The days are getting shorter and as the darker colder weather draws in it time to get in and wrap up warm. Despite the worries around energy bills this year, your wellbeing is of utmost importance so do try to keep warm by layering up and making some smart choices where possible.
As we approach Christmas it starts to put added pressure on our finances so once again don't forget to get in touch if you think we can help find financial savings on your bigger commitments like mortgages and insurance.
The Bank of England Base Rate has been in the news several times in as many months, and with it has been a lot of noise around mortgages and what the Base Rate increases means for mortgage rates. Not much of this has felt like good news, but as we have said previously: ‘we’re here to help.’
It can be easy to question the need of obtaining financial advice when considering those bigger financial obligations so why not take a look at some of the reasons, you’ll want to speak to us when it comes to looking at your mortgage and more in the coming months, amid the noise.
If the mortgage later turns out to be unsuitable for any reason, you can make a complaint. If necessary, you can take your complaint to the Financial Ombudsman Service. This means you automatically have more rights when you take advice.
Not getting advice means you have to take full responsibility for your mortgage decision.
If you don’t get advice, you could end up:
If your loved ones are looking at their mortgages why not share this information with them to ensure they can also obtain the most suitable advice for their needs too.
Get in touch today to speak to us about your mortgage needs
Get in touch today to discuss organising private healthcare for your small business
People over the age of 50 often find it difficult to get a mortgage because many lenders will not take future income, such as pensions, into account. But some lenders do, in particular those who offer retirement interest-only mortgages (RIOs).
Later life borrowers who find they cannot get a mainstream mortgage, often turn first to equity release. Many brokers are also trained to look at equity release as a first solution but, while it has a really valuable role to play, it may not always be the most appropriate option available for you.
Tempting as equity release might be with no monthly payments to make, there are many reasons why you may not qualify or why it simply is not the most suitable product for you. This is heightened if you’re only in your 50s.
Reasons could include age restricted properties; the construction type may not fit with the lender’s criteria, or you may prefer to retain a significant proportion of equity in your property and don’t want to run the risk of this being eroded. In each of these cases retirement interest-only may be a viable, affordable and the right option.
Retirement Interest-Only Mortgage Case Study Mrs R
Mrs R has devoted her years in work - and in semi-retirement - to helping children and young adults who've endured challenging starts in life. But when it came to making home improvements and remortgaging her house, as a single woman in her 60s with multiple incomes, her financial advisor warned that options are more limited.
During her professional life in education and social care, Mrs R worked in some of the most difficult environments: areas suffering from riots and social unrest; deprived inner-city schools; and working with children whose lives had been continually disrupted due to their family circumstances.
Since semi-retirement, Mrs R’s commitment to vulnerable children hasn’t waned either through her work with charities and support groups.
“All the way through my life, I've only ever been looking for ways that I can make a difference to children,” she says. “And I was never happier than when I was actually teaching.”
However, Mrs R was to find her own circumstances challenging as she approached the end of her fixed-rate mortgage. Having moved from one of the cheaper areas of the country to one of the most expensive, to be near her family, she was looking for some financial assistance to make home improvements.
“I wanted the back of my house to be a beautiful liveable space – it’s south facing so I wanted to sit and look out at my garden as opposed to looking out at the road in front,” she explains.
“I needed additional money to do that, but even though I didn’t have any other debt and a good credit profile, my existing lender wanted me to take out a second mortgage on top of my first. It just felt messy.”
Mrs R’s issue was that her high street lender had a somewhat blinkered view of her income streams and her affordability and suggested she would have to move to a repayment mortgage before they would give her the extra capital.
“I don't see the need to own my house outright so I wanted to stay interest-only,” she continues.
“The other problem is that most lenders will only take into account two income streams, but I have five – my pensions and two incomes from part-time and self-employment. In a couple of years’ time, when I start getting my state pension, I’ll have six.
“Individually, none of these are sufficiently large to service a mortgage of the size I was asking for but, when you add them all up, it's a fairly decent income.”
Mrs R sought the help of a financial advisor, who put her in touch with LiveMore, where everyone’s circumstances are appraised according to their own merits instead of applying rigid rules and criteria.
“[This is what] a lot of people are looking for now. [As a society] we’re moving away from everybody having one job. I've not had one job – I've reinvented myself and I'm still doing it now.”
