As you approach your retirement, you may be thinking about spending quality time with family and friends, enjoying a few more hours on the golf course, taking up new hobbies or planning a ‘once in a lifetime’ trip. There are however, a few important considerations that you may wish to think about before you turn on your out of office for the last time.
When you are nearing retirement you should review your affairs. Are you prepared for the years ahead?
Estate Planning
Estate planning will allow you to confirm what you wish to happen after your death. In recent years, legislation has changed in relation to the transfer of any remaining pension funds on death. You should ensure that you have nominated a family member or friend to inherit your pension fund and review any existing nominations to ensure that they meet with your current wishes, or indeed, family circumstances.
These will allow for the nominated person (or persons) to inherit your pension fund at any age and, whilst the funds remain within the pension, they will not be subject to Inheritance Tax, as they are outside the nominated person or person’s estate. You should consult your pension provider for more information.
A properly structured estate plan will ensure that your wishes are fulfilled and there are no unintended consequences for your loved ones. The rise in property prices and investment values may leave your estate liable to Inheritance tax and you may for instance wish to put some money aside which is easily accessible to meet this liability.
You may also be contemplating:
- your ability to support the next generation, during your lifetime, and decide to give gifts to your family and friends
- whether you wish to prepare for financing any care that you may need as you get older; and
- whether you wish to retire abroad, and what tax implications this may have on your estate.
It is never too late to start protecting your estate and planning for your future.
A lot of the information and advice available on planning for your retirement is concerned with pensions and your finances generally. Further to any lifetime planning you may have undertaken in the past, Financial Advisers can assist with Retirement Planning, which is about more than just your pensions but looking at your assets as a whole and how you might make them work for you, during the transition from working life to retirement, with a view to helping you maintain a comfortable standard of living. However, as well as consulting your Financial Adviser, or seeking such advice, you should also consult your Solicitor.
Wills
Wills are an essential part of any estate planning, as they set out your instructions and wishes for the distribution of everything you own upon your death. There may be specific family members, friends or charities that you wish to support. If you do not have a Will in place, the law decides who will inherit and this may be different from what you would want.
The making of a Will is usually a straightforward process and you can rewrite it as many times as you wish during your lifetime. You should ensure that you review your Will regularly, and particularly after or at the time of any significant life events such as births, deaths, marriage and retirement, to ensure that it reflects your wishes and is appropriate for your individual circumstances.
Powers of Attorney
On retirement, you may also wish to plan for the possibility that, at some point, you may no longer be able to make decisions for yourself, or in later years may simply require some assistance with your affairs. A Power of Attorney is a document which authorises one or more people to make decisions and deal with your affairs on your behalf. A Power of Attorney can cover financial or welfare matters or both. It allows you to decide who can act on your behalf and what specific powers they will have.
If you do not have a Power of Attorney in place it may be necessary to appoint a Guardian. This can be a time consuming and costly process and your appointed Guardian may not necessarily be the person that you would have chosen.
By putting a Power of Attorney in place you are not giving up your ability to deal with matters but instead, you are ensuring that your affairs will be looked after and any decisions required made by a person you trust, if in later years you are no longer able to deal with matters.
If you take the time to think about these considerations, it will put your mind at rest and allow you to enjoy your retirement. And once you have dealt with getting your financial and legal affairs in order comes the fun part – planning what you are going to do with all the free time you are going to have.
Hannah Dossett is a Senior Solicitor in our Private Client team. If you wish to discuss the potential options available to you, we would urge that you seek advice at the earliest possible stage. You can contact Hannah on 0131 624 6815 or email hdossett@thorntons-law.co.uk or any member of our Private Client department.
