Have you had questions about your finances that you’ve been too embarrassed to ask a professional? In this four-part series, I’m taking a look at 50 of the most popular questions that people may be too scared or embarrassed to ask. Here we go with the final set of questions.
I.F.A. stands for Independent Financial Adviser. This means they are regulated by the Financial Conduct Authority and are authorised to give professional advice on products such as investments and pensions. They have to meet certain criteria such as qualifications and professional competency. They are independent meaning they can provide advice on any products in the marketplace accessible to consumers to give unbiased and unrestricted advice.
A will is a legal document that enables you to pass on your estate such as money or property to those you wish to benefit from it. You can also provide details on who you would like to look after your children should something happen to you. If you die without a will in place you will be subject to intestacy rules and these will decide what happens to your estate.
There are various different types of Power of Attorney. If you are writing one it will be called a Lasting Power of Attorney. This is a legal document that means you can appoint someone to help make decisions if you are unable to. There are two types of Lasting POA:
You can appoint a different attorney for each of these.
If it is a Defined Contribution scheme the money will pass to your beneficiaries. They will receive the capital which will be decided by the pension trustee. They will be guided by your will or Death Nomination form. You should make sure you complete one of these forms for any pensions you have.
If it is a Defined Benefit it may provide a pension for beneficiaries up to the age of 18 or 21 if they are still in full-time education. It will also provide a spouse pension when they reach the scheme retirement age.
If you move to a new company the pension you previously had still exists but it will no longer receive ongoing contributions towards the plan. The sum in the pension will continue to be invested and will hopefully continue to grow, dependant on the underlying fund.
Yes, these are your pensions and you are in control of them. You could transfer your pensions to your new company pension or a new provider. There are several factors to consider before transferring your pensions and it may be beneficial to take financial advice.
Yes, you can contribute to a pension. The amount you can contribute will depend on the rules and how much you earn. Alternatively, the business could pay into the pension for you as long as the contribution amounts are appropriate. This is an allowable business expense and will reduce the level of corporation tax payable.
This is possible but it may only be cost-effective if you have a number of employees. It is possible to set up a life insurance policy paid by the business which is also allowable as a business expense. This is called a Relevant Life Plan and is a tax-efficient way of setting up a plan. It’s a great option for business owners who aren’t big enough for a Death in Service scheme.
If there is more than one shareholder in the business you should consider other insurance such as Shareholder Protection. This can ensure that there is a lump sum to enable the business to buy the shares should one of the Directors pass away. You should also ensure there is an appropriate Shareholder Agreement as to what would happen in these circumstances, as currently the shares may pass to the deceased estate. In this circumstance they may want to become involved in the business or sell the shares. This may not be the wishes of the remaining Directors and cause problems.
This can be a Life of Critical Illness Policy that can be taken out on an employee within the business. It is designed for someone who is key to the running of the business and the overall profitability. This could be a director or a sales person within the business. if that person was to pass away or be unable to work due to a critical illness, this could have a massive financial impact on the business. A Keyman Insurance policy can help offset this financial impact.
Financial planning is a long term coherent strategy that looks at all the elements of your finances and goals. It then creates a financial strategy to achieve these. It should cover all of the elements covered in these 50 questions and consider cashflow, future earnings, existing investments and pensions and appropriate insurances.
The aim of financial planning is to have a coherent strategy to help you achieve your personal and financial goals such as buying a dream home, paying for private school fees, retirement, selling a business and stopping work.
It should be viewed as an ongoing process that is regularly reviewed and adapted as your life and circumstances change.
This article doesn’t constitute financial advice and is intended as information only. Should you need financial advice you should speak to a trusted financial adviser. For simplicity and brevity purposes, I have been unable to cover all of the different elements that I could answer. This is intended to be as simple as possible and not an all-encompassing answer.
You should do your own research before acting on any information within this blog.
