When thinking about the consequences of the pandemic, much is often made of the economic impact, the effect on mental health, and the pressure on the NHS.
Sometimes it’s important to remember the stark fact that more than 127,000 people in the UK have died because of Covid-19.
While around 600,000 people die in this country every year, in 2020 we had one of the highest rates of excess deaths in the world. In England and Wales, almost 80,000 more people died in 2020 than we might typically expect in a typical 12-month period.
And, with worries about variants, fears about what will happen after the summer, and many millions yet to be vaccinated, the numbers are set to remain elevated for years.
This number of tragic deaths means that thousands more families then usual are having to deal with the financial affairs of loved ones and manage the distribution of their assets or estate.
It’s not an easy task – especially at a time when a client may be grieving for the loss of someone close to them. So, it’s perhaps no surprise that a new report suggests two in five bereaved people see a decline in their mental health when dealing with the financial affairs of a loved one.
Two in five people suffer mental health issues dealing with a loved one’s affairs
When a client dies, it’s often people close to them that end up administering their estate. While an individual can choose up to four executors, and can be someone with relevant professional experience, it’s often family or friends that take on the tasks of:
- Finding any relevant paperwork
- Applying for the legal authority to deal with matters
- Closing bank and savings accounts
- Encashing investments
- Dealing with pension, protection, mortgage, and investment providers
- Settling debts and tax bills.
If the client dies without a will, matters can be even more complex.
With little knowledge of the issues involved, family and friends can often find it hard to deal with everything – particularly now when delays and inefficiencies have been exacerbated by the Covid-19 pandemic.
Looking after the financial affairs of a loved one can be upsetting, as a complicated legal process is the last thing a client might want when grieving.
The outcome, according to new research, is that two in five people dealing with the affairs of a deceased person experience a marked deterioration in their mental health. In addition, a quarter of people suffered financial difficulties as a direct result of acting as an executor or administrator.
Encouraging clients to prepare while alive can help
When we speak to clients, we take a holistic view of their financial situation. This might include putting the right protection in place, saving for the future, helping children and grandchildren, and leaving a legacy to loved ones.
Estate planning is a key part of this. From ensuring the clients have a will, to considering gifts to reduce Inheritance Tax, planning for the transfer of wealth can make things easier for loved ones when the time comes.
For example, a third of executors admit they were clueless about the process when they started and one in seven only found out they were named as the executor after the person had died.
We work with clients to ensure they put plans in place so their executors know what they will be dealing with. For example, including family in financial planning conversations can make the passing down of wealth more straightforward.
Additionally, we can help to ensure that a client’s paperwork is all up to date. A third of financial accounts only come to light during probate, and legal professionals report that 1 in 20 cases start with no details at all. Working with a client to prepare can help to reduce delays.
According to the Independent, 88% of legal professionals think probate is “slow and inefficient”, while 52% admit the time it takes is unreasonable. To help speed up the process, and support grieving individuals, professional advice can help.
Placing life insurance and other assets in trust can ensure prompt payment/transfer. Even just being someone that a client can approach for help can provide them with the support they need at a difficult time.
Dealing with an inheritance
Of course, many executors will be dealing with the distribution of assets. Many may inherit themselves – whether that is property, pensions, or investments.
It’s likely that these people will benefit from impartial and independent advice – particularly at a time where their heightened emotional state could lead them to make rash decisions that they later regret.
For example, if your client inherited a pension would they know how to deal with it, and what the tax position might be? If not, seeking advice can be transformative.
Get in touch
We’re here to advise you and your clients on all aspects of financial planning. If you have clients that would benefit from advice, or you’re interested in how you can work more closely with us, please get in touch. Email firstname.lastname@example.org or call 01454 416 653.