In just over a week, changes will be introduced to Widowed Parent’s Allowance which will leave parents with children who have recently lost their partner significantly worse off. The changes are the latest in a number of measures that target those already struggling to cope with both their grief and the financial impact of losing their partner.
Under the current system, if your spouse or civil partner dies, you could be entitled to a tax-free lump sum payment of £2,000 (Bereavement Payment). In addition, you may be entitled to a weekly allowance of £112.55 (Widowed Parent’s Allowance). This allowance is paid until the child no longer qualifies for child benefit.
A parent with a newborn baby could therefore receive up to £119,052, comprising of the lump sum and weekly payments of £112.55 for the maximum 20 years.
If you have no children but you are over the age of 45, you can instead claim Bereavement Allowance. The amount is from £33.77/week for those aged 45 to £112.55/week for those aged 55 up to state pension age.
All of the above are conditional upon eligibility – see the provided links for more information.
If your spouse or civil partner dies on or after 6th April 2017, you’ll be affected by new changes to be rolled out by the Department for Work and Pensions (DWP).
The initial lump sum Bereavement Payment will increase to £3,500 (or £2,500 if you don’t have a child). The weekly Widowed Parent’s Allowance payments will be replaced by 18 monthly payments of £350 (or £100 if you don’t have a child). The maximum available will therefore be £9,800.
Only those who lose their partner on or after 6th April 2017 will be affected by the changes. Those claiming under the current scheme will not be affected.
Although many will receive less under the new rules, those aged under 45 without children will receive a payout for the first time. Widowed parents whose children are within one year, five months and two weeks of the cut off date for child benefit will also fare slightly better under the new system, according to Money Saving Expert. However, parents of young children will lose thousands of pounds.
The changes to Bereavement Payments, Widowed Parent’s Allowance and Bereavement Allowance are one of a number of measures that have affected those who have lost a loved one.
From May 2017, probate fees will increase substantially from the current charge of £215 (for estates £5,000+) to between £300 and £20,000 (for estates £50,000+), depending on the overall value of the estate. The concern with this change is that estates can sometimes be ‘asset rich, cash poor’ – in other words, the family home can sometimes be the only asset. See our article on the probate fees hike for more details.
The inheritance tax threshold has also been frozen at £325,000 since 2009 and will stay frozen until at least 2020, despite the growth in house prices. The UK price index reports that the average price in London in March 2009 was £247,264 – while the average price for January 2017 was £490,718. Consequently far more people will be caught by the tax. The new Residence Nil Rate Band due to be introduced from April offers some consolation but careful planning is required to ensure you do not inadvertently expose your assets to risk. See our article on the Residence Nil Rate Band for more details.
Planning for the future
Perhaps surprisingly, about two thirds of adults in the UK do not have a Will – the effect of which can be devastating. Unmarried partners have no right to inherit if there is no Will – and even married partners or those in a civil partnership do not automatically inherit the entire estate. With less support available than ever before for those losing a partner, it makes sense to ensure your affairs are in order should the unexpected happen. Contact us to find out more about making a Will – April King Legal specialise in trust Wills that protect your estate from care fees and keep your assets within the family.
April King Legal also offer affordable probate services – find out more here.