I'll never forget three women coming to speak to me, by chance one after another, after an Ideal Home Show talk. All were in their 40s-50s, all had lost their husbands in the last few months, and all were desperate: "I'm in dire straits, where do I start?"
Their partners had 'saved' them from dealing with the finances, but that kindness was now a curse, heaping financial misery on grief, leaving them unequipped for a future on their own. One, whose husband was will-less, couldn't access 'his' money to pay the mortgage. And this isn't a gender issue - it happens to all.
What I'm writing isn't pleasant, but is important. Ignore it and the potential financial and emotional cost to loved ones can be dire. So whether with parents or children, I'd encourage you to have the 'unpleasant issues' chat. Of course, don't frame it that way, but often being candid, blunt & unemotional makes it easier. And if there's the odd tear in the eye, carry on - it just means they love you...
1. FREE WILLS - you're going to die, protect your family. If you've assets such as a house, savings or a business, and people you'd like to look after when you're gone, consider a will. If not, as Hollie emailed: "Two years on I'm dealing with the fallout from mum not having a will. Please get a will." The gold standard is a solicitor-drafted will usually costing £100s, but right now:
- October is Free Wills Month (over-55s). Free Wills Month runs in over 50 locations across Britain (not NI), yet act quick as appointments are scarce. It's totally free for simple wills for single over-55s or couples doing 'mirror wills' (those that are nearly identical), where one is 55+. It's run by charities in the hope you'll leave them a bequest (something in your will).
- November is Will Aid month (all ages). Will Aid month runs across the UK. Solicitors give time in return for a suggested £95 donation (£150 for couples) to one of nine charities, eg, the NSPCC and British Red Cross. This is cheaper than normal. If you can't afford it, you can give less, but don't game it as it is for charity.
Far more help, options & guidance in our full Cheap and Free Wills guide.
2. Live together but not married? Get a will, a contract or tie the knot - your relationship means nowt in law. I don't care if you've been together 37 years and have 6 children, if you're not married or in a civil partnership, your relationship usually has no status under inheritance law. So if your partner dies, the other one may not get the house.
3. Dads, if you're not married, don't assume custody of the kids. Some unmarried fathers don't automatically have parental responsibility, which means if the mother dies, custody of the children may go elsewhere. To check and for help, see Who has parental responsibility?
4. One in three over-65s will develop dementia - a Power of Attorney is just as important as a will. I'm 44 - thankfully I can't foresee losing mental capacity, but I do have a Lasting Power of Attorney set up, in case.
Without a Power of Attorney, if you lose your faculties through dementia, a stroke or accident, sorting your finances is less clear-cut than if you'd died. Don't assume relatives can walk into the bank & access your money - not even to pay for your care, or the mortgage.
To take charge of your affairs, someone would need to apply via the Court of Protection - this is a hassle and costly. I've heard many nightmares, like forumite Norma, who said: My mum is now responsible for my dad, who has advanced dementia. It's a very long, intrusive and expensive process. She'll have to pay hefty yearly fees too. I just wish we'd managed to get Power of Attorney instead, when dad was more capable."
With a Power of Attorney, 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 come into effect if you're no longer capable. Full help & costs in Lasting Power of Attorney.
NB. There's also a Health & Welfare Power of Attorney for authority over your treatments, and a living will (officially 'an advance decision'), where you can refuse certain medical treatments if you lose capacity in future.
5. Are you hurting your partner by looking after the finances? Over 60% of couples say one person deals with all the home's money issues. If you're reading this, you may be that one. Yet, as I explained in the intro, if you were hit by one of the three Ds (death, divorce or dementia), it can be a disaster.
So why not create a financial factsheet naming all product providers - from roadside recovery to investments, boiler cover to bank accounts. Keep it somewhere safe, but don't put too many security details in, just in case. Then have a kitchen table briefing every few months to update and discuss. I'd love to know how you do it, via this financial couples tips forum discussion.
6. Is your house your only real asset? Don't leave it too late. Those in their 60s living in large homes with kids who've long since left the nest often plan to downsize "one day" to release money as they're asset rich, cash poor. But as time ticks on, I often hear "it's still a few years away" and then finally"we're too old to move".
It's usually far better just to bite the bullet early. If not, the main option is an equity release product - a way to borrow from your home's value while living there. However, interest rates of c.5.5% are far higher than many mortgages.
And more significantly, as it's usually paid from your estate or the sale of your house on death, you often don't make any repayments, which means that, unlike with a mortgage, you're subject to vicious interest compounding.
While I've never been a great fan, if you don't have dependants who need the money, equity release can work, but be careful. See equity release quick tips.
7. One in 29 children lose a parent before they grow up - are yours financially protected? It's a sobering statistic. I was one of them. It's why whenever friends who have children ask me "where should I save for their future?", I first check if they've got life insurance. It gets me a few funny looks, but it's worth it. Families already in dire unexpected grief can risk losing their income, standard of living or even their home if unprepared.
For most people wanting a fixed payout, the cheap and easy way is level term life insurance, which pays out a fixed sum if you die within a set term. Yet how you pay for it can make a huge difference.
Take a £200,000 level term policy to cover your kids until they leave full-time education, so 21 years. Buy direct and a 40-year-old smoker would pay £35/mth, but an often identical policy bought via an 'execution-only broker' can be as little as £23/mth, saving over £3,000 over the life of the policy.
And as the payout is fixed, and there's little argument over whether you've died, as long as the firm's legit, cheaper is better. Full help and best deals in our Cheapest Level Term Life Insurance guide.
NB. Beware over-50s' life insurance plans (eg, Axa's, famously advertised by Michael Parkinson) - they work in a very different way. For many these are a waste of cash. See my Beware Over-50s' Plans guide.
8. Want to pay for your funeral now? Even the most basic funeral can cost over £5,000 all-in. And if you want a more lavish send off, the costs can soar. So if you're worried about what kind of funeral you'll have once you pass, one option is to buy a funeral plan. Our brand-new Funeral Plans quick guide will take you through it.
9. Do debts REALLY die with you? It's often said that "when you die, your debts die with you". But it's a little more tricky than that.
If you owe more than your assets are worth, your debts do die with you (your beneficiaries will get nowt, but they won't be asked to pay the rest of the debt). But if you owe less than your assets are worth, anything you owe has to be paid first before any assets can go to your beneficiaries.
Even worse, if your inheritors are JOINTLY responsible for a debt (eg, a joint mortgage), they'll have to make up the shortfall and become responsible for the WHOLE amount. If you're concerned about the impact this may have, contact Citizens Advice or consult a lawyer.
10. Just to let you know, if someone close dies, we've help. If someone you know passes away, even if it was expected, it can be a very difficult time. To take the stress away, it's worth you knowing that we've a What to do when someone dies checklist, which helps you through the practicalities step by step, from how to register a death and check for a will to how to cancel someone's outstanding mobile contract or stop mail going to them.
This article first appeared in the MoneySavingExpert.com weekly email on 12 October.