Additionally, if a guardian is claiming child benefit for the child, they may be able to claim the guardian’s allowance of £20.40 per week, per child.
Questions to ask clients:
- Who would look after your children if anything happened to you?
- Would they be financially able to take on the role?
- What does their state of health look like? Are they healthy enough to look after the children until they turn 18?
Wills
It might not come as a surprise that very few adults in the UK have a will. In fact, Royal London’s recent research estimated that more than half of adults in the UK do not have a valid will.
It is a staggering number of people at risk of dying intestate, but we know people just do not want to think about it, or they think they do not have the time.
Why are wills so important when it comes to financial planning?
Where there is a will, a clients’ assets will not be subject to rules of intestacy: dying without a will means a client’s assets, which form part of the estate, will be distributed according to the rules of intestacy and could result in a very different outcome than the client would have wanted.
For families, the intestacy rules class ‘children’ as those only related to the client by blood or whom have been legally adopted, meaning step-children are not considered children and will have no automatic right to a step-parent’s estate should they die without a will. Children also inherit equal under intestacy laws regardless of their needs.
Clients can use a will to ensure they have control over their possessions. As well as naming who they would like to receive specific assets, a will can also, albeit less commonly, be used to name specific people whom they do not want to receive an inheritance.
It can include decisions about whether the client’s property should be held in trust for the children until they become adults, and whether the guardians should also be the trustees of the children’s fund.
Remember, that a will is also a great place to specify any guardianship arrangements for the client.
IHT planning is another key reason wills are essential in financial planning.
Any assets transferred between spouses and civil partners during life and on death are exempt from IHT. Clients may want to consider making certain gifts during their lifetime as a way of reducing the value of their estate.
Certain gifts made on death are also exempt from IHT, including gifts to charities and political parties (assuming they meet the eligibility criteria) and gifts for the national benefit, such as gifts to the National Trust or museums.
