Estates: What do I do when someone close dies?

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Estates: What do I do when someone close dies?

Like most people, this is something that I have experienced personally on several occassions. Everyone says that when someone dies, “its a difficult time” – it is, but having just read a link from a follower on Twitter, clearly there are some organisations that are actually making life coping with death even harder. I’m fully aware that this is a morbid topic, invariably one that is met with humour, but of course it is deeply personal, highly sensitive and one that we all have to address.

Most of us do not get to time to organise our final farewells, but some do, this is perhaps the one of the few positives from a mortal illness or disease. However that doesn’t lessen the pain or the very real experience that “money” isn’t top of the to-do list. In fact in my experience with clients, “money” is never at the top of any “to-do” list. As you may know I like to draw connections with movies, I can only say that the WH Auden poem read at the funeral in “Four Weddngs and a Funeral” captures something of grief that few movies achieve.

Order, comfort and relief

One of the elements of service that a good financial planner brings is a sense of order to finances. Personally I favour simplicity and as people get older they tend to want less nuance, preferring something that is very easy to monitor and manage. Having your financial details available for you and your potential beneficiaries readily available is a genuine relief. Clarity of what you have, where it is and who needs to be spoken to is hugely undervalued. Just pause for a moment and ask yourself if you would value this now? who knows where all your important “stuff” is? Is it difficult even for you to remember what you have?

Reviewing your Will and ensuring that the Executors know their responsibilities (and can be helped with them) undoubtedly makes grief much less burdened by the practicalities of “the aftermath”. Its odd that only yesterday I was on a training day about Trusts – which when used properly can really help with estate planning, but naturally requires quite a lot of forward planning, but whether you need a Trust or not, the questions posed about your own death and how your estate and affairs are to be managed are applicable to most people. Whenever someone dies their estate needs “settling” which means giving an accurate account to all connected parties, including HMRC and the dreaded Probate and inheritance tax forms.

May I suggest that you read this personal article by Victoria Bischoff, a journalist at the Daily Mail who writes movingly and succinctly about the problems that she and her family faced despite her mother’s highly organised affairs. The link is here. I have been through the process personally and am aware of how what should be simple, becomes unnecessarily difficult.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Estates: What do I do when someone close dies?Dominic2023-12-01T12:40:11+00:00

Dementia – Suppose I Lose It

Dementia – Suppose I lose It

Radio 4 will be running a programme this evening at 8pm, which will be a highly personal view of dementia. It features a well-known married couple – Timothy West and Prunella Scales who are interviewed by their long-time friend Joan Bakewell. The preview this morning sounded enganging, expressing the very practical, personal and real problems that anyone suffering dementia can face.

Becoming infirm is not a topic that many people wish to talk about, yet it is, in my opinion a vital part of proper financial planning. After all, the job of a financial planner is the attempt to make your money last as long as you, ensuring that it doesn’t run out. Yet we all know that should we ever require care at home or in a residence, this can be incredibly expensive and is often referred to as a “ticking time bomb” within press and political circles. One of the scenarios that I model for clients is precisely this problem and of course there are implications for ensuring that not only your Will is up to date, but also that you have Lasting Power of Attorney in place.

The broadcast promises to be interesting and is on this evening at 8pm, Radio 4, called “Suppose I Lose It”. It will be available on the BBC i-player afterwards presumably for the usual time-limited period.

Dominic Thomas

Dementia – Suppose I Lose ItDominic2023-12-01T12:39:45+00:00

Another Bad Result for Footballers

2008: Pride and Glory – Gavin O’Connor

A news item that has just come to my attention is yet another Ponzi scheme. This time, it was one that appears to have been marketed to footballers based in the Midlands. The scheme is alledged to have offered monthly returns of 20% with capital guaranteed and able to be withdrawn at any time without notice. Sadly it appears that a number of people were duped by this.

Many will say, if the item is correct, that clearly this was a case of things being too good to be true and rather obviously so. However, for those that get bombarded by emails (and I had at least 3 bogus emails over the weekend which were not really from HMRC, Santander and Barclays) and are not familar with financial limitations, it is rather harder to judge what really is too good to be true – particularly when you consider that a Building Society offering a 5% deposit rate is also, frankly too good to be true.

