Financially secure

Nick_C_4

oceanblue -thanks for the various advice, but now you've opened this can of worms, I'd appreciate you explaining a bit more....or maybe this is all available elsewhere?

don't forget about wills and enduring powers of attorney for you and your wife

We have wills, but what are "enduring powers of attorney"?

consider severing any joint tenancy you may have, re-registering as tenants in common, and setting up the provision for discretionary will trusts

You mention life assurance; is it written in trust?

Have you completed a "nomination of beneficiaries" form for the trustees of your employer's pension/death benefits scheme?

What advantages do these have?

oceanblue_3

An enduring power of attorney will enable someone you trust (your wife, for example) to act on your behalf if you were to become mentally incpacitated. It would not acquire any power until and unless you were mentally incapable.

In these circumstances, and in the absence of this provision, your wife would have to apply to the Court of Protection to become your appointed receiver - this is both costly and time consuming.

If you own your house as joint tenants, in the event of one of you dying, the survivor would automatically own all of the house. If your assets exceed, say, £500,000.00 in value, this would lead to only one Nil Rate Band (NRB) of, currently, £275,000.00 being capable of being passed on to your beneficiaries, leaving £225,000.00 being taxed at 40%. If you sever this joint tenancy, and re-register as tenants in common, your 50% "share" of the house can be isolated and, if necessary, left to your beneficiaries via a Discretionary Will Trust. This would not compromise your wife's ability to live in, or to sell, the house, but it would allow BOTH NRB's to be utilised. For this sort of planning you would need to engage the services of a solicitor/will-writer/estate planner, but it's well worth considering.

The proceeds from life insurance policies placed in a suitable trust can be released almost immediately - there is no need to wait for the grant of probate to be issued. Those policies which also cover you on the diagnosis of a critical illness (CI) need "split trust" provisions, which enable the proceeds arising from a CI claim to be paid to the claimant, and not into the trust.

If you are employed, and a member of an employer-sponsored death-in-sevice scheme, the Trustees would be grateful to know whom you would like to nominate as your beneficiary. They may not know you are married, for example. Ultimately, they will decide who is the most deserving recipient, but they are unlikely to cut across your nomination.

nightsong

It's interesting to consider what 'security' means in this context. I agree with deemy's definition, and we are in fact in that position ourselves, fortunately. Needless to say we are fundamentally frugal and there have been many years of living below our means (we're late 40s/early 50s).

But I've become aware that there is no such thing as absolute financial security. Even if you avoid stock maket investment (and you need a really huge amount of money to provide an inflation-proof income if so, especially if you are below retirement age), history shows there is no totally safe home for your money. Even your house might not be completely safe (compulsory purchase anyone?).

From this it may be clear that I have slightly neurotic tendancies And I have learnt to be comfortable with all the above, after all we are in a great and very fortunate position financially. I think I just meant to say that uncertainty is an unavoidable part of life, and there is no such thing as absolute security, financial or otherwise.

EdInvestor

....uncertainty is an unavoidable part of life, and there is no such thing as absolute security, financial or otherwise.

Quite agree nightsong.I came to the view some time ago that the most importnat thing to do was to learn about what financial risk is and how to manage it and live with it.You absolutely can't avoid it, no matter what anyone might say.Millionaires have a load of separate risks affecting them that most of us don't even know about