Financial Planning | Preparing for Life After You Die
The topic of death tends to result in people clamming up and refusing to speak about it, but the truth is it happens to us all in the end. As final as it might seem, passing away can be the beginning of a lengthy process for friends and family who have to pick up the pieces after you pass away. In most cases, this involves dealing with your finances and your estate.
There is no doubt that the thought of passing away is one that is not pleasant, but we need to make sure our finances are planned accordingly. In doing so we can relax in the knowledge that things should be easier for our loved ones.
What happens to your money when you die?
In most cases, all of your assets will be frozen as soon as the asset holder, like a bank or building society, is notified of your death and they cannot be accessed until a Grant of Probate, or other suitable proof of authorisation, has been submitted to the asset holder.
In some cases, people might feel as though they are going around in circles because often, a situation can arise where the executors require access to funds in order to settle certain commitments before they are able to apply for probate. However, they cannot do this until the assets are released after the grant is obtained.
Funds held by the deceased can be accessed for certain purposes. These include funeral expenses and Inheritance Tax.
Make sure the cash is available
Before you die, it makes sense for you to ensure that there are sufficient funds in your accounts that the executors can use to cover any expenses after you pass away. In general, the funeral costs can amount to anything up to £10,000.
Dealing with inheritance tax
This is a process that is slightly more difficult and complicated. If your estate is liable to Inheritance Tax then it could be time to seek professional advice. This will enable you to gain an understanding of what might be payable and when it will need to be paid, so that an additional reserve of cash can be made available to pay to HMRC when the time arrives.
If you opt to put a reserve in place, then this will make things easier for your executor when it comes to covering the cost of the liabilities however this is not always possible. Having a professional executor in place will ensure that these issues will not be left as an additional burden to your friends and family.