Tuesday, 17 April 2012

Could you leave your children at the mercy of Social Services?

The easiest way to make the toughest decision

Don't leave your child's future to chance
“If anything happens to us, my sister (mother, best friend) will look after the kids, I’ve already talked to them about it.”

Sounds familiar? It’s what an awful lot of people think. The truth is rather different, however. If you haven’t made a Will, then the decision is out of your (and your sister’s, mother’s or best friend’s) hands, because Social Services will make the decision as to who will be the guardian of your children until they reach the age of 18. For those people who are not married to the other parent of the children, it gets even worse, because the father is not automatically given guardianship of his own children should the mother die.
And there’s such a simple way to avoid this; make a Will!

The key decision to make is who, if you die, should look after your children and carry out your wishes for their care. Even if you haven’t got many worldly goods, your most valuable asset is your children, and a Will ensures they go where you want them to. It obviously ensures that all your other assets go where you want them to as well.

Guardians should ideally be of a similar age to the parents. If appointing older guardians, then make sure you review their suitability at regular intervals.

Unless the guardians are a couple, do not appoint joint guardians. Typically appointing both grandmothers is a recipe for disputes. On the face of it they get on, but would they if they had joint guardianship of the children? Whom do they live with? What type of discipline do they get? Which church do they go to? The list is endless. The last thing you want is to risk your children being the centre of a dispute when they are already upset.

Appointing guardians who live abroad, can cause problems as permission will be required to take them abroad and that might not be granted. Just because a person is a guardian to children, the children will not automatically be allowed to live in the guardian’s country (e.g. USA). Nor will the guardian be automatically allowed to live in England unless they are from the European Union.

One final point – before you take the big step of appointing guardians for your children, make sure they want the job and are prepared to look after them.

If you need to make a will or just need some advice, call us today 01778 382723.

Friday, 13 April 2012

Is Your Life Relevant?

If you worked for a big organisation chances are that amongst your benefits would be a death in service insurance linked to your pension scheme. As an entrepreneur you probably don’t have that luxury. However there is a way that you can insure your life through your business without falling foul of the benefit in kind rules, and whilst most death in service benefits to out at four or five times your salary a relevant life policy can in certain cases offer cover of up to twenty five times salary.

Sounds great, but who is it aimed at and how does it work?

The plan is aimed at three groups, Company Directors, High Earners and smaller companies who don’t warrant a group life insurance cover, but want to protect key staff members.

The policy must be written on a single life basis and the only benefits which can be provided under the relevant life policy are terminal illness cover during the employee’s employment and Lump sum death benefits. In other words, the policy can’t be used to provide other benefits such as critical illness benefits, income protection or disability cover.

Cover can be taken on a fixed term basis of up to 50 years in some cases. However, the policy can’t continue beyond the life assured’s 75th birthday. The employer pays the premiums to maintain the policy. If the employee leaves the employment of the original employer, there are two options:-
(a) The employee could choose to let the policy lapse or
(b) The life policy could be maintained by the employee personally. However, under the terms of the policy the terminal illness cover would terminate.

The premiums paid won’t form part of the employee’s annual allowance. The annual allowance is the amount that can be contributed by, or on behalf of, an individual to any registered pension scheme with the benefit of tax relief. So the employee is still able to make full use of their annual allowance to make contributions to a registered pension scheme. Premiums paid by employers are not normally assessable on the employee as a benefit in kind so they’re not subject to income tax. Premiums paid by employers are not normally assessable for employer or employee National Insurance contributions.

A relevant life policy could be worth serious consideration if you are looking to cover yourself or your key staff, however you should always seek professional financial advice on your particular circumstances from an independent financial advisor. If you feel we could help please call us on 01778 342291