Rooster today, feather duster tomorrow.
PROVERB, QUOTED IN THE DAILY TELEGRAPH
What are you doing to prepare yourself for the end of life? How do you think you will cope with old, old age? Baroness Trumpington (born in 1922) is an outstanding example of a nonagenarian. Aged 91, she is the oldest guest ever to have appeared on Have I Got News for You. In a recent interview she was reported as saying that one good thing about growing older is that you can get away with more, like saying things you would not have dared when younger. The bad thing, she admits, is not being able to do what you used to: play tennis, dance, sew needlepoint. When asked by her interviewer if she felt age made her wiser, she replied, ‘No, but with age you gain a certain clarity. However, there is always the worry about how long before senility sets in.’ Her reply to the question, Do you believe in the Pearly Gates, was ‘I rather hope not. There are a hell of a lot of people I don’t want to see again…’
Facing up to the end of our life is not easy. We know it’s inevitable but many people find talking about death difficult, which can make it hard for loved ones to prepare for it, ascertain our wishes and how we would like to be treated. For a number of people approaching the end involves big questions, such as ‘Why am I here? What’s the real purpose of my life? What happens when I die?’ Talking openly to trusted friends, family, health care professionals or spiritual advisers can be helpful in finding answers to some of these big questions. Doing so can help the psychological wellbeing, which in turn can often affect the physical state. Anxious people tense up. Relief from that can lessen physical pain as well as give peace of mind. End of Life Care (EOLC) is the phrase used in the NHS to describe the last year or two of someone’s life, before the ‘terminal’ stage of an illness. Good End of Life Care means that the conditions have been created for people to face the end of their life in comfort and dignity, with the right people nearby. It starts with good communication.
Top tips: Five things you can do to die well:
Talking through options and deciding on practical details is so important. It is essentially a matter of making sure everyone who needs to know does, and that the right plan is in place. This could involve a legal document, such as a living will or an advance directive about medical treatment. We all know that we should write a will, but it is one of those things that many of us never seem to get around to. It is estimated that 53 per cent of people die intestate. Not writing a will could mean chaos and money problems for your family or dependants after you’ve gone. A great deal of heartbreak and real financial worry could be avoided if people are brave enough to broach the subject of dying before it is too late. At the earliest and most appropriate moment, if you can bring yourself and your relatives to have an honest and open discussion about mortality, it could potentially save huge amounts of trouble later on.
Planning what happens to your money and possessions after your death helps ensure your survivors are financially secure and that the people you want to inherit from you do so. When you retire, there are big changes to your finances as well as to the rest of your life. It is important then to review how your survivors would manage financially if you were to die. Would, in fact, your money and possessions (your ‘estate’) be passed on as you would wish? (Your estate is everything you own at the time you die, including your share of any joint possessions, less everything you owe.)
Three out of 10 people aged 65 and over die without having made a will. This is called dying ‘intestate’. A will is, in its simplest form, a set of instructions about how your estate should be passed on. If you don’t have a will, the law makes these decisions for you. This could mean that the wrong people inherit, your home might have to be sold to split the proceeds and your survivors could have extra work and stress. There are five rules of will making:
Having a will is especially important if you live with an unmarried partner, have remarried, need to provide for someone with a disability, own a business, own property abroad, or your estate is large (ie over the inheritance tax threshold). A will is a legal document that sets out your wishes clearly and unambiguously. Although you can write your own will, it is safer to get a solicitor to do it.
Laws of intestacy
Under the intestacy laws:
Making a will
You have three choices: you can do it yourself, you can ask your bank to help you, or you can use a solicitor or a specialist will-writing practitioner.
Home-made wills are not generally recommended, but provided your affairs are simple, it is possible to do so. You need to set out: who you want to benefit from your will; who should look after any children under 18; who is going to sort out your estate and carry out your wishes after death (your executor); what happens if the people you want to benefit die before you. Two witnesses are needed, and beneficiaries cannot witness a will, nor can the spouses of any beneficiaries. If making your own will, it is sensible to have it checked by a solicitor or by a legal expert from the Citizens Advice Bureau. (You should get legal advice if your will is not straightforward.)
For individuals with sight problems, RNIB has some helpful advice. See: www.rnib.org.uk.
