Tuesday, 28 May 2013

The importance of making a will...

Making a will is important because if you are married at the very least you will want to ensure that on your death your assets will go to your spouse - a will ensures that this will happen without major complications. At a time of bereavement the last thing you would want to burden your family with is a complicated financial and legal process – all because you didn’t think to plan ahead and make the necessary arrangements. There are tax reasons to make a will as well as ensuring that your assets go to the person that you want them to.

For example, in the case of a single person who has no children, but has brothers and sisters and parents - if they don’t make a will, their assets go back to their parents. From a tax point of view that could mean that because that will add to the parents’ assets, they will then end up paying inheritance tax on that extra money when they die. It might be better to make sure that such assets went to brothers and sisters or to a friend, a charity, or even to the church. Often single people feel that they do not need to make a will, but it is something you should seriously consider.

If you have children who are under age (they still are legally ‘minors’), you should also give serious thought as to who you would like to look after them if you were to die while they were still young and needing care. Have you asked someone to take responsibility as guardians? That should be high on your priority list. If you were to die, the people who would be considered in line to do this, maybe a brother or sister in some situations, might not actually be your first preference for such a role. Sometimes it’s hard to think about such a drastic scenario but it can become a massive reality for some people. If you want to be considerate in managing your family affairs it would be wise to have thought through this important responsibility. Also you should so arrange things that funds are available to enable those chosen people to look after your children for what could be a period of some years and lessen the financial burden for them – some thought on this is needed. Without getting heavy about such things it is certainly worth thinking about.

This series of blogs is based on the annual stewardship seminar from King's Church London

Tuesday, 21 May 2013

Tax and Inheritance Tax

You have to be earning a certain amount of money to pay tax – but there are certain things that you can do that will help you keep this to a minimum. Checking that your tax code is correct and ensuring that you are getting all the allowances that are due to you would come first. Like the banks, it is not unknown for the Inland Revenue to make mistakes! Completion of your tax return form will also help you to be up to date with this important item and may sometimes even result in a tax rebate! Self-employed people and employees are in different situations and will need different advice on tax matters.

Inheritance tax

Most people think that this will never apply to them but in the circumstances, say, that you have a house that is worth £300,000 with a mortgage covered by a life policy, or if you are employed and have a ‘death in service’ benefit which could pay out £100,000 if you died while you were working - in that scenario there would be £30,000 of inheritance tax for you to pay on your death – a situation which could take you unawares. Some people might consider that it won’t affect them as they won’t be around to be bothered by it! But if we are talking about good stewardship that means that you would want to think about the situation for your heirs and organise your affairs as well as you can rather than doing nothing. A large tax bill after your death is not good stewardship and would result in there being less to pass on to those left behind.

It is well worth taking some qualified advice to see if your estate might be affected by inheritance tax. That is the essence of stewardship – thinking ahead. If you think that your estate might be liable to inheritance tax then you need to make a will - that is definitely a good thing to do.

This series of blogs is based on the annual Stewardship seminar from King's

Tuesday, 14 May 2013

Good stewardship

Debt is never good - but if you are in debt there are ‘good’ places to owe money and others that aren’t good! You have to look carefully at what is known as the APR on your debt – banks provide a better rate than credit card companies. The percentage you are paying is critically important to the length of time it will take you to pay off the debt otherwise you could end up paying several thousands in interest on a relatively small debt of a few hundred pounds.

Prevention is better than cure and with that in mind at King’s we now provide a Debt Advice Centre called King’s Money Advice. Suzy and Carol Bradshaw head that up and have come to us from Sheffield with a wealth of experience in this vital field of debt advice. They will be a really helpful and important resource for many in debt in our area.

If you are going to prioritise managing your debt you may need careful professional debt advice. Some of the loan companies that advertise in the media that they consolidate debts can result in you paying a final interest rate of 4000%. The so-called lower monthly figure means that the period of the loan is extended - in some cases you can be paying off that ‘smaller’ amount for the rest of your life – or it can seem so. Apart from increasing your income and reducing your expenditure you also need to get the interest rate you are paying down as low as possible. I say again - avoid television loan companies!

This series of blogs is based on the annual Stewardship seminar from King's

Tuesday, 7 May 2013

Money: who does what...

Who in the family deals with money matters? Is it you? I am a great believer in husbands taking the responsibility for finances but let’s face it – sometimes it’s the wife who is better with numbers and finances! You have to work out how to cover it together, I am not of the view that the man necessarily has to do it but I do think that the man should take ultimate responsibility and ownership, otherwise there can be too much abdication of responsibility to his wife. Don’t be disengaged! Deb and I have made it a long-term practice to work closely together on our finances.

In our marriage, I take responsibility for the ‘Big Picture’ planning but Deb makes the day-to-day decisions. If you are married you should talk through together how you will arrange these things. Deb and I have a joint account for household and family expenses – there should be openness and dialogue between couples around the subject of money and how it is spent. And apart from our joint account we also have personal accounts for which we take individual responsibility.

Next - do you have a good filing system for your documents? This is important in handling money. It doesn’t need to be complicated – a concertina-type box file from W H Smith will do – but you need to have something. I am a Big Picture person, Deb is a details person, so we work well together in a lot of things - she has organised all the filing and keeps it up to date. And it’s a good idea to keep relevant bills and banking documents from past years for up to about 7 years for tax purposes.

This series of blogs is based on the annual Stewardship seminar from King's