This is precisely why you need someone like me to assist make sense of the huge array of Banks, Building Societies, Investment Houses, Stockbrokers, Hedge Fund Managers and so on, all willing to offer the answer to financial woes with “fantastic” products and services. The truth is rather different and often more complex than I would like. I work hard to reduce the financial mistakes that my clients would otherwise make on their own. This includes everything from having a proper Will in place to an appropriate investment strategy for your financial plan. The stockmarket or financial market is no place for pride, if you don’t understand something do not do it. If you want proper financial planning advice, get in touch – whether you are a footballer, movie star, business owner, member of parliament or anyone else. If I cannot help I will put you in touch with someone that can.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Another Bad Result for FootballersDominic2023-12-01T12:48:10+00:00

The Real Cost of Bad Advice

2009: This Is It – Kenny Ortega

The trial of Michael Jackson’s doctor has come to the conclusion that Dr Conrad Murray was guilty of involuntary manslaughter. The New York Times suggests that Dr Murray acted improperly for a qualified doctor and the prosecution in the case have suggested that his motives were somewhat suspicious.

Michael Jackson is one of those celebrities that generates a huge amount of media coverage, it seems that everyone has an opinion about him. Whilst the media will on occasion report how isolated some celebrities become, few really do much thorough analysis. His website has over 40m Facebook “likes”.

To my mind, it would appear that Michael Jackson was bereft of good advice. Quite apart from a bizarre personal life which like many other “icons” will continue to generate questions and supposition, by people that were not “there” and of course he is unable to answer any accusations. You might recall that Vincent Van Gogh experts Steven Naifeh and Gregory White Smith recently stated that they believe that Van Gogh did not commit suicide, but was accidently shot by two young boys and he didn’t want them to get into trouble. Anyway, it seems that Michael Jackson did not receive very helpful advice and there were plenty of people willing to help part him from his money.

It is somewhat shocking that a man that sold millions of records was $400,000 in debt at the point of his death, according to the New York Times. He was working on a new Tour which would help revitalise his career and reduce his debts. Apparently exhausted, he employed Dr Murray at $150,000 a month that’s $1.8m a year (remember Jackson was in huge debt at the time) as his personal physician. Dr Murray then dismissed his other clients (patients) and solely took care of Jackson. A problem surely – even to an untrained eye.

As a result of his death, record sales and tribute concerts have helped to swell the funds in his estate, The New York Times, puts this figure at $310,000 – still leaving a deficit of $90m by my maths. Somehow the estate has managed to pay out $30m to the beneficiaries (40% his mother, 40% his children and 20% to charity). I’m not clear how it is possible to pay $30m from minus $90m. Perhaps it has been helped by the huge reduction in overspending (estimated at $30m a year of overspending) and rising revenue from record sales.

I wonder what Michael Jackson might have achieved had he benefited from good advice and some great financial planning? Surely any good adviser would have challenged the sustainability of his spending patterns. Perhaps like many other celebrities, he was constantly told things he wanted to hear, rather than what he needed to hear and perhaps he ended up feeling unable to know who he could really trust. This is a real problem for those with significant wealth – when others depend upon it, their “advice” is perhaps less than entirely honest. A good financial planner will be very clear about their charges and their advice, importantly they need to be able to bring good news and bad. To genuinely care is to help protect you from yourself. This is a key part of what I do for clients and also embedded within my investment philosophy.

As for Michael Jackson, well he had something to say about isolation, the media and money.

They don’t care

They’d do me for the money
They don’t care
They use me for the money

DT

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

The Real Cost of Bad AdviceDominic2023-12-01T12:48:48+00:00

For better or for worse… the tax benefits of getting married

Tomorrow is the “big day” and whatever your views about the coverage and national celebrations, I’m sure that most of us would wish Miss Middleton and Mr Windsor the very best for their future together. So, given that we are all very much aware of a certain wedding, perhaps this is an appropriate time to reflect on some of the tax issues surrounding “tieing the knot”.

David Pointer of Open Tax Consultancy explains..

