Getting your financial affairs in order

When you’re looking at later life planning, it’s important to think about how you’d like your money to be handled and how you would pay for essential costs in the event of your illness or death. Sorting things out now will help make sure you or your family are ready to meet any expenses that come up in the future and take the pressure off. This action plan will take you through the things you need to think about.

Deal with debts

It’s really important to deal with any problem debts before you tackle other money issues.

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If you’re facing a debt emergency

If you would prefer to speak to someone or you’re facing a debt emergency, such as eviction or enforcement action by bailiffs or sheriff officers, you can also get free confidential debt advice in the way that‘s best for you, online, over the phone or near to where you live.

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Review your budget

If you’re going to have to manage on a lower income, it’s important to look at your budget to make the most of your income.

Reviewing your budget is also an essential step if you have debts you need to deal with. This is because it will tell you have much money you have left to pay the people you owe money to (your creditors).

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Make sure you claim everything you’re entitled to

If you’re living on a lower income, you might be entitled to some benefits.  

Build up savings or get the right insurance

It’s really important to have some money set aside to deal with unexpected emergencies if you can. However, if you’re living on a lower or fixed income it can be harder to build up savings.

Reviewing your budget might free up some money that you could save in an easy access savings account.

Taking out insurance can also be a cost-effective way to provide anyone who depends on you with an income or lump sum if something were to happen to you.

Depending on what stage you’re at in your life, insurance could provide income protection if you were no longer able to work. Or you could arrange for a lump sum to be paid to dependants through a life insurance policy. 

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Use formal arrangements to put your affairs in order

Do you want to be absolutely sure that your money and finances will be taken care of if anything were to happen that would stop your ability to make decisions for yourself? Then the best way to do it is usually through a formal arrangement,

Formal arrangements are useful for everyone – but are really worth considering if:

  • your finances are complicated, or
  • the arrangements you need to make for people who depend on you are complex.  

The most popular ways to do this are either through power of attorney or a trust.

Power of attorney

A power of attorney is a legal document that lets you give one or more persons the power to make decisions, and manage:

  • your money and property, and/or
  • your health and welfare.

A power of attorney can help you with:

  • temporary situations – for example, you’re in hospital or abroad and need help with everyday tasks such as paying bills
  • longer-term situations – for example, you want to plan for the unexpected or have been diagnosed with dementia and might lose the mental capacity to make your own decisions in future.

Get informal help to manage your money

You might also need to think about finding someone to give you a helping hand with day-to-day finances.

Here are some examples of what this might include:

  • Help with paperwork – support to fill in important documents, or understand certain terms. For example, information about your bank account, tax, or benefit payments.
  • Help with meetings – someone to attend important meetings with you. For example, with a solicitor, financial adviser or benefits adviser.
  • Support with day-to-day spending - someone to help manage your money on a daily basis. For example, filling in our free Budget Planner, switching your gas or electricity provider to get a better deal or drawing out money for you if you can’t get to the bank.

You might be able to organise some of these things yourself by rethinking how you manage your money.

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Plan for long-term care costs

Few of us can afford to pay the high cost of long-term care out of our day-to-day income. So thinking ahead about what you would do if you needed long-term care is a good idea.

It’s hard to think about something that might not actually happen. But very often, care decisions have to be made by family. These are often unplanned because no-one had the conversation before help was needed.

If this were to happen to you, it might mean your wishes might not be taken into account or your money could have been used more efficiently to pay for your care.

A good place to start is to find out how much government-funded care you would be entitled to in. This means you can then work out what the shortfall might be, and what the options are for planning ahead.

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Write a will

A will makes it much easier for your family or friends to sort everything out when you die. Without a will, the process can be more time-consuming and stressful.

If you don’t write a will, everything you own will be shared out in a standard way defined by the law – which isn’t always the way you might want.

A will can help reduce the amount of Inheritance Tax that might be payable on the value of the property and money you leave behind.

Writing a will is especially important if you have children or other family who depend on you financially, or if you want to leave something to people outside your immediate family.

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Reduce your tax bill with good inheritance planning

Only around one in 20 estates are large enough to incur Inheritance Tax (IHT).

You usually won’t have to pay it if:

  • the value of your estate is below the Nil Rate Band (NRB) of £325,000
  • you leave everything above the threshold to your spouse or civil partner, or
  • you leave everything above the threshold to an exempt beneficiary, such as a charity.

Any part of your estate above the NRB threshold might be liable for tax at the rate of 40%.

If you think this might affect you, you’ll need factor this tax into your plans when you make your will.

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If you have to retire early due to illness and disability

Sometimes, the future we imagined for ourselves doesn’t quite happen as we’d hoped.

Having to stop work early because of illness or disability can mean you have to reassess your finances, and readjust your spending and planning for the future.

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Plan your funeral

Funerals can be expensive. But there are ways you can keep costs to a minimum and plan ahead so your family or friends don’t have to worry about finding the money at a stressful time.

There are several ways to pay for funerals upfront, but you’ll need to think about the pros and cons of each one:

  • You can put money into an easy access savings account earmarked for funeral expenses.
  • With a pre-paid funeral plan you pay a lump sum or instalments to a provider who invests the cash and then uses it to cover the costs of a funeral you’ve chosen. Check the terms and costs of funeral plans carefully – they’re often poor value compared with a straightforward savings account.
  • If you have life insurance, check whether there are extra benefits if the proceeds are used to cover funeral costs. Make sure the proceeds are written in trust so they’re easily available after your death and don’t form part of your estate.
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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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