should talk about,” is the surprisingly easy way to begin talking. In short, many parents are already wondering how to start the conversation, themselves. “Let’s make a plan. Then we can enjoy life.”

In every situation, remember, there’s usually no rush. Take your time and don’t worry if it’s not a free-flowing conversation to begin with. Just starting the thought process may be enough.

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HOW DO FUNERAL PLANS WORK?

A funeral plan lets you pay in advance for the basic costs of a funeral. This means your family or your estate doesn’t have to find that part of your end-of-life expenses, when the time comes. In short:

  • A funeral plan pays for funeral director’s basic costs.
  • Some funeral plans include third party fees (such as the cost of being buried or cremated).
  • Good funeral plans invest your payment in an independent Trust or an insurance policy.

Every provider’s plans are different

This does make it hard to compare funeral plan providers’ services, but everyone who’s a member of the Funeral Planning Authority signs up to deliver on the same promise. We will make sure your money is secure, we’ll keep evidence of that governance, and we’ll guarantee to pay the costs described in your funeral plan – no matter how much they increase.

Funeral plans don’t pay for everything.This is why it’s so important to work with a plan provider who explains things clearly. The last thing anyone wants is for their family to be worried by expenses they weren’t expecting.

Here’s an example: our pre-paid funeral plans are easy to understand. Three of them cover specific third-party costs up to an agreed limit. That allowance increases in line with the Consumer Price Index, every year. Two of our plans don’t include that allowance – they are simpler options, one for burial or cremation and the other for direct cremation – but both are ideally suited for families that want to minimise their expense now and guarantee a funeral director’s costs and support in the future. No matter how much those funeral director’s fees go up, our plans will cover them.

Every product has terms and conditions

End-of-life planning isn’t a comfortable subject. But that’s no reason to be shy when it comes to understanding the practical terms and conditions of a financial product. In all of our plans, for example, we explain that a funeral can’t go ahead until the funeral plan is all paid up. Commercially, that’s just good practice. We also include a caveat that says there may be an additional per-mile charge, if the funeral director has to travel more than 25 miles.

Good funeral plans do provide good value

We can’t predict what the cost of a funeral will be in the future. We do know – thanks to the Sun Life ‘Cost of Dying’ report – that on average, it’s likely to be more than £5,000 by 2023.

However, everyone’s funeral should be unique and personal. So the personal touches (things like an order of service, flowers, specialised transport, headstones or woodland burials), all add to the cost. But with the basic cost of a funeral director guaranteed in advance by a pre-paid funeral plan, your family will have fewer financial worries in the future.

The money is invested for the long-term

Members of the Funeral Planning Authority (FPA) make a commitment to invest your money in either a trust fund or an insurance vehicle that guarantees a payout when you die. And, as a key part of the Authority’s code of conduct, all members and the FPA itself pledges to pay for any funerals that aren’t covered – if, for example, a provider went out of business.

If you have any questions, our team’s always happy to help – general questions about funeral plans are more than welcome, anytime.


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WHAT ARE THE ALTERNATIVES TO A FUNERAL PLAN?

This might surprise you, but we do recommend you look at the alternatives to buying a funeral plan. In the same way we pay for homes in different ways – with a mortgage, by renting, via a half-and-half arrangement – everyone’s plans for paying for a funeral are unique, too.

Everything depends on your situation. So, what we’ll do here is run through the four most common alternatives to a funeral plan. Hopefully, you’ll find this feels unbiased. What’s most important to us, is that you choose the right option for you and your family. Here we go:

SAVINGS

A very simple and safe option (as long as the money’s not going under your mattress). You might think about putting money into a bank account, or an ISA, or something other long-term savings plan – a high-interest building society account, perhaps.

Why is this a good idea? Well, it definitely gives you more control over the money while you don’t need it. And the money is with an institution that’s regulated, so there’s peace of mind there, too. But there are two significant disadvantages to ‘savings’ being a choice for paying funeral costs.

When savings are needed to pay for the funeral – the most basic parts of the funeral, at least – your family may still need permission to access those funds. That’s not always possible, quickly.

Plus, there’s no guarantee what interest rates will do or how the money will grow over time. In the background, funeral costs are always rising. In other words, if you put £5,000 into an account today, your funeral might cost more than the amount you’d have in that account in 10 years’ time.

Still, savings do give you control over your money now.

A WHOLE-OF-LIFE INSURANCE POLICY

Life insurance – whole-of-life insurance – exists to provide a payment when you die. But there’s no rule stating what the money will be spent on, and that is important to remember. The payout is paid into your estate or to a named beneficiary as soon as it’s practical to do so.

