Later Life Planning

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It is not always easy looking to the future, but it’s important to plan ahead to give you and your family peace of mind in stressful times.

We can help with:

  • Ensuring that your Will reflects your wishes
  • Consider changes in circumstances; including children, grandchildren, marriage and divorce
  • Ensure that your assets are passed to the correct people on death
  • Minimise Inheritance Tax
  • Name executors to manage your affairs
  • Plan your funeral
  • Set up trusts and gifts to family, friends or charities
  • Minimising exposure to care costs and care home fees
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Guides

What to think about when preparing a Will

Frequently Asked Questions

Potentially, yes.

A disappointed beneficiary can challenge your Will on your death if they believe that you didn’t have the necessary capacity to fully understand the Will, for example if you had dementia when it was written. Someone left out of your Will may also challenge it if they think that somebody else exerted undue influence on you to leave your assets to them, that you were persuaded to write the Will in the way that you did. They could also claim that you weren’t’ fully aware of the contents of the Will when you signed it.

When we prepare a Will we record evidence that none of those situations arose, for example by ensuring we see you on your own, and we keep that evidence on file forever in order to defend any claim that may arise on your death. This ensures that your wishes can be followed, and you can leave your assets as you wish to.

If you choose not to provide for your relatives in your Will then it may be that they can make a claim against your estate. There is a specified list of relatives who can bring a claim and the likelihood of them being successful will depend on the circumstances at your death such as their age, relationship to you and what maintenance you were making for them in your lifetime. For example an infant child who relies on you financially will have a much stronger claim than your adult child who is financially independent.

We always review the likelihood of any possible claims when preparing your Will and can advise on what steps you can take to reduce their chances of success.
Wills need to be signed and witnessed according to legislation, if they are not then the document will be invalid. Whilst there are will writing services available that will draw up a Will according to your instructions, in our experience they often do not get a complete picture of your circumstances before doing so, leading to unforeseen problems in the administration.

When preparing your Will we would meet with you and discuss your current circumstances to get a full background on you, your family and your assets. This enables us to look out for any potential problems or pitfalls for your estate and ensure your Will fully reflects your wishes.

For example we would consider the use of Trusts if you have children from an earlier marriage and advise how you can provide for all your relatives in this instance.

We would consider the circumstances of each of your beneficiaries, and look at alternatives if it is not sensible for them to inherit for any reason.

We would consider the impact of inheritance tax or care fees on your estate, and structure the Will accordingly.

We would consider any lifetime gifts you have made previously and the fairest way of recognising these in your Will.

It is important to recognise that your assets may change during your lifetime, for example you may not own your house on death if you have gone into care, and so we would consider all the possible implications of how you intend to distribute your estate.

We see our role in preparing your Will as advising you of all the surrounding issues which may not be immediately obvious, rather than solely preparing the document itself which is the advantage of having the document prepared through a solicitor.
Pets are often important members of the family, and carefully drafted provisions should be made for them in your Wills to ensure that they are properly cared for after your death.

You need to consider is who is suitable to look after your pet. This can be a person or an organisation, such as a pet charity. It is important to ensure that whoever you choose is happy to accept the responsibility of caring for your pet and that you have discussed this with them beforehand.

You may want to consider a cash gift in your Will to whoever would care for your pet in the event of your death, to help with expenses such as veterinary bills. This can be worded so that they would only receive the money in the event that they took your pet into their care and not otherwise.

It is important that any clauses in connection with your pets and their care are carefully drafted to ensure that they are enforceable, cover any eventuality and most importantly are in accordance with your wishes. It is therefore advisable to seek professional help when looking to make a Will that provides for your pet.
If you leave assets to your child in your Will and they then divorce after your death, the assets you leave to them may form part of the divorce proceedings and be claimed by their former spouse.

If your child is in the early stages of a separation, we would recommend considering using a Trust in your Will for them instead of giving assets directly to them. You would choose who you would like to be your Trustees and they would manage the funds until they considered it sensible to pay them out, once matters were finalised.

This would enable your Executors to review your child’s marital situation on your death and hold back funds until an appropriate time when any separation is concluded, which would provide some financial protection to your child and ensure they are provided for as you would wish.

If this is something that you would like to discuss further then please do give us a call.
We would recommend that you carefully consider the circumstances of each of your beneficiaries in your Will. If you have concerns about your children’s ability to manage money, then you may wish to consider leaving their share to a trust in your Will.

This would allow you to choose people to act as Trustees, to look after the assets or money on your child’s behalf. The Trustees would have discretion as to how funds were managed for your child, but you would leave them instructions as to how you would like this to be done. For example, you may want your child to receive a regular allowance, so they are provided for on a long-term basis but do not receive a large sum up front. Or you may wish for a house to be purchased for them but owned by the Trust rather than in their name. This would mean that they could not sell or mortgage the property, and it would avoid the property being vulnerable to financial difficulties such as bankruptcy.

If you are considering using a Trust then you should give careful consideration to who your trustees should be, and whether you are putting them in a difficult position by asking them to be in control of the funds for your relatives. If that were the case you could appoint a professional such as Nockolds to manage this for you.

This article looks at defined contribution pensions, most commonly known as personal or workplace pensions. They work by building up a pension fund from contributions made by you, your employer and tax relief from the government.

The value of your pension and the income it will provide isn’t guaranteed and depends upon the total contributions made and investment growth after charges.