Banks
Advice on wills and the administration of estates is given by the trustee companies of most of the major high street banks. In particular, the services they offer are to provide general guidance, to act as executor and to administer the estate. They will also introduce clients to a solicitor and keep a copy of the will – plus other important documents – in their safe, to avoid the risk of them being mislaid. Additionally, banks (as solicitors) can give tax planning and other financial guidance, including advice on inheritance tax. Some banks will draw up a will for you.
Solicitors and will-writing specialists
Solicitors may offer to draw up a will, act as executors and administer the estate. Like banks, they will also retain a copy of your will in safekeeping (most will not charge for storing a will). If you do not have a solicitor, your friends may be able to recommend one, or ask at the Citizens Advice Bureau. The Law Society can also provide you with names and addresses, see: www.lawsociety.org.uk.
Alternatively, if you simply want help in writing a will, you could consult a specialist will-writing practitioner. The best approach is to contact one of the following organizations:
The Society of Will Writers: www.willwriters.com.
Trust Inheritance Limited: www.trustinheritance.com.
The Will Bureau: www.twb.org.uk.
A basic will costs around £150 or just under. However, if your affairs are complicated, it could be considerably more. Always ask for an estimate before proceeding. Remember that professional fees normally carry VAT. Many solicitors will give you a fixed-fee estimate for a will. The fees for will-writing practitioners are broadly in line with those of solicitors.
Community Legal Service funding (Legal Aid)
Financial assistance for legal help and advice is available to certain groups of people for making a will. These include people aged over 70, disabled people, and a parent of a disabled person whom the parent wishes to provide for in his or her will. Additionally, to qualify, the people will need to satisfy the financial eligibility criteria. For further information enquire at your Citizens Advice Bureau or other advice centre.
Age UK can help with information on locally based wills and legacy advisers who provide confidential, impartial advice to older people in their own homes about all aspects of making or revising a will. The advice service is available free of charge to anyone of retirement age: www.ageuk.org.
Executors
The person who sorts out your property when you die and carries out the instructions in your will is your executor. You can choose whoever you like to do this, but it’s important to get the right person and it must be someone over the age of 18. Many people choose their spouse, civil partner or one of their children to be their executor. It is wise to choose two executors: one family member and one professional, such as a solicitor or accountant. It must be someone you trust, and someone who is good at dealing with paperwork. The duties of an executor are many. They might have to deal with the sale of your property so that the people who inherit the proceeds get the most money. They must ensure that the correct amount of Inheritance Tax or Capital Gains Tax gets paid. Family disagreements over how the assets of the deceased are distributed can be commonplace. The executor should have the capability to stay calm when dealing with disgruntled family members over the contents of a will.
When choosing an executor of a will, the following points are worth bearing in mind:
Other points
Wills should always be kept in a safe place – and their whereabouts known. You must tell your executor where it is. The most sensible arrangement is for the solicitor to keep the original, and for you and your bank to have a copy each. A helpful initiative devised by the Law Society is a mini-form, known as a personal assets log. This is for individuals drawing up a will to give to their executor or close relatives. It is, quite simply, a four-sided leaflet with space to record essential information: name and address of solicitor; where the will and other important documents, for example share certificates and insurance policies, are kept; the date of any codicils and so on. Logs are obtainable from most solicitors.
Wills may need updating in the event of an important change of circumstances, for example a divorce, a remarriage or the birth of a grandchild. An existing will normally becomes invalid in the event of marriage or remarriage and should be replaced. Any changes must be by codicil (for minor alterations) or by a new will, and must be properly witnessed. The inheritance tax threshold is £325,000 for the 2013/14 tax year – frozen until 2015. If your estate is likely to exceed this amount, it is wise to review your will regularly. Partners who wish to leave all their possessions to each other should consider including a ‘survivorship clause’ in their wills, as an insurance against the intestacy rules being applied were they both, for example, involved in the same fatal accident. Legal advice is strongly recommended here.
If you have views about your funeral, it is sensible to write a letter to your executors explaining your wishes and to lodge it with your will. If you have any pets, you may equally wish to leave a letter filed with your will explaining what arrangements you have made for their immediate and long-term welfare. Over the years there has been increased interest in advance decision making. For those who would like more information on this matter, there are a number of organizations who can help.
