No one likes to think of a future that doesn’t include them, but there are many ways you can organise your money to help your family after your death.
Planning ahead will allow family members to understand how you would like your affairs handled, should you become ill or die. Being prepared will give you the peace of mind that your loved ones are provided for. Easing the financial burden for family members after your death is the kindest legacy you can leave.
Put your affairs in order
It’s always wise to be well organised when it comes to your finances. However, it’s particularly helpful when you are facing old age. Inevitably, there is an increased risk of illnesses that could render it difficult for you to manage your money. In some cases, it may become impossible for you to deal with your financial affairs.
Organising your financial affairs doesn’t have to be particularly elaborate. The first step is to simply keep all your financial documents together, neatly filed and labelled. Another simple step is to keep a clearly written list of all your finances. This should include:
- Any sources of income you receive.
- Any outstanding debts you may have.
- Your spending month on month.
- Details of savings, investments or property you may own.
In short, keeping clear records of anything that will make life easier for someone picking up your financial affairs is a good idea.
Handing someone control of your finances
If you become too ill to manage your own financial affairs, then you may need to put in place a legal arrangement to allow someone to make decisions on your behalf.
This arrangement is called a ‘power of attorney’, and there are two different types:
- Lasting power of attorney – this gives your chosen person the right to manage your financial affairs for you on an indefinite, ongoing basis. Note that this term applies only in England and Wales. Scotland has a ‘continuing power of attorney’, while Northern Ireland calls it an ‘enduring power of attorney’.
- Ordinary power of attorney – this gives someone a temporary legal right to manage your financial affairs. This is used, for example, if you are in hospital for a period of time. A solicitor should be used to set this up, and it generally costs about £150.
If you subsequently become mentally incapacitated, a lasting power of attorney is still effective. This is not the case for an ordinary power of attorney. The former must be registered with the Court of Protection.
You must have ‘sufficient mental capacity’ to set up a power of attorney and it needs to be set up before you might need it. If you don’t have one, then it’s difficult and expensive for someone else to manage your finances.
Leave a will
If you die intestate (without leaving a will) then the law will decide how your assets are divided. This means that your money and estate may not go to the people you want them to go to. If you want to be in control of where your money goes, then you must draw up a will.
You can write one yourself, however, any small mistakes will render in invalid. It’s always best to get advice from a professional or solicitor. If you made a will and then got married, your will is more than likely invalidated and you will need to make a new one.
These measures can give you peace of mind as you face a period of illness, and will help your family and loved ones immeasurably at a time of deep stress.