Nobody likes to think about their own death, but it may be important to consider some of the challenges your family could face when you’re gone. The “cost of dying” is on the rise and if you don’t put plans in place now, you could leave your loved ones in a difficult position.
Indeed, according to SunLife, the average cost of dying – including basic funeral costs, professional fees for administering the estate, and optional extras such as a wake – was £9,658 in 2023. This is an increase of 5% from the previous year.
Additionally, your family may have to navigate certain legal hurdles if you don’t complete crucial estate planning tasks while you’re alive.
Fortunately, it can be relatively easy to get your affairs in order. Read on to learn five practical ways to make life easier for your family when you die.
1. Write or update your will
A clear will is the basis of a good estate plan. If you die without a will, your estate is usually divided according to the rules of intestacy, and this could mean that your assets are inherited by somebody that you didn’t intend.
Typically, under the rules of intestacy, a spouse or civil partner inherits:
- All personal property and belongings of the deceased
- The first £322,000 of the estate
- Half of the remaining estate.
The rest of the estate is normally split equally between your children, if you have any. Otherwise, family members such as siblings or parents might inherit the remainder of your assets.
Unfortunately, in certain situations, these rules could miss out key people. For example, if you aren’t married, your long-term partner may not inherit anything from your estate.
If there is no will in place, your family usually has to apply to the courts for probate before they can administer your estate. This can be a lengthy and stressful process, made even more difficult at a time when they’re grieving.
Fortunately, you can make the whole process much easier by creating a will and setting out your wishes clearly. This also means your estate will be inherited by the people you intended.
You may want to create a Lasting Power of Attorney (LPA) at the same time as your will. This appoints one or more attorneys to look after your affairs if you are not able to.
An LPA could be valuable if you fall ill or have a serious injury, as it allows your family to access bank accounts and pay bills, manage pensions and investments, maintain your home, and make decisions about your care on your behalf.
Even if you already have a will and LPA in place, you might need to update them after significant life events such as having a child, marriage, divorce, or the death of an existing executor or attorney.
2. Make plans for your funeral
According to SunLife, the average cost of a funeral in 2023 was £4,141. This is a significant expense for your family, and planning a funeral can be a lot of work. So, you might want to prepare as much as possible while you’re alive to make it easier for them.
Set out clear instructions for your funeral in your will, so your family know exactly what you want your send-off to look like. You might consider putting money aside to pay for the funeral too.
SunLife reports that 70% of people do this, but only 54% of them leave enough to cover the full cost of the funeral. Bear in mind that costs are continually rising, and you may need to take this into account when deciding how much to put aside.
Alternatively, you could pre-pay for your funeral. Many providers allow you to plan and pay for everything now, so your family don’t have to arrange anything when you die.
Finalising the details of your funeral and taking care of the financial side of it now means that your loved ones don’t have to deal with potentially difficult decisions while they are grieving.
3. Review your protection needs
A lump sum payout from life insurance could help your family maintain financial stability after you’re gone. They could use it for funeral costs (if you haven’t already paid for it), pay off their mortgage, cover general living expenses, or contribute to their retirement savings.
In some cases, they could use the money to pay an Inheritance Tax (IHT) bill or other administrative costs associated with your death.
Ultimately, this means that your family are protected and they can continue meeting their short-term obligations and working towards their long-term financial goals when you die.
However, according to Mortgage Strategy, only 44% of households have enough life cover to protect their family, and this falls to 35% among those with mortgages.
Without adequate protection, you may leave your family in a difficult financial position, and they might struggle to deal with the administrative costs of your death.
As such, it may be a good idea to review your protection needs and ensure you have a suitable policy. If you need guidance here, we can help you understand your options.
4. Nominate a beneficiary for your pension
You can pass any remaining funds in your pension to your loved ones, but a pension isn’t covered by your will. In fact, your provider typically decides who they pay death benefits to.
Normally, you can fill out an “expression of wish” form to nominate your chosen beneficiary. While your provider doesn’t have to follow this instruction, they usually will.
Yet, if you don’t fill out an expression of wish or fail to keep it updated, your pension could be inherited by somebody that you didn’t intend. For instance, if you nominated a partner and didn’t update your expression of wish form after separating, they might still inherit your pension.
Your family may be able to challenge the decision if they feel it is unfair, but this can be taxing for them. It makes life much easier for everybody involved if you keep your expression of wish updated regularly.
You may be able to do this online or contact your pension provider directly to choose who inherits any remaining funds.
5. Gather important paperwork and create an ICE document
When you die, your family needs to find your will and administer your estate. They may also need details about bank accounts, investments, pensions, and protection policies so they can make all the necessary arrangements.
You can make the process much simpler for them if you gather and organise all this important paperwork ahead of time. You might also want to create an “in case of emergency” (ICE) document for them.
This includes instructions about what to do in the event of your death. It might give a full list of your assets, any important paperwork, and passwords or relevant information to help them access bank accounts, pensions, and investments.
You could also add directions about important people who need to be informed about the death, bills that need to be paid, and any other arrangements you can think of.
Discuss this with the executor of your will and other close family members, so they know where your ICE document is. It may be useful to check and update the document regularly to ensure all paperwork is recent.
By taking these practical steps now, you can make life much easier for your family after you’re gone.
Get in touch
If you want to get your affairs in order and ensure your family are looked after, we can help you.
Email enquiries@blackswanfp.co.uk or contact your adviser on 020 3828 8100.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, Lasting Power of Attorney, or will writing.
Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
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