How much money can be released without probate?
It is up to the executors of a will to handle the financial dealings of the deceased person. Often, this means they have to apply for probate in order to begin to settle their estate.
On being provided with the death certificate; banks, building societies and other financial institutions will automatically freeze the deceased’s accounts until probate has been granted – a process which can often take months or even years, depending on the value and complexity of the estate.
This can obviously cause problems when the undertaker needs to be paid and the inheritance tax bill settled, all before the funds in their entirety are released.
Until recently, banks allowed executors to access a certain amount of money from the late person’s estate, so that at least part of these bills could be paid. This amount usually ranged between £15,000 and £20,000, dependent on the institution. In recent weeks however, some of the more well-known banks have agreed to raise this limit, to allow more funds to be accessed which in turn, may help loved ones who are left with a financial burden.
Lloyds Bank has raised its limit from £25,000 to £50,000, whilst RBS has raised its limit from £15,000 to £25,000.
Whilst this may seem a great deal of money however, families are increasingly feeling the pinch when it comes to laying their loved ones to rest. With the average funeral now costing around £7000, growing numbers are turning to loans and other forms of credit, to pay the undertaker. It makes sense therefore, for adults to consider paying into a funeral plan whilst they still can, to ease the financial strain when they’ve gone.
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Top 5 tips when preparing for end of life
Let's face it, all of us are painfully aware that we must die at some point in the future. Not all of us are aware of roughly when this will be, but for those of us who have sadly been forewarned that it will be imminent, it's more important than ever to be prepared, so that you don't leave behind a web of uncertainty, mistrust and tension.
Here are our top five tips for preparing for end of life. Whether you are aware that you have weeks or months left, or whether you simply like to have your life in order, then follow our checklist to ensure that you minimise any stress, distress and financial pressure for your loved ones left behind.
- Write a will - it's important that you outline not only who you want to benefit from your estate and who you want to be in control of distributing it, but what you want to happen after your death. Remember to include details such as whether you'd like to donate your organs, whether you want to be buried or cremated and any specific aspects of the funeral service.
- Consider taking out a funeral plan – with funeral costs now running into thousands of pounds, many families are facing the financial burden of having to find the funds to give their loved one a decent send-off. For some, this has meant taking out extra credit, sometimes landing themselves in debt. By paying into a funeral plan now, you are actively assisting your next of kin whilst you are still alive – allocating funds which will help to pay for your funeral.
- Choose your executor - being an executor is a responsible job and the individual can be held personally liable if your estate isn't distributed correctly. You can select an individual, a number of individuals or an organisation such as a bank to be your executor, but it's important that you choose someone who is sensible, reliable and preferably experienced in handling legal or financial matters. Discuss your request with them beforehand to ensure that they are happy to take on the role.
- Discuss the contents of your will with loved ones – all too often and on an increasingly frequent basis, cases are being brought before the court, disputing probate. Family circumstances may result in children being omitted from a will or you may decide to leave your assets to a friend or charitable organisation, rather than to your family. Save your family the anguish, confusion and substantial legal costs of such court cases, by explaining your decisions to them whilst you are still alive.
- Document your passwords and collate all paperwork – probate can become a lengthy and complicated process if a significant degree of detective work needs to be carried out by your executor. Why not save them time and effort by placing all your affairs in order and telling them where they can find all the documentation they will need relating to online bank accounts, statements and other financial details, after your death.
Over half of adults have no funeral plan
Despite our recent post which revealed that funerals can lead to credit card debt, recent research has shown that over half of the adults in the UK have no funeral plan in place.
The research, carried out by Royal London, states that 59% of UK adults aged over 50 have no funeral plan to cover the cost of their funeral when the time comes, yet are not concerned about how their loved ones will find the money to pay.
Of course, it's easy to think along the lines of: "I don't care what happens to me after I'm gone". But when you consider that the average cost of a funeral now runs into thousands of pounds and that there may not be enough money in your estate to cover the fees, then you need to think about the stress and financial difficulty you could be inflicting upon the family or friends you love the most – hardly a great parting gift.
Around 64% of respondents did not in fact realise how much their funeral would cost, despite the many media reports about rising funeral expenses. Perhaps even more surprisingly, over a whopping third of those surveyed aged over 70, were not saving any money at all to pay for their funeral.
