Financial Angles

We met up with our long time financial adviser, and it was quite a surprise to hear about the changes to the financial system – insurances and savings are now completely separate.

The present climate is pretty awful for savings and investments, and there really is no with-profits type of insurance anymore.

ALL savings have the same tax breaks  -so Individual Savings Accounts (ISAs) are not terribly attractive anymore. Most other types of account have better interest rates!

It was a real eye-opener! What a bizarre world.

It looks like funeral costs will have to be from Term insurance, Whole-Life insurance, or borne at the time from whatever cash is to hand.

The good news is that we’re in a better position that we’d thought (mostly by chance).

Years ago, an incorporated company needed a minimum of two directors. This changed and so my latest business had just me as the sole required director when I started it up.

However, when my daughter was ready for nursery, because my wife was not back at work, and we were not claiming state benefits, a nursery place was impossible!

The only way around this was to employ my wife, and so my children were able to get places at pre-school nurseries.

And that was the way we left it – until the changes in workplace pensions of late meant that she had to become a director to avoid all that.

This is a really good position to be in as it turns out; this is our main income source, so if anything happened to either one of us, the survivor would be able to continue access to the money without having to do anything.

There is no point in opening a joint bank account because our individual accounts are barely used, and are mainly fed from whatever we chose to transfer from the business.

All we have to figure out is what happens to the business should anything happen to us both at the same time.

We do have savings, so we have decided to look at splitting this lump into two – one invested in something ethical but risky (and so higher on our ROI) – maybe something like equity crowdfunding or an angel investment, Crowdcube, or Seedrs type of thing – which may be fun if a wee bit too risky. Then again, it may just be safer yet still better than the high street with  a P2P/ Peer-to-peer social lending set up (the old marketplace lending scenario is getting good press lately eg Zopa is returning a whopping 7% just now), the rest probably ought to be in a bank or building society – a joint account with good access.

The plan is to use the savings account to cover funeral costs, the business account for the day-to-day living costs and bills immediately following a death, and the higher yield investment to take care of the children’s future whatever happens.

A check on Moneysavingexpert shows that the rates are all terribly low, and that current accounts are better than savings accounts! West Bromwich Building Society offers an easy access account at 1.05%, better rates mean locking away the cash.

Anyway… we’re on the case. The limitations and restrictions mean that everyone is in the same boat, and that everything is actually a lot simpler too. So there is that.

What Happens When I Die Part 2

In my previous post, What Happens When I Die, I considered things like what would happen if I died abroad, and the basic necessary process of dealing with my remains.

Today, I want to take some time to think about what else happens that affects my wife and children.

Probate is a legal process which confirms an executor’s authority to deal with everything I own (my estate/possessions). Getting probate granted can take a long time, even when there is a will. In cases of intestacy (where there is no will), it can drag on for a lot longer.

If I leave everything to my widow in my will, then she’ll have to get probate granted before she can distribute my money, property etc.

Upon my death, my bank accounts and investments are immediately frozen, and everything ought to be considered as forming my estate and she needs a grant of probate to get at the money.

I was shocked to realise that if my wife popped online and did some internet banking to get food or to run the house as well as pay for my funeral costs – and the transactions took place after the time and date on the death certificate – then that would be fraud.

Obviously this doesn’t apply to joint bank accounts, but nevertheless – who knew that my wife could unwittingly become a criminal by trying to get my funeral sorted out.

Then I found out that term insurance and funeral plans refund premiums if the death is too soon, leaving everyone without any help. I also found out that medical schools refuse to take a body that donates organs to save lives, and that sometimes they are just too full to accept another body, again leaving everyone high and dry.

Life assurance means the beneficiaries have to pay the government inheritance tax. According to insurer Aegon, only 6% of life-insurance policies in the UK are set up as trusts (which avoid inheritance tax).

“In industry jargon, putting a life insurance policy into a trust is known as ‘writing life insurance in trust’ or a policy is ‘written in trust'”.
-confused website

The good thing about writing a policy in trust is that it avoids tax and the insurer just needs a death certificate before paying-out – no need to wait for probate to be granted.

This raises the whole thing about the Will – appointing an executor and all that. I plan to have a look around this stuff in my next posts on here.

Other things that are overlooked are passwords and logins for internet shopping, accounts, utility bills, credit cards and more besides.

Even personal e-mail accounts and drive or cloud storage facilities – flikr family photos, or dropbox – or perhaps google drives holding personal information.

What about PINs for tablets and phones – or voicemail?

Some consideration of leaving behind access information is important – and it needs to be maintained and updated somehow too.

There is a lot to pull together -to “get my affairs in order” as they say, but I’m at least looking at this stuff now – hopefully heading off a lot of pain when the inevitable day dawns.