OK everyone, This one’s a bit serious. Following a couple of discussions elsewhere, Here’s a few thoughts for those of you in relationships, especially if you have children. This may seem a little morbid, but these are important things to consider.
1. Make sure you have adequate life insurance. Make sure both of your are covered on it. Even if one of you is the breadwinner, and the other a home maker, if anything happens to the home maker, the mortgage being covered makes life a whole lot easier for them at a difficult time.
Make sure there’s enough. You want any mortgage to be paid off. It would help to get any other liabilities covered too, and if there’s something left over so the breadwinner can have the choice to take a sabbatical so much the better. Don’t forget funerals are not particularly cheap. Having the money at least on the way makes it easier to handle.
2. Make a will. Make sure people know where to find it. This is particularly important if you are not married.
3. Talk to each other about what you want to happen. Buried or cremated? Religious service or not? If Cremated, what do you want to happen with your ashes. There are a LOT of decisions to be made quickly.
4. If you are not married, consider it (or a civil partnership). It doesn’t have to be a big flash wedding, but being married (or in a CP) brings on extra rights as well as changing where any estate goes if intestate. Being married may also bring extra entitlements, especially if you have children – Things like Widowed Parent’s Allowance or pensions. That can be a few hundred pounds a month. This and making a will are important, especially if there are children from previous relationships.
By all means decide not to get married, but make it a conscious decision, knowing some of the fuller implications.
5. Document your finances. Make sure you have a note of all your bank accounts, and any liabilities. That will make it easier for your partner or executors dealing with your affairs.
6. Even if you run your finances separately, it is a good idea to have a joint account with enough for a couple of months worth of bills in it (unless you each have that sort of money to hand). The insurance policy may take a little time to come through, and your partners accounts are frozen on their death. You only get access once you have a Grant of Probate or Letter Of Administration. You need to fully value the estate before you can apply for that. See note 5. If accounts turn up slowly, everything gets delayed.
7. Tallying up your bank accounts once in a while lets you see what your estate is worth. Don’t forget to get a reasonable idea of the value of your house too. This is very useful as there are two very important numbers to look at. The first one – £250,000. If you are married but intestate the first £250,000 goes straight to your spouse. Above that it starts to depend upon whether or not you have children or other surviving family. A Will of course sorts all that.
The other number of importance is £325,000 for inheritance tax. This isn’t an issue for passing to a spouse, but if something happens to both of you, it isn’t a tremendously high bar if you own a home. Add in insurance cover, death in service benefits from employment and it is easy to hit. Better to know and take advice an plan up front.