David Pointer, Open Tax Consultancy

Any transfer of assets between spouses or civil partners who are living together are treated as being made on a ‘no gain/no loss’ basis for Capital Gains Tax (CGT) purposes. This can therefore provide an opportunity to ensure that both spouse’s or civil partner’s personal tax allowances and basic rate tax bands are utilised efficiently, and allow assets to be transferred without an immediate tax charge. This also helps couples to make use of their CGT annual exemptions. For example quoted stocks could be transferred between each other, especially if only one of you is liable to higher rates of tax and the other is not. To work transfers need to be genuine with ‘no strings’ attached.

On the flip side there is a major capital gains tax disadvantage of being married or in a civil partnership. This relates to the principal private residence exemption. For CGT purposes a married couple or civil partners who are living together can only have one ‘main residence’. Where a couple have two properties which are used as residences, their main residence will usually be determined based on the facts and a CGT liability could arise on the sale of the second property. It is possible to submit an election within two years of acquiring the second property to specify which should be regarded as the principal private residence. This can then be varied at a later date as required.

For inheritance tax (IHT) purposes any gifts between UK domiciled spouses or civil partners during their lifetimes or assets left upon death to each other are usually not chargeable to IHT.

David also reminded me that …It is also important to note that marriage or entering a civil partnership invalidates an individual’s Will so once married new Wills should be considered. This is an excellent reminder to ensure that your Will is up to date. The highlighted links will open up my guide to Wills (not a personal guide to married life to the Prince, but how to prepare the legal document!).

Finally, let’s not forget that marriage is a legal contract, a couple enters into an agreement to share everything, including assets and liabilities as well as the bathroom! So with this additional responsibility, thought should be given to ensuring that adequate financial protection has been arranged, perhaps making sure that any employee benefit schemes are notified about changes to beneficiaries. Of course, it would be very sensible to have a proper financial review that takes account of joint priorities and any plans for a family. These all have a dramatic impact on financial planning and the sooner that they are discussed thoughtfully the better. Something, that I obviously do with clients.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

For better or for worse… the tax benefits of getting marriedDominic2023-12-01T12:51:24+00:00

Budget 2011: New IHT Rule

The Chancellor introduced an alteration to the Inheritance Tax rules in yesterday’s Budget. This will possibly help chairities with perhaps slightly larger gifts.

Example 1

Let us suppose that an estate is worth £800,000 and that the couple have died without using any other forms of tax planning. Prior to the budget the tax levied would be 40% of the balance above the nil rate band (with a couple, this is effectively doubled from £325,000 to £650,000) so 40% of the remaining £150,000. An IHT payment of £60,000 to HMRC. The balance of £740,000 would be paid to the beneficiaries of the Will.

The Budget states that if 10% of an estate is gifted then the tax liability would also reduce by 10% from 40% to 36%.

Returning to our example, an £800,000 estate, gifted £80,000 leaves a £720,000 estate (£80,000 to charity). Using both nil rate bands (£650,000) the taxable estate is £70,000 which would not be taxed at 40% resulting in a payment of £28,000 but 36% resulting in an IHT payment of £25,200. The beneficiaries of the Will inherit £694,800.

The only change in the rule is the reduction to the IHT tax from 40% to 36% as any gift to charity from an estate is paid tax-free to the charity and falls outside the estate for tax calculations.

Please note that the nil rate band of £325,000 per person is frozen until April 2015. However after this date CPI (Consumer Price Index) will be applied to the allowance.

Example 2

By way of another example, say a larger estate worth £10m and assuming that no other tax planning has been performed. Before the budget, the tax liability would have been £3.74m with the remaining £6.26m passing to beneficiaries of the Will. In the new Budget a gift of £1m must be made to charity leaving an estate of £9m. If this sum had been given before the Budget the resulting tax payment would be £3.34m following the Budget it is reduced to £3.006m a saving of £334,000. The beneficiaries inherit £5.334m.