Pension freedom rules introduced in April 2015 now give you more flexibility over how you can access your pension benefits.

For most people, the earliest you can access the money without significant tax penalties is age 55 (rising to 57 in 2028). As pensions are designed to support you throughout retirement, ideally you should wait as long as possible before accessing them. This will give you time to consider your options and determine how best to use your pension during retirement, as well as giving your pension fund more opportunity for growth. In most cases, 25% of the fund is available as ‘tax free cash’, with the remainder being used to provide a taxable income. A brief summary is provided below of the main options for accessing your pension benefits.

Annuity

Annuities allow you to exchange some or all of your pension fund for a secure income for life. It can help those who want certainty or to cover essential expenditure. There are a wide range of options available to suit differing needs (such as spouse’s benefits, escalation and guarantee periods), which all have an impact on the annuity rate available. Shopping around for the best rate in the market is therefore crucial, especially if you smoke or have a medical condition as you could receive an enhanced annuity rate.

It is important to think carefully about the annuity options you choose, as once selected they can’t be altered in the future, even if your circumstances change.

Flexible access

Flexible access lets you dip into your pension while the remaining fund stays invested.

You also have the ability to start or stop regular withdrawals or to increase or decrease them as your needs dictate. This means that you can take all of your pension fund in one lump sum or spread it out over a series of smaller withdrawals. How much you take and when is entirely up to you, but taking large withdrawals (in excess of your tax free cash) is likely to result in a significant tax bill.

You also have the ability to access just the tax-free cash element until it is exhausted or a combination of tax free cash and taxable funds.

With flexible access, regular reviews are essential as your pension fund isn't guaranteed to last throughout your lifetime. If you take excessive withdrawals, live longer than expected or suffer poor investment performance, your pension could run out of money before you die.

The option to purchase an annuity is always available.

A combination of approaches

You don’t have to use just one option. You can combine these options to suit your particular needs.

Which option is right for you will depend on your:

  • Age and health
  • Current and likely future circumstances
  • Income requirement
  • Attitude to risk
  • Other assets or income sources and the size of your pension
  • Tax position
  • Your spouse’s/partner’s assets and whether you have financial dependents

As you can see there is a lot to think about before deciding upon your retirement options and you should seek independent financial advice if you are unsure. Speak to a member of Nockolds Wealth to find out more.

Important Information

  • This article is for your general information only, and is not intended to address your particular requirements. The content should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice.
  • No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the content.
  • Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is provided or that it will continue to be accurate in the future.
  • Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the specific circumstances of the individual. All figures relate to the current tax year unless otherwise stated.
  • The value of your investments and the income derived from them can go down as well as up and you may get back less than you invested. Where stated, past performance is used as a guide and is no guarantee of future returns.
If you don’t have a Will then if you die domiciled in England and Wales your estate will be distributed according to the laws of intestacy. These vary depending on your circumstances at your death. Any property jointly owned will automatically pass to the co-owner where it is owned as what we call ‘joint-tenants,’ if you would like further advice on this then please contact us as you cannot assume that a jointly owned house would pass to the co-owner. The following rules apply to property that does not pass automatically to the co-owner.

If you are not married and do not have children then your estate would be divided equally between your parents or paid to your sole surviving parent generally. If they have died it would be distributed between your whole siblings initially, or their children if they have predeceased.

If you are married and do not have children or grandchildren then your estate passes to your spouse.

If you are married and have children then your spouse is entitled to all of your personal belongings and the first £270,000 of your estate. The remainder is then divided in two with one half going to your spouse and one half to children, or their children if they have predeceased.

If you are not married and have children then your estate would pass to your children. This is the case even where you have a long-term partner, the intestacy laws only recognise marriage. It is particularly important to have a Will in place in this situation to provide for your partner.

If none of the above applies then assets pass further along the family tree to half-siblings, grandparents, aunts and uncles then cousins before being paid to the crown if none of the above exist.

There are anomalies and exceptions to the above so we would recommend that you seek advice. Even if the intestacy laws reflect who you would wish to inherit your estate, we would recommend having a Will in place as the Will allows you to choose who would administer the estate for your beneficiaries. Litigation and disputes regarding inheritance are increasing significantly and so having a Will in place ensures your wishes can be followed.
Depending on the type of care that you require, if you have assets or income over a certain amount then you may need to contribute financially to your care. There are certain situations in which your home would be exempt, for example, if you or your spouse or partner are aged 60 or over and living in the home. If this were the case you could not be forced to sell your home to pay for care, but other assets such as savings or pension income could be used towards fees.

Many clients ask us if they can simply give assets away to avoid paying for care and we would advise against this, as if the local authority considers that a gift was made in order to avoid paying for care, then they will treat you as if you still own the asset and charge you for your care accordingly. You are also leaving yourselves financially vulnerable in putting your assets into someone else’s name.

If you and your spouse or partner wish to ensure your home is protected from care fees then we would recommend considering what is called a ‘Life Interest Trust’ in your Wills, as this enables you to protect one half of your home from care fees in the event that the second of you to die required care. Instead of each leaving your share of the home to each other in your Wills, you leave it to a Trust for the survivor’s lifetime. According to the terms of the Trust the survivor of you can live in the house, but does not own it outright, and so if they then require care at a later stage one half of the house is ring-fenced from paying for their care.

Please do get in touch with us if this is something you would to discuss further.

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