Through a more detailed exploration of her income streams, Mrs R was able to obtain a five-year fixed-rate mortgage on a payment plan that worked for her, which also released enough funds to create the open plan living space she’d always wanted and give her the freedom she desired.
“It’s enabled me to have the value of my own roof, my own front door and my security on my own terms,” she beams. “For me, that's a wonderful place to be.”
A great reward after a working life spent giving to others.
Credit: LiveMore
Your home or property may be repossessed if you do not keep up repayments on your mortgage. You may be charged a fee for mortgage advice.
Writing life insurance in trust is one of the best ways to protect your family’s future in the event of your death. Your life insurance policy is a significant asset, and by putting life insurance in trust you can manage the way your beneficiaries receive their inheritance. Here, we take you through the benefits of life insurance trusts, how the process works, who’s involved and the other considerations.
What is a trust?
Trusts are a straightforward legal arrangement that let you leave assets to friends, relatives or whoever you pick to be your beneficiaries. A trust is managed by one or more trustees – family members, friends, or a legal professional – until the trust pays out to your beneficiaries, which can either happen upon your death, or on a specified date such as when a child turns 18.
Your life insurance policy can be put into a trust, which is often referred to as ‘writing life insurance in trust’. One of the main benefits of this approach is that the value of your policy is generally not considered part of your estate.
How does putting life insurance in trust work?
You will need to decide which type of trust is right for you. Your options are:
- Discretionary Trusts – your trustees have a high level of discretion about which beneficiaries to pay when you’re no longer around, using your letter of wishes as a guide. Your letter of wishes outlines your intentions as to how trustees should administer the trust.
- A Flexible Trust - is a trust where there are two types of beneficiaries. The first type of beneficiary is the default beneficiary. These beneficiaries are entitled to any income from the trust as it arises. In practice, if the life policy is the only asset in the trust there will not be any income. The second type of beneficiary is the discretionary beneficiary. These discretionary beneficiaries only receive capital or income from the trust if the trustees make appointments to them during the trust period. If no appointments are made by the end of the trust period, the default beneficiaries will receive all the benefits.
- Survivor’s Discretionary Trust – this form of joint life insurance in trust pays out to the surviving policy owner; for example, if you die before your partner, they would be entitled to inherit your estate before your beneficiaries. If both policy owners die within 30 days of one another, your beneficiaries can benefit on the same basis as a Discretionary Trust.
- Absolute Trust – in this scenario, the beneficiaries are named individuals who cannot be changed in the future. This includes any children born later and a spouse following a divorce. The advantage of an Absolute Trust is that the pay-outs can be made quickly without long legal delays, and as with other trusts, the Inheritance Tax is likely to be nil or negligible.
Once your trust is set up, your trustees legally own the policy and must keep the trust deed safe – they can ask a solicitor to store the documents or find a safe place in their home. Your trustees will ultimately make a claim to your insurer when you pass away, so they will need the trust deed close to hand.
It’s worth remembering that as the settlor, you maintain responsibility for making sure your life insurance premiums are paid. It may be beneficial to hire a legal adviser to ensure the legal wording of your trust agreement is precise.
Who can be a beneficiary?
You can choose any person, or people, to be your beneficiaries - this will entitle them to receive a pay out in the event a valid claim is made. Contrary to what some people may assume, there are no rules that restrict who your life insurance beneficiary can be. For example, you could choose the following:
- A spouse or civil partner
- A child
- A relative
- A friend
- A charity
While you won't be able to change your beneficiaries if you have an Absolute Trust, if you take out a Discretionary Trust, your trustees will have the freedom to decide who your beneficiaries are, and how much they're entitled to receive from a pay out.
The benefits of writing life insurance in trust
There are many reasons why putting life insurance in trust is a popular option. Here are some of the ways you can benefit from a life insurance trust.
- Control over your assets – if you don’t have a trust, your money might be used to pay off outstanding debts. Putting life insurance in trust gives you greater discretion, as you can decide who to appoint as your beneficiaries and trustees. Setting up a trust is especially important if you’re not married or in a civil partnership, as otherwise, your assets may not transfer to the intended recipient.
- Faster access to your money – without a trust, when you die your would-be beneficiaries would need to obtain probate, which can cause delays. With a trust in place, your loved ones could receive the inheritance within a couple of weeks of the death certificate being issued.
