Bereavement planning: helping those you leave behind

Losing a loved one is never easy. Alongside the emotional impact, you are often faced with a long list of financial and administrative responsibilities, at a time when you are least ready to act.

It’s an issue receiving growing attention and many referring to it as ‘deathmin’ or ‘sadmin’.

Why bereavement planning matters

Industry regulator the Financial Conduct Authority (FCA) recently announced a review into whether investment firms are doing enough to support bereaved customers, highlighting that many people continue to experience delays, confusion and poor communication following the death of a family member.

Hopefully this will see improvements across the process.

While no amount of planning can remove the pain of bereavement, putting the right arrangements in place can make life significantly easier for those left behind.

A bereavement planning checklist

One of the most valuable gifts you can leave your family is organisation.

To help with this, here is a simple checklist of things to consider that can really help your family at a difficult time:

• Keep your Will up to date
• Review your pension death benefit nominations regularly
• Let family members know where important documents are stored
• Keep contact details for your financial planner, solicitor and accountant in one place
• Record any gifts made during your lifetime for inheritance tax purposes
• Consider completing an “After I’m Gone” document to help loved ones understand your affairs and wishes
• Where appropriate, discuss your plans with beneficiaries so there are no surprises later

The Government also has some useful guidance for bereaved relatives which outlines the main responsibilities they face.

Why professional financial advice can help with bereavement planning

When someone dies, family members often have to navigate a range of financial matters, including investments, pensions, protection policies and inheritance tax considerations.

Working with a financial planner and solicitor can help ease the burden at what can be an overwhelming time.

As financial planners, we can help beneficiaries understand their options, liaise with providers and explain the implications of decisions before action is taken.

Ideally, if we can have these conversations with loved ones whilst they are still alive, it helps when the time comes.

They will be familiar with us, and this can help ease the process, as well as providing some valuable peace of mind that things will be taken care of.

We and other professionals are experienced at dealing with these issues sensitively and we always look to put the people before the paperwork.

How different assets pass to your beneficiaries

Not all assets pass on in the same way. Here are some of the main assets which your beneficiaries may received – and how they receive them.

Life insurance

Life Insurance can provide valuable financial support to beneficiaries at a difficult time.

Depending on how a policy is arranged, the proceeds may be paid directly to a named beneficiary, into a trust, or to the deceased’s estate.

Policies written under trust can often be paid more quickly and may not form part of the estate for inheritance tax purposes.

In cases such as this, it is important to ensure policy trust deeds are in place and up to date.

Individual Savings Accounts (ISAs)

ISAs can often retain valuable tax advantages for a surviving spouse or civil partner through Additional Permitted Subscription rules, but those benefits are not available to other beneficiaries.

The ISA funds pass to these beneficiaries without the tax efficiency associated with ISAs.

Pensions

Pensions usually sit outside the Will and are typically distributed according to death benefit nominations and scheme trustee discretion. Keeping nominations up to date is therefore extremely important.

Usually, inherited pension funds can stay within a pension environment.

Offshore bonds

Theses can have different outcomes on death depending on ownership arrangements and the lives assured.

Business Relief and Trusts

In the case of these assets, it is important where inheritance tax planning has been undertaken that beneficiaries understand how these assets are treated following death.

Understanding how these assets work can help beneficiaries make informed financial decisions during a difficult period.

Understanding Inheritance Tax (IHT)

Inheritance tax is already a major consideration for many families and proposed changes that bring pensions into scope for inheritance tax from April 2027 are likely to add further complexity to estate planning.

This makes reviewing existing arrangements and seeking professional advice more important than ever.

How a financial adviser can support your family with bereavement planning

Whether you’re planning ahead for your family or facing the responsibility of administering an estate, our role is to provide guidance, support and reassurance when it’s needed most.

For more information on how we can help, get in touch with an adviser today.

Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.