Sometimes things in life can be so complicated - we like to take some of that weight off your shoulders. In fact, you might not recognise just how simple it can be!
Did you realise you may not necessarily need to take the benefits provided by your pension?
It may be possible to restructure your benefits such as:
- By not providing a dependants' pension you could increase the pension payable to you. This may be beneficial if you are single or your partner has a good pension of their own.
- Obtaining a level pension instead of an index linked pension may give you a higher income in the earlier years. This could be an advantage to those who do not expect to live more than ten years, for reasons linked to family history.
- Instead of providing a dependants' pension, it could be possible to provide a lump sum on death. This would be beneficial to those who do not have dependants but want to be able to pass wealth on to the beneficiaries of their estate.
Do you know what will happen to your assets after you die?
The laws governing what happens to the property of someone who dies without a will have basically remained unchanged since 1925. For example:
- If you have no formal partner your parents will inherit your estate. If you have no parents your brothers and sisters will benefit, if there are no brothers or sisters your grandparents will be beneficiaries, if you have no grandparents, your uncles and aunts will benefit and if there are no uncles or aunts, the Crown will inherit your estate!
- In Scotland things are slightly different. If you have parents and brothers or sisters, half of your estate will go your parents and half will go to your brothers and sisters. If you have no brothers or sisters your parents will inherit everything and if you have no parents your brothers or sisters will benefit from the whole estate. If you have neither, uncles and aunts will benefit, if you have no uncles or aunts, grandparents, or their brothers or sisters will benefit. The next in line would be remoter ancestors and if there are none, the Crown.
- If you have nominated your partner as the beneficiary of your death in service benefits and they subsequently die, who will benefit, your family or theirs?
Do you need life assurance to cover your mortgage?
Possibly not! Consider the following:
- If you do not have any financial dependants, do you really need life assurance? If so, do you receive the ‘death in service’ benefits from your employer that would meet these needs?
- If you live by yourself, in the event of your death your house will be sold and your mortgage repaid.
- If you live with your partner, do you need to be insured for the whole amount of the mortgage, or just your share?
- Reducing the amount of life assurance you have will save you money that can be used for your benefit, not somebody else's!
- For single people, critical illness insurance is probably more important than life assurance because in the event of suffering a serious illness, they will still need the house to live in.
You spend a large part of your life at work - do you have a strategy to make your money work for you?
- If you are unable to work due to ill health, state benefits are unlikely to be any more than £75.40* each week. Could you maintain your standard living and repay your mortgage on this income?
- The basic state pension is £90.70* each week. Could you live on this income when you retire? How much do you need?
- Inheritance tax is not a tax on the rich. If you have assets of more than £312,000* (which may include life assurance provided by your employer), your estate will be subject to this tax.
- Most new mortgages are for a term of 25 years. Why? Repaying your mortgages as quickly as you can could save £1000s in interest payments over the longer term.
- Wherever you place money there is a risk, whether from investment performance or the effects of inflation. What is the risk associated with your money at present and does this match your risk profile?
- Pensions are just a tax-efficient way of building up capital. What is the best way for you to increase your wealth for retirement?
Your home may be repossessed if you do not keep up repayments on your mortgage
For mortgage advice we charge a fee of 0.95% of the loan. This can be offset by any amount that we receive from the lender.
The FSA does not regulate some forms of tax and trust planning.
* Applicable to the tax year 2008/09