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Wealth Checklist – What should you consider?

With lockdown measures in place, it makes sense to use this time wisely and a financial spring clean certainly seems like a good idea. Director, Matthew Bromley has put together a quick list to look over as starting point to help you get your financial tidy up under way.

1. Write a will

If you already have a will, this time may be a good opportunity to review the document and determine if it needs updating. This may be a new will to reflect changes in legislation or circumstances since it was written or  via a codicil.

2. Establish a Power of Attorney

A Power of Attorney is a legal document that allows someone to make decisions for you, or act on your behalf should you no longer be able to, or if you no longer want to. This could be in the short term, for example as a result of spending a period of time in hospital or long term, due to mental incapacity.

These decisions can relate to your general welfare, including decisions made on your daily routine, any medical care, or in choosing a care home – this is known as a Health & Welfare Lasting Power of Attorney.

Alternatively, you may require assistance on making decisions, should you be physically or mentally incapacitated, regarding your finances. This includes managing your savings and investments, structuring your income requirements, paying your bills or selling your property(s) – this is known as a Property & Financial Affairs Lasting Power of Attorney (LPA).

You are able to appoint one or more attorneys to help you make the decisions on the above. An attorney must be over 18 and have the mental capacity to make their own decisions. Where the expectation is that the attorney could only be required for a short period of time then a simpler ordinary power of attorney could be considered rather than an LPA.

3. Collate lost pensions arrangements

Pension funds which you have accumulated during your working life could make a real difference to your overall pension savings when you reach retirement. We regularly see clients with several pots from several employers, many of which have not been reviewed or analysed for many years.

You are now able to track down the pension scheme’s contact details by using the ‘Pension Tracing Service’ which is a free government service on the following address: https://www.gov.uk/findpensioncontactdetails

4. Update pension beneficiary form (expression of wishes)

In order to specify who you want to inherit your pension after your death you need to have an Expression of Wish in place. If any of your pensions pre-date your current relationship then you may want to review this to ensure they are up to date.

The best chance of ensuring your beneficiaries are able to retain the tax advantageous pension wrapper in the form of a beneficiaries’ pension, is to list them specifically on your Expression of Wish form and check the death benefit options of your existing arrangement.

You should contact your financial adviser or pension providers to find out your current nomination and to obtain the relevant forms as soon as possible.

5. State Pension

In 2016 the UK Government introduced the new single-tier State Pension. Under the previous system it was difficult to understand exactly what you may have been entitled to until you reached your state retirement age, however the new system is designed to make this far simpler.

The new State Pension is based on your National Insurance record, requiring an individual to have 35 qualifying years to be eligible to receive the full amount. A qualifying year can include years where you have been in full time employment, or where an individual has received National Insurance credits given to those who have caring responsibilities (i.e. those receiving Child Benefit).

The majority of individuals are unaware of how much they may be eligible to receive as their State Pension, or at what age they will qualify for it. The link below provides further information on how much you could stand to receive and at what date it could become payable. The State Pension could form a valuable part of your retirement income, so understanding your entitlement is essential – https://www.gov.uk/checkstatepension

6. Review old insurance policies

As your personal and financial circumstances change, so do your insurance requirements, but we regularly see that clients think they have suitable arrangements in place that bear no resemblance to the insurance that they actually do need. If you have experienced any of the following since you last reviewed you insurance arrangements it would be a good idea to revisit your arrangements again:

  • A new job or changing to self-employment.
  • You may have sold your business and be considering retirement.
  • Marriage or divorce.
  • Children or grandchildren.
  • A change in either yours or your partner’s health.
  • Paying off a debt or other liability.
  • Moving house or buying/selling property. Making financial gifts from your estate.

As you review these policies, you should also check if your life assurance policies are held in trust. A trust is not appropriate for all types of insurance but where appropriate a trust will mean that when the funds are paid out they do not automatically form part of your estate or your beneficiary’s estate on your death.

7. Consider new insurance policies

If you do not have any insurance currently in place, then this is something that you may wish to consider. Putting in place a basic level of protection is probably more affordable than you think and you could buy certain life insurance for just a few pounds a month.

Given the recent COVID-19 pandemic and the increasing levels of staff being furloughed, or made redundant now could be the time to consider your ongoing protection needs for you and your family.

8. Consider making gifts

Right now might be a time that someone close to you needs some financial support more than ever and you may want to help. Making an outright gift from capital is usually classed as a Potentially Exempt Transfer for Inheritance Tax (IHT) purposes. This means that if you were to pass away within seven years of making the gift, it would form part of your estate for IHT purposes unless the gift qualifies for an exemption.

One such exemption is the IHT exempt annual allowance of £3,000 per tax year. Each individual is able to make an outright gift of £3,000 per annum which is immediately exempt from their estate for IHT purposes. In addition, once the current year’s allowance has been maximised, you are able to utilise the previous year’s unused allowance meaning the first gift could amount to £6,000, which is immediately exempt from IHT.

If you have the disposable income to do so, gifts out of income could also be immediately exempt from IHT provided the gifts are from disposable income, the intention is to establish a regular pattern of gifting and, they do not adversely impact on your standard of living.

9. Charitable donations

You only have to hear the story of Captain Tom Moore, a 99-year-old war veteran who has raised an enormous amount for NHS Charities Together by setting out to walk 100 lengths of his garden before he reaches 100, to realise how many people are making charitable donations during the lockdown. You may be making donations to a charity close to your heart at this time too.

If you are a UK tax payer, when you make these donations, you are usually able to elect to apply Gift Aid to these contributions meaning the charity you are donating to receives an extra 25%, at no cost to you.

In addition, if you pay tax above the basic rate, you can claim the difference between the rate you pay and basic rate on your gross donation (i.e. the donation amount after gift aid is applied). You should therefore remember to make a note of the donations you make so that you can apply for the additional relief on completion of your self-assessment tax return.

10. Budgeting  

With all this extra time on our hands, now could be a good time to go through the rather boring (and sometimes frightening) exercise of seeing what you normally spend. This may be especially important if you are currently facing a cut in pay or income as a result of the pandemic. While in lockdown you are likely to save costs on some expenses, such as parking, petrol, train fare, coffees, eating out and entertainment.

You may also have been able to put certain monthly subscriptions on hold such as gym memberships.  As such, a good start point would be to review your expenditure prior to lockdown to determine how much is available in disposable income to start a new savings arrangement, make gifts out of income to a loved one or, to your chosen charity.

Please do get in touch if there is anything we can help with. Our team of experts are on hand to provide you with the support you need during these unprecedented times. Email enquiries@cowgills.co.uk and one of the team will be in touch.


The information was correct at time of publishing but may now be out of date.

Posted by Matthew Bromley
6th May, 2020
Get in touch with Matthew Bromley