- Protect your beneficiaries from Inheritance Tax – writing life insurance in trust means the money paid out from your policy should not be considered part of your estate. There are exceptions; for example, you may be liable for an Inheritance Tax charge on the value of the property on each ten-year anniversary. Currently, the standard Inheritance Tax rate is 40%, which is charged on the part of your estate above the £325,000 threshold.
Life insurance in trust for cohabiting couples
According to ONS data released in 2021, around 60% of the population in England and Wales were living in a couple. The population who are cohabiting is growing; in 2020 13.1% of the population aged 16 years and over were cohabiting, compared with 11.3% in 2010.
While there is no legal definition of a cohabiting couple, sometimes called common-law spouses, it generally means to live together as a couple without being married. However it’s a misconception that common-law spouses have the same legal rights as a married couple, or as couples in a civil partnership.
The truth is that there are no cohabiting rules in law, and a surviving co-habitee has no legal claim on their deceased partner’s estate unless they left a will that includes their co-habiting partner. And, if a life insurance policy is not written in trust, they will have no legal claim on the policy either.
If you are living together without marriage or civil partnership, it’s even more crucial that you have clear legal and financial protection in place for your partner and children after you die. With a life insurance policy written in trust, the proceeds of the policy can be paid directly to your intended beneficiaries, rather than to your legal estate.
Joint life insurance in trust
A joint life insurance policy covers both partners but pays out only once in the event of a valid terminal illness or death claim. This is usually after the first death, with the intention to financially support the surviving partner.
Once the policy has paid out, it ends, leaving the surviving partner without life insurance cover under the policy. If both partners die at the same time, then the lump sum would be paid to the estate of the younger of the life assured.
If the policyholders are co habiting, then the surviving partner receives the lump sum but for IHT calculations, half the cash sum is deemed to form part of the deceased’s estate. This is not normally an issue for married or civil partnerships.
With a joint life insurance policy, there is still a benefit in putting the policy into trust, especially if you are not legally married or in a civil partnership. For a married couple, life insurance policies include an inheritance tax exemption for the spouse or civil partner, but this doesn’t apply if you have a joint policy and are cohabiting.
If you place your policy into a Discretionary Survivor Trust, the trustees can pay any money to the surviving partner as long as they're still alive 30 days after the death of their partner.
If the surviving partner dies within 30 days of the other partner, the trustees can pay the money straight to the beneficiaries of the Trust (for example, your children or grandchildren). This way, the beneficiaries usually won’t pay Inheritance Tax on the money as part of either yours or your partner’s estate.
Married or cohabiting couples can choose to take out a single life policy each, a joint policy that provides cover for both partners, or a combination of both. A single policy covers one person, and when that person dies the policy pays out a lump sum to their estate. If a couple have a policy each, the policies remain completely independent of each other and can be for different amounts or with different companies, and each one pays out when the policy holder dies.
Please remember, life insurance is not a savings or investment product and has no cash value unless a valid claim is made.
How long does a trust last?
Technically, your trust can last up to 125 years – there is no expiry date for trusts set-up for charitable purposes – but ultimately, your trust agreement should last however long you deem necessary. Your personal circumstances may influence the length of time you stipulate; for example, the trust could last until a child grows up and marries.
Is there an extra cost?
There is no added cost to putting life insurance in trust with Legal & General. You can put your personal life insurance policy in trust when you take it out, or at any time after that – you simply need to own the policy. You should note that if you transfer your life insurance policy to another individual, this may have implications for your trust so it’s best to contact us directly or seek legal advice.
If you would like to speak about your protection policies and writing them into trust, please get in touch to discuss your needs.
Credit: Legal & General
From streaming your favourite films to getting your fill of coffee, many people find paying for a range of subscriptions normal now. But the costs are creeping up.
A total of 1.51 million video services were cancelled in the first three months of 2022, with more than half a million of these due to 'money saving', according to market research firm Kantar.
It also found that around 58% of households in Great Britain (16.9 million), have at least one paid subscription.
Top tips to save on subscription costs
From sharing plans to joining a library - we've rounded up 10 ways to save money on the cost of subscriptions.
1) Share your subscriptions
Ssharing your streaming subscriptions within your household is one of the quickest ways to save money. Most services have plans you can switch to that could help you save, without losing personalised features.
Spotify for example offers a Premium Duo plan for £13.99 a month, perfect for two people in the same household, saving £71.88 a year versus the price of two individual subscriptions.
For larger households, there is the Premium Family plan for £16.99 a month which allows up to six users to get premium benefits, saving a whopping £515.40 a year over six individual subscriptions.
