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Martin: It's time for a difficult conversation...
How to financially protect yourself & loved ones from the 3Ds - death, dementia & divorce

FREE wills | Inheritance tax | Power of Attorney | Funeral plans | Why 'I do all the finances' may hurt, not help

Deep breath everyone. Each year in this email, I try to encourage you to have an unpleasant but necessary chat. And it's that week, because the two big will schemes have opened up for bookings (though it's about far more than just wills). While it's understandable to want to avoid these topics, the knock-on financial & emotional costs of not engaging are worse, and...

...this isn't just for those with grey hair - anyone with dependants should be thinking about this.

Opening a conversation can be difficult, whether it's with aging parents, or the reverse - getting your adult children to acknowledge your situation is changing. Either way, with parents, a partner or children, planning matters - talk about wills, what you (or they) want to happen or have planned if you die, need care or get dementia.

Be candid, blunt & as unemotional as possible... though the odd tear in the eye is fine, it just means you love each other. To help, here's a mix of need-to-knows and a checklist of what to think about.

Sorting a will is crucial if you've got a house, savings, a business, or people you'd like to look after when you're gone. It means you get to decide who gets what. Without one, rigid intestacy rules dictate it and you don't have a say.

Plus as solicitors tell us, die will-less and it may complicate dealing with the estate, as Bee's tweet last week backs up: "@MartinSLewis My uncle died intestate in 2022 & it took 13mths for letters of administration to be granted. My parents left wills last year & probate took 8 weeks each - much simpler. I set my will up this year. I don't want to leave a mess for my sons."

The wills gold standard is for a solicitor to draft it, which normally costs £100s. Yet currently two charity schemes provide them for cheap or free (as long as your circumstances are relatively simple). Each works slightly differently, there are far more options in our Cheap & free wills guide.

• It's FREE WILLS month (for age 55+). Free Wills Month happens in October and March, each cover different locations. This month it's on in Liverpool, Manchester, Belfast, Birmingham, Bristol, Cardiff, Newcastle, Swansea & far more (see full list). If it's not on in your area now, the likelihood is that it will be in March.
  
  - A solicitor will draft the will for free.
  - It covers a single will for anyone aged 55+, or a 'mirror will' for couples where the wills are near-identical, as long as one is 55+.
  - You need to book your appointment by the end of October, though the appointment itself can take place after that.
  - It's organised on behalf of Age UK, Alzheimer's Research, British Heart Foundation, Marie Curie, Mind, Samaritans and more, in the hope you'll leave a bequest (money in your will) of typically £300 to £500 - it's not compulsory, but it is a charity scheme, so do it if you can.
  
  
• You can book now for November's Will Aid month (age 18+). Will Aid is a bigger scheme. It runs across the UK and is open to all adults. Here you're asked to make a suggested donation to charity for the will...
  
  - A single will has a suggested donation of £100.
  - A mirror will has a suggested donation of £180.
  - The donation's spread across 7 charities: Age UK, British Red Cross, Christian Aid, NSPCC, Save the Children, SCIAF & Trocaire.
  - If you can't afford it, you can give less, but please don't game it.
  - Will Aid is already open for bookings, which must be made by the end of Nov (but go sooner, as it books out), though the appointments can take place after that.

Solicitors will often store your will in a safe place for free - if you're using one of these schemes, check if that's an option (you can also store it at home in a safe place).

Already got a will? Check it's up to date, especially if you've married since. An out-of-date will is almost as bad as no will. It's important to note that in Eng, Wal and NI (not Scot), wills are often revoked when you get married, so you'll need a new one.

Warning:  Don't leave your pension to your ex

You CAN'T put it in your will, so ensure you've an up-to-date expression of wishes Die before taking your private or company pension, and the provider / trustees decide what to do with it. An expression of wishes (or nomination) form tells them your preference, it's not binding but usually does the job. Check you've done one and, if so, check it's up to date. There are horror stories out there from people who haven't. Here are just a couple of the large number of responses I've had when I've warned about this on social media... Dawn: "@MartinSLewis Pension expression of wish in ex-wife's name (divorced 14+ years ago). Pension provider found in my favour as his sole beneficiary. Ex-wife taking action via solicitor to retrieve money." Ruth: "@MartinSLewis My ex-stepdad did this, left everything to my mum even though they'd been separated for years. She is beautiful and kind though and gave every penny to his son (her stepson). Unfortunately, not everyone is quite as good-natured."

