During your life, you’ll likely accumulate assets that you want to pass on to your loved ones when you die. These could be anything from valuable assets like property to sentimental items such as pieces of jewellery or prized collections.
You’ll also likely have financial assets that you want to distribute among your beneficiaries when you’re no longer around.
The rules governing who will inherit your possessions and wealth when you die can be complex. And, it’s easy to make assumptions or fall foul of these regulations, meaning your assets could end up in the hands of people who were not your first choice. This can have a devastating impact on your loved ones, and cause arguments and disputes between family and friends.
So, if you want to make sure your assets pass to those you wish when you die, read on for some useful tips.
The life insurance you have in place will provide valuable financial support to your loved ones when you pass away.
It could enable them to:
- Pay for your funeral
- Pay off debts, such as a mortgage or credit cards
- Pay regular commitments such as rent/mortgage and bills
- Replace your income.
If you haven’t arranged your cover yet, get a life insurance quote online to find out how much you could save.
While life insurance provides a useful financial safety net, it’s vital that you take the necessary steps to ensure the proceeds pass to the right person or people.
The Scottish Sun reports the case of 57-year-old Liz Dallas who found herself missing out on her late husband’s life insurance payout when he died because the couple had not taken the right steps.
Liz set up life insurance for her long-term partner Robert McCallum when he was diagnosed with cancer. They took out an over-50s plan with Royal London in a bid to help Liz cover the cost of Robert's funeral.
While the couple had been together for 18 years and lived together, they were not married. This means that, as Robert hadn't left a will stating that the money was supposed to go to Liz, it passed down to his estranged children. It meant Liz had to meet all the funeral costs.
Speaking to the Scottish Sun, Liz said: "Robert didn't leave a will because it was so quick. He just got worse very quickly. It was fast – but it was the shock mostly for us because it was unexpected. But unfortunately, it wasn't to be.”
Liz is now urging others to have a will in place to avoid being caught out, especially if you are living together as long-term partners but aren't married.
She continued: “I want to raise awareness that if you take out a life insurance policy and you are not married or left a will, you have no rights whatsoever. After living with my long-term partner for 18 years, it apparently counts for nothing. Common law is just a myth, you have no legal rights at all.”
The simplest way to ensure your life insurance payout goes to the right person or people is by making a will. Here, you can specify in writing how you would like your assets – including a life insurance payout – to be distributed when you die.
Another option is to ensure that you put your life insurance policy in trust. This is a legal document that lets you (the “settlor”) choose who certain assets are passed to on your death.
Read more about the benefits of trusts when it comes to life insurance.
Your pensions are likely to be one of the biggest assets you own. So, it’s vital that you take the right steps to ensure they pass to your chosen beneficiaries when you die.
While you can deal with other assets in your will – more of this below – pensions are not usually covered by your will. Your pensions will sit outside of your wider estate from both a will and Inheritance Tax perspective.
So, there is another step you must take to ensure your pension passes to the person or people you want. This is an “expression of wish” form.
Expressions of wish forms tell your pension provider how you would like them to deal with your pension when you pass away. While it is ultimately the decision of the administrator of the pension scheme how they distribute any benefits, they will take your wishes into account.
Pension providers will normally supply their own form for you to complete, requesting specific instructions as to how you want your pension to be distributed. You can split by asset or percentage of the overall pot. You’ll need to complete an expression of wish form for every pension you have.
For example, you might leave 100% of your pot to your spouse or partner.
It’s important to remember to regularly update your expression of wish form as your circumstances change – for example, if you:
- Get married or divorced
- Have children or grandchildren
- Lose a loved one.
If you don’t complete or update your expression of wish form(s), it can potentially have complicated and difficult consequences when you pass away. This could add to an already stressful situation for your loved ones who are already likely to be dealing with their grief.
The most straightforward way to ensure that your other assets are distributed in line with your wishes is to ensure you have an up-to-date will.
Despite the importance of this, Canada Life reports that 3 in 5 adults in the UK have not made a will – equivalent to 31 million people. That includes more than half of 55- to 64-year-olds.
If you die without a will, your estate will be distributed according to the rules of “intestacy”. This could mean that your assets don’t pass to the people you want them to – particularly if you are in a relationship and you’re not married or in a civil partnership.
If you are married or in a civil partnership at the time of your death, you die without a will, you have surviving children, grandchildren or great-grandchildren, and the estate is valued at more than £322,000, your partner will inherit:
- All your personal property and belongings
- The first £322,000 of the estate, and
- Half of the remaining estate.
If you are not married or in a civil partnership when you die, your children will inherit the whole estate. This applies however much the estate is worth. If you have two or more children, the estate will be divided equally between them.
We can help you to protect your loved ones
As you have read, there are a number of steps you need to take if you want to ensure that your chosen beneficiaries receive your assets when you pass away.
Life insurance is a valuable way of ensuring there is financial support available to your loved ones.
As life insurance experts, we can help you to find the cover you need, and to put the policy in trust for the benefit of your chosen heirs.
5 things science says can help slow the ageing process and help you to live longer
November 16, 2023
Almost half of those planning a funeral were “stressed by the cost” – here’s what you can do
November 9, 2023
Revealed: The 5 most important things you’ll consider when buying health and life insurance
November 2, 2023
Dementia – here are the symptoms to look out for and how protection can provide valuable support
October 26, 2023
2 in 3 adults worry about money – here are 3 useful ways to reduce your financial stress
October 19, 2023
5 easy steps to finding the right life insurance for you
October 12, 2023