Many families see these policies as an excellent way to save money for end-of-life plans – and rightly so. The monthly payments are usually quite low, although they might be higher if you’ve been asked to have a medical exam. That’s usual. When you apply for most kinds of life insurance, you’re asked a few questions about your health. Depending on the answers, your premiums may be higher or you may be declined cover.

Some whole-of-life policies do guarantee a minimum pay-out. Others won’t. There may be a waiting period – known as deferment – which is usually one or two years, during which time the policy won’t pay out the full amount if you die. And, it is always possible that you live for a very long time (we do hope so), but if you that’s the case, then you may pay in more than the policy will provide.

Also, whole-of-life insurance can’t be ‘redeemed’ while you’re alive. And unless you buy an index-linked or inflation-linked policy, you can’t be sure the amount you put in will have the value you’re depending on to pay for a funeral – which is why you’re looking at the policy.

So what’s the big advantage? Well, whole-of-life insurance is a simple product. It’s also a regulated product. As long as you’re paying in consistently and never miss a premium, there will definitely be a payout – it’s guaranteed to deliver on its promise. And, as mentioned, whole-of-life policies can have relatively lower monthly premiums than some other products.

OVER 50S POLICIES

An Over 50s policy is another, regulated whole-of-life policy – but this time, you can’t buy the insurance until you’ve had your 50th birthday. So far, so good. However, believe it or believe it not, you may find there’s an upper age limit to an Over 50s plan, usually 80 years old. Where there is a significant advantage over whole-of-life insurance, is in the guarantee to be accepted. We can’t find any Over 50s plans that involve a medical exam. This is good news – we’ll explain why in a second.

Different providers offer different payouts, which is normal, but most of them also have a ceiling on how much you can guarantee in that payout – and not all Over 50s plans are index-linked or inflation-proof. That’s important. Again, depending on which plan you buy, you might pay in more than your family receives as a payout and, usually, if you die within the first year, then your family won’t receive the fixed lump sum. They’ll receive an amount that’s equivalent to what you’d paid in.

That said, Over 50s plans are simple. They’re regulated. And, especially if you’re in poor health or you have a prohibitive lifestyle – you’re a heavy smoker or you’re very obese – then these plans can be a sound financial option. You don’t need a medical, even though your life expectancy is likely to be much lower. Again, for us though, the downside is that an Over 50’s policy payout isn’t specifically linked to the costs of paying for your funeral – and unless it’s index- or inflation-linked, there’s no guarantee what that payout will cover. This brings us to…

FUNERAL PLANS

As long as you’ve paid in the full amount agreed, a funeral plan guarantees to pay the basic costs of your funeral – the funeral director’s costs. With a funeral plan, you can also make wishes that will be passed on to the funeral director. It’s a paid-up promise, your end-of-life planning is all in hand.

So what are the disadvantages? Well, if you plan to retire abroad, then most UK-based plans wouldn’t cover you to have a funeral in that country, us included. But let’s be clear, there are three main things about funeral plans that many people don’t like – and we think we’re the only funeral plan provider who’ll be this frank with you.

First, there’s an administration cost for liaising with the funeral director. That’s paid for by part of your plan. Other kinds of policy, like Over 50s plans, simply don’t make that same commitment – it’s not part of what they do, so your family has to do it instead. In addition, a part of your plan will cover the cost of us running our business responsibly, the same way banks charge account fees for having access to an overdraft. To us, that feels sensible.

Second, it’s very important to understand what’s covered by a funeral plan and what’s not. Some plans cover third party costs (the unavoidable fees, things like paying for burial or cremation), and some do not – it’s up to you to check, and buy the plan that provides what you prefer. In addition (unless you add these in advance), your family will still have to pay for those personal wishes. Things like orders of service, flowers, and a headstone perhaps. However, a funeral plan guarantees to pay the funeral director’s costs, directly, no matter how much those costs go up in the future.

And third, we’re not regulated as an industry yet. Most funeral plan providers are part of the Funeral Planning Authority. To be a member, we have to demonstrate we’re operating under the Authority’s code of practice. It’s very much like being regulated. For us it means proving that your money will sit, safely, in an independent, ring-fenced Trust – the Safe Hands Trust Fund.

Did that help? Is there anything else you’d like to find out? You’re more than welcome to ring us up and pick our brains on the pros and cons of funeral plans – and other products – at any time. We’re not financial advisers, but we can explain how our products might fit into other financial plans.

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FIVE GOOD REASONS TO MAKE A WILL

Everyone over 18 should make a Will. In short, a Will is a legal document that explains what you’d like to happen to your property, money, and possessions after your death. It doesn’t have to be drawn up or witnessed by a solicitor, but that is best practice (because a badly-worded Will might cause more problems than it solves). There are many professional will writers who can help too.

What’s most important, is that you have something specific put down in writing – and, of course, that you make sure your family know where the original is being stored. Here are five of the best reasons, not just good reasons, for making a Will.