Unmarried couple? That oft means diddly squat in law! Get a will, a contract, a civil partnership or tie the knot. So you've been together decades and have a dozen children - in inheritance law, so what? If you're not married or don't have a formal civil partnership, your relationship usually has no status. So if your partner dies, the other one may not get the house (see joint tenants vs tenants in common).

That makes a will even more important here. There are also tax advantages to marriage, especially with inheritance tax and transferring assets from one to the other. It's also worth considering a cohabitation agreement, which spells out what happens if your relationship breaks down.

Who'd look after your children if you died? This is hard to write, and I'm sure hard to read. We all want to imagine we will watch our little ones grow up, but not everyone does. I'm one of those who lost a parent when still a child, thankfully not both though, but that happens too. So the grown-up thing is to think about it. There's a bigger briefing in what happens to my children if I die?, but in short...

If a parent dies, responsibility for your under-18-year-old children normally passes to anybody else with 'parental responsibility'. Mothers automatically have this, and fathers very often do, though there are scenarios where this isn't the case (if not, dads can apply for it).

If nobody is left with 'parental responsibility', they'll check your will for who you've named as legal guardians, so it's very important to do that. If not, the courts decide who takes care of your children.

Your socials & photos are an asset too - protect your digital legacy. There's no specific UK law on this, but you can grant individuals access to 'digital assets' in your will. This can include far more than social media - photos, videos, emails and so on. Find details in MSE Kelvin's digital legacy blog. Some have had to take legal action when a lost loved one hadn't specified access, so it's worth doing the basics...

1. List the digital assets you want to pass on, on paper.
2. Back up important files (on an external hard drive if possible).
3. Make a record of your decisions using a digital legacy template.
4. Add a 'legacy contact' on platforms that allow it (Apple, Facebook, Google) - you could append this to your will.

1. The vast majority SHOULDN'T worry about inheritance tax (IHT) as only one in 25 estates pay it. Only those at the higher end of the wealth scale are impacted by current IHT rules, as only about 4% of estates pay it (though many more fear it) - you'll understand why as you read down. For more, see our Inheritance tax guide.

An important inheritance tax & probate listen... To really understand this, take a listen to my Not The Martin Lewis Podcast via BBC Sounds | Apple | Spotify or other pod platforms, where I discuss with top specialists key IHT issues, including... IHT need-knows | What counts as your main residence? | How to pay IHT during probate | Gifting rules | Are trusts worth it?

2. Anything left to a spouse (married / civil partner) is EXEMPT. So you can leave whatever you want to them and there's no tax on it, but crucially this (and point 5) doesn't apply to those who are just cohabiting, no matter how long you've been together.

I've even been contacted by some people to say they got married after hearing me talk about this (let us know if you're one), while others have sadly found out through harder ways...

"@MartinSLewis My partner died suddenly two years ago - we were together 36 years, not married and no will. My children paid £97,000 inheritance tax. Luckily, several friends learned a lesson, and have now all either married or made wills. Don't get caught out like I did."

If you're anti-marriage, a civil partnership confers the same rights.

3. If your estate is under £325,000, no IHT is paid. You don't pay IHT on the first £325,000 of your estate (all your assets, including property, added up). So if that's you, IHT is not an issue.

4. This is boosted by £175,000 to £500,000 if you pass on your main residence to your direct descendants. That includes (biological / foster / step / adopted) children or grandchildren. So if your house and other assets are under £500,000, then IHT isn't an issue.

Though if your total estate is over £2m, you start to lose this extra £175,000 allowance (by 50p for every £1 over £2m - meaning if the estate's over £2.35m, you lose it entirely).

