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Challenging A Will

Admin : May 17, 2019 10:00 am : Articles, Blog, Empty Nester, Estate Planning & Wills, Parents, Retiring, Working Women

How To Challenge a Will

– and Make Sure it Doesn’t happen to Yours.

Most people think that when they die, whatever they have written into their Will will be adhered to and acted upon as you wished. However this is now not the case and can have huge effects on families.

In England it is not mandatory to leave money to your children when you die, however a wife, husband or child has the right to go to court for a share of their relative’s estate if they have not been left anything in the Will. Scotland and Northern Ireland operates different systems.

Why are Wills challenged and when can they be challenged?

In today’s current tough economic climate and also the rise in second marriages have seen an increase in people willing to contest a Will. It’s not an easy process however as it is usually lengthy, expensive and emotionally scarring. At the end of the day there is also no guarantee that the person challenging will be successful.

There are only a small number of circumstances where you can challenge a Will in the UK.

The Will is invalid because

  • The person who owns the Will has been coerced or pressurised into writing something that they didn’t want or believe should happen
  • They did not have full mental capacity at the time of writing so they did not know what they were doing for example in the case of dementia
  • The Will was not signed or witnessed properly
  • Or a family member was not provided for

Husbands, wives, civil partners, children and other dependents can contest a Will if they haven’t been left anything or enough in the Will. This challenge comes under the Inheritance Act 1975 – Provision for Family and Dependents in England and Wales.

Rules are different in Scotland – click here for details

There are lots of different cases as to when someone may contest a Will. These can be for example

  • in the case of Step families when a parent dies after a short second marriage and leaves everything to the second wife and children leaving the first wife and children with nothing.
  • families who live far apart from each other or are emotionally distant from each other. A person may leave most of their assets to a carer or a neighbour or a charity and the family sometimes suspects that they have been put under pressure to make this decision.

I’ve not left anything to my children in my will, can they challenge it?

Once an appeal has arisen, the court will take a range of factors into consideration. Many appeals do not succeed. Paula Myers, who is the national Head of Wills Disputes at Irwin Mitchell says, “For a claim to succeed, adult children normally have to show they’ve been maintained financially – namely that they had received money from the parent while he or she was still alive.”

Therefore, it is possible for adult children to claim against their parent for not including them, but it doesn’t guarantee that they will get anything.

The courts take into consideration the current and future living standards of the adult child and make a decision whether what is stated in the Will is reasonable for them and their family.

The courts in England and Wales will intervene if

  • The Will affects a young child, the judge could rewrite the Will if they believed that a dependent was not being provided for.
  • The total assets of a Will was left to a charity or someone outside the family, the courts can intervene if they believe that the family members were not being provided for

In cases of family disputes and long standing disagreements, solicitors advise both sides to use Mediation to settle the contest of the Will as it is cheaper and can increase the chances of reaching an agreement.

Decisions can seem unfair in cases where one child gets more than another. One example of this comes from Paula James at Thomas Eggar who explains that in some cases parents will give a lot of money to one sibling throughout their lives, so to give balance, they leave more money to the other sibling in their Will.

In this case, “the child who’s received money throughout their adult life has a very good chance of making a claim precisely because they’ve not been financially independent.”

How can I make sure that my Will is not challenged?

In order for you to make sure that your legacy goes to the people it is intended for, there are a few things you can take into consideration to help ensure that this happens:

Talk about your Will

It can be hard to talk about death, it is still seen as a taboo subject in some families, and it is also difficult to talk about money, therefore to discuss a Will is not going to be easy. Also if you have family issues, it may be very difficult to talk anyway.

Work out who is likely to challenge your Will

English law dictates that you can leave your money to whoever you like. Scottish law says that you must leave a percentage of everything to your children and spouse excluding land and buildings. Within English law, your husband, civil partner or children or anyone else financially dependent upon you can challenge your Will. If you acknowledge this fact when you are thinking about who you wish to leave your money to, then it can save problems later on when you are gone.

Make sure your Will is watertight

Dot the ‘i’s and cross the ‘t’s. Your Will should be properly written, signed and witnessed. Witnessing is by two people who are not going to inherit or are married to anyone who will be due to inherit. Also get everyone together at the same time, so all sign and witness together.

Ensure that you have full mental capacity at the time of writing and that you can prove it

Any Will can be challenged if there is any reason to believe that the person who has drawn up the Will was not in control of their mental capacity at the time. It is worth getting a note from your GP or Consultant who can legally testify. It is a delicate matter especially for someone who has been diagnosed with dementia or if they are becoming confused. However, it is better to be safe than sorry and get the medical opinion so that the Will will stand the test of time.

If you don’t wish to go down this route, you can get the drawing up and signing of the Will videoed to prove that the person was acting under their own free will.

Solicitor’s notes

If you are getting the help of a solicitor, make sure that they write good notes in order that if anything is not understood, the solicitor can draw upon their notes to explain the point in question.

Do not be pressurised into anything

Ensure that you have meetings with your solicitor on your own. If you wish to have someone with you, make sure that its someone who is not due to benefit from the Will and can help with emotional support or if you are hard of hearing. A Will can be challenged if it can be proven that the person drawing up the Will was put under duress.

Leaving a letter

You can leave a ‘letter of wishes’ along with your Will in cases where you are making a change to a current Will because of changes in your personal circumstances, say a new marriage. This letter is read out by your Executors and is helpful to explain your feelings and why your assets will be left to certain people and not to others. You can leave a separate letter to those you are excluding to be sent to them on your death to explain your decisions. This is useful in situations where you are estranged from a relative who would normally stand to benefit.

Future proof your Will

Write your Will in a way that will accommodate new changes, for example in the case of Grandchildren or Godchildren, you can decide to only give to those who were alive at the time you wrote the will, or to give to all of them who are alive at the time of your death.

