As the end of the year approaches, many of us reflect on the last 12 months and look ahead to what is to come. For some, it will be a time of optimism and opportunities. For others, it might be a time to start thinking practically about making sure your affairs are in order.
It is not just old age that triggers such thoughts. Any diagnosis of a serious illness can be followed by a maelstrom of medical treatment, deep emotions and feeling unwell. If there’s a sombre prognosis – when the disease can be treated but not cured – or it’s clear that you may have limited time left, someone may suggest that you ‘put your affairs in order’. But what does that actually mean, and how do you do that while coping with everything else?
If your illness is life-limiting, you may have thoughts about your ‘bucket list’ (things you do for your own enjoyment or experience, or to create memories for your loved ones) or your legacy (something you’ll do for others). Some want to plan their funeral, too. Most people find it difficult to talk about death, but your family and friends will love helping you with these things, if you want them to.
If you’re thinking about philanthropy, that might mean choosing one or more charities to support now, through gifts, sponsored activities, or fundraising; or charities to support through legacies in your will. Others might want to have an event, such as a one-off or annual sports match, which could also be used to raise money for charity.
You might even create your own charity for a cause particularly close to your heart, like Nick Hungerford, an entrepreneur who set up the investment house Nutmeg. He used his skills after his terminal diagnosis to create Elizabeth’s Smile, a charity for children like his daughter, Elizabeth, who have lost (or will lose) a parent or close family member in childhood, focusing on resources to help them with their grief and loss. Your own experience often spurs a desire to help others in the same position.
A common misconception when getting your affairs in order is that, if you don’t make a will, everything goes to your spouse anyway under the intestacy rules, but (in the UK at least) that’s not true. It’s generally divided between your spouse and children, which may make things difficult – especially if you have an unmarried partner or young children.
If you’ve already got a will, you might think that box has been ticked. But here’s a thought – when people make a will, normally it’s quite a theoretical exercise (‘If I died, then I would want…’). If you’ve been given a significant diagnosis, that becomes more concrete: ‘If I do die, then…’ or even, ‘When I die, then…’ With that perspective, does your will actually do what you want?
These ‘normal’ wills often make provision for children or grandchildren who are now young, but might be adults by the time it takes effect. The will is a guessing game of what might be the right amount and the right age for them to inherit, not knowing how they might turn out. You might choose your spouse/partner and a friend or relative as executors, and leave legacies to family members, your old school or a favoured charity.
But when you know, or have a risk, that your life span is limited, you may see all of this differently. What does your spouse or partner need? This is both a practical and a financial question. He/she may want to be involved in administering your affairs if you die, but for some people, it would be too much in a time of grief – could you choose different executors, and just have them consult your spouse/partner? If your children or grandchildren are young, and will still be when you die, you might prioritise your spouse’s financial needs, or provide differently for the young, mindful of their actual current needs. Legacies to others might seem less (or more) important.
Remember, too, that a will is no place to send a message. If you have something you want people to know, don’t do that by giving them more, less or nothing in your will. In the pain of losing you, your family doesn’t need the burden of a dispute.
Power of attorney
Normal life doesn’t stop when you’re ill. How much do you want or need other people to run your affairs on your behalf during your treatment?
Powers of attorney ensure that someone can sign documents, operate your bank account, and so on if you don’t feel up to it. However, a normal power of attorney can’t be used if you’re in a coma or lose mental capacity – the attorney can only do what you could do. The UK is among many countries with a specific power of attorney (a Lasting Power of Attorney) which will remain effective, even if you lose capacity. In many countries (the UK included), your family can apply to the court for an attorney or guardian to be appointed to look after your affairs while you’re incapacitated – but often, that can only be done once you have already lost capacity, which may leave your affairs in limbo while the appointment process happens.
Remember that roles you hold (as director, trustee, or business partner) often can’t be delegated by an ordinary power of attorney or a lasting one. If you can’t participate, is the business (or board of trustees) quorate without you? It might be appropriate to step down.
A living will or advance direction is typically a non-binding expression of your own wishes as to what medical interventions you do (or do not) want, if you can’t tell the doctors yourself at the relevant time. But doctors will consult your family anyway, so make sure your family know your wishes when getting your affairs in order.
The practical stuff
Aside from the formal documents, it’s helpful to think about the purely practical things when getting your affairs in order.
If you’re the main breadwinner, or your spouse would struggle without your financial contribution, or the mortgage or utility bills are in your name, that can cause practical problems. If you die, probate can take many months. How will your family manage financially during that time, while your accounts are frozen? Will your life insurance go straight to your relatives, or pass through the probate process?
If you don’t already have a joint bank account, consider having one. A joint account is not frozen on death, and the co-owner can continue using it if you lose capacity. Or you could transfer money to your spouse to ensure he/she has enough cash for household expenses. In either case, if you can, provide a generous sum, as you can’t know how long they may need to wait for your funds to be released; and consider having utility bills paid from that account if you can.
Remember that you can have a joint account with anyone (a partner, another family member or anyone you trust) but in the UK (and other countries) they may have to pay inheritance tax on the money you put into the account if it’s a gift.
If the mortgage is in your sole name, you may be able to change the account from which it’s paid, so it comes from a joint account, but some mortgage companies may insist you re-apply for a joint mortgage, which not be possible. If you die, whether the mortgage is in your sole name or joint names, will your spouse/partner pass the eligibility criteria to continue the same mortgage on his/her own? You may (between you) have enough money to repay some or all of the mortgage – would that leave him/her enough to live on? Or will he/she need to sell your home after you die, and if so where would they live? Talk to him/her (and your mortgage broker) about the options.
And finally, it might feel important for you to get your affairs in order yourself, but it may be too much. Perhaps your spouse or others could be involved – it might help them, to be allowed to help you. Sometimes, it’s useful to have an independent third party to support you in arranging everything just as you want, or to act as intermediary with conversations you would find difficult. I have recently helped a family post funeral to move things forward in a very tricky and complex estate – having a third party is helping us keep the temperature down in a difficult situation. After all, a ‘good death’ is in part one where you leave those you love financially and emotionally secure.