  1. YOU CAN PROVIDE FOR YOUR CHILDREN

It’s not such a worry when you’re older. But if you have younger children now – even if they’re in secondary school or college – it makes sense to make plans that provide for their future financially (for grandchildren, too).

That might include putting money aside for education, or setting up a small trust to give them a nest egg for buying a home. Those plans can all be part of a Will, specifically in a Will Trust.

In addition, UK law states that only spouses or blood relatives can automatically inherit from your estate if you haven’t made a Will. So if you want step-children or foster children to benefit in any way, then you definitely need to write a Will that includes them.

  1. YOU CAN HELP YOUR FAMILY AT A STRESSFUL TIME

Dividing up an estate can lead to a stressful, un-necessary period of in-fighting if your wishes aren’t clear. A well-written Will can help your family to avoid contentious issues completely. What’s more, when you write down what you’d like to happen, your family has a plan they can follow. That makes everything much easier. There’s less to think about. And, even if there are questions about your wishes, there’s a guide that can help a solicitor (or a court) to understand what your intentions were.

  1. YOU CAN SAVE MONEY

Writing a will can save a lot of money on inheritance tax, or ‘IHT’. At the moment, if your estate is worth more than £325,000, then – unless you’re married or you’ve made alternative arrangements – your family will have to pay 40% of its worth, to the Treasury, in tax, before they can access any of the value themselves.

By talking things through with a financial adviser and a soliciter, you can often make arrangements that will help to minimise the amount of IHT that’s due. It’s all part of life’s normal financial planning, much like taking out a funeral plan.

  1. YOU CAN PROTECT YOUR FAMILY HOME

Believe it or not, unmarried partners and step-children don’t automatically inherit a property if you die without making a Will. Writing a will makes sure that your partner will have what you wanted them to, and that they’ll be able to stay in your – their – family home.

More to the point, a Will can explain what you’d like to happen to your children if they’re very young. You can name a guardian and leave instructions on how money should be used for their welfare.

  1. YOU CAN SUPPORT A CHARITY (AND REDUCE YOUR IHT)

Whichever charities you’ve supported over the years, it’s worth thinking about using your Will to leave a legacy – large or small. Of course, it’s up to you what you leave and which charity should benefit. But charitable donations can be a useful part of sound financial planning.

If you do leave something to charity, then it doesn’t count towards the total taxable value of your estate. It’s called a ‘charitable legacy’. And – as long as that legacy is at least 10% of your net worth – then the rate of IHT due on on the rest of your estate falls from 40% to 36%.

Making a Will is sound financial planning, just like making end-of-life plans, and it may cost much less than you imagined.


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WHAT TO DO WHEN SOMEONE DIES

First things first. If you need these details straight away and you’re in a calm situation, don’t feel you’ve got to rush. Take your time. There will be people who can help you. It’s true, there’ll be documents to deal with and some decisions to make, but that comes later.

If you’re exploring this information because it seems sensible, then you might like to print this page and keep it for reference. The steps to take will depend on where the person was when they died, and whether or not the death was unexpected. This is an overview of each situation in turn.

AT HOME – EXPECTED 

If you knew someone was likely to die at home (perhaps due to illness or old age), then you simply need to call your family doctor as soon as it’s practical. Take your time.

Whenever you feel you’re ready, you should – if you have a funeral plan – also contact the plan provider. Or, if you don’t have a funeral plan, you’ll have to find and contact a local director yourself.

AT HOME – UNEXPECTED 

If you don’t know what’s happened, or if the person hasn’t been seen by their own GP in the last 14 days, then things are a little different. It’s important to leave the body where you found it (apart from your own attempts at resuscitation if that’s appropriate).

Call 999. Ask to speak to the police. You’ll be given advice on calling a doctor, or the police will send paramedics to your home as soon as possible. The police will also arrange for a local funeral director to collect the person’s body, so that a coroner has an opportunity to decide if a post mortem should be carried out.

IN HOSPITAL OR HOSPICE

Usually, the hospital or hospice will have a bereavement team – trained professionals who can give you practical support. They’ll be there to help you. The body will also be taken to the hospital’s mortuary, or be looked after with care in a hospice, until you make decisions about what you’d like to happen next. You’ll be given a medical certificate straight away if you’re in hospital (you will need a doctor to visit the hospice, otherwise).

IF SOMEONE DIES ABROAD

It depends where you are but the general rule is, contact the local police and let them know what’s happened. You’ll need to register the death in line with the regulations of the country, but you’ll also need to register the death with the British Consulate.

In every situation, remember, there’s usually no rush. Take your time. We suggest you also call someone close by, a friend or a member of your family, who can be there to give you some support.