Financial Well-Being Activities During Changing Times
I hope you are well and continuing to remain safe during these unprecedented times. As we are all adjusting to new ways of living and adapting to different working patterns this period of time can offer some valuable breathing space for consideration & creative thinking around your financial health. If you find yourself with some downtime during this period, then now presents itself as a good time to dedicate some positive forward planning around your financial well-being.
I wanted just to give you a few very basic items on this ‘check list’ for you to consider checking or putting into action. I would be delighted if I can assist, or even just to hear how you are managing. There really has never been a better time to talk!
- Create or update your ‘ICE’ document
ICE stands for ‘in case of emergency’. This is something that you can give or send to people close to you, should you be unable to provide them the information yourself, for example, if you are seriously ill. It could be a list of accounts, policies, and services that you rely upon, or it could simply be the name of the person to contact who would have those details.
We don’t recommend that you note down important passwords, or full account numbers as these should always be secure and private. In the event of your death, your executors can obtain all these details quite properly through probate. The important thing is knowing which bank, which financial adviser, which utilities supplier and so on.
- Do a household or personal budget
Challenging as this can be, its often both valuable and rewarding! You will feel that you are more in control of your money having done it, and properly informed as to what you can do if you want to improve matters.
A good way to start is to run through your bank statements for the last 2 to 3 months, noting down what you actually spend, and trying to categorise whether it’s a ‘necessity’ or whether it’s a ‘discretionary’ spend. Don’t be too hard on yourself – this need not be about cutting back. It’s likely that whilst moving through the lockdown conditions you may be spending less. Ask yourself if you can identify this money, and what you plan to do with it instead?
- Trace lost or old pension plans
Are you aware of all your pension arrangements? What about that short employment from 10 years ago? Funds accumulated in your working life are seldom actually lost. They remain in your name, but it’s not uncommon for the providers of these pension schemes to lose touch, especially if you have moved to a new address over the years. The Association of British Insurers estimates there could be as many as 1.6 million lost pensions, with an average value of £13,000. Surely worth a few minutes to note down all the employers you have worked for, and see if anything has been overlooked?
The government operates a pension tracing service (https://www.gov.uk/find-pension-contact-details), or if you have details of the pension provider, or even the employer I may be able to assist, even if its merely to confirm you haven’t forgotten anything.
- Update your pension beneficiary
Who would inherit your pension benefits, and is this what you intended? Pension benefits do not normally form part of your estate for inheritance tax purposes, so its possible to plan for an effective transfer of wealth, as well as influence the tax the beneficiary may pay on those benefits in the future. You can update an ‘expression of wish’ at any time to tell your pension provider how you would like any unused pension benefits paid to. You can split benefits to more than one person. Please ask me for the relevant documents for your pensions, and perhaps we can discuss the implications for you personally.
- Check your insurance policies
As your circumstances change, its always wise to consider your personal insurances meet your current needs. It’s also common that you may have forgotten to update or cancel policies that you no longer need. We recommend you always take some advice before cancelling cover, but more importantly, if you have had a significant change in your circumstances, for example:
- A new job or change in employment status
- Marriage, separation or divorce
- The arrival of children or grandchildren
- Paid off debts, or taken on new ones, including mortgages
- Moving home
The terms of insurance cover to protect you constantly change, so its important to ensure not only that your premiums are competitive, but that you get the most appropriate coverage for your money.
- Gifts and charitable donations
It could be that someone close to you needs some financial support more than ever. Gifts of up to £3,000 can qualify form an IHT exemption, with an additional £3,000 available if you haven’t used this allowance in the previous tax year. These exempt gifts benefit from not being classed as a ‘Potentially Exempt Transfer’ and so fall outside your estate immediately, perhaps resulting in a lower IHT liability in the event of your death. Further gifts can be made from regular income, providing they do not impact on your own standard of living. Please ask me for more information on this rather complex area.
The quite remarkable efforts of front-line NHS staff supported by private individual such as Captain Tom Moore (the 99-year-old veteran raising over £20m by walking in his garden) has perhaps encouraged you to make a charitable donation recently. The charity can claim gift aid on any contributions you make, but if you pay higher or additional rate tax, you can reclaim this additional tax (above the basic rate) in your tax return, or by notifying HMRC who will amend your tax code.
- Wills and Power of Attorney arrangements
The events of this terrible health crisis are obvious to us all. It is perhaps a good time to take the rather difficult step of considering not only what happens in the event of our own death, but also in a situation where we are unable (however temporarily) to deal with your own finances. Making a will really is a significant and simple step to protecting your financial legacy, as well as those who survive you.
We do not offer Will or Power of Attorney Services, but I can recommend you to a trusted colleague to assist with your arrangements.
I hope that you have found the above content helpful and I look forward to speaking with you soon.
In the meantime if you wish to arrange a review meeting either by telephone, FaceTime, Skype or Zoom please do not hesitate to contact us to arrange a suitable time to discuss matters further.