It is always worth getting professional advice when it comes to writing your Will in order that you can be sure you are providing for your loved ones. With the right advice you can even reduce your inheritance tax and avoid any issues of your Will being invalid because you didn’t write it correctly and there are many common mistakes that have been made by people writing their own Wills. If you haven’t made a Will already, it is worth thinking about it now.

If you are worried about your will – speak to a financial adviser who can make sure it meets the criteria we have set out.

If you found this article useful, click here for Writing A Will For Your Family

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How to write your will so that your family actually gets what you want to give them and how to avoid common mistakes

Rebecca Robertson : May 14, 2019 10:00 am : Articles, Blog, Estate Planning & Wills, Parents, Returning To Work, Starting A Family

Plenty of people tell you to make a will especially when you have children, they say, make a will before it’s too late so you can protect your family. However not many people tell you what you need to write and how to write it, so experts are now saying that a badly written will can be just as bad as no will at all.

Surely most people have a will?

Only 40% of us in the UK have a will and now research shows that 1 in 4 people who have made a will could end up giving their family a nightmare when they pass on. Engage Mutual has discovered that many people have already fallen out over a will.

Saga Legal Services commissioned a study which found that 25% of people wrote their will without any use of a legal professional, another 20% bought one from a shop or downloaded one online and a further 5% just wrote something on a piece of paper without any consideration or research. Of the ones that that did a will themselves around 37% thought that it was cheaper than hiring someone, 25% thought it would be quicker and 20% didn’t want anyone to know about their assets.

So why will this affect me?

If you have a small nuclear family with little assets and you have followed the instructions to the letter you may not have a problem and get a cheap and effective will after all. However if your family is more complicated, you have very specific wishes or if you have more to leave behind you may leave your family with a headache.

The research showed that one in fourteen people have had problems with a DIY will and out of these 46% have said that it led to family arguments while 39% said that it made probate take longer.

What are your options when making a Will?

DIY – it is a fact that more Wills fail or are challenged when they have been done by a well-meaning amateur – you know what you want to do, but can you interpret that onto paper so that the law also knows and understands what you want. In todays world of more complex families, higher divorce rate, more couples living together, same sex relationships, the list goes on, do you really know the ramifications when it comes to former spouses, children, step children and anyone who considers themselves dependent on you and the challenges that can be brought against your estate at a time when you are unable to argue back.

Use a professional – I’m not going into the where’s and why-for’s when it comes to whether using a solicitor is better than a professional Will Writer, simply that whoever you choose as a professional, ensure that they have the right qualifications and in the unlikely event of a complaint it will be dealt fairly and swiftly, i.e. they have the support and backing of a recognised body.

Using a professional Will Writer, ensures that the person who is attending to you, will know and understand your needs and have the necessary expertise to advise you properly on how your Will should look and how it will work, especially if your estate is complex – although few people believe theirs are as they start the conversation with “I only need a simple Will!”.

What are the mistakes that can be made?

Here are some of the most common mistakes that have caused family heartache:

Future planning

Most people writing their will don’t think about the future. For example if you want to leave something to your grandchildren, if you name them in the will and then one is born between you writing your will and you passing on, they will not receive anything unless you word it so that future grandchildren yet to be born are to be included.

Specifics

You could come unstuck if you start mentioning specific sums of money. You need to have a very good idea of how much you will have in your estate and that the value will not change much between you writing the will and your passing. If you have under estimated there may not be enough money in the pot to pay everyone the amount you want to give, if you have over estimated each person may received a much larger percentage of your estate than you thought that you were going to give to them.

‘I’s and ‘t’s

If you are not totally clear what you wish to happen, the there is a possibility that your request could be misinterpreted and your family may fall out due to ‘chinese whispers’.

There could be problems if you do not follow the strict rules for signing and witnessing the will it could become null and void so pretty much useless.

Appearance

This could be simply the way that the will has been put together. If it is not done up properly someone may claim that it has been tampered with, or there are pages missing. This may mean that it could take longer to go through probate.

What can I do to make sure this doesn’t happen?

Get a professional to either go through the whole thing for you, or look over it once you have written it. Emma Myers who is Head of Wills, Probate and Lifetime Planning at Saga Legal Services says, “Having your DIY Will reviewed gives you piece of mind that is fit for purpose and gives you the chance to correct any mistakes before it’s too late.”

In the case where a Will is judged null and void the estate of the Will holder will be dealt with by the courts under the rules of Intestacy as if they had died without making a Will at all.

Intestacy Rules are very strict and the Government decides who inherits your estate in a specific order without any consideration for your wishes, starting with your spouse or civil partner, then:

  • Your children, grand children and any great grand children.
  • Any surviving parents
  • Brothers, sisters and/or their children
  • Half brothers, sisters and/or their children
  • Surviving Grandparents
  • Uncles, Aunts and/or their children
  • Half Uncles, Aunts and/or their children
  • The Crown or Duchy of Cornwall or Lancaster

The rules also give control of your estate to those who will immediately benefit from it, and that may be to people who you do not want included.

If your Will is deemed valid but some of the wording is wrong or unclear, then your loved ones will end up having to go to court and have them making the decision about how the estate is distributed rather than what was written in the Will.

Whatever way you wrote your Will, whether DIY or by a professional, it is important to review it regularly, especially if you or your family circumstances change, so that it still is valid and relevant for you.

There are also some actions you can take to help you make a Will that won’t be argued about or taken to court over and I’ll go through them here to help you, especially as according to Engage Mutual, 17% of families have already fallen out over a Will of some kind and I’m sure you don’t want to add to that percentage.

Conversations

When you start thinking about making a Will, it’s worth writing out what you wish to do and then talking to your family about your wishes so that they are aware and prepared for what your intentions are. It is here when you candidly tell your family why you want to spend some of their inheritance once you retire or why you are leaving more money to one than another because you have already given the other their share to buy a house last year. These conversations allow families to discuss any objections and sort them out before you even go to your solicitor to have the Will finally drawn up.

