Unless you can accurately pinpoint the day you're leaving this planet of ours, it's difficult to plan your finances throughout life. While you may say you'd like to leave your children a suitable legacy – and don't we all - the current global economic crisis looks like keeping us all in some state of recession for some years to come.
The tax we pay always feels like it's going up; the cost of living increases year on year, but available income doesn't feel as though it matches those increases.
The loss of equity in property these last few years will come as a great shock to many when some estates are valued for probate.
With a stream of hit records in various parts of the world, you would have thought that Freddie Garrity of Freddie and the Dreamers fame would have built up a good cash asset reserve during his lifetime. He died at the age of 69 in 2006, some 43 years after his first hit.
When you consider the royalties for performing on all those songs and the fact that they're still played on the radio channels across the world today and that he wrote some of those songs (thereby receiving royalty payments), it comes as a surprise that he left just £244,000; not even enough to pay any inheritance tax. That may sound a lot to some people, but not for someone that had so many hit records and has some 15+ CDs available on Amazon and elsewhere.
Also, we must not forget that he toured the world for most of those 43 years. He disbanded the group after seven years' success in the late sixties only to reform them (with a new backing band) in the mid-seventies and played the world for another 25 years before becoming ill and unable to gig any more.
Did he have a cunning master plan in his will - money in trusts somewhere - or had he given away his assets in plenty of time (seven years plus) to avoid Potentially Exempt Transfers (PETs)? Or did he genuinely spend his money while living life to the full?
So where did the money go?
The point here is that whatever you do during life you don't know what you'll have at the end. You might lose everything; you might win a large lottery prize too late to use it properly. You can only plan for what you believe will be your target at such a time that is also unknown. Perhaps, due to Freddie's illness in 2001, he had time to plan differently during his last five years which wouldn't be enough to escape a PET tax charge had his total finances reached inheritance tax allowance limits.
How do you plan?
It's best to plan in stages throughout your life. That way you'll be able to address the changes in your lifestyle and finances as you approach each phase. Marriage (perhaps multiple marriages), bereavement, children (and their university fees) and perhaps moving country for a while can play havoc on your finances especially if you buy and sell property as often as we tend to do. A quarter of the UK population have either purchased abroad or are still considering it now property prices have dropped so far overseas, perhaps adding to a varied financial planning package.
It should remind you that you must always review your Will regularly (at least annually), whenever your finances and circumstances change and speak with your professional Will writer to see if you need to update your last document. You'll need to keep on top of your revolving financial situation. We don't all stay in one job for life anymore with some people expecting to change jobs up to twelve times.
Planning is essential, but dreaming about it won't help. We should all take regular action to avoid the pitfalls of so many one-hit-wonders.
Stephen Hall is a freelance writer for The Will Writing Company, experts in all matter of estate planning. Stephen can be contacted via his website http://about.me/stephenjameshall.