Dignity in Dying: www.dignityindying.org.uk.
Dying Matters: www.dyingmatters.org.
Say It Once: www.sayitonce.info.
If you would be willing to donate an organ that might help save someone else’s life, you could indicate this in your will or alternatively obtain an organ donor card. These are available from most hospitals, GP surgeries and chemists.
Inheritance tax points
Inheritance tax (IHT) is a tax on money or possessions you leave behind when you die, and on some gifts you make during your lifetime (see Chapter Four, Tax). There are two main aims to planning inheritance: to make sure your estate is divided as you wish; and to minimize the amount of tax paid on the estate. The particular inheritance planning strategies you adopt will depend largely on your personal intentions and circumstances.
Some ways of reducing IHT include: making tax-free gifts in your will. Bequests to charity and whatever you leave to your spouse or civil partner are tax free. Nearly 75 per cent of people give to charity during their lifetime, but only 7 per cent include a charitable legacy in their will. The government has changed the tax law reducing the inheritance tax payable on estates that give at least 10 per cent to charity. It is called Legacy 10, and anyone who does this will have the remainder of their estate taxed at 36 per cent instead of the usual 40 per cent IHT tax rate.
Charities have welcomed the move, as have many will-writers. Existing wills can be amended by codicil to include the 10 per cent provision providing the wording is precise enough to make the donor’s wishes clear, yet not mention exact amounts because they won’t know the size of their eventual estate. There is, however, no advantage to people with estates below the inheritance tax threshold.
Examples of IHT-free gifts:
1 Gifts you make during your lifetime:
2 Gifts you make during your lifetime or on death:
Useful reading
Will Information Pack, from Age UK; see: www.ageuk.org.uk. How to Write Your Will (the complete guide to structuring your will, inheritance tax planning, probate and administering an estate), by Marlene Garsia, published by Kogan Page; see: www.koganpage.com.
Provision for dependent adult children
A particular concern for parents with a physically or mentally dependent son or daughter is what plans they can make to ensure his or her care when they are no longer in a position to manage. There is no easy answer, as each case varies according to the severity of the disability or illness, the range of helpful voluntary or statutory facilities locally, and the extent to which they, as parents, can provide for their child’s financial security long term. While social services may be able to advise, parents thinking ahead might do better to consult a specialist organization experienced in helping carers in this situation to explore the possible options available to them. Useful addresses are:
Carers UK: www.carersuk.org.
Carers Trust: www.carers.org.
Parents concerned about financial matters such as setting up a trust or making alternative provision in their will would also be advised to consult a solicitor or accountant.
Money and other worries – and how to minimize them
Many people say that the first time they really think about death, in terms of what would happen to their nearest and dearest, is after the birth of their first baby. As children grow up, requirements change, but key points that anyone with a family should consider – and review from time to time – include life insurance and mortgage protection. Both husbands and wives should have life insurance cover. If either were to die, not only would the partner lose the financial benefit of the other’s earnings, but the partner would also lose immeasurably in other ways. Most banks and building societies urge homeowners to take out mortgage protection schemes. If you die, the loan is paid off automatically and the family home will not be repossessed. Banks also offer insurance to cover any personal or other loans. This could be a vital safeguard to avoid leaving the family with debts.
Many people worry about funeral costs. They can be expensive, costing several thousands of pounds. To avoid worrying about not having enough money to cover your funeral costs, a funeral plan is a way of paying for a future funeral today. How they work: you pay either a lump sum or instalments to the plan provider, or to a funeral director. The money is invested either into a trust fund with trustees, or in an insurance policy, the money being used to pay for the funeral whenever that is. The aim is to safeguard your money until it’s needed, and ensure it is used to pay for the funeral you’ve paid for.
Because trust funds and insurance policies are already regulated, the money you pay into these funds is protected by compensation arrangements.
Plan providers can register with the Funeral Planning Authority (FPA) if they agree to meet its rules and code of conduct. You can find a list of registered plan providers from The Funeral Planning Authority: www.funeralplanningauthority.com.
