Dealing with the death of a loved one is already a difficult time before factoring in the technicalities behind dealing with their estate too. However, Brits can help make the transition smooth, at least financially, for their dependents.
Evelyn Partners’ Head of Estate Planning Ian Dyall detailed six key things people should start making meticulous records about as soon as possible. He particularly recommended bundling up a final parting gift for your loved ones to find after your death.
Ian has seen first-hand the impact this type of pre-planning can have as he recalled when one of his colleague’s dad died last year, following a long illness, his family discovered a folder on his desk titled: “Dad’s dead – what next!?”
Ian shared: “This is a relatively simple measure that anyone who is concerned about passing on their wealth smoothly to their family, and making it easier for them, can and probably should adopt.”
One particularly difficult aspect for executors to figure out for inheritance tax is gifts, as these are exempt from the tax in certain circumstances and can be liable for the 40% bill even if they were made up to 14 years before your death.
Ian explained: “Your executors will also need to know what gifts you made in the seven years before your death and potentially in the seven years before the earliest of those gifts, in other words up to 14 years before death. That is very difficult for an executor to answer unless you have kept a record of the gifts you have made.”
Gifts made on a regular basis, or those planned to be made on a regular basis, that don’t affect your standard of living is immediately exempt from IHT. However, proper evidence needs to be provided that these gifts meet the criteria for the exemption that your executor will be charged with providing.
Having the records of these gifts, particularly the tables that need to be completed on the IHT403 form, can be the make-or-break evidence your loved ones need. Ian advised adding copies of these forms into your file and filling them out as gifts are made.
Having similar paper trails from each of your investment, savings, pensions and bank accounts can also help with this as well as ensure your executors have tied up all the possible loose ends and none of your hard-earned cash is getting lost in the inheritance process.
Ian also advised adding the contact numbers for financial advisors, accountants, and any other professionals involved in your finances to the file. This can even include past employers where you may still have pension pots, and while you’re at it, nominate beneficiaries for these pension policies to ensure a smoother process.
Similarly, this is also where you can leave the number of suppliers handling your bills such as utility suppliers, internet providers, and car and house insurance. This will make it far easier for your loved ones when they have to alert all relevant parties about your passing.
This can include contacts you have for any unique, important, or collectable physical items you may have. Ian explained: “For example, I have a collection of guitars which would be difficult to value and sell, so I have a list of their approximate values and contact numbers of people I trust who would be able to help when selling them.”
While no one wants their parting memories to be about debts, the expert urged people to be transparent about all their debts in this folder too. Including credit cards, mortgages, and car loans to avoid any nasty surprises for your dependents.