Tidy Up The Paperwork before I Die.
Part 2 of Things to do before I die.
Tidy up the paperwork is something we all need to do (especially me!) But it becomes crucial in your final years. (And who knows when they will be!) Why is it so important to tidy up the paperwork? When someone dies, every single piece of paperwork will have to be checked carefully by your executors. Otherwise, they may miss vital documents or accidentally committing tax fraud. And you won’t be there to help.
Remember that your executors will have to swear an oath that the information they provide to the authorities is true and complete. If they get it wrong, tax penalties can double the amount of tax payable AND fine the executors personally. So professionals will be very careful, and family executors should certainly be careful. Just imagine the amount of time which will have to be spend checking that old bills have been paid, finding out if old savings accounts still exist and identifying which assets exist. It is quite common for executors to have several black plastic sacks of paperwork to examine in detail. That takes time and costs money.
Before I die: Tidy up the Paperwork of Family Records.
People are far more interested in family history than they used to be. Why not organise any old documents and photographs logically, with clear identification of the people in the photographs. Your children otherwise may have no idea who they are and just bin valuable family history documents. If you are trendy (my age is showing!) and do this online, make sure access is available to the next generation. If not, keep it in carefully labelled folders or boxes. We had a case where hundreds of thousands of pounds worth of assets were not found until after probate had been granted, and long after the deadline for paying Inheritance Tax. Advance organisation would have saved the problems.
Before I die: Do NOT tidy up the paperwork by throwing everything in the bin!
This is a really common mistake. Well meaning people tidy up all the paperwork by throwing it in the bin. This means that the executors have to recreate the information, potentially asking the banks to provide 7 years worth of bank statement to check. And that is just the start.
It is often the case that assets are not discovered until a statement comes through perhaps a year after the death – by which time the estate has normally been sorted. By this time the “lost” asset is effectively just added to the billions of pounds worth of unclaimed assets. If you are lucky, the letter finds its’ way to the executors who may then have to re-open the case, apologise to the Taxman and pay any fine HMRC decides to levy!
Before I die: How to tidy to paperwork.
- Keep a simple list of assets and their locations in a safe place. If you are a member of the Peace of Mind Service they can keep that for you, alternatively you can let your executors have up to date copies. In this digital age, many assets are never discovered because there is no physical evidence of their existence!
- Keep a list of gifts that you have made for at least the last 7 years and sign it off at the end of each tax year. There is a list in Inheritance Tax Secrets, but if Inheritance Tax isn’t a problem, you don’t need to spend the money, just make up your own list.