If you take out a funeral plan, make sure you have a written record of the arrangements and keep it safe. You should receive a plan confirmation. Make sure your next of kin knows you have already paid for your funeral and what the details are. Check to see that the plan provider has a clear complaints procedure and is a member of the FPA. Members must follow its standards when dealing with you and when considering any complaints.
The following organizations offer funeral plans:
Age UK: www.ageuk.org.uk.
Co-operative Funeralcare: www.co-operative.coop/Funeralcare/.
Dignity Caring Funeral Services: www.dignityfuneralplans.co.uk.
Golden Charter: www.golden-charter.co.uk.
Perfect Choice Funeral Plans: www.perfectchoicefunerals.com.
Those in receipt of Income Support, Pension Credit, Housing Benefit or Council Tax Benefit may qualify for a payment from the Social Fund to help with funeral costs. For details of eligibility and how you claim, see website: www.gov.uk – Bereavement benefits.
Dealing with a death
A very real crisis for some families is the need for immediate money while waiting for the estate to be settled. At least part of the problem can be overcome by couples having a joint bank account, with both partners having drawing rights without the signature of the other being required. Sole-name bank accounts and joint accounts requiring both signatures are frozen. For the same reason, it may also be a good idea for any savings or investments to be held in the joint name of the couple. Additionally, any financial and other important documents should be discussed together and understood by both parties. Both partners need to know where important papers are kept.
When someone dies, the bank manager should be notified as soon as possible so he or she can assist with the problems of unpaid bills and help work out a solution until the estate is settled. The same goes for the suppliers of essential services: gas, electricity, telephone and so on. Unless they know the situation, there is a risk of services being cut off if there is a delay in paying the bill. Add, too, any credit card companies, where if bills lie neglected the additional interest could mount up alarmingly.
Normally, you must register the death within the first five days (eight in Scotland). Your local registrar can be found on the government website: www.gov.uk. You will need to take to the registrar’s office the medical certificate issued by the doctor who attended the death, and if possible, the deceased’s medical card, birth certificate and any marriage or civil partnership certificate. The registrar will give you:
For more information on what to do after a death, see the government website: www.gov.uk.
Registering a death is upsetting, and dealing with a death involves more paperwork and phone calls than a family wants to deal with at such a time. A new scheme, the Tell Us Once service, means people need make just one appointment with their local registrar, who can then advise 28 different services of the changed circumstances, including all state pensions and benefits through the Department for Work and Pensions, and HMRC, passports, driving licences, council tax, local library, Blue Badge and social services. See: www.gov.uk/tell-us-once.
Another organization that may be able to help you after a loved one has died has one aim: to reduce the amount of direct mail to those who are deceased. Originally launched in the UK in 2000, this service has since expanded into France and Canada. Coming to terms with the loss of a loved one takes time; receiving direct mail bearing the name of the deceased is often painful and unnecessary. For more information see:
The Bereavement Register: www.the-bereavement-register.org.uk.
Useful reading
What to Do after a Death, a free booklet, from any social security office, and Planning for a Funeral, a free fact sheet from Age UK, website: www.ageuk.org.uk.
Several extra financial benefits are given to widowed people. Most take the form of a cash payment. However, there are one or two tax and other points that it may be useful to know.
Benefits paid in cash form
There are three important cash benefits to which widowed people may be entitled: Bereavement Benefit, Bereavement Allowance and Widowed Parent’s Allowance. These have replaced the former widow’s benefits, as all benefits are now payable on equal terms to men and women alike. To find out more information see website: www.gov.uk – Bereavement benefits. You will be given a questionnaire (BD8) by the registrar when you register the death. It is important that you complete this, as it acts as a trigger to speed up payment of your benefits.
Bereavement Benefit
This is a tax-free lump sum of £2,000, paid as soon as people are widowed, provided that: the widowed person’s spouse had paid sufficient NI Contributions; the widowed person is under state retirement age; or if over state retirement age, the widowed person’s husband or wife had not been entitled to retirement pension.
Bereavement Allowance
Bereavement Allowance is for those aged between 45 and state pension age who do not receive Widowed Parent’s Allowance. It is payable for 52 weeks and, as with widow’s pension before, there are various levels of payment: the full rate and age-related allowance. Receipt in all cases is dependent on sufficient NI Contributions having been paid.
