February 1, 2023
No-one who has lived through the last two or three years would argue that uncertain times can have a big impact on family finances. Whilst recent events have shown us that we can’t predict what life is going to throw at us, we can take steps to make sure that the impact on family finances is minimised.
This point in the year is a good time to review your protections, make sure your Will is up-to-date and pay some attention to estate planning.
At Talis IFA, we usually advise our clients to consider these three steps to protecting family finances:
There is no ‘one-size-fits-all’ protection solution, so seeking professional advice is important when considering the right products to take care of for you and your family’s needs and ensure that your finances remain secure in the event of sudden illness or death. Getting the right protection in place can be a lifeline when things are difficult – meaning that at least you or your loved ones don’t have to add financial worries to your burden.
A life insurance policy is one of the most important types of protection to have in place. It pays out a lump sum if you die during the duration of the policy, helping your family to pay off any debts, maintain their lifestyle or cover any other expenses.
Critical illness cover can also provide valuable financial protection in case you are diagnosed with a specified serious illness while your policy is active. This type of cover will pay out a tax-free lump sum if you are diagnosed with an eligible condition, allowing you to concentrate on getting better without having to worry about bills piling up.
Income protection is also worth considering when developing your financial plan. This type of cover provides regular payments should you become ill or injured and are unable to work. This can help you cover your regular outgoings, such as mortgage payments or rent, while you recover.
Having a Will is essential for making sure that your wishes are respected and carried out after you pass away. It ensures that your money and other assets go to the people and causes you care about, such as relatives, family friends, charitable organisations, etc. It also provides you with the opportunity to appoint guardians for any children in your life, so they can be looked after by people you know and trust.
If you don’t have a Will in place when death occurs, then the rules of intestacy will be applied to distribute your assets and possessions according to legal guidelines. So if you die intestate (without a valid Will), things might not happen as you would have wished. Ideally, you should get professional advice on how to make your Will, especially if your wishes are complex or you have a complicated estate. The right professional advice and guidance will give you the peace of mind that comes with having your affairs in order.
Creating an estate plan can make a significant impact on the financial futures of your children and grandchildren, and it’s not just for the super-wealthy. Rising house prices and the freezing of the Inheritance Tax (IHT) nil-rate band until April 2028, could mean that your estate incurs inheritance tax that you might not have expected. There are things you can do though, to keep more of your money in your family’s hands rather than the tax man’s – from making lifetime gifts to utilising pensions and trusts.
It’s best to seek professional financial advice, as the different options and rules can be confusing, and change over different tax years.
By talking and listening to you, to understand what you want to achieve for your family after you’re gone, we can help guide you as you build a comprehensive estate plan, leaving you with the peace of mind that your family is well-protected and their financial futures are secured.
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