3 min read
The death of a loved one can be a difficult time for families, both financially as well as emotionally. It is important to be aware of the potential financial implications of bereavement, and where possible plan accordingly to avoid any further stress at what already can be a very upsetting time.
There are a number of immediate expenses that can arise from bereavement, such as funeral costs, travel expenses and legal fees. There may be ongoing costs associated with the estate of the deceased, such as mortgage payments or maintenance costs. Bereaved individuals may also suffer a loss of income if they are unable to work during this time.
If the deceased was the main breadwinner in the family, their death can have a significant financial impact. This is especially true if there are dependents involved, such as young children. Without proper financial planning, bereavement can cause serious financial hardship for those left behind.
Dealing with the affairs of an estate can be challenging, and it may be beneficial to seek professional advice and support to ensure that you are able to manage all of the financial implications of bereavement.
If you have not planned ahead and do not have life insurance in place, the burden of paying for the funeral and a potential Inheritance Tax Bill would fall on your loved one’s shoulders. This can be a very overwhelming prospect at a time when they are already grieving. There are a number of things you can do to prepare for the financial implications of bereavement, including:
Making a Will: This ensures that your assets are distributed according to your wishes and can help to avoid any disputes. You should seek legal advice to ensure that your Will reflects your wishes and is legally binding.
Designating a beneficiary: For accounts such as life insurance policies and pensions, you can designate a beneficiary who will receive the money in the event of your death. This can help to ensure that your loved ones are financially taken care of.
Making funeral arrangements: You can pre-plan your funeral or make arrangements with a funeral director. This can help to ease the financial burden on your loved ones at an already challenging time.
Having life insurance: This can provide a financial safety net for your loved ones in the event of your death.
Inheritance Tax (IHT): There are various ways to mitigate the amount of IHT. Working with a regulated wealth planner will help you to make smart financial decisions and have well prepared plans in place should the situation arise.
Setting up a Trust: There are many reasons and many circumstances where a trust might be of benefit. It is a relationship in which one or more people (the trustees) holds and manages assets for the benefit of one or more other people (the beneficiaries).
No one wants to think about their own death, but we should all be prepared for the potential financial implications. By being proactive and planning ahead, you can help ease the burden on your loved ones during an already difficult time.
Please note, The Financial Conduct Authority does not regulate advice on taxation, Trusts, Estate Planning or Will writing.
Please note: This article is for general information only and does not constitute advice. The information is aimed at retail clients only.