National Savings and Investments (NS&I) say that around 36% of people whose parents are still alive have no idea whether they have made a Will or not and what they intend to do with their estate.

Do it by the book

Ensure that when you come to write a Will that you follow the instructions to the letter. This stops anyone from saying to a court that the Will is incorrect or void because you were under influence when you wrote it or that no one witnessed your signature.

What makes a valid Will?

  • It needs to be in writing.
  • You must appoint an Executor who is someone that will carry out your wishes and distribute your estate properly.
  • It must be signed by you (you are called the Testator). If you cannot sign, it must be signed on your behalf in your presence and by your say so.
  • It must be witnessed by two individuals who must also sign at the same time and in the presence of you.

Witnesses:

  • A witness can be someone who is ages 18 or over, is not blind and is capable of understanding what is going on and what the consequences are of what they are doing.
  • You cannot have a witness who would be a beneficiary of the Will or is married to or is the civil partner of a beneficiary in these cases the beneficiaries would not get their share but the Will would still remain valid.

Don’t rush anything

The saddest thing about Wills is that they can become a tool to use for family members to take revenge or over-power siblings or other family members and that can lead to terrible family breakups. Engage Mutual have stated that 3.5 million people in the UK have changed their Will within the last 2 years and the most common reason is family arguments.

People are starting to anticipate arguments over who should get more and around 15% of people are worried that these problems will come from them leaving some money to friends rather than family.

In this instance it’s worth having the conversation now and seeing if you can explain why you are making the decisions you are and whether you can even things up a bit.

So in a nutshell, it’s worth getting some advice from a professional even if you want to do things yourself to save money as you could be leaving your loved ones with a battle on their hands if you get something wrong. If you think about the assets you are leaving to your loved ones, paying a small fee for a professional Will is not a lot in comparison.

If you are worried about your will or need advice around creating one – speak to a financial adviser who can make sure it meets the criteria required.  Prices start from just £98.00.

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Childcare Options for Working Mums

Rebecca Robertson : April 9, 2019 1:11 pm : Articles, Blog, Parents, Returning To Work, Starting A Family, Starting Out, Working Women

Please note: this article is for information only and is not an expression on any one persons opinion. Research was carried out however this doesn’t cover every area of the country. For further information please refer to https://www.moneyadviceservice.org.uk/en/articles/childcare-costs or for regulated matters refer to https://www.gov.uk/government/organisations/ofsted

Returning to work after children:

When returning to part-time or full-time work after having children, many women are faced with an endless amount of childcare choices and costs which can make it really difficult to make a decision. For very young children, the choice of childcare options includes nursery, childminders, nannies, shared nannies, au pairs and of course relatives. Then, when a child turns three they have the added option of pre-school and an entitlement of 15 hours and then once at school age, working parents often need to consider breakfast clubs, after-school clubs, after-school childminders or nannies and possible help with the school run in addition to help over the holidays. With so many options to choose from and so much juggling involved, it is no wonder that parents get confused and wonder whether it is even worth them going back to work!

Nursery option:

Childcare costs obviously depend on the area where you live but within London and the surrounding areas you can expect to pay between £55-£65 for a full day at nursery (8am-6pm), which will usually include breakfast, lunch and snacks, or around £30-£35 for a half day. The cost goes down the older the child gets and there may be a sibling discount in place if you have more than one child in the same nursery. There are many reasons for parents choosing the nursery option, a key reason is that fact that nurseries will always be open and even if a key worker was ill or on holiday, there would always be someone else in the team who could look after the child. Many also like the social side of a larger number of peers for their child to interact with. There are different types of nurseries to choose from – including mainstream, Montessori and Steiner – so you need to choose the one that’s right for you and your child.

In addition to the basic nursery cost there may be extra charges for ‘extra curricular’ classes that some nurseries run which many mums fork out for to ensure that their child isn’t the one missing out. Some nurseries may charge extra for breakfast club if you need to drop your child off early. On top of that, some nurseries charge a late fee if parents fail to arrive by the strict 6pm pick-up time! While some charge £1 for every minute a parent is late by, others will charge a set fine of £20 (per child!) the minute you are late through the door to collect your child.

The childminder choice:

Child minders provide a home from home environment. They follow the EYFS and are registered and inspected by ofsted. They plan fun, educational activities for the children and have the unique ability to plan for the individual child’s interests or stage of development due to a more one on one interaction. They are able to be more flexible with opening and closing times and can often do those little favors of opening early or closing late on those odd occasions. Depending on where you are in the country, They charge from around £3.50 up to £7 an hour. They can provide the government funded hours for 2 year olds and 3-4 year olds. Some childminders work term time only but the majority work all year round. Obviously there are some negatives (for some people) if  your child minder is unwell or their child is unwell they need to close so the parents will need to make other plans or take the day off work. Also when they take my holidays, the parents will need to take the same dates or arrange other childcare.

Is it a nanny you need?

Parents wanting someone to come and look after their children in their own home and keep to their routine will need to hire a nanny. You have the choice of going through an agency or finding one independently, either through advertising or word-of-mouth. You can expect to pay from £8 an hour depending on the number of children. If you employ a nanny you also have to pay their tax, NI and expenses such as petrol. You would also need to pay the nanny agency to arrange payslips or use ‘taxingnannies’ so it can add up financially.

If you are looking for a full-time nanny then you have the option of a ‘live-in’ or ‘live-out’ nanny. Live-in nannies usually work an 11-12 hour day Monday to Friday, including two nights babysitting duties. Nannies living in your home will take sole charge of your children and perform nursery duties such as cooking meals for the children and cleaning up in the kitchen afterwards, tidying away toys, doing the children’s washing and ironing. Housekeeping duties for the rest of the house would not normally be carried out by a nanny. A full-time live-out or daily nanny would normally work 10 hours each week day taking care of all your child’s needs during that time.

