Articles
Investment
Retirement
Tax

Taking Care of Business

March 4, 2021 – Written by Ben Klein


The focus of our work at Tideway is advising our clients on generating a tax efficient income in retirement.  We ensure the investment portfolio is suitable, well diversified and is generating the income and growth required for clients to draw the required income in retirement.

It is also important to discuss what happens if something goes wrong in the lead up to or in retirement.  By this we mean the loss of mental or physical capacity and death and we shall be covering this in this piece.  It is naturally a more sensitive topic that is perhaps difficult to broach, but one that certainly cannot be ignored. 

Annual Review Meetings

Before we go on to more technical aspects, simply ensuring your spouse / partner or family member is aware of your financial situation and your assets is crucial.  We do not expect you to know details of the underlying holdings etc, but an awareness of the different accounts and how much is in your SIPP, ISA or General Investment Account, for example, is a good start.  It would certainly be worth considering simplifying your arrangements so that you do not have multiple pensions or ISAs to have to administer and ultimately deal with.

Many clients benefit from ensuring their family are part of the annual review process, so that they are not only part of the conversations and aware of the broad strategy, but they also know who your Wealth Manager is.

Again, we do not expect you to be aware of the finer details surrounding the rules of death benefits, it is important to have a broad understanding.  We shall not be covering this here and we can cover this in the future, but of particular importance are the rules surrounding death benefits before and after age 75 for pensions and what the options are.

If you would like more information or would like to discuss this, simply contact your Wealth Manager and they will be more than happy to explain this to you.

Wills

The most well-known tool that is used to manage your estate is by creating a Will, which ensures your estate is distributed on your death, as per your wishes and in an orderly way.  Ensure your will is up to date and corresponds with your wishes.

Expression of Wishes

For those with pension funds, ensure your Expression of Wishes is firstly completed and secondly up-to-date.  If you are unsure of your beneficiaries of your SIPP, please contact your Wealth Manager who will be able to confirm this with you.  The process for updating the beneficiaries is simple and quick.

Although the Expression of Wishes is not legally binding, it does give the pension trustees a very clear guidance as to whom to pay the death benefits to.  They will complete their own investigations and use their discretion, but often they will follow the instructions in the nomination unless there is a good reason not to.

Power of Attorneys

The coronavirus pandemic has highlighted that, regardless of age, there is the possibility that anyone could become unable to manage their affairs, either for a brief period of time or permanently, and someone may be required to deputise on their behalf.

Not only can a power of attorney provide you with the security and knowledge that your finances and personal matters would be taken care of if you are incapacitated, but they can also save a lot of stress for family members if worried about the health or mental capacity of a relative.

Power of Attorneys and Pensions

As all of our clients are in investment portfolios and many have the ability to or are in the process of drawing funds down, it is important to have a Lasting Power of Attorney in place as the pension we manage for you represents an ongoing investment decision.

Your attorney will therefore be able to act on your behalf in regards to the investments and tax wrappers we manage on your behalf, and as such you would be able to continue following our most up-to-date advice.

Lasting Powers of Attorney

The law surrounding powers of attorney have been updated on several occasions in the past 20 years, and the most holistic and recent iteration of the power of attorney is a Lasting Power of Attorney (LPA).

There are two elements which can be applied for. There is no rule that says both need to be requested. They are a Power of Attorney covering your health and wellbeing and another covering your finances and property.  Both are usually taken out via a solicitor.

  • A health and welfare LPA allows medical decisions to be made about a family member should they become incapacitated because of ill health.
  • A property and financial affairs LPA gives similar permission over money and property, such as managing bank accounts and paying bills.

If you do not have a power of attorney in place then an application to the Court of Protection is needed and subsequently a deputy is appointed for them.  Although this will provide protection and safeguards for your finances, the process is more expensive and can take more time.

In our experience, most people do not have a Power of Attorney that fully covers their affairs.  They may have a Power of Attorney that covers their property and financial affairs, but the health and wellbeing LPA is often overlooked, potentially as it is not seen as being as likely an event, or being as relevant as the financial and property LPA.

If you already have a Power of Attorney in place, it is still worth reviewing as the law has been updated several times and you may not have the newest and far reaching protections.

Tideway also works closely with several solicitors and if you would like us to recommend one to you we would be happy to arrange this.

Summary of the key points:

  • Make sure your spouse / partner / family member is part of the annual review meeting with your Wealth Manager
  • Make sure your family are aware of your different accounts and assets
  • Consider simplifying your arrangements
  • Ensure you have a valid and up-to-date will
  • Ensure your Expression of Wishes is completed and up to date
  • Ensure you have a Power of Attorney set up covering both health and welfare and property and financial affairs

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