This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
COVID-19 is now recognised by the Office of National Statistics (ONS) as the seventh leading cause of death in the UK. Thankfully, so far NHS hospitals have not been flooded in the manner widely feared at times earlier in 2020. Yet the pandemic is causing problems in other areas such as funeral services and – for the purposes of this article – probate, where families are waiting months for inheritance tax cases to be resolved following the death of a loved one.
In this article, our financial planners here at Elmfield Financial Planning in Padiham, Burnley, Lancashire offer this encouragement to people who are yet to get their estate in order – as well as some reflections on how to gather your thoughts on starting this process.
We hope you find this content useful. If you’d like to speak to an independent financial adviser then you can reach us via:
T: 01282 772938
COVID-19 & estate planning
In “normal” times, lawyers and local governments are often busy sorting through the legal process of passing on assets after someone dies. With the pandemic sweeping the UK since its arrival in early 2020, however, many people have passed prematurely – often without a clear estate plan or will in place, thus placed extra strain on an already long and complex process.
There is, therefore, a moral case under present circumstances for individuals to sort out their estate plan. After all, many surviving dependents are currently facing significant financial hardship as they wait for the deceased’s estate to be dealt with – often paying expensive bills (e.g. energy bills and mortgage payments) out of their own pockets in the meantime. Sometimes these payments can be deferred until the estate is fully administered, but this can lead to costly debts being accrued during the interim.
However, there is also a self-interested reason to consider approaching a financial adviser to sort through your estate in 2020. If you have loved ones who could be affected by a delay in the distribution of your assets (should you die prematurely), then now is a good time to start thinking about the matter. As of September, more than 8,000 cases of unclaimed inheritance have been recorded; a 20% rise over the last two decades. Make sure yours isn’t amongst them.
The benefits of estate planning
Estate planning might sound mysterious or intimidating, but it is an immensely rewarding process where you gain a sense of control over what you own and how it will be passed on. In fact, here are just five reasons to consider sorting through your estate – even putting COVID-19 aside for the time being:
- Gain more understanding. Could you be sitting on tens of thousands of pounds worth of assets without realising it? Is it possible that your property and possessions may be valued differently in the future, affecting your net worth? Going through your estate plan with a financial adviser helps you to gain a clearer picture of what you own, what it is worth and how these might grow/deplete over time.
- Mitigate inheritance tax (IHT). Do you know how much IHT your loved ones might need to deal with one day? What if there were ways to reduce or even eliminate this, leading to a much smoother process and a better legacy for them? That is often one result of the estate planning process.
- Plot your income sustainability. If you are planning to retire in the next 10-12 years, do you know how much income you’ll need to generate and how this may affect the value of your estate which will, one day, be bequeathed to loved ones? An estate plan can help you achieve the twin goals of establishing a comfortable retirement income whilst gaining an idea of what will be left to your beneficiaries.
- Give loved ones peace of mind. Sadly, millions of Britons refuse to discuss their will with their families. Sometimes this is justifiable, but if you have a good relationship with the people who one day will receive your estate, it can go a long way to help them prepare for the work involved with administering it later. This can also improve their own financial stability and peace of mind.
- Offer more support in the short term. Sometimes, one of the by-products of an estate plan is that you might realise you can afford to offer your loved ones more financial support in the here and now – rather than waiting until they receive an inheritance. This can be especially helpful to younger generations now within an environment of longer life expectancies, where they may have to wait longer for an inheritance to help achieve key financial life milestones (e.g. settling outstanding debts or repaying the mortgage).
Overall, there are powerful reasons to consider reviewing your estate at this important time – especially in light of the probate backlog caused by COVID-19. We hope this article has given you some incentive to start considering this, if you are yet to do so.
If you are interested in starting a conversation about your own financial plan or estate, then we’d love to hear from you. Please contact us to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
Reach us via:
T: 01282 772938