There are also male nannies or ‘mannies’, bilingual nannies, holiday nannies, nanny shares and after school nannies. A part-time after school nanny will mean that you only pay for the hours you require if you work part-time, need ad-hoc extra childcare or need help once your children start school and usually charge around £8 an hour upwards. If you choose to share a nanny with another family then they will charge from £12 an hour upwards depending on how many children and the expectations from each family.

Going down the au pair route:

If both parents work full-time and the children are at school age, many families often go down the au pair route which involves an additional adult living with you at home. Financially, this will mean higher living costs as they will be entitled to free board and lodging at your home, paid holidays and sick leave, and you would also have to pay them pocket money each week. According to the Home Office, au pairs in England, Scotland, Wales and Northern Ireland should receive around £70-£85 per week for approximately 30 hours per week, including babysitting. While the au pair’s primary responsibility is to help you look after your children they may also help out with light household chores as part of their duties.

Possibility of pre-school once three:

All 3 to 4-year-olds in England can get 570 hours of free early education or childcare per year. This is usually taken as 15 hours each week for 38 weeks of the year. The free early education and childcare can be at: all types of nurseries and nursery classes, playgroups and pre-school, childminders and Sure Start Children’s Centres.

Many children begin to attend pre-school at this age while others continue at their current nursery. If attending a pre-school, parents fill out the necessary forms and then the school applies for the funding meaning that there is no outlay of cost involved for the parents. Pre-schools are open during school term-time hours so you can pay an additional £2-£3 a day if you would like your child to attend lunch club and you can also pay for extra morning or afternoon sessions on top of the 15 hour allowance.

While many nurseries do accept the government-funding, it only covers £3.60 per hour of a nursery placement and isn’t enough to cover the £6 or so hourly rate that nurseries charge. In some cases, parents need to pay for the ‘free’ hours in advance and are then later refunded once the nursery has received the funds from the government at the end of the term meaning an outlay of £740 to account for.  Nurseries will also charge extra for breakfast clubs and lunches and non-term time weeks so it is important to get a full breakdown of all costs involved.

Some 2 year olds are also eligible to get free early education and childcare if their parents are on specific benefits, if they are in care, have a statement of Special Education Needs or receive a Disability Living Allowance.

Even more costs…

So, you’ve decided to return to work – a big enough decision alone – and you’ve chosen the childcare option that’s right for you and makes sense financially. Now it’s time to consider the travel costs, which can again make things challenging! Many full-time mums may pay a premium if they select a more expensive nursery in close proximity to a station in order to get to work for 9am. If driving to nursery and then travelling by train there will also be a daily parking charge to consider in addition to petrol costs on top of the train fare. If driving to work, you will need to budget for fuel.

Mums returning to work also need to factor in the cost of work lunches, work clothes, shoes, haircuts and expenses. Many mums manage financially with one child but the cost of two in childcare often means that they aren’t much better off. If after tax and all the extra costs you are only bringing home an extra £100-£200 a month then it may not be worth it financially.

Then they start school:

So, your child has started school and you can stop paying the expensive childcare fees. Phew! But, if you’ve survived all the above costs and are still (enjoying life as) a full-time working parent then you may need to consider dropping your child off for breakfast club and putting them into after-school club. Breakfast clubs can start from 7.30am and will cost between £4-£5 a day while you can expect to pay between £7-£10 a day for after-school clubs which run until 6pm. However, not all schools run these so if you don’t have this option then you may need to hire help for either the morning school run, after school pick-up or both… if you have grandparents nearby and willing to help then you are lucky, otherwise, as mentioned above, a childminder or part-time nanny option is probably your best bet if you are able to find someone you are happy with.

Some schools now ask for a ‘voluntary’ contribution which can be up to £100 a month to help the school fund things. Then of course there are costs associated with school trips, charity events, purchasing school photos and school dinners (currently free for years R, 1 and 2).

School holiday childcare:

Some parents take it in turns to take annual leave so that they don’t fork out for childcare costs during the school holidays. If you won’t be able to take annual leave during the holidays then you will also need to budget for care out of term-time. Some schools run holiday clubs for part of the summer and during half terms which can cost around £20 a day. Many of these don’t run during the Christmas holidays though so you will need to take the holiday or find an alternative type of childcare.

The emotional cost:

Many mums struggle with constant feelings of guilt. They feel guilty that they’re not putting in the hours at work and feel guilty about not spending more time with the children. It can also be hard to ease back into work after being off for a while. In order to get to work on time mums need to factor in road traffic, tube delays, bad weather and reluctant kids who want to stay at home and play!  Then, to collect their children they have to leave work early or at 5pm on the dot and rush back to pick them up. Some families manage to split the drop offs and pick-ups which can be really helpful and mean they can both complete a full day’s work and keep their employers happy!

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Long-term saving could yield a £1m retirement pot for some millennials

Admin : July 10, 2018 11:00 am : Articles, Pensions, Retirement, Saving and Investing
The millennial generation don’t just spend their hard earned savings on smashed avocado and flat whites, but they do have a different attitude to money than older generations. In fact, some young people today or in future generations could accumulate a pension pot as high as £1 million[1] when they come to retire through a combination of higher earnings, a generous workplace pension and several decades of saving, according to new research.

The study was carried out in conjunction with the Pensions Policy Institute to look at what level of retirement pots younger and future generations could expect, based upon the current and proposed model for automatic enrolment. A 22-year-old median earner (peak earnings of circa £30,000 at age 40) in 2017 may be able to build up a pension pot of £108,000 with minimum scheme contributions levels. Those with higher earnings and in a more generous workplace scheme could build up a substantially bigger sum.