5. You can pass all your unused allowance to your spouse, so if you left them everything, they could leave £1m (including a house) with no IHT. As that's your £500,000 and their £500,000.

6. If it looks as if your estate will be over your total allowance, IHT is charged at 40% of everything above that. So if your estate is £1.3m including the house, and it is all passed to one spouse, then on to dependants, you'd pay 40% of the £300,000 above that, ie, £120,000.

7. If you look likely to pay IHT, giving assets/money away while alive can cut/cancel it. Anything you can comfortably afford to give out of your normal income is exempt from IHT (though proving it can be tricky). Plus there are a host of allowances, even if giving away from your capital (wealth). In general, the longer you live after giving it away, the better. For a full explanation, see gifting rules and/or listen to my IHT podcast.

If you die, you're gone, then it's about getting your assets to others, and while it's cumbersome, there's a process even if you're will-less.

Yet lose your faculties and financial issues are often more urgent, but less clear-cut. Who'll look after you? Who can access your funds to pay for YOUR living and care? Who'll ensure your money's still working for you if you're no longer capable? That's what a Power of Attorney (PoA) is there to fix, and why it's arguably more important than a will.

Losing faculties isn't just something that happens to the elderly. Accidents, strokes, early onset dementia and more may hit anyone. And younger people tend to have more separate finances - so it can be even tougher. I'm only 52 (I know, I know, I don't look it), have no reason to foresee losing mental capacity, but I've had a PoA set up since my 30s, just in case. Yet sadly I'm in the minority.

I did a poll on this on my X (Twitter), Insta, Threads & Facebook pages. In total, 51,000 people voted - of those, while 51% had a will, only 26% had a PoA - yet there are very few reasons not to have a PoA if you're in need of a will - so I'd urge more of you to look at this.

Of course, 41% had neither, and while some may not do it as they've no dependants or assets, let's be honest, many have just 'not got round to it'. Again, time to change that!

- A Lasting Power of Attorney (LPA) makes it easier for someone to take over your finances & financial decisions if you can't. Like many, I've felt the pain and horror of seeing close loved ones suffer the ravages of dementia. While there's little that can be done to stop it, a Lasting Power of Attorney (while not perfect) is one of the most important precautions.

If you were to lose your faculties, don't assume relatives can walk into the bank and access your money - not even to pay for your care, or the mortgage.

With an LPA, you nominate a trusted friend or relative to look after your affairs if needed. This DOESN'T mean giving up control now - you can opt for it only to be in effect if you're no longer capable.

In England & Wales: (See the PoA guide for Scot & N Ireland help.)

• You can DIY if you've simple affairs. The PoA form is available from Gov.uk. If you're good at this type of thing, it's worth taking a look at it to see if you feel happy and confident to fill it in without help (there's good assistance on the Age UK website).
  
  
• Feel unsure? Pay for someone to review it. Which? Wills* has a decent halfway house, where you fill in a questionnaire that it populates for you, then it is checked by a specialist paralegal within two weeks. This normally costs £99, but via this link, we've blagged it for £69.30 for you.
  
  
• The gold standard is to get it solicitor-drafted. If you've more complex financial affairs, I'd get a solicitor to set one up for you properly. It can cost from £300 to £700. See LPA help.

PS: Enduring vs Lasting Power of Attorney? In 2007, Lasting Power of Attorney replaced the older Enduring Power of Attorney (EPA) system, yet if you've an EPA from back then, it's still valid (though there are some differences).

- Without a Power of Attorney, it's the dreaded Court of Protection. To take care of someone's finances without a PoA, in Eng & Wales you'd need to apply via the Court of Protection (Scot: 'guardianship' at the sheriff court. N Ireland: 'controllers' by the Office of Care and Protection).

I've heard of far too many nightmare experiences - about both the time and cost, with people deeply regretting they didn't sort things sooner. It's hard to think of this route as anything other than hellish for many. As David tweeted:

"@MartinSLewis This is so important. My dad collapsed and suddenly was diagnosed with dementia. I had no LPA, so had to apply through the Court of Protection to access his bank accounts. It took nearly a year, and all the while his £2.5k care home fees had to be paid."

