Do it for the kids

An estimated 46,300 dependent children (aged 0-17) are bereaved of a parent each year. that equates to 127 newly bereaved children each day.*

As depressing as this issue may be – and hopefully unlikely – it makes sense to plan ahead, and we set out here a few options that you should consider with regard to the future well-being of your children.

family income benefit

This is an alternative (or additional) type of life cover to consider, if you have young children.

Whilst you may have normal life cover in place to help pay off the mortgage, what about the everyday items such as food, clothing, bills, fuel and other expenses such as a new car, or holiday?

This is where Family Income Benefit could help, as this generally lower-costing product is designed to pay out a tax-free amount until the children have grown up. This means it’s normally taken out over a shorter time period of, say, a 10 to 20-year term. If there was a claim in the first year, then it would provide a monthly payment until the end of the policy period. Alternatively, if a claim was made with two years left, then it would simply pay out for the last two years, or not at all, if there was, fortunately, no claim made.

guardianship arrangement (or will)

Again, this is pretty morbid stuff, but vital, and once done you can file it away, and return to your normal parenting needs.

But first, here’s the horror bit. Did you know that if there isn’t a Guardianship arrangement in place to protect your young children – and, for example, both parents sadly perish in a car accident – then the children may have to initially go into Care!

The simplest way to protect against this is through a Will, or by having a Guardianship letter in place, both of which will set out your wishes, and whom you want to appoint as their guardian.

Yet just over half of all UK adults (51%) have not made a Will*, let alone ensuring that a Guardianship letter is in place.

Similar circumstances might occur if a couple aren’t married and the mother dies and hasn’t previously granted parental rights.

As unlikely as this event may be, it would prolong a nightmare scenario if the worse did occur, and it’s relatively easy to sort out.

trusts

A Trust is another legal arrangement, which could benefit the children, along with other dependants. For example, it can help ensure that life policies are paid out speedily to the beneficiaries.

It can also protect beneficiaries who might be too young to handle their affairs. Or, it could potentially enable you to ringfence any payouts to help reduce a future Inheritance Tax liability.

However, not all protection policies should be written in Trust, so do take advice.

Whatever your situation, do talk to us to establish the best way forward for your needs and circumstances.

HM Revenue & Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The Financial Conduct Authority does not regulate will writing, trust or taxation advice.

As with all insurance policies, terms, conditions and exclusions will apply.