Source: HM Treasury Budget 2011, p36

My Thoughts

I’m not sure how much headline this small change will create. In practice, it would be difficult to be specific about specific amounts of money given to charity as the estate would need to be valued at the date of death, so using the first example, if you had decided to leave your favourite charity £80,000 this may not actually be 10% of the estate. The value will fluctuate on a daily basis. So in order to take advantage of the new legislation you would actually need to amend your Will to make a provision to gift 10% of the net value of the estate to charity. This is perfectly possible to do, but of course may not take account of your family circumstances at the time. Only 1 in 7 people have a valid Will which in of course suggests that few people really plan ahead. So whilst, this is good news potentially for Charities, in practice unless you amend your Will few will see the benefit, unless you have already made a provision to give a sum that is probably substantially more than 10% of your estate. So if this is something that you wish to do (and remember IHT legislation does alter) you need to pay a visit to your Solicitor to review your Will. There is a guide to making a Will within the resources section of my website.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Budget 2011: New IHT RuleDominic2023-12-01T12:51:43+00:00

Ghost or Deadman Walking?

I wonder if you have seen the latest AVIVA TV advert for life assurance. For once, an insurer has not pulled any punches on the traditionally off-limits subject of death…or at least the impact of it upon a family.

Paul Whitehouse (Harry Enfield’s chum) plays the ghost of a father that has since departed, only obvious at the end of the piece. I don’t have any advantage in promoting AVIVA – its a decent advert and I reckon a pat on the back to their marketing team on this one. Not everyone has life assurance, fewer still have a Will, fewer still have an Enduring Power of Attorney… all rather important for anyone that has anyone else financially dependant upon them.

Here’s the advert. What do you think?

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Ghost or Deadman Walking?Dominic2023-12-01T12:52:16+00:00

The Price of a Stamp

Stamps have been regarded as a form of investment for some time, albeit alternative investment. There have been a number of articles of late in the weekend press about the merits of investing in stamps. As with any form of investment, please exercise due caution and I would suggest that any investor only ever makes investments that s/he understands well.

Stamp collecting is a hobby and relies on collectors. The price of stamps can vary considerably from the “list price” published in one of the many Stanley Gibbons guides. As with many forms of investment the value of some stamps has risen, but for many it has fallen.

A note of caution too – I learned of one avid collector that died and his beneficiaries neither cared about nor understood his passion for stamp collecting. The entire collection ended up in the “to the dump” pile. It was a collection worth many thousands of pounds.

Out of interest, the worlds most expensive stamp is currently the three-skilling yellow, printed in Sweden in 1855 and was the result of a printing error. Instead of printing the stamp on green stock, it was printed on yellow paper. In 1970, the authenticity of this misprinted stamp was questioned by the Swedish Postal Museum, but it was found to be genuine.

The stamp has not actually appreciated in its considerable value of $2.3m in 1996 when it was reauctioned this year for what is believed to be the same price. So when you allow for inflation, that’s a loss. I hope that the owner has this very small piece of paper insured.

So if you have been a stamp collector in the past, it may be in your interests to review your collection. Here’s the authority on stamps.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

The Price of a StampDominic2023-12-01T15:32:20+00:00

Guide for Making a Will

We have added our Guide to making a Will in the resources section of the website. Hopefully you will find this of use. Please feel free to share it with others.

The importance of a Will is nothing to be trifled with. I may be behind the news on this one, but today learned about the problems that Stieg Larsson’s death caused for his family and partner. You may know him as the Swedish author that has enjoyed success with his crime/thriller fiction, notably the Millennium Trilogy which were published after his sudden death in 2004. I understand that the Trilogy has sold over 27 million copies in 40 countries!

Unfortunately this posthumous success has resulted in a difficult situation for his surviving family. A Will from 1977 was found that was unsigned and therefore not valid under Swedish law. This Will left his estate to a branch of the Communist Workers League. It was found by his long-term partner Eva Gabrielsson who has no legal rights to any inheritance as they were not married (Swedish law) as it all passes to his father and brother.

As you might imagine, there are considerable sums involved and the dispute continues. This merely adds to the the body of evidence and experience that screams: “Sort your Will out!…. before its too late”.

It is estimated that only 1 in 7 UK adults has a Will.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Guide for Making a WillDominic2023-12-01T15:32:22+00:00