Reducing the age limit
The study also found that changes proposed in the Department for Work & Pensions’ Automatic Enrolment Review, including reducing the age limit and removing the lower limit of eligible salary, could lead to a 32% increase in fund size for a median earner who starts saving at age 18.

The impact of the introduction of automatic enrolment on future generations focused on young people who were aged 22–35 by the end of 2017 – i.e. those who entered the workforce during the initial implementation of auto enrolment in October 2012 and the first generation likely to spend their entire working life in pension schemes into which they were auto enrolled.

Automatic enrolment has almost doubled the participation of 22-29-year-olds saving into pensions, according to the research.

Using four hypothetical individuals in the younger age group with different salary circumstances, the research shows how:
Stopping saving – even close to retirement – can significantly damage retirement outcomes
A wide range of possible pension pot values can result, depending on the quality of the workplace scheme and the level of contributions made by employer and employee
The triple lock has a proportionally larger impact on lower-earning millennials than higher earners

Improving financial futures
The research demonstrates that bringing people into savings at a younger age and increasing the contributions made can significantly improve their financial futures. Now that nearly 10 million people have been auto enrolled into a workplace pension, we’ve moved to a stage where it’s time for savers to think about what they’ll get back at retirement and consider any additional steps they may want to take along the way to build up their life savings.

Millennials are likely to be the first generation to benefit fully from the introduction of automatic enrolment, with the opportunity to have an employer contribution and government contribution paid into a workplace pension scheme throughout their working life. This means that automatic enrolment has the potential to make a significant difference to later life for millennials, providing more options and a more secure foundation for funding retirement.

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Source data:
[1] Based upon an example of a female saving from 18 to State Pension Age into a workplace pension contributing 16% of total earnings, deemed to be a 90th percentile earner (peak earnings of circa £49,000 at age 40). All figures in the research are in 2017 earnings terms.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

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Changing Financial Habits

Admin : June 8, 2018 2:08 pm : Articles, Financial Advice, Financial Planning

Admit it! You are over spending on worthless ‘stuff’ and don’t have a clue where it all goes?!

Yes, so many people feel like this!!! I really can’t tell you have many people have said this to me. “I don’t know where it all goes?”

STOP SPENDING… that’s it!! Just stop… That’s the answer…

This is easy to say and much harder to do, yet, there are some really easy things you can do to save money. Remember the old saying, ‘look after the pennies and the pounds will look after themselves’. It doesn’t matter how much money you have in the bank or how well you budget, most people overspend even with the best intentions.

So this is where we have to change our habits, habits which have been built up over years and also passed down from our parents.

What is a habit? It’s something that you don’t think about, something that you see as part of your daily routine, but may be completely unnecessary to your health and wellbeing even if you enjoy it. It can also be something that you used to do with old friends, and now you have moved on, you still do it because it’s what you always have done.

Here we are trying to help you change old habits and make new ones which will save money rather than spend it. A bit of focus and thinking before you buy, can help you keep the money in the bank at the end of every month.

So, to start with, you need to track what you are spending, this can be enlightening as most people don’t track what they buy throughout the month and are then surprised that they are in the red at the end of the month. Start making a list of everything you spend. This will then tell you what is unnecessary and what a habit is.

How do you change a habit?

According to leading psychologists, it takes 21 days to change a habit. This is a generalisation and it doesn’t take into account how long you have had the habit for and how hard it could be to break. It does however give us a starting point and proves that it takes time to break an old habit and form a new one, so basically, don’t expect things to change overnight!

The next important thing to realise, is that you can’t change them all at once. For starters you will get burnt out and bored and stop everything, and secondly, you get into overwhelm, which can be even worse as you cling on to the old habits to give yourself comfort! Also, make small changes, something huge will send you into panic mode and that will stop you in your tracks.

We form habits for a reason. So start to look at the reasons why you have your current habits. Once you see the emotional and sensory triggers behind your habits, you can then start to look at ways to replace those old habits with new ones that are perfectly able to give you the response that you desire, but are also helping you keep the money in your pocket at the same time.

Make the new habit easy for yourself. Having things in handy places at home, or shift your workplace around to make it easier for you to put the new habit in place. In return, make the old habit hard, so make sure there is no spare change in your pocket, or move money about in your accounts so that you can’t spend that money. Also, give yourself little reminders, such as a note in your purse to ask yourself ‘do you really need that’, or a reward chart for the kids to turn the lights off when they leave their bedrooms.

If you falter, don’t panic, just tell yourself that tomorrow will be better. Maybe ask one of your friends to watch out for you and distract you!

spending habits

Why are you wasting so much money? 

So we have changed our habits, yet we still don’t know much about our money. What do we need to learn to improve how our money grows?

Your financial intelligence is all about knowing how money works, what the government decides on law to do with the regulation of investment and what the law states for business. So if you don’t understand the laws and rules that are relevant to the finances you have in place then how will you know whether you are getting any return or profit on your savings or investments. Havingsome financial intelligence allows you to create a better plan for your money so that what you have will grow more effectively and what you intend on having will actually happen.

So, we may now have some disposable income and some savings, but are they really working for us? Are they moving us towards our goals in life or business? We have a mortgage but is it in best place?

Look at short and long term debt

A long term debt would be your mortgage, usually taken over a period of around 20 years, your working lifetime. A short term debt could be a loan for a new sofa or a car over a period of 2 or 3 years. If you look at the interest rates you are paying you will notice that normally the mortgage will be at a much lower percentage than the short term loans.

What does this mean for financial management? Well when you get to a point that you can start paying off debt, look at short term debt first to get rid of them and then tackle the long term debt a bit at a time. You will get rid of the debt that is charging you the most interest, which will give you more substantial disposable income to start paying off the long term debt more quickly than you would have done before.

