Dealing with finances and protecting your family’s future when your partner dies.
When your partner dies…According to the Women’s National Commission, an estimated 500 women become widowed in the UK every day. But when losing your partner is devastating for any woman, for those who suddenly find themselves dealing with the family finances for the first time, it can also be very frightening. The consequences of poor legal planning can be severe for married couples, and disastrous for unmarried ones.“There are still a lot of women, particularly among the older generations, who have spent most of their lives without ever making any significant financial decisions,” says Ruth Dolan, a Chartered Financial Planner.As an accredited Later Life Adviser and member of SOLLA (Society of Later Life Advisers), it’s a situation Ruth has come across many times.“Often, as was traditionally the case, men took on the responsibility of handling all aspects of the family finances,” she says.“In other cases, the husbands have taken full responsibility of the finances because they genuinely believe they are doing the best thing for their wife. Unfortunately, if he dies, their wife may feel utterly lost. It’s a daunting prospect for them when they have never had to deal with banking, let alone manage investments and savings.”For those who have never even had to deal with day-to-day budgeting, the prospect of sorting out their loved one’s estate can make an already emotional and upsetting situation even more daunting, particularly if there is no will or the estate is complex.“If your husband has always managed the family finances, you may be left totally unaware of what your financial situation is and how to cope,” says Ruth. “You’re suddenly faced with paying the bills, sorting out pensions and investments, and dealing with tax matters – all at a time when you are struggling to cope with your loss.”But as hard as it is to focus on finances when you are bereaved, it’s crucial to take proper advice to make sure you can manage and safeguard your family’s future.“It’s important you know where you stand in relation to income, taxation, savings and investments and any life policies that are in place,” says Ruth.“In the event of your husband’s death, your financial situation can change considerably. Your requirements may suddenly be very different so it’s vital that these are reviewed to make sure they meet your future needs.”In the short term, you could be entitled to certain benefits to help you pay for funeral costs, as well as allowances, one-off payments and other benefits. These could include a Bereavement Payment (a lump sum), or a Bereavement Allowance (a regular payment paid for 52 weeks from the date of bereavement).“Again, you should seek advice as soon as possible about your entitlements, as some benefits need to be claimed within a certain time,” says Ruth.It’s also important to sort out your spouse’s tax and National Insurance as soon as possible, since there may be tax to pay or even a rebate due. If both you and your spouse were getting the basic state pension when they died, you may be able to use their National Insurance contributions to get extra basic pension. You may also be able to claim money from your spouse’s personal pension scheme or life insurance policy, or be entitled to a War Widow’s Pension.In the long term, however, losing a husband’s regular income can leave you struggling to make ends meet on a single income. “Before you start dipping into savings, take a fresh look at your investments and aim to preserve your capital for the future,” says Ruth. “You may find that by simple restructuring of your investments you can generate more income.”It’s also wise to review your will when your partner dies to consider whether your wishes remain the same. It could also be that further inheritance tax planning is required if you haven’t considered this before.You should also think about what help is available when it comes to making financial, health and welfare decisions if you become unwell or lose capacity. In these situations, a registered lasting power of attorney would be invaluable.“It’s difficult to face all these issues at such an emotional time, particularly when you’ve never had to deal with financial matters before. But a sound strategy will help reduce the financial burdens and allow you to focus on what’s really important – coming to terms with your loss and hopefully moving forward,” says RuthStephen Pett, of The Probate Department Ltd says “Sound advice from Ruth – if you aren’t local to her, we know many professional Independent Financial Advisers so we can no doubt introduce you to a local one. When your partner dies it is crucial to get sound advice, especially if your advance planning has been less than perfect. We thoroughly approve of sound legal and financial planning – and you might even wish to read my ebook on the subject!! www.LegalPlanning.com For our free guide to Probate click what to do when someone dies. Bereavement help
