Estate Administration Service

Tidying up your affairs

Six actions you can take now to tidy up your affairs in order to make your life simpler and the administration of your estate, when it eventually comes, more straightforward.

26th May 2021

1. Review any directly held shareholdings

Directly held shareholdings, especially if they are small, or holdings in foreign companies cause a disproportionate amount of work for executors.  These could be sold now, transferred to a nominee service, or given away to charity.

2. Open a joint bank account with an executor

For those who don’t have one already opening up a joint bank account with an executor now, so that there will be funds available after death to meet costs of the estate, for example, death certificates, ongoing property costs, clearing small liabilities etc can be very helpful.  Generally, banks will only release funds from sole accounts of the deceased for funeral and Inheritance Tax costs until probate is granted whereas for joint accounts the bank will simply need to see the death certificate.

3. Think about your personal possessions and who these should be passed to

It’s common for Wills to leave them to the Executors to be distributed in accordance with any list prepared – is there a list?  Have you considered whether any items are of value? Perhaps list these separately as it can be difficult for Executors to know whether a professional valuation of possessions is needed. Have you asked your family if there are any pieces that have sentimental value and they would like to receive after your death?

4. Create a list of accounts and choose a way to store the logins and passwords securely

In a world where more and more information and services are supplied online, what about store accounts and reward cards, PayPal or other online accounts or subscriptions.  Again, putting together a list of these to hold with the Will could prove very helpful. This can cause problems with data protection and certainly lists of usernames and passwords shouldn’t be left around your home. Increasingly ‘password managers’ – which are online services or apps that securely hold your passwords are allowing you to nominate a beneficiary. In the event of your death the beneficiary can produce the death certificate and then the service will allow them to change your passwords and deal with online companies. This is also something that is being brought in for social media – for instance Facebook allows you to nominate a legacy contact who, after your death, can either permanently delete your account or look after your memorialised account.

5. Consider payment of any Inheritance Tax liability

If it’s likely that Inheritance Tax may be payable, try to ensure there are sufficient liquid funds to settle this, or provision made separately perhaps via an insurance policy held in trust. Most banks, NS&I and some investments can be used to pay HMRC directly, however certain assets, for example direct shareholdings, can’t be accessed until probate is granted, but probate can’t be granted until the tax is paid.  It can be possible to borrow the funds but depending on the amounts involved this can be difficult to arrange and costly.

6. Keep a record of gifts made

Record keeping is a very key element in estate administration, especially in respect of gifts made during your lifetime and claiming transferrable inheritance allowances from a deceased spouse. For gifts, it’s important to keep a record of gifts made, of cash or assets to individuals or trusts and in the case of trusts, it can be necessary to have records for the previous 14 years. There are a number of exemptions available for gifts and if full details are kept, it allows flexibility in how these are claimed.

One of the very valuable exemptions for gifts is a claim that gifts have been made out of surplus income. In order to claim this relief, details of your annual income and expenses for up to the previous seven years would need to be presented on the Inheritance Tax form and it’s much easier and more efficient to compile this information each year, rather than Executors or professionals trying to reconstruct a picture from seven years worth of bank statements, without being able to ask for clarification!

Your Old Mill Financial Planner will be able to help you with ensuring your affairs are organised as efficiently as possible, or alternatively, click here…