Create a plan to move forward with

Having a plan gives you a focus and allows you to create goals of where you want to be financially over time. Maybe you want to be debt free in five years, then write a plan of how you are going to achieve that.

Think about where you want your money to be in five or ten years’ time? Is it in your children’s trust funds, in your pension or paying off credit? Which would you choose?

Get the basic’s right first

Looking at your general spending, what is going out each month is a major and important step. It sounds so simple but often the basic simple stuff is what matters. Will you do it through? Will you put the time aside to achieve the basics? Without the foundation, we aren’t able to build a strong position.

Let me help you a little by giving you this free spending guide on ‘Practical examples of changing habits to save money’ providing you with a number of practical ideas to help save those pennies.  Plus as an added bonus when you download the guide, you’ll also receive the check list of outgoings. This check list will list all the possible outgoings to make a note of and review. Make a note of any review dates and see what needs adjusting or cancelling. When you download this handy checklist and guide, we will also add you to the mailing list to receive further emails to help you change your spending habits for good….

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Making the most of your pension

Admin : June 6, 2018 8:30 pm : Articles, Pensions, Working Women

Have you accumulated multiple plans that need reviewing?

By the time we have been working for a decade or two, it is not uncommon to have accumulated multiple pension plans. There’s no wrong time to start thinking about pension consolidation, but you might find yourself thinking about it if you’re starting a new job or nearing retirement.

Consolidating your pensions means bringing them together into a new plan, so you can manage your retirement saving in one place. It can be a complex decision to work out whether you would be better or worse off combining your pensions, but by making the most of your pensions now, this could have a significant impact on your retirement.

Retirement savings in one place

Whenever you decide to do it, when you retire it could be easier having a single view of all of your retirement savings in one place. However, not all pension types can or should be transferred. It’s important that you obtain professional advice to compare the features and benefits of the plan(s) you are thinking of transferring.

Some alternative pension options may offer the potential for a better investment return than existing pensions – giving the opportunity to boost savings in retirement, without saving any more. In addition, some people might benefit from moving their money to a pension that offers funds with less risk – which may not have been available before. This could be particularly important as someone moves towards retirement, when they might not want to take as much risk with their money they’ve saved throughout their working life.

Keeping track of the charges

If someone has several different pensions, it can be difficult to keep track of the charges they’re paying to existing pension providers. By combining pensions into a new plan, lower charges could be available – providing the opportunity to further boost retirement savings. However, it’s important to fully understand the charges on existing plans before considering consolidating pensions.

Combining pensions into one pot also reduces paperwork and makes it easier to estimate the income someone can expect to receive in retirement. However, before the decision is made to consolidate pensions, it’s essential to make sure there are no loss of benefits attributable to an existing pension.

Review your pension situation regularly

It’s essential that you review your pension situation regularly. If appropriate to your particular situation and only after receiving professional financial advice, pension consolidation could enable existing policies to be brought together in one place, ensuring they are managed correctly in line with your wider objectives.

Gone are the days of a job for life. So many of us may have several pensions accumulated over the years – some of which we may have left with former employers and forgotten about! Don’t forget your pension can and should work for you to provide a better quality of life when you retire. Looked after correctly, it can enable you to do more in retirement, or even start your retirement early.

If you need advice around your pension, get in touch today and one of our advisors would be pleased to help you.

_______________________________________________________________________________________________________________

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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New initiatives you need to know about 2018/19 Tax Changes

Admin : June 1, 2018 10:00 am : Articles, Financial Planning, Taxation

It’s important to consider the tax implications of making financial decisions. The 2018/19 tax year is now upon us, and a raft of new changes have come into force. The good news is that the overall tax burden is little changed for basic-rate taxpayers, but there are number of areas that have changed that should be taken note of.

Here’s what you need to know about the 2018/19 tax year changes and new initiatives.

Personal Allowance

The tax-free Personal Allowance is the amount of income you can earn before you have to start paying Income Tax. All individuals are entitled to the same Personal Allowance, regardless of their date of birth.

In the 2017/18 tax year, the Personal Allowance was £11,500, and it rises to £11,850 in the 2018/19 tax year. This means you can earn £350 more in the 2018/19 tax year than in the previous tax year before you start paying Income Tax. However, bear in mind that the Personal Allowance is restricted by £1 for every £2 of an individual’s adjusted net income above £100,000.

A spouse or registered civil partner who isn’t liable to Income Tax above the basic rate may transfer £1,185 of their unused Personal Allowance in the 2018/19 tax year, compared to £1,150 in the 2017/18 tax year to their spouse or registered civil partner, as long as the recipient isn’t liable to Income Tax above the basic rate.

Higher-rate threshold

The threshold for people paying the higher rate of Income Tax (which is 40%) increased from £45,000 to £46,350 in the 2018/19 tax year. This new figure also includes the increased Personal Allowance.

Dividend Allowance

The Chancellor of the Exchequer, Philip Hammond, announced in the Spring Budget 2017 that the Dividend Allowance would reduce from £5,000 to £2,000 from 5 April 2018.

Any dividend income that investors earn above the £2,000 allowance will attract tax at 7.5% for basic-rate taxpayers, while higher-rate taxpayers will be taxed at 32.5% and additional-rate taxpayers at 38.1%.

This may impact on shareholders of private companies paying themselves in the form of dividends, for example, rather than salary. Investors with portfolios that produce an income in the form of dividends of more than £2,000 a year, which are held outside ISA or pensions, will also be affected by the reduction in the allowance.

National Insurance Contributions (NICs)

NICs be charged at 12% of income on earnings above £8,424, up from £8,164 until you are earning more than £46,350, after which the rate drops to 2%. It’s the same in Scotland.

Auto-enrolment contributions

Auto-enrolment contribution rates have increased for employees and employers. In the previous 2017/18 tax year, the minimum pension contribution rate was 1% from the employee and 1% from the employer, which provides a 2% contribution. However, from 6 April 2018, the contribution rate increased to 3% for employees and 2% from the employer, totaling 5%.

