Make a plan before it’s too late

As financial advisers we see the financial reality of what happens when someone dies without having made the necessary plans. You can however do it all for a relatively small amount of effort and modest cost.

This has been brought sharply into focus for me in the last couple of weeks as we have unfortunately just lost a client who died in his 50s with a wife and two young children.

So very briefly these are some of the areas you should review to make sure your plan is likely to work.

Will
The first step is to write a will. Remember for married couples, assets do not automatically pass to their spouse if there’s no Will.

If you are married and have children and your estate (excluding any joint assets) is worth more than £250,000, your spouse will only get the first £250,000 and a life interest (ie the right to take interest on the remainder, but not the capital itself) in half the remainder – the children get the rest.

If there are no children, the spouse would receive the first £450,000 and half the remainder.

Most dental practices are typically owned in just one of the spouse’s names and with no Will there’s no guarantee the spouse would receive the sale proceeds of the practice.

Life Cover
I’m also feeling slightly irritated as I write this as I have a client who’s expecting her first child next year and her husband has been quibbling over a £30 monthly premium to provide over half a million pounds of life cover so that in the event of his death she won’t have to leave the baby in childcare and turn up to the surgery every day.

Life cover has to be the cheapest way to provide financial stability for your dependants.

Trusts
If you do have any life policies make sure these are placed in trust, which either your solicitor or financial adviser can do for you. This makes sure that in the event of a claim the lump sum falls outside of the estate and is paid directly to the spouse. This not only helps speed up the payment process but can avoid the problems if there isn’t a Will (see above) as well as reducing potential tax bills.

NHS Nomination
If you work in hospital or as a NHS dentist in practice in the event of death your estate will receive a lump sum of two times your superannuable pay. If you’re legally married you don’t need to complete any further forms as your wife and any dependents will receive both this lump sum and any pension.

However if you’re not married or want various people to benefit you should download and complete the DB2 form. You can now nominate as many people as you like or, alternatively one organisation, such as a trust.

If you make the death benefit nomination in favour of your partner and want them to receive your survivor pension benefits when you die, you must also complete a 'Partner Nomination Form' PN1.

Dentists’ Provident
Many clients we meet are members of Dentists’ Provident and you can complete a nomination form for the first £5,000. Although this doesn’t actually fall outside the estate it can be very useful to provide a lump sum of cash without having to wait for any legal matters such as probate to be finalised.