I am a big fan of Blackadder and Lord Flashheart, played by Rik Mayall, is probably one of the best characters in the whole series. Here he is in typical pose in Blackadder Goes Forth:
Rik Mayall died suddenly in June 2014 and sadly did not leave a valid Will for his £1.2m estate. On average 40,000 people die each year without a valid Will and in such circumstances their estates are dealt with by the laws of intestacy.
These rules changed in October 2014 – click here to see a flowchart of what happens. I have borrowed this flowchart from Wright Hassall Solicitors (yes, that is a genuine name) and if you die without a Will that is exactly what you leave behind – a right hassle.
Just because you are married does not mean your surviving spouse will inherit everything. Far from it. As you will see, where a married parent, as per Rik Mayall, dies without a Will, a portion of their assets will go straight to their children, potentially leading to an inheritance tax liability.
Any tax charges could have been entirely avoidable with a Will which could, for example, have stated all assets are left to the surviving spouse.
Driven by my own personal experiences in the last 12 months, at Chatfield we now go through our Financial Fire Drill with clients so that they and their family are thoroughly well prepared in event of 1) death, 2) serious ill health and 3) an investment market crash.
Being thoroughly well prepared for death sounds more morbid than it actually is. It involves more than just having a valid Will and life assurance policies in place. Some of the other questions we ask are: where is the original Will kept? Do the executors know where it is? Do your [adult] children know where it is? If they are minors, do their guardians know what will happen? If you own a business, what do the Articles of Association say should happen on death? Can we have a copy please!
In preparing for serious ill health, firstly this might never happen. However, it involves more than just having an up to date Power of Attorney, critical illness and income protection policies. Similar to above, we ask: How long will your income carry on for? Do the attorneys know where your Power of Attorney is kept? Has it been registered? Do your [adult] children know where it is?
Can we have a copy! And so forth.
Thirdly, investment markets have fallen sharply in the past and I’m sure they will do so again. It’s just that nobody knows when! Some of the aspects we explain are that being prepared for this eventuality means carefully managing and also being aware of your exposure to the equity, bond and property markets and what has happened after previous crashes. You would be surprised how well markets have performed if only you have the patience and discipline to ride out the storm. In fact, a crash is a buying opportunity, but it is difficult to override your feelings at such times.
Have you done a Financial Fire Drill recently?