Bereavement is always difficult, but it can really pay to seek financial advice.


Experiencing the loss of a loved one is never easy and there are many things to think about If there is a Will, then it is usual to engage a solicitor to apply for Probate to administer and distribute the Estate in accordance with it.

Seeking the advice of a professional financial advisor could be very important in ensuring that you do not miss important tax breaks or government benefits.

An example of this could be inheriting a large pension entitlement where access to the some or all the funds is required. If the scheme value exceeds the current lifetime allowance (£1,055,000- 2019/20) on death you could be given a tax charge on the excess. However, it is possible to posthumously apply to HMRC for protection, either fixed or individual, depending on when the last contributions to the scheme were made. This can result in very significant tax savings.

Another way in which advice could be important comes with ISA portfolios. Previously, on death of the holder all tax-free status was lost, but under new rules known as additional permitted subscription, the allowance can be retained by the surviving spouse thereby adding to their existing tax-free savings.

Thinking about Inheritance tax, it is important to consider what gifts have been made in the Will. For example, if a significant gift was made to surviving children rather than a spouse it could create a 40% tax charge immediately. Whereas, with clever planning a change can be made to the Will using a Deed of Variation that would allow the spouse to inherit and, then gift to the children, assuming the spouse lived 7 years, there would be no tax to pay. Of course, all parties within the family must agree to this change.

Finally, having knowledge of what benefits can be claimed from the government by the spouse can have significant financial benefits. A widowed client could apply for bereavement support payment which is available to anyone under state pension age whose late civil partner or spouse paid national insurance contributions for at least 25 weeks or, died because of an accident or disease caused by work. The lower rate is a lump sum of £2,500 plus £100 per month for 18 months. At the higher rate, when eligible for child benefit, you could receive a lump sum of £3,500 followed by £350 a month for up to 18 months. You must claim this within three months from the date of death to gain the maximum.

As this is a specialist area of advice it is important to seek out this information from an appropriate financial adviser. Richmond House Wealth Management has this specialist knowledge and are always available to answer your questions.

John Merrifield. Dip PFS, Cert (Cii) MP.

This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case. Based upon our understanding of UK tax law at July 2019. The value of investments can fall as well as rise and you may not get back the full value of your investment.