Bank accounts & credit cards
We may assume that those around us know what bank accounts we have, but this isn’t always true. Most major banks have bereavement advisers who will help bereaved people through the process of releasing money from the deceased person’s bank accounts before probate is granted, if necessary. (Probate is the official process of checking that the will is valid, that the correct people (the executors) will be in charge of carrying out the terms of the will and that any tax has been paid before the estate is released). With joint accounts, there is no block on access to the money after one person has died: any money in a joint account automatically belongs to the surviving account holder.
However, you may have more bank accounts/credit cards than your next of kin are aware of. Using a secure method (such as a password protected document or secure online system), indicate what accounts and what cards you have (not the details of account numbers or likely balances) and maybe the relevant website details and then store this with your other Plan If documents.
‘Not only had we lost him, I also had absolutely no money. He kept most of our money in a savings account with a different bank and moved it online into our current account when we needed it. I had no idea how to access this …’
We may assume that those close to us know where we work (if we work); this isn’t always the case. On another simple document in your Plan If, list your employers (including voluntary positions) with, if possible, your employment / payroll number.
Obviously, this is less important if you are self employed, not working or if you work for a relatively small organisation since they will probably be on your contacts list anyway.
Having this information may speed up the process of releasing death-in-service benefits and other employee-based considerations for those widowed.
You may have a pension connected with employment or a private pension scheme or both. Would your family know about these? We were told of someone who had not known his wife had been contributing to a private pension scheme as well as her workplace pension until an annual reminder appeared in the post many months after her death.
And since April 2015, it may be possible for your nominated next of kin to inherit your private pension 'pot' - so make sure that you have nominated someone if you have a private pension. There are tax implications so do seek advice.
In your Plan If, note down the name of the schemes(s) your reference number(s) and contact details for them.
If you die before you have drawn your workplace pension, your family may receive a lump sum payment. If you have made contributions to an employment scheme but have since changed jobs, probably only the contributions you made will be returned to your family but individual circumstances will differ.
In some circumstances, pensions may be exempt from Inheritance Tax - it is important to get advice if this might be relevant to your circumstances.
Death in service benefits
Most (well, just over half) firms offer a ‘death in service’ benefit, usually as part of a pension scheme. This is a lump sum, usually tax-free, normally paid to a person nominated by you in the event you die while working for that employer. This arrangement ends when the employment ends. As part of your Plan If, check that you have nominated someone to receive this and then make a note in your Plan If that this arrangement exists. The scheme is not obliged to follow your wishes (if, for example, you have nominated a non-dependent but you have dependent children) but will strive to do so in most cases. In some circumstances, this payment may be exempt from Inheritance Tax - it is important to get advice if this might be relevant to your circumstances.
Have in the back of your mind the question ‘is this actually enough?’ Most employers offer a payment of around 2 years salary: that is not going to be anywhere near enough to cover housing costs let alone protect your family’s current lifestyle in the future.
Plan If is aimed at putting in place the sort of things that would help your children and your family if you were to die before they had grown up. As part of that planning, you might like to know what your family would receive from the State: there are links below to information on the Government website.
The payment of bereavement benefits is changing significantly under new arrangements introduced in the Pensions Bill 2014: the changes are currently expected to come into force for new claimants in April 2017.
It is important to note that under the present and also under the future arrangements, only widows, widowers and those in a civil partnership are eligible for these benefits. Co-habiting partners are not eligible to claim, even if the couple have children together.
For more information on the legal differences for those who are married or in a civil partnership and those who aren’t, please see here.
Bereavement Payment is a one-off, tax-free, lump-sum payment of £2,000 paid to a widow, widower or civil partner. There are a few restrictions on this payment, for example, the person who has died needs to have made National Insurance contributions: full details on eligibility and how to claim can be found here.
Widowed Parents Allowance
Widowed Parents Allowance is paid to widows, widowers or civil partners who have at least one dependent child for whom they are eligible for Child Benefit (or if they are pregnant when the other parent dies). Currently it is paid until the youngest child is no longer in receipt of Child Benefit. The amount paid depends on the National Insurance contributions of the parent who has died – the maximum amount payable is £111.20 per week. Full details on eligibility and how to claim can be found here.
If your family is in receipt of other benefits, through claiming the Widowed Parents Allowance, they may become subject to the Benefits Cap (currently set at £500 a week for a person with a child or children living with them). Full details can be found here.
Spare room subsidy
Currently, families who have experienced a bereavement have 52 weeks before the spare room subsidy (sometimes called ‘the bedroom tax’) comes into force. After this time they may face a reduction in their housing benefit.