Full-rate Bereavement Allowance is paid to widowed people between the ages of 55 and 59 inclusive. Age-related Bereavement Allowance is for younger widows or widowers who do not qualify for the full rate. Bereavement Allowance is normally paid automatically once you have sent off your completed form BB1, so if for any reason you do not receive it you should enquire at your social security office. In the event of your being ineligible, owing to insufficient NICs having been paid, you may still be entitled to receive Income Support, Housing Benefit or a grant or loan from the Social Fund. See website: www.gov.uk – Bereavement benefits.
Widowed Parent’s Allowance
This is paid to widowed parents with at least one child for whom they receive Child Benefit. The allowance is usually paid automatically. If for some reason, although eligible, you do not receive the money, you should inform your social security office.
Retirement pension
Once a widowed person reaches state retirement age, he or she should receive a state pension in the normal way. An important point to remember is that a widow or widower may be able to use the late spouse’s NICs to boost the amount he or she receives. See leaflet RM1, Retirement – A Guide to Benefits for People Who Are Retiring or Have Retired.
Problems
Both pension payments and bereavement benefits are dependent on sufficient NICs having been paid. Your social security office will inform you if you are not eligible. If this should turn out to be the case, you may still be entitled to receive Income Support, Housing Benefit, Council Tax Benefit or a grant or loan from the Social Fund. If you are unsure of your position or have difficulties, ask at your Citizens Advice Bureau, which will at least be able to help you work out the sums and inform you of your rights. See website: www.citizensadvice.org.uk.
Most widowed people’s benefits are taxable. However, the £2,000 Bereavement Benefit is tax free, as are pensions paid to the widows or widowers of armed forces personnel. Widowed people will normally be able to inherit their spouse’s additional pension rights if they contributed to SERPS (see the note below) and/or the Second State Pension (S2P), or at least half their guaranteed minimum pension, if their spouse was in a contracted-out scheme. Additionally, where applicable, all widowed people are entitled on retirement to half the graduated pension earned by their husband or wife.
NB: SERPS benefits paid to surviving spouses are due to be halved over the coming years. Anyone over state pension age before 6 October 2002 is exempt from any cuts and will keep the right to pass on his or her SERPS pension in full to a bereaved spouse. Equally, any younger widower or widow who inherited his or her late spouse’s SERPS entitlement before 6 October 2002 will not be affected and will continue to receive the full amount.
Women in receipt of widow’s pension who remarry, or live with a man as his wife, lose their entitlement to the payment unless the cohabitation ends, in which case they can claim it again. If a woman is aged over 60, the fact that she is living with a man will not affect her entitlement to a retirement pension based on her late husband’s contribution record. Widows and widowers of armed forces personnel whose deaths were a direct result of their service are now entitled to keep their armed forces attributable pension for life, regardless of whether they remarry or cohabit.
Tax allowances
Widows and widowers receive the normal single person’s tax allowance of £9,440 and, if in receipt of Married Couple’s Allowance, are also entitled to any unused portion of the allowance in the year of their partner’s death.
Advice
Many people have difficulty in working out exactly what they are entitled to and how to claim it. The Citizens Advice Bureau is always very helpful. Additionally, Cruse and the National Association of Widows (see below) can assist you.
People deal with bereavement in various ways. For some, money problems seem to dominate everything. For others the hardest thing to bear is the loneliness of returning to an empty house. For older people who have been part of a couple for decades, widowhood creates a great gulf where for a while there is no real sense of purpose. Many widowed men and women go through a spell of feeling enraged against their partner for dying. Talking to other people who know the difficulties from their own experience can be a tremendous help. The following organizations not only offer opportunities for companionship but also provide an advisory and support service:
Cruse Bereavement Care: www.cruse.org.uk.
The National Association of Widows: www.widows.uk.net.
Many professional and other groups offer a range of services for widows and widowers associated with them. These include:
The Civil Service Retirement Fellowship: www.csrf.org.uk.
The War Widows Association of Great Britain: www.warwidows.org.uk.
Many local Age UK groups offer a counselling service. Trade unions are often particularly supportive, as are Rotary Clubs, all the armed forces organizations and most benevolent societies.