- There's a health Power of Attorney too. There's also a Health & Welfare Power of Attorney for your medical and daily care routine decisions, should you be unable to make them. Another option to consider is a living will (officially 'an advance decision'), where you can refuse certain medical treatments if you lose capacity. They're important, though not my expertise, but I didn't want you to think I'm ignoring them.

Does  looking after the finances  hurt your partner?

I've told this a good few times before, but it bears repeating. Three women once came up to me after a talk, all in their 40s to 50s. They weren't together, but one after another, each told me they'd recently lost their husbands and were desperate: "I'm in dire straits, where do I start?" Their partners had each hoped to ease their wife's burden by becoming the Chief Family Finance-doer. Yet that kindness was a curse. Doing it all for them loaded financial misery on to grief, leaving them inexperienced and ill-equipped for solo responsibility. One, whose husband was will-less, was struggling even to access 'his' money to pay the mortgage. This isn't about gender, it can happen in any couple, and could be dementia- or divorced-caused. So while I'm not against one partner being the Chief of Family Finance (no surprise, I am in my home), the real issue is doing it 'all', and the other partner saying: "I know nothing about the finances, they do everything". So I've three quick steps for the Chief Financier to do to help... a) Beginner's briefing. Sit down to do a beginner's briefing on the family finances for a partner who's not already involved. They may resist, but be blunt that this is so they could take over if needed (blame me if you need). b) Create a financial factsheet. List all product providers, from roadside recovery to investments, boiler cover to bank accounts. Keep it somewhere safe, easily accessible, but without too many security details in. c) Kitchen table catch-ups. Every few months, have a kitchen table briefing to update & discuss. I'd love to know how you do it, via this couples' financial tips forum discussion (and read others there).

The aim here is to lessen the impact on those left behind, so that grief isn't closely followed by financial tragedy. While quite a lot of the ground is already covered here, our 22 death-planning checks is a good one-stop checklist of some of the things to look at.

There's also our What to do when someone dies guide, which helps you through the practicalities as well as details of where to find support as you go through the grieving process, and our Probate DIY guide if you're the executor of someone's will.

• Funeral planning. Funerals are expensive, from a direct cremation at c. £1,500, to a bells and whistles burial service at £3,500+. So prepaying for a funeral plan (which beats inflation by paying for a future funeral at today's prices) saves your loved ones the stress of organising your funeral, and are the prepaid funeral sector's big sells. And leaving them notes about your preferences helps too.
  
  You will likely have heard many bad things about funeral planning, people being left in the lurch when firms collapsed and more. Well, they're probably true. Yet in July 2022, funeral planning became regulated, which helps protect your money and means you can take a complaint to the Financial Ombudsman. Our Prepaid funeral plans guide takes you through it, including plan providers.
  
  Yet do be aware plans often exclude things such as burial plots, headstones, flowers, embalming and wake costs, so there can be £100s or £1,000s more to be paid by loved ones. So you need to know exactly what's included in the funeral plan you're paying for.
  
  
• Think you / a loved one had a funeral plan but can't find it?  
  It's not uncommon for details of a funeral plan - the plan number, name of firm etc - to get lost or misplaced as the years go by. Thankfully, you can fill in a short form on the 'find my plan' tab of the National Association of Funeral Plan Providers (NAFPP) website. Almost all authorised firms are part of the NAFPP.
  
  If that doesn't work, I'm afraid you'll have to individually contact the remaining authorised funeral plan providers listed on the Financial Conduct Authority register.
  
  
• Important. Beware over-50s' life insurance plans. They work in a very different way and can be a waste of cash for many.

A PS about divorce: Having just finished writing this, I've realised I'm light on the divorce part of the 3Ds, though many of the sensible planning tips above will make that easier too. With that realisation, the team and I will be looking at putting some work into bolstering our help resources to cover divorce more in future.