Death is free but dying can be expensive

December 13, 2019
Taryn Lee-Johnston

These days, funeral music can go way beyond traditional hymns like Abide with Me, but out of all the songs you might want to choose for your funeral, possibly the most appropriate would be the 2015 hit by LunchMoney Lewis – Bills, because, while death may be free, dying can be expensive.  Here are some of the ways it can cost you and your estate.

End-of-life care

Even if you spend your last days in your own home, you may find that it brings a financial burden.  For example, you may need to make adaptations to your property to reflect your reduced mobility and/or employ someone to help you with tasks you are no longer (as) able to do yourself.  If you need to go into a care home, then costs can really mount up.  This has long been a controversial political area and it’s always possible that politicians will put a fairly low cap on the amount which must be paid by the individual before they receive tax-funding, but then again, it’s always possible that they will raise it or eliminate it completely.

Funeral costs

In principle, you don’t actually have to pay for your funeral.  If you really can’t afford it, your local council will arrange a “public health funeral”, which may be a burial or cremation.  Although the local council will arrange for a coffin and the services of a funeral director so that the deceased’s remains can be treated with a reasonable degree of dignity, that may well be as far as it goes in terms of the ceremony.

In other words, the ceremony will take place at the time and place which is most convenient for the council, there may not be a great deal of notice for any family and/or friends and you can forget about flowers, music, viewings, obituaries or transport for family members.  In fact, you may well have to forget about having a grave to yourself, let alone one with any kind of memorial.

If you’re the kind of person who thinks that your earthly remains don’t matter, then you may be fine with this.  If, however, you’d like something a little more to speed you on your way, or you think it’s important to those left behind that they can grieve with more dignity, or at least, more control over the practicalities of the funeral ceremony, then you will need to be able to fund it out of your estate.

Probate and Inheritance Tax

Even if your estate falls below the IHT threshold, you are still going to have to complete the process of probate to HMRC’s satisfaction.  This is probably going to involve some degree of cost for which someone is going to have to pay.  If your estate does fall above the IHT threshold then HMRC has first claim on the estate (apart from certain allowed costs) and you’re going to have to factor this reality into the calculations you make about how much money/assets you will need to leave behind in order to ensure that your loved ones (continue to) have a decent standard of living.

The importance of insurance

It can also be very difficult, for some people, to save the money they are likely to need for their end-of-life expenses.  The good news is that insurance can often help, you just need to make sure that you have the right sort of cover at the right level and set out in the right way.  For example, life insurance written into a trust can be used to cover IHT fees with minimal tax liability.  If you’re confused about how to make insurance work for you, a financial professional can give expert guidance tailored to your specific needs and wants.

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