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Make November the month you write your Will

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If you’ve been putting off making a Will, now might be the right time to put it back on your to-do list. Throughout November, Will Aid is helping thousands of people to get their Wills written professionally, while also contributing to several charitable causes.

 

According to research from Royal London published in 2018, 54% of UK adults haven’t made a Will, and a worryingly high 5.4 million people in the UK don’t know how to go about making one. There are several reasons most people give for not making a Will. Procrastination is the most common reason, with lots planning to make one ‘when they get older’. A large proportion of people without a Will simply seem to believe that they don’t need to make one –  either because they feel they have very little value to leave behind or they are confident their estate would end up where they intended it to without one. But this may prove to be a mistake.

 

What does a Will do?

Your Will gives you the opportunity to clearly state your wishes about what should happen to your money, your possessions, and your property after you die. It also allows you to name the person or people you want to be in charge of organising your estate after your death (called your ‘executor’), and lets you give them specific instructions on how to carry out your wishes. This could be anything from appointing legal guardians for your children, making gifts of your possessions to family and friends, making arrangements for your pets, and your specific requests for your funeral.

 

Why is having a Will important?

Writing a Will puts the control over your wishes in your hands. But it also removes most of the complexity that comes with sorting out a person’s estate after their death, which is a particularly difficult and stressful period at the best of times. Knowing that you have a Will already in place can give you and your family peace of mind that the process of dealing with your estate has already been taken care of. And leaving a Will that states clearly who should get your possessions and your property when you die can prevent unnecessary distress for your loved ones after you’ve gone.

 

Providing clarity on your financial affairs

Writing a Will is particularly important for anyone who has children or other family members that depend on you financially, or if you would like to leave some of your possessions to people who are not considered part of your immediate family.

 

Writing a Will can also make your financial affairs clear to the taxman, and help reduce the amount of inheritance tax that could otherwise be payable on the value of the property and money you leave behind. For example, by specifying you are leaving the family home to your children or grandchildren, your estate can claim the main residence nil-rate band, which would allow it to benefit from up to an additional £175,000 in tax-free allowances in the 2020-2021 tax year.


Life Interests

Leaving a Will can also be tremendously important in more complicated family circumstances. For example, you can use a Will to provide a ‘Life Interest’ – which can prevent unpleasant and expensive legal battles between your loved ones after your death. Creating a Life Interest is particularly important for people who have divorced and have children from their first marriage. With a Life Interest, the deceased can make sure their new partner is legally entitled to stay in their home while ensuring it will be passed on to the children as part of their inheritance.

 

What happens if you don’t write a Will?

If you die without leaving a valid Will, this is called ‘intestacy’ or ‘dying intestate’. This means that if you live in England or Wales (the rules are different in Scotland), everything you own will be shared out under standard intestacy rules. In other words, the law gets to make the decisions on who gets what from your estate. Here are some of the most common problems that can arise from letting the law decide:

  • If you’re married, your husband or wife can inherit all of your estate even if you were separated at the time of your death. Your children might not get anything.
  • If you’re unmarried, and not in a civil partnership, your partner will not be legally entitled to anything when you die, no matter how long you were together.
  • If there is inheritance tax due on your estate, it could be significantly higher than necessary.
  • If you have children or grandchildren, the amount they are entitled to may depend on where you live in the UK.
  • If you die with no living close relatives, thanks to a law called bona vacantia, your entire estate could be handed to the Crown.

 

Stop putting it off

Some people worry about the costs involved with writing a Will, but in most cases it is not as expensive as you might think. And in November, you can arrange to have your Will written through Will Aid and make a charitable donation to several good causes at the same time.

 

What is Will Aid?

Will Aid is a partnership set up between the legal profession and nine of the UK’s best-loved charities. Since 1988, it has enabled helped raise more than £21 million for good causes, while ensuring that more people in the UK get peace of mind from having their Will professionally written. More than 500 solicitor firms nationwide took part in Will Aid last November, raising over £900,000 for charities working with some of the most vulnerable people in the UK and around the world.

 

How does Will Aid work?

Solicitors who are taking part in Will Aid will draw up a basic Will for clients without charging their usual fee. Instead, clients are invited to make a voluntary donation. The suggested donation is £100 for a single Will or £180 for couples. The donations are then given to nine of the UK’s biggest charities, including the NSPCC, Save The Children, Age UK, British Red Cross, and more.

 

Over the years, Will Aid has helped more than 300,000 people to put their financial affairs in order, make their last wishes known, and give them and their families peace of mind. If you would like to have your Will written through Will Aid, you can find your nearest participating solicitor and book an appointment on the Will Aid website.

