Facts & Figures

"Over recent years the increase in life expectancy among older adults has been particularly dramatic. Between 1970 and 2004, life expectancy at age 65 in England and Wales increased by 4½ years for men and 3½ for women."

Goverment Actuary's Department

Glossary of Terms

Advance Funeral Directive

The best way to ensure your wishes are carried out at your funeral is to make them known and commit them to writing, in an Advance Funeral Directive or Plan. You can be as detailed and specific as you want, or just generally indicate what you want, such as "no music" or "the least expensive coffin" or whatever.

The key thing to realise is that if you do not make some form of plan you are likely to cause anguish and worry to your family who may be left wondering what you would have wanted.

Assurance Policies (Whole Life)

A useful way of ensuring there is enough money to pay for your funeral, or indeed to cover other costs or to leave a legacy is to take out a whole of life assurance policy. These can be taken out at any age, usually without any need for medical tests or declarations and guarantee a lump sum payout on death in return for a monthly premium.

Such policies are offered by many of the large financial institutions.

Discretionary Trusts

Discretionary trusts are devices which can be used in planning to mitigate tax, when contemplating making a Will. There are many different types, for different circumstances. They are simple in concept but require the knowledge and experience of a professional person from the legal profession.

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Donate your Body

An important, if not vital, part of the training of medical practitioners, in particular those who intend to become surgeons, is to be able to dissect real human tissue - in the form of a cadaver or dead body. In recent years fewer and fewer people have elected to donate their bodies for such training or research and there is currently a shortage.

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Enduring Power of Attorney

An Enduring Power of Attorney is a legal document which enables anyone to nominate one or more people as attorneys to act on their behalf should they become unable to do so themselves through physical or mental incapacity.

Under legislation which became effective on 1 October 2007 EPAs were replaced by LPAs (Lasting Powers of Attorney). It is no longer possible to set up an EPA, although any which were established before the deadline will remain legal and valid.

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Equity Release

For those who are asset rich but cash poor (such as many pensioners) Equity Release can be a means of solving the dilemma. There are a number of different types of schemes all of which involve selling part of the equity in one's home to release cash, whilst retaining the right to live in the home. It is highly recommended that professional advice is sought before embarking on a scheme.

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Funeral Bonds

Funeral bonds, or pre-paid funeral plans, are a means whereby a funeral can be paid for (and planned) at any time during one's life. Anyone over the age of 18 can buy a plan. They are regulated by the OFT.

The advantage for the purchaser is that the funeral is paid for at current prices, even though the event may not happen for several, or even many, years. The advantage for the funeral director is that cash is received up-front, an important factor in an industry which suffers badly with late payments and bad debts.

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Inheritance Tax

Inheritance tax (IHT) is payable on the value of the estate of a deceased person over a certain threshold.

In the financial year 2007/08 the threshold (over which amount tax is payable) is £300,000 for every estate. However, for married couples and registered civil partners any 'unused' part of the threshold on the first death is carried over to the estate of the surviving party, in effect potentially doubling the inheritance tax threshold to £600,000.

The tax is levied at a flat rate of 40% on the whole value of the estate over the threshold. The threshold is planned to increase every year to 2010 when it will be £350,000.

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Lasting Power of Attorney

Legislation introducing Lasting Powers of Attorney and replacing the old Enduring Powers of Attorney was introduced in October 2007.

There are two types of LPA - one dealing with Property & Financial affairs and the other dealing with matters of Personal Welfare. Both are legal documents enabling an individual to appoint an attorney (or attorneys) to deal with their affairs in the event they become incapacitated.

Although it is no longer possible to draw up an Enduring Power of Attorney any which were set up before 1 October 2007 will remain legal and valid.

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Lifetime Gifts

These are literally gifts made during one's lifetime. They assume significance because some types may give rise to inheritance tax liability on the death of the donor, depending on how long before death they were made. Some others are exempt in all circumstances.

Careful planning in this area, both before one's lifetime and in the actual construction of a Will can mitigate tax payable.

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Living Will/Advance Directive

A Will deals with the disposal of the deceased's assets after death. A Living Will or Advance Directive deals with one's wishes as to the type of medical treatment one would like to have, before and in the time leading up to death.

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Organ Donation

Medical advances over recent years have made it increasingly possible for doctors to use the organs and some of the tissue from those who are clinically dead for the benefit of other patients.

For those who wish to offer parts of their body for these purposes a declaration (through registration with UK Transplant and through the expediency of carrying a donor card) will help ensure others may benefit from their death and spare the anxiety and possible anguish of the immediate family who might, in any event, be asked for their permission.

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Potentially Exempt Transfers (PETs)

A PET is a lifetime gift which is potentially exempt from inheritance tax. Whether or not such tax will be levied on the death of the donor depends on the length of time which has elapsed between the date the gift, or transfer, was made and the date of death. If seven or more years have elapsed the gift is totally exempt. If the time elapsed is less than seven years some tax may be payable.

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Residential Care

The likelihood, for all of us, that our final months or years will be spent in some type of residential care home increases each year - as our life expectancy increases over the years. Unless nursing and medical care is required, as opposed to simply residential care, most of the cost incurred falls to the individual concerned.

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Tax & Estate Planning

This phrase refers to the process of planning, both in drawing up a Will and in the process of arranging the distribution of an estate, to minimise the tax liabilities of the estate to the eventual benefit of the beneficiaries.

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Will

A Will is a document which lays out how you wish your possessions (your estate) to be distributed after your death. It names beneficiaries (which could include charities and other institutions, as well as individuals) and defines the amount of money they are each to receive.

Making a Will offers the opportunity not just for you to decide what you want to happen to your possessions - it also offers the opportunity to maximise the amount of after-tax wealth you pass on.

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