Do you think as adults, we have a right not to have to worry about finding money for other people in order to arrange a funeral? We say that we don't care about what happens to us after we're gone, but certainly, we wouldn't want to cause further grief and suffering to those we love. Given this information, are you intending to look at ways to support your loved ones financially after your death?
Funerals main culprit of credit card debt
It came as no surprise to read recently that funerals are thought to be the main culprit of credit card debt.
Annual spending on both credit and debit cards in the UK has now passed £0.5 trillion, with funeral costs clearly forming the largest credit card transactions.
According to research carried out by the UK Cards Association, spending using debit and credit cards rose by 6.7% between 2012 and 2013, with consumers spending around £520 billion on UK goods and services alone in 2013. Three quarters of all retail spending is now carried out using cards, of which there are thought to be just over 175 million within the UK.
Three of the highest value retail purchases and services were paying a tax bill (£838), "vehicle sales" (£359)and floor coverings (£353). However, the biggest spend by far was on funerals. Many of us choose to pay this expense on our debit or credit card, with the average amount shown to be around £1,114 – about a quarter of the normal cost of an entire funeral.
Although of course most of us now prefer to use cards on a daily basis to pay for goods and services – after all, it is much safer and easier than ensuring we're carrying enough cash at any one time, it saddens me to think of those who are forced to pay over £1000 for a loved one's funeral which they know they are unable to afford at that time. By adding the cost onto a credit card, they are of course simply adding to the interest and deferring the need to pay; but for some, this could be their only option in ensuring their friend or relative has a decent farewell.
A funeral plan can avoid causing unnecessary debt for those you leave behind. For further information on what funeral plans can do and how much they cost, simply contact a member of the IWC team.
I watched an interesting item the other day, featured on the Daybreak programme, which discussed how many people felt the charges for organising a funeral were excessive and how some companies in the industry were taking advantage of these people at a vulnerable time.
The feature went on to talk about how although on average, funerals tend to cost around anywhere up to £7000, there are ways to reduce this cost considerably, if you’re prepared to plan most of it yourself.
It may surprise you to know that hiring a funeral director to arrange everything is not a requirement, although at such a difficult time, most of us choose to hand over the funeral planning details to someone with experience.
We all have differing views on burial and cremation which may not even necessarily depend on our religion. It’s worth having the conversation now with your spouse, siblings and parents, to see whether they have any strong views, one way or the other. What should be bourne in mind is that a burial can cost substantially more than a cremation.
Whilst you’re having that conversation, why not also find out if they have any preferences with regards to a coffin? If they want to be cremated when the time comes, then buying an expensive coffin may not be a sensible choice if the budget is tight. Costs can vary widely, depending on choice of wood and accessories. If your loved one cares about the environment, they may even opt for a bio-degradable coffin, rather than an expensive wooden one.
Items such as flowers and stationery can also be bought quite reasonably, if you take the time to shop around.
Although it’s traditional to hold a reception of some kind after the funeral, so that friends and family can socialise, share their memories and pay their respects; remember that this doesn’t have to be held in a pub or other venue. Why not hold it in the deceased’s home or your home instead and ask close relatives to help out with the catering? In many cases, they’ll be glad that they can play an active part and it will give them something else on which to focus.
Finally, the last thing you want is to cause your family financial hardship and additional stress, to add to their grief when you’re gone. Why not do one last thing for them and plan in advance by paying small amounts into a funeral plan, so they don’t have to worry so much about budgeting for your funeral? For help with funeral planning please call us
With the average cost of a funeral now exceeding £5000 and rising by around 7% annually, it’s worth allocating money now to help with your funeral costs. By doing so, you’ll be sparing those left behind, the financial strain and unnecessary stress caused when trying to find the money to give you a decent funeral.
Confused.com carried out research which revealed that over the last five years, about 100,000 people have been given a pauper’s funeral, yet around 80% of us still have no savings or funeral plan in place for this eventuality.
Usually costing around £2000 – £4000 in total, with payments starting at about £34 per month, a funeral plan will often state that acceptance is guaranteed, and that medical or health history is required. One of the advantages of a plan such as this is that whilst funeral fees continue to rise by 7% per year, your funeral plan payment will often remain the same throughout the length of the term.
Additional extras can be added into your package, including your favourite flowers or readings, giving a personal touch to the proceedings.
Be careful to check the cover required, along with any restrictions, however. Some plans will ask for additional money to cover the distance travelled by the undertaker, cremation or your burial plot.