In recent years, we have learned just how important it is to arrange a will and all our finances at an early age. In years gone by, we would not plan for death at all and this would lead to a number of problems which we will show to you now. If you haven't yet taken action towards planning your finances or what will happen when you pass away, keep reading because you might just pick up some valuable information.
Power of Attorney - Firstly, leaving it so late can be dangerous because you might reach a stage where you can no longer make decisions. Due to a physical or mental illness, you might be in a position where your finances are taken out of your hands. If you don’t feel comfortable or are unable to make decisions because of an illness, it might be worth arranging a power of attorney so your finances are looked after. Once this has been set up, the power of attorney will arrange your finances and make decisions for you.
Tax - Nowadays, money left to a loved one or relative is subject to all sorts of taxes and other costs. If you really want to leave money to a loved one, you will want to do so as soon as you can otherwise they face losing a large chunk to the tax man. Dealing with a terminal illness or the fact that life could come to an end soon is extremely tough; however, failing to deal with it will see a significant portion of your estate go to hands you don’t want it to go to.
Inheritance - Many choose to gift money to their family before they die but, unfortunately, this isn't immune from taxation. In fact, gifts that are made within one year of a death are generally considered ‘inheritance’ and will be subject to tax.
Power of Attorney’s Powers - Finally, it should also be noted that not all power of attorneys are allowed to make gifts to themselves which is something else you will have to look out for. If you set your only child as your power of attorney, they may be limited as to what they can do when it comes to rewarding themselves as this helps to prevent fraud and money-making schemes. When setting your POA, it is important to read the small print.
As you can see, deathbed planning causes problems but it still happens far too often. If you want to avoid the stress and have everything in order early, why not look into financial planning as soon as you can? Whenever you get a spare bit of time, make the first step and contact a financial planning professional. As much as we don't like to think about it, life could strike us down at any moment so be sure to get your finances in order today!