Pension Lifetime Allowance

The Lifetime Allowance increased from £1 million to £1.03 million in the 2018/19 tax year. This is the maximum total amount you can hold within all your pension savings without having to pay extra tax when you withdraw money from them.
If the total value of your pension savings goes over the Lifetime Allowance, any excess will be taxed at a rate of 25% in addition to your marginal rate of Income Tax if drawn as income, or 55% if you take it as a lump sum.

State Pension

There has been a 3% rise for the old basic State Pension and the new flat-rate State Pension. If you’re on the basic State Pension (previously £122.30 per week), this has increased to £125.95. The flat-rate State Pension has increased from £159.55 to £164.35 a week.

Inheritance Tax

The residence nil-rate band (RNRB) has risen from £100,000 to £125,000. The RNRB enables eligible people to pass on a property to direct descendants and potentially save on death duties.

Capital Gains Tax

Capital Gains Tax is charged on profits that are made when certain assets are either transferred or sold. There’s no tax to pay if all gains made in a tax year fall within the annual Capital Gains Tax allowance. For the 2018/19 tax year, this will be £11,700 (it was £11,300 for the 2017/18 tax year).

Buy-to-let landlords

Changes mean that only 50% of mortgage interest will be able to be offset when calculating a tax bill, compared with 75% previously.

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Art of bond investing

Admin : May 26, 2018 10:00 am : Articles, Entrepreneur, Financial Advice, Financial Planning

Portfolio balancing, negating stock market volatility and lowering risk

Bonds have historically been an alternative way to balance a portfolio and negate stock market volatility, and they are treated as lower risk. The art of investing is all about mixing assets to build a portfolio aligned to your investment outlook and attitude to risk, with shares and bonds as primary components. For investors, bonds can provide a stream of returns.

A bond is an IOU, typically issued by a government or company (an ‘issuer’). Companies issue bonds to meet their expenditure or to settle out their debts. Governments also issue bonds in order to settle any financial deficits of the government, and also to bring development. When issued by a company, they are referred to as ‘corporate bonds’. By buying a bond, you are lending the issuer money. Two things are specified at the outset: the agreed rate of interest that the issuer must pay you at regular intervals (the ‘coupon’), and the date at which the issuer must repay you the original amount loaned (the ‘principal’).

Making different market assessments

Bonds can be bought and sold in the marketplace. Their prices change constantly because people in the market make different assessments on two main factors: the likelihood that the issuer will repay its debts (‘credit risk’), and the effect of interest rates (‘interest rate risk’).

If more investors want to buy a bond than sell, the price normally increases. Similarly, if there are more sellers than buyers, the price normally goes down. The rising or falling price affects the yield of the bond. Yield is a way of measuring the attractiveness of an individual bond. However, bonds are not always held until the principal is repaid – they can be bought and sold at any time until the principal is repaid – so there are many ways of calculating the yield. The most common is the ‘redemption yield’. This discounts the value of coupons received over time. It also adjusts for any difference in the price paid for the bond and the principal repaid at maturity.

Generally stable regular income

Bonds pay investors a regular income, and their prices are generally stable. They are also generally considered safer than equities and are issued by reputable companies or governments. Should a company that has issued bonds run into financial difficulty, the bond holders rank ahead of equity holders for repayment. However, the price of a bond can fall as well as rise, and there is no guarantee that an issuer will not default on its obligations. The effects of interest rates and inflation can also erode the future values of returns.

Investors demand a premium for the extra risk they are taking when lending money to a less well-established company or less creditworthy government. Therefore, bonds from these issuers tend to be higher yielding. Comparatively well-financed issuers are referred to as ‘investment grade’, while less secure issuers are referred to as ‘high yield’ or ‘sub-investment grade’. Different types of issuers are affected in different ways. For example, government bonds tend to be more affected by changes in interest rates, while corporate bonds are more affected by the company’s profitability.

Bond investments not right for everyone

Like any security, there are many options when it comes to bond investments, and they are not right for everyone. Various types of bonds can be issued. These include inflation-linked bonds, where payments are linked to changes in inflation, and convertible bonds, which are corporate bonds that can be converted into the company’s underlying equity. Certain types of bonds may be better suited to particular economic conditions or meeting particular investment objectives.

A credit rating can be given to an issuer, either to one of its individual debts or overall creditworthiness. The rating usually comes from credit rating agencies, such as Moody’s, Standard & Poor’s or Fitch, which use standardised scores such as ‘AAA’ (a high credit rating) or ‘B-‘ (a low credit rating).

Considering economic and technical factors

Inefficiencies in the bond market cause potential returns available from one bond or sector to outweigh each other at different times. By carefully researching the issuers in the market, as well as considering economic and technical factors, bond fund managers aim to manage portfolios of bonds that suit the current investment conditions.

How bond fund managers perform is typically measured against an index of bonds in the region or type of issuer in which they invest. This is known as a ‘benchmark’. The fund manager will aim to outperform the benchmark, as well as protect investors’ capital when the wider market is falling.

Bond Jargon

Face Value/Par Value
The par value or face value is a term used to define the principal value of each bond, which means the amount you had paid while purchasing the bond. The amount that you paid while purchasing the bond is the exact amount that you should expect in return once the tenure of the loan is completed.

Maturity Date
The maturity date of a bond is the date on which the bond validity expires, and the company or government that issued you the bond should pay you back the entire face value or par value at the end of the maturity date.

Coupon
A coupon is the annual interest amount in percentage that you will be receiving for the face value of the bond.

Yield
The yield of a bond is the percentage of annual interest that you get paid for your bond depending on the current market value of the bond you purchased.

Investment Grade
Investments in terms of bonds are generally made by taking the bond investment grade into consideration. The bond investment grade can be considered as the score of a company depicting how likely the company is to pay back your bond after the end of the maturity date.

