In money, as in life, there are two ways of doing most things. You can do things the easy, informal way. Or you can do things right, by the book.
In this episode I’m talking about the importance of managing money for others ‘by the book’ and what can go wrong when you enter into informal financial arrangements with your relatives.
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Personal finance news
-House price growth in the UK has slowed to its lowest rate in nearly six years. The latest Nationwide House Price Index found growth slowing to almost a complete halt in January.
-The Italian economy entered an economic recession at the end of last year, according to new official figures. Italy’s economy contracted by 0.2% in the final quarter of 2018, after shrinking in size by 0.1% in the third quarter.
-Financial advisers and their clients will have to pay an additional £78m towards compensation costs for failed firms. The extra levy for the Financial Services Compensation Scheme (FSCS) follows a rising cost of claims.
-The UK car industry experienced investment halving last year, as a result of Brexit uncertainty and economic anxiety. According to the Society of Motor Manufacturers and Traders, investment in the automotive sector fell to £589m last year, down nearly 50 per cent compared to 2018.
-A new survey of financial advisers have found more than a third expect to increase their clients’ cash holdings in the first half of this year. The survey from National Savings & Investments found security is still the top priority for advisers’ clients.
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Doing things by the book
When it comes to your money, there’s a couple of ways to approach doing things.
You can do things the easy, simple, informal way. Or you can do things the slightly harder, slightly less simple, formal way.
It’s a choice we all make when we make important financial decisions. Especially when we need to make financial decisions on behalf of other people. Do we do things informally, or do we do them by the book.
We often talk to our clients about the importance of having a valid will in place.
This crucial legal document clearly sets out your wishes for what should happen with the value of your property and other assets when you die.
Without a valid will, you die ‘intestate’ and your property gets distributed according to the law, which may or may not match your own wishes.
Just as important as having a will in place is drawing up a lasting power of attorney.
These legal documents give someone you trust responsibility for making decisions about your money, health and welfare, in the event you are unable to make those important decisions for yourself in the future.
Despite the importance of having a lasting power of attorney in place, few people draw up these documents, instead often relying on the goodwill of relatives to manage their finances should the worst happen.
New research from Co-op has found that a quarter of over 45 year olds have access to a relative’s bank account, excluding the account of their spouse.
Of these adults, 7% have set up formal joint accounts with a relative, whilst a fifth have access to a relative’s bank card or online accounts.
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