Unpleasant Issues – the 3 “D’s

The three Ds – death, divorce and dementia – are things none of us want to think about. Yet if you’re reading this you’re likely old enough to know life isn’t always happy and hassle free. So, cheery chap that I am, I want to encourage you to sit down and have the ‘unpleasant issues chat’ whether with your parents or children.

DementiaIgnoring this costs. Not just financially, but in hassle and emotion too, for you and your family. So, I plan to be candid and unemotional. Unpleasant issues happen and you need to plan. Here are four of the big ones;

1. Free wills – you’re going to die, ensure you minimise the impact on your loved ones

Die will-less and your affairs can be in limbo for years. So, whatever your age, if you’ve assets (e.g., house, savings, a business), and people you’d like to look after, consider making a will.
This is even more important if you live with your partner but aren’t married or in a civil partnership. Your partner has no status under law. If you die, they may not get the house or even the kids – even if you’ve been together 37 years and have 6 children.

Making a will, the right way, can be costly. For full help, see my cheap wills guide at www.mse.me/wills, which runs you through all the options.

However right now Will Aid month offers solicitor drafted wills (the gold standard) for far less than you’d usually pay. Go to the www.willaid.org.uk website to choose a local solicitor to book an appointment.

The solicitors give their time in the hope you’ll donate to one of nine charities, including Action Aid, NSPCC and the British Red Cross.

The donation requested is £95 (£150 for couples), which you can make online before your appointment. Print out the receipt and take with you to the solicitors. If you can’t afford it, you can give less, though don’t game it.

2. One in three over 65s will develop dementia.

I’m 44 – thankfully I can’t foresee losing mental capacity, but I do have a Lasting Power of Attorney set up, in case.

Without a Power of Attorney, if you lose your faculties through dementia, a stroke or accident, sorting your finances is less clear-cut than if you’d died. Don’t assume relatives can walk into the bank and access your money – not even to pay for your care, or the mortgage. To take charge of your affairs, someone would need to apply via the Court of Protection – this is a hassle and costly. I’ve heard many nightmares, like forumite Norma, who said: “My mum is now responsible for my dad, who has advanced dementia. It’s a very long, intrusive and expensive process. She’ll have to pay hefty yearly fees too. I just wish we’d managed to get Power of Attorney instead, when dad was more capable.”

With a Power of Attorney, you nominate a trusted friend or relative to look after your affairs if needed. This DOESN’T mean giving up control now – you can opt for it only to come into effect if you’re no longer capable.

You can set one up yourself by filling in the online form for England and Wales at www.gov.uk/power-of-attorney (£110 fee). For Scotland, it costs £74 (www.publicguardian-scotland.gov.uk), and for Northern Ireland it’s £115 (search on www.nidirect.gov.uk).

Yet if you’ve complex financial affairs I’d get a solicitor to set one up. It’ll cost around £700ish.
There’s good info on www.alzheimers.org.uk.

3. Are you hurting your spouse by looking after the finances?

More than 60% of couples say one person deals with all the home’s money issues. If you’re reading this, my guess is that’s you. Yet if something happened, it could heap financial misery on the grief. That’s because often the other partner is in the dark.

Too often people ask me: “My partner just died, I’m in dire straits, I simply don’t know where to start with the finances, what do I do?” Why not create a financial factsheet naming all product providers – from roadside recovery to investments, boiler cover to bank accounts. Then have a kitchen table briefing every few months to update and discuss.

4. Need cash from your house? Don’t leave it late

Those in their 60s living in large homes with kids who’ve long since left the nest often plan to downsize “one day” to release money as they’re asset rich, cash poor. But as time ticks on, I often hear “it’s still a few years away” and finally “we’re too old to move”.

It’s usually far better just to sell and downsize. If not, the main option is to use an equity release product. This is a way to borrow from your home’s value while you still live there. But with average interest rates at around 5.5%, they are far higher than most mortgages. And more significantly, as it’s usually paid from your estate or the sale of your house on death, you often don’t make any repayments, which means that, unlike a mortgage, you’re subject to vicious compounding.

Having said that, while it is more expensive, if you don’t have any dependents who need the money, equity release means you maximise the gain for your money.

My two main tips for equity release are:

A) Don’t just think ‘how much will we need for the rest of our life’ – as the sooner you borrow the more expensive it is, as it has longer to grow. So borrow what you need when you need it, and borrow more later if you have to.

B) Get advice before you do it. And only go for a firm that is a member of www.equityreleasecouncil.com – this trade body’s members at least promise your estate will never owe more than your house is worth.