How to protect yourself against online spammers

How to protect yourself against financial scams and fraud

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There has been an alarming rise in financial scams since the coronavirus lockdown. Here’s what you need to know about the different types of scam, and how to defend yourself.

 

Rise of financial scams during lockdown

According to recent research published by Barclays, there was a 66% increase in reported financial scams during the first six months of this year. And, in an effort to get around increased security measures from banks and other financial services firms, scammers are developing increasingly clever ways to persuade people to part with their personal details and even hand over their money themselves.

 

Impersonation frauds

One of the most popular ways is through something called ‘push payment fraud’. This occurs when the fraudster manages to convince the victim in ‘real-time’ to make a payment or transfer money from their bank account into another account controlled by the fraudster.

Here’s how this particular scam works. You receive a friendly phone call from someone claiming to represent your bank, HMRC, or a utility provider. The caller knows personal details about you, and the number they call from appears to be genuine (it could be the number on the back of your debit card, for example). The caller will tell you there has been some suspicious activity on your bank account – which means you need to open a new account and transfer all your money into it immediately.

In most instances, the first part of the fraud has already happened. Victims might have had their post intercepted or clicked on a ‘phishing’ email that handed over some of their financial or personal details to the scammer. That’s why they already know so much about you and your finances during the phone conversation.

 

A cunning confidence trick

The call is designed to make you feel anxious, or that you will be in trouble if you don’t take immediate action. It’s a psychological ploy, backed up with modern technology that convinces people the call is coming from a legitimate and trustworthy source. Before you know it, you’ve willingly handed over all of your money directly into the scammer’s account.

These impersonation scams were particularly prevalent during the early months of lockdown. Perhaps people were already more vulnerable than usual, had added money worries or scammers simply had more time to phish for people’s details and follow up with the impersonation part of the scam.

 

Investors need to be careful too

There are other impersonation scams out there to be aware of. The Financial Conduct Authority (FCA) has been warning people about the rise of “clone firms”, where criminals copy the names, websites, and literature from established investment companies and use them to target unsuspecting victims on sponsored links on search engines and through social media. Fraudsters will also ‘cold call’ investors directly, claiming to be from a company that the victim already has an investment with. In some instances, fraudsters have even set up email addresses in the names of actual staff members at investment management firms they are pretending to represent.

The fraudster will quickly gain the confidence of the investor and persuade them to make new investments or transfer existing investments. These new investments eventually turn out to be wildly over-priced, impossible to trade or they don’t even exist. Many investors only realise they have been conned when they contact the authentic investment firm to chase payments that haven’t arrived.

 

Pension freedoms have opened the door to fraudsters

Pensions have also become a target for criminal scams, especially since the introduction of pension freedoms that mean people can access their pensions early. People now have far more flexibility in what they do with their pension pot. For the fraudsters, this is an opportunity to get their hands on previously untapped wealth, and to rob people of their life savings.

Last month, the FCA and The Pensions Regulator estimated that more than £30 million had been lost in pension scams since 2017. Victims of pension scams, where fraudsters have managed to persuade the pension owner to transfer their pension to a fraudulent pension scheme, have lost an average of £91,000, and some unlucky victims have been robbed of more than £1 million of their hard-earned pension.

 

What can you do to protect yourself?

There are some common-sense steps you can take to help defend yourself against financial scammers. Here are some of the most useful ones to remember:

  • Don’t automatically trust an unexpected communication from your bank, HMRC or a company you’ve done business with, and don’t ‘confirm’ your personal details or agree to transfer any money.
  • Pay alert to messages from your bank or other service provider that ask you to click on an email link – they could be phishing for your personal details.
  • If you’ve been called by someone claiming to be from your bank, end the call and then phone the official bank number from a different phone (scammers can keep the line open if you call back from the same phone).
  • Reject ‘out of the blue’ investment offers, and remember that if something sounds too good to be true, it usually is.
  • Be wary of cold callers trying to flatter you, pressure you, or scare you. Don’t allow yourself to feel rushed into making a financial decision.
  • Trust your instinct. If something feels suspicious, report it.
  • Always get professional financial advice between switching investments or making changes to your pension arrangements.

Summary

The Citizens Advice Bureau warns that the most vulnerable people are often at greater risk of being contacted by a scammer. But the reality is that these are sophisticated, ruthless criminals who go to great lengths to present themselves as genuine. It’s easy to be deceived, especially when the scammers know so much about you and are preying on your personal fears. But knowing how the fraudsters operate is an important first step to ensuring you don’t give them what they want.

