Pay for your funeral now at todays prices? Funeral Bonds?

fluffybunny_2

Mojisola wrote: »

Because once they had more than £6k in savings their benefits would have been affected. They would have been trying to save up for big items from a reduced income.

I've read that it can still affect benefits though? it counts as an asset as, hypothetically, they can be cashed in?

http://forums.moneysavingexpert.com/showpost.php?p=20483755&postcount=5

Mojisola

fluffybunny wrote: »

I've read that it can still affect benefits though? it counts as an asset as, hypothetically, they can be cashed in?

http://forums.moneysavingexpert.com/showpost.php?p=20483755&postcount=5

The ones my parents had couldn't be cashed in and were never counted as capital.

fluffybunny_2

Mojisola wrote: »

The ones my parents had couldn't be cashed in and were never counted as capital.

ah right, thats different

bowlhead99

Mojisola wrote: »

fluffybunny wrote: »

I dont understand how paying for their funerals over two years meant that they could then buy other things? surely by "ring fencing" £5k, they would still have been able to buy other things?
Don't get me wrong, I really do think funeral bonds are excellent but I dont understand the logic?

Because once they had more than £6k in savings their benefits would have been affected. They would have been trying to save up for big items from a reduced income.

Not intended to be a harsh criticism but the way you were explaining it, you were allowing them to ease the burden on the state by paying for their own wheelchairs, stairlifts, carers etc and saving money for NHS, LA, grant providers etc, right?

Whereas the way some people would look at it, effectively the LA etc (i.e., us as taxpayers) are only making savings because you're receiving benefits (from us as taxpayers) that you would not have otherwise received, and using them to pay for those things. It is hardly a win-win.

End result is that your parents buy their own wheelchairs with income from the benefits they continue to receive, and the avoidance of the meanstest cap means your parents are able to ensure that they would get a funeral that's a better-than-bare-minimum state one, while still getting the state to give them weekly income which over time will replace whatever of their own money they put in the funeral bonds. Basically you and your family benefit overall by getting access to more taxpayer funding than they would otherwise have had.

Don't get me wrong, I don't get on my moral high horse and pay more tax than I strictly have to and if I were less well off I wouldn't turn down more benefits than I strictly had to. There can definitely be some value in getting your assets off your 'personal balance sheet' if you're in a position where lower assets qualifies for means tested free stuff.

So even if a funeral bond or plan isn't going to give the same potential level of return as, say, an investment ISA or even a cash ISA depending on the state of the economy, it can be useful if it works like a trust that isn't something you 'own' and have to get means tested on. And it's a simple off the shelf product rather than having to ask a solicitor how to put something 'in trust' without being seen to exploit the benefits system.

Also, something with defined benefits with inflation protection (like a funeral plan that delivers you a funeral regardless of whether funeral prices are up or down) may give you a good financial return as well as the comfort of knowing it will hit the target (subject to risk of provider going bust).

A couple of other ideas though:

1) If you want to get something off your balance sheet you can contribute to a pension each year (a few thousand a year even if you don't have earned income). Now the rules are changing, you're not forced to buy an annuity with the assets inside the pension - and when you die having not cashed in the pension, it will generally go to your heirs outside your estate. They can use this to pay the funeral fees.

So if you put 5k into a stock market investment fund inside a pension it wouldn't cost you as much as 5k (because of tax relief) and it may grow at 5-20% a year in the good years. Obviously investments can go down as well as up but this may not matter if the heirs don't mind the investment risk and it gets the cash off your books.

2) If you need to get some cash for a funeral in the event of your untimely demise you will probably find some life insurance options which are not specifically marketed as 'to pay for a funeral' but the proceeds can be used for that and in some cases you might end up paying significantly less to buy the policy than you get back.

Insurance is obviously harder to get once you start to become more infirm but if you are willing to pay big premiums for a few thousand pounds of payout - and those premiums mean you are naturally stopping your savings rising too fast, so you receive more benefit cash - you may find a suitable deal.

Mojisola

Mojisola wrote: »

The ones my parents had couldn't be cashed in and were never counted as capital.

bowlhead99 wrote: »

Not intended to be a harsh criticism but the way you were explaining it, you were allowing them to ease the burden on the state by paying for their own wheelchairs, stairlifts, carers etc and saving money for NHS, LA, grant providers etc, right?

Whereas the way some people would look at it, effectively the LA etc (i.e., us as taxpayers) are only making savings because you're receiving benefits (from us as taxpayers) that you would not have otherwise received, and using them to pay for those things. It is hardly a win-win.

End result is that your parents buy their own wheelchairs with income from the benefits they continue to receive, and the avoidance of the meanstest cap means your parents are able to ensure that they would get a funeral that's a better-than-bare-minimum state one, while still getting the state to give them weekly income which over time will replace whatever of their own money they put in the funeral bonds. Basically you and your family benefit overall by getting access to more taxpayer funding than they would otherwise have had.

Yes, because that's the way the laws work. Just the same as other people use tax avoidance measures to pay less into the tax pot..

As it was, being able to buy things like the stairlift meant that they were able to buy one when it was needed. They were assessed as being entitled to having one bought for them but they would have waited nearly a year before the funds became available.