You can also share your Amazon Prime benefits with another person in your household, halving the cost of having two separate accounts.
2) Select the annual option
If you love a streaming site and know you won't want to cancel it, then you could save by buying the membership in one go, rather than paying monthly.
For example, Disney+ costs £7.99 a month, or £79.90 for the year - a saving of £15.98.
While Amazon Prime costs £7.99 a month or £79 for the year - a saving of £16.88.
3) Rotate monthly subscriptions
Do you really need to pay for all the TV and film subscriptions you enjoy at the same time?
Netflix, Now, Amazon Prime and Disney+ will allow you to cancel monthly subscriptions at any point with no exit fee, so if you can plan what you want to watch you could alternate to save.
For example, if you subscribed to both Disney+ and Netflix (standard) at a monthly rate, you would pay £227.76 a year in total.
However, if you alternated months you would pay just £113.88 a year (six months of Disney at £7.99 and six months of Netflix at £10.99).
4) Do your research and compare prices
If you know you want to watch something specific, do your research to find out which platforms actually have it and shop around for the cheapest one to watch it on.
Free app JustWatch pinpoints where you can find television shows and films. It also compares the best price for streaming what you fancy watching.
For example, Line of Duty and Peaky Blinders are available on Netflix and BBC iPlayer. The cheapest Netflix subscription is £6.99 a month, but if you already have a TV licence, BBC iPlayer is free.
5) Downgrade your plan
You could save by switching to a cheaper plan.
For example, Netflix has three different plans - basic (£6.99), standard (£10.99) and premium (£15.99).
The basic plan only lets you watch on one screen at a time - but if you live alone and don't share your account with anyone this could be ideal. It would also save you £48 a year.
It will also launch a new plan in November called Basic with Adverts, costing £4.99 a month. However, you'll have to put up with four to five minutes of adverts per hour, and you won't be able to download titles.
Amazon Prime also offers a basic membership called Prime Video for £5.99 a month - it doesn't include other benefits such as free premium delivery, but it's worth it if you only want to stream shows. It would save you £24 a year.
6) Calculate if it's really worth the money
If you're only using your subscription a handful of times a month it's probably not worth it.
For example, the Pret coffee subscription costs £25 a month - this allows you to have five hot drinks a day (but you can only redeem one every 30 minutes).
A regular-sized latte in Pret cost £2.95, so if you get three a week it would cost £35.40 a month. That's a saving of £10.40. But what if you do drink 5 lattes a day? At a cost of £2.95 each that could cost you over £70 for five drinks a day, five days of the week. The subscription is a no brainer.
7) Make the most of free trials
Some services will give you a free trial before you have to pay.
Music streaming services, Spotify, Apple Music, Tidal, Amazon Music Unlimited and YouTube Premium all currently give new users a one-month free trial.
This means you can listen to music for five months before paying a penny.
However, remember to diary the date the trial ends or set an alert so you avoid accidentally paying for the next month.
8) Cancel what you don't use
If you have multiple bank accounts and different bills going out from each of them, you could lose track of the subscriptions you are signed up to.
Money Dashboard and Snoop are two apps that can help you get an overview of all your accounts in one place.
Once you have an overview of your finances it should be easy to spot subscriptions you no longer need or want.
Some banking apps also have features that make it easier to stay on top of bills. Starling Bank for example offers Bills Manager which allows you to set aside money each month just for your bills so you ensure you don't fall short.
9) Use free alternatives
You can use All 4, ITV Hub and My 5 for free (as long as you are not using them to watch live television).
For free music, BBC Sounds allows you to listen to live radio and has loads of podcasts and playlists - all completely free of charge, it even has a workout anthems playlist which is perfect for the gym.
If you fancy free e-books, magazines and newspapers, join your local library.
10) Check for bundles
Most mobile providers offer free extras with your contract which could give you access to your favourite streaming site for up to two years.
Vodafone offers up to 24 months of Amazon Prime, Spotify or YouTube Premium with certain pay monthly deals, and EE offers a 'special benefit' for the length of the mobile contract. This currently includes BT Sport, Apple Music or Netflix.
It's important to make sure any new phone contract is right for you before taking it out, and make sure you shop around for the best deal.
Credit: Which?
Raising a family is expensive, but our tips will help you make savings, cut costs, find freebies and shop smart, whether you have a baby, toddler or older child.