The investment grade for each company is offered by different agencies such as Moody’s, Fitch and Standard & Poor. In order to be considered trustworthy for buying bonds from, any company should have at least a rating of ‘BBB’. The companies with a ‘BBB’ grade rating are highly likely to pay back your investment amount after the maturity date and are safe bond investments. The companies that have a rating of ‘BB’ or lower are considered to have a ‘junk grade’ and is not at all recommended while buying bonds.

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INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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Deciding what to do with pension savings – even if you’re still working

Admin : May 21, 2018 10:00 am : Articles, Pensions, Working Women, Workplace
It might seem like a far off prospect but knowing how you can access your pension pot can help you understand how best to build for the future you want when you retire.

On 6 April 2015, the Government introduced major changes to people’s defined contribution (DC) private pensions. Once you reach the age of 55 years, you now have much more freedom to access your pension savings or pension pot and to decide what to do with this money – even if you’re still working.

Depending on the scheme, you may be able to take cash lump sums, a variable income through drawdown (known as ‘flexi-access drawdown’), a guaranteed income under an annuity, or a combination of these options. This means being faced with the choice of deciding how much money to take out each year and setting an appropriate investment strategy. It goes without saying that your income won’t last as long if you take a lot of money out of the pension pot early on.

What are your retirement income options?
There are many things to consider as you approach retirement. You need to review your finances to ensure your future income will allow you to enjoy the lifestyle you want. You’ll also be faced with a number of different options available for accessing your pension. Being faced with such an important decision, it’s essential you obtain professional financial advice and guidance. We’ve provided an overview of the main options.

Keep your pension pot where it is
You can delay taking money from your pension pot to allow you to consider your options. Reaching age 55 or the age you agreed with your pension provider to retire is not a deadline to act. Delaying taking your money may give your pension pot a chance to grow, but it could go down in value too.

Receive a guaranteed income for life
A lifelong, regular income (also known as an ‘annuity’) provides you with a guarantee that the income will last as long as you live. A quarter of your pension pot can usually be taken tax-free, and any other payments will be taxed.

Receive a flexible retirement income
You can leave your money in your pension pot and take an income from it. Any money left in your pension pot remains invested, which may give your pension pot a chance to grow, but it could go down in value too. A quarter of your pension pot can usually be taken tax-free, and any other withdrawals will be taxed whether you take them as income or as lump sums. You may need to move into a new pension plan to do this. You do not need to take an income.

Take your whole pension pot in one go
You can take the whole amount as a single lump sum. A quarter of your pension pot can usually be taken tax-free – the rest will be taxed. You will need to plan how you will provide an income for the rest of your retirement.

Take your pension pot as a number of lump sums
You can leave your money in your pension pot and take lump sums from it as and when you need until your money runs out or you choose another option. You can decide when and how much to take out. Any money left in your pension pot remains invested, which may give your pension pot a chance to grow, but it could go down in value too. Each time you take a lump sum, normally a quarter of it is tax-free and the rest will be taxed. You may need to move into a new pension plan to do this.

Choose more than one option and combine them
You can also choose to take your pension using a combination of some or all of the options over time or over your total pot. If you have more than one pot, you can use the different options for each pot. Some pension providers or advisers can offer you an option that combines a guaranteed income for life with a flexible income.

Significant effect on the amount of income available
The earlier you choose to access your pension pot, the smaller your potential fund and income may be for later in life. This could have a significant effect on the amount of income available to you, meaning it may be less than it could have been, and it could run out much earlier than expected.

Taking an appropriate income or money from your pension is very complex. We’ll help you access your options. Remember: if you choose to only withdraw some of your money, what’s left will remain invested and could go down as well as up in value. You could also get back less than has been invested. Also, if you buy an income for life, you can’t generally change it or cash it in, even if your personal circumstances change. And the inheritance you can pass on depends on what you decide to do with your pension money.

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A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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Are you too kind with money?

Admin : May 15, 2018 12:21 pm : Articles, Our News

Speaking to a client the other day she told me she couldn’t afford to treat to herself to a spa day, costing around £150, due to having children. They had kids clubs and days out planned, which meant the majority of any ‘spare’ money went on them! Another lady told me she had 3 older children still living with her but they were costing her a fortune in food and that she couldn’t change her mortgage from interest only to repayment because they were still at home. This would mean in 8 years time the mortgage company would expect the debt in full to be repaid; surely her children didn’t want that for her?

It left me thinking that maybe, women are putting their own children’s needs and big wants before their own basic financial requirements before treating themselves? We all know that if you are on an airplane and there was an emergency that you are to put on your own mask before you help another, thus meaning you can help others around you. Many of us don’t seem to do this in life.

Over the 18 years I’ve worked in financial services, I’ve met every kind of client there is and seen most situations there are. Thankfully most are really lovely kind people. Throughout these conversations, I’ve discovered four types of clients. One being the Big Hearted. Generous at heart and with children they spoil them in ways they don’t think they are spoiling but is part of life today. As they grow older those children become more demanding and expect more, maybe not understanding the value of money themselves. Overall they tend to put others needs first and always wanting the best for them. However, for some this kindness is a replacement of genuine affection.

The three other profiles are BohemianCollector and Prominence. Would you like to know which profile you are?  I’ve created a mini quiz asking a few key questions to see what kind of spender you are, why not give it a go…

Spending Profiles Quiz

Which kind of profile are you? I’d love to hear from you.

Love Rebecca x

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Evolution Financial Planning Ltd is an Appointed Representative [no. 593368] of New Leaf Distribution Ltd which is Authorised and regulated by the Financial Conduct Authority. Number 460421. Registered Office Address is 1st Floor Princess Caroline House, 1 High Street, Southend On Sea, Essex, SS1 1JE.