 

You can report potential scams by calling ActionFraud on 0300 123 2040, or visiting actionfraud.police.co.uk

 

If you are interested in discussing the above with one of our experienced financial planners at FAS, please get in touch here.

 

This content is for information purposes only. It does not constitute investment advice or financial advice.

Is it ever too late to start investing?

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It is fair to say that conventional wisdom states you should start saving as early as possible for your retirement. The reality, of course, isn’t always the case.

For many of us, “life” gets in the way of investing in our twenties and thirties. Salaries tend to be low for most people as they embark on their careers, and the cost of rent (assuming you live away from home) can be a big drain on what little money you have coming in.

During this stage in your life, what little you have to save, you understandably might want to put towards a house deposit rather than a pension. By the time you are on the housing ladder, perhaps you are in your thirties and you now have the cost of a family taking over.

As a result, it isn’t uncommon for people to reach their forties and suddenly think: “I should probably start thinking about retirement!” At this point, of course, many of us hear the message that we “should have started saving in our twenties” and wonder if it’s all too late.

Naturally, the ideal scenario would be to start putting money aside as early as possible but it is certainly never too late to start investing and saving for your future life after work.

In this article, we’re going to suggest some ways to “catch up” on your retirement savings if you have missed out on previous years. This content is for information purposes only and is not financial advice, so best to speak to us further for specific guidance on your own situation.

Look at the positives

Whilst you might feel disheartened that you didn’t start saving sooner, consider the strengths of your current position. In your forties, for instance, your salary is likely to be much higher than it was when you first started working in your twenties. This means you have more money to potentially commit towards a pension if you have spare funds available.

Also, it is quite likely that your outgoings are not as high as they could be. Admittedly, you will have a mortgage or rent to pay, and possibly children to look after. However, for many people, the children are older at this point, which allows more freedom for two parents to work and increase their household income.

Moreover, if you are now on the property ladder then you presumably no longer need to save for a deposit, which was previously hindering your ability to build up your pension in your twenties.

Take a look at the longer-term picture. The reality is, most of us are now living longer, which means we all are likely to need larger pension savings compared to previous generations. However, it also means that you could still have more decades in which to build up your pension pot.

For instance, if you recently turned forty years old, then your retirement age (under the current system) is likely to be sixty-eight, which gives you potentially twenty-eight years of work, during which time you can build up your retirement savings. This is a good length of time, assuming, of course, you are fortunate enough to remain in good health and in employment.

Draw up a plan

Let’s continue to assume that you are forty; that you have no retirement savings; that you have two children in full-time education and that you are slowly paying off your mortgage.

How much will you need in retirement, and how much will you need to start saving to get there?

Here, it is usually helpful to draw up a plan and perhaps discuss with a professional financial planner, who will be able to present you with some options. However, it’s also a good idea to start thinking about things yourself, to at least get you started.

Begin by looking at how much you are likely to need in retirement. A general benchmark is to assume that you will need at least £18,000 per year to cover the essentials, and at least £26,000 to live more comfortably in retirement.

So, how can you start to work towards this? Firstly, look at your State Pension. In 2019-20, the most this will give you is £168.60 (about £8,767.20 per year). To be eligible for this, you need at least thirty-five years of qualifying National Insurance Contributions (NICs).

Are both you and your spouse/partner on track to achieve the thirty-five qualifying years? Together, that would generate £17,534 per year in today’s money and achieves a large percentage of your target. (Bear in mind, however, that you cannot “inherit” your spouse’s/partner’s State Pension when they die, so this would dramatically reduce your retirement income from the Government).

For the rest, you will need to make up the difference with your own saving and investment plan. So next, look at your workplace pension.

Some employers offer very good pension schemes, which can enormously boost your retirement savings. Under Auto Enrolment rules, employers must contribute at least 3% of your eligible earnings towards your pension pot. You need to put in at least 5% of this yourself (of which 1% is made up of tax relief) making a total of 8% in pension contributions each year.

You will need to do some careful planning to see whether these current levels of contributions will get you to where you need to be in retirement.

For instance, 8% of a £40,000 annual salary, is £3,200. Broadly speaking, over say twenty-eight years, achieving an estimated 7% annual investment return, this would generate a £267,252.92 pension pot.

This sounds like a lot of money and it’s certainly a good start. However, it is quite likely that you will need significantly more to attain a comfortable retirement income, and also counter the eroding effects of inflation. If you would like help in devising a plan for the future, please do get in touch with us as we can help you cover all the necessary bases.