Do you have a will, is it time to set up Power of Attorney, should we get a living will…? These are not easy subjects to bring up with your loved ones. But asking these questions in the right way will give you peace of mind and most importantly, a more financially secure future for your family and make things less traumatic whatever happens.
Here are four key questions to get you started…
Should we get life insurance?
Or to put it another way, what’s your Plan B if something goes wrong with your or your partner’s health?
While most companies pay some form of sick pay, this is often short term. If you don’t qualify or are ill for longer, you may have to rely on statutory sick pay (£94.25 a week for up to 28 weeks). If you have children, a partner or other relatives that depend on your income to cover the mortgage or other living expenses, then life insurance makes sense – it will help provide for your family in the event of your death.
If you’re about to move or are taking on a bigger mortgage, this can be a good time to bring this up. Otherwise, saying something like, ‘I think we should check if we’re protected if one of us dies,’ can be a way to tackle the topic, suggests Sarah Coles, Hargreaves Lansdown.
There are two main types of life insurance: term life – which runs for a fixed term (perhaps you only need it while your children are minors) and pays out if you die during the policy’s term; and whole of life – which pays out no matter when you die, as long as you’ve kept up the premium payments. The average monthly premium a 35-44 year old is £18.28 (ABI) and the average claim pay out £78K for term life.
Work out how much cover you need. Most insurers have online calculators to help you, or you can use comparison sites. Tell your partner and family where policy details are kept. Find out more at the moneyadviceservice.
Coronavirus and life insurance
Whether you have an existing life policy or buy a new one, you would be covered for death related to coronavirus. But if you wanted to take out a policy but have symptoms or tested positive recently, Neal Cross, life insurance expert, MoneySuperMarket, says “any new application would be postponed for 3-6 months (depending on insurer). If Covid has caused any other residual health effects, these would have to be underwritten on a case by case basis.”
Tip: If you are looking for cover that pays out if you can no longer work due to illness or injury, check out income protection or critical illness insurance.
Is your will up to date?
Around 57% of adults don’t have a will or have one that is out of date, according to research for Royal London.
My own father’s will was about 30 years out of date, so when I moved house last year and needed to update my will, I suggested we did his at the same time. It worked. Death in any shape or form was not a subject he wanted to talk about but this ‘shared business’ technique took the focus off him and his mortality and made it much more about good practice in keeping paperwork in order.
Do you need a will?
Many, like my father, have out of date wills that they haven’t got around to updating. But if your situation changes – whether it’s marriage, divorce, long term illness, moving house, or something else – it make sense to update it.
Two-thirds of us don’t have a will at all. For some, it just never gets to the top of the priority list, others can’t see the point if their situation is simple.
Who inherits if there’s no will?
I can’t stress how important it is to make one or update your will if you have one. If you die without one (intestate), your worldly goods are shared out according to rules of intestacy. In England and Wales, surviving spouses are entitled to the first £270,000 of the estate. Beyond this, the spouse gets half of the remainder and the surviving children share the other half. Find out who would inherit your estate.
Without a will, unmarried partners have no legal claims and would have to go through the courts.
How to write a will
Speak to a solicitor (use the Find A Solicitor tool at lawsociety.org.uk) and expect to pay at least £125 for a single will, depending on the complexity. Ask for the form in advance so you have all the information to hand. DIY ‘will packs’, which can cost as little as £20, may be worth considering if your situation is uncomplicated, but if children are involved or you’ve remarried, it’s best to get professional help.
Will Aid Month
November is Will Aid month where solicitors waive their fees in exchange for a donation to charity. Visit willaid.org.uk.
What is a living will?
This is also called an advance decision and allows you to express your wishes to refuse medical treatment in future. This can be included in an ordinary will or just written down and a copy given to your loved ones and all involved in your care. For more information, visit AgeUk .
Is it time to set up Power of Attorney?
Nobody likes to think about what would happen if at some point they lack the mental capacity to make their own decisions, so this is one of the trickiest conversations.
My mother had the foresight to set up power of attorney when she was in her 60s. When she developed Alzheimers’ and it became clear she needed me to take over running her finances, it was quite simple to activate. When I updated my will, I also set up Power of Attorney for my own family in case they need it for me in the (distant) future. Combining it meant one less trip to the solicitors.
What is Power of Attorney?
It’s not easy to manage someone else’s finances without legal power; even speaking on their behalf to utility providers requires authority. A lasting Power of Attorney (LPA) is the official document giving trusted family or friends the right to act on your behalf if you’re seriously ill. There are two types of LPA: one for money and property and one for health and welfare. Don’t leave it too late for an LPA, otherwise you’ll need to apply to the Court of Protection to become a ‘deputy’, which allows you to act on someone’s behalf. Making a deputyship application costs £400. Visit gov.uk for more details.
How to set up Power of Attorney
An LPA is a big step and must be set up before it’s needed, as it’s much harder and expensive to do after someone becomes unable to manage their own affairs. Download the forms at gov.uk/power-of-attorney; it’s a good idea to arrange one through a solicitor (around £350) as they are complicated. Each signed LPA must be registered with the Office of the Public Guardian before it can be used and costs £82.
What kind of funeral would you like?
Most of us steer clear of discussing death with our parents but, the conversation may be a little nearer the surface bearing in mind everything that’s happened this year with the global pandemic and daily focus on the victims of Covid-19. If you can bring the subject up, it will give both of you peace of mind. “I know this isn’t easy, but I want to ask…” might be a good way in.
Dealing with grief and the huge amount of organising and decision-making involved at someone’s death is hard enough without worrying that you might not be organising the kind of ‘send-off’ they would want. Plus, there’s the financial impact to consider, with the average funeral costing more than £4,000. Even a few scribbled notes about whether someone would prefer cremation or burial, their favourite hymns and readings, or whether they would prefer that you “didn’t waste money on a big do” is hugely helpful to the family.
Writing down funeral wishes
You can put your funeral wishes in your will, although it’s a good idea to tell your family so they’re prepared. A prepaid plan lets you pay in advance for your funeral, but these can be costly (basic level plans start at £2,800), and there may be other costs that fall outside the plans. Read the 60 Seconds Prepaid Funeral Plans guide from moneysavingexpert. Find registered providers at funeralplanningauthority.co.uk.
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