Money

Our experts

Pensions abroad and DIY wills

A will

John Husband runs the Money clinic for Saga Magazine and has been writing about business and personal finance for more than 40 years. John is on hand to answer your money queries. Here is a selection of your latest online questions and those from the May 2008 edition of Saga Magazine:

Q. With compensation limited to £35,000 should a bank collapse, and many cash ISAs having reached that limit, would it be wise to start another cash ISA from new - and how many cash ISAs can one start?

A. If your cash savings exceed £35,000 it makes sense to invest the difference with another bank or banks. You can contribute to just one cash ISA in any one tax year. But if you are married you have the opportunity invest in two between you.

Q. When I bought my present house I borrowed some of the money from my daughter and we signed a trust deed stating that she owned 20 per cent of it. If I sell the house or die would she be liable to Capital Gains Tax on her part of it?

A. As she is not an owner occupier yes she would if her liability exceeded her individual Capital Gains Tax exemption limit, which this year is £9,600.

It would be worth your while taking professional advice as to how to minimise any likely tax bill if you sold the house or when you die. An obvious possibility would be, for example, for you to become the sole owner.

Q: Can my UK pension be paid to me while I am in another country?

A: Yes it can. But, unless you spend at least six months a year in Britain, you will get annual increases only if you live in a European Union country, Gibraltar, Iceland, Liechtenstein, Norway, or a country with which the UK has a social security agreement that allows increases. That doesn’t, for example, include Canada or New Zealand. For more information contact The Pension Service, 0845 6060 265 or log on to www.thepensionservice.gov.uk.

Q: For 10 years I have put aside £10 a month in a [b]National Savings Investment Account for my granddaughter to be given to her on her 18th birthday. She now has a little brother and I would like to save a similar amount for him. Would this be the best place to put it?[/b]

A: No. The Investment Account pays only around 3.5% on that sort of amount. I suggest you open a regular savings account for him with a bank or building society instead. Or you could ask his parents whether you could contribute to his child trust fund instead.

Q: What would happen to our home if my spouse and I both needed long-term care at the same time?

A: Your house could well have to be sold, but there are steps you can take that may protect your property from this situation. Speak to a specialist care-funding adviser holding the CF8 qualification, or call 0800 056 6101 for Saga's free guide, 'Making sense of care in later life' - www.saga.co.uk/finance/spf/ltc/

Q: I want to leave some money to my children in my will but my daughter is currently getting housing benefit. Would that affect what she is getting?

A: Yes it might. As a rule most benefits are means-tested and generally you get no help if your savings exceed £16,000, and reduced help if they exceed £6,000. (It's £10,000 if you are in a care home.) With savings of more than £6,000, with most benefits it is assumed you have an income from them of £1 a week for each £250 or part thereof.

For pension credit the test is less severe, assuming £1 a week of income for each £500 or part thereof. To find out more, log on to www.direct.gov.uk, www.adviceguide.org.uk or contact your local Citizen's Advice Bureau or Jobcentre Plus.

Q: I am due to retire soon and I have been told I can use my personal pension plan to buy a pension on the open market. What does that mean?

A: Instead of accepting the pension offered by your present provider you can transfer your plan to one offering a better pension. If you smoke or are in poor health some providers offer much better rates. A man aged 65, for example can typically expect to receive an income of about £712 a year for each £10,000 in his pension pot. A heavy smoker could get that increased to £773 and someone in very poor health as much as £886.

Q: Is it legal to make a will at home or do we have to go to a solicitor?

A: There is nothing to stop you making a do-it-yourself will at home – and it would be legal. However as it is such an important document, people pay a solicitor to do it for them to make sure that nothing can go wrong or their wishes are not misunderstood. If you decide to do it yourself, I would suggest you get a will-writing form from a stationers, such as WHSmith, that comes with simple instructions.

Your local public library or bookshop will also have books explaining what to do. After reading them and seeing the possible pitfalls, you may decide it’s worth paying a professional.

Q: I'm considering releasing equity from my home to increase my income. As I currently let out a room will this mean I’ll no longer be able to do this?

A: Many providers have no problem with that so long as you have a formal tenancy agreement with your tenant.

Q: I have the chance to join my employer's pension scheme, whereby they match my contribution. I don’t know how long I will stay with the company, so do you think I should join?

A: A lot of people will envy you. You should definitely join the scheme and contribute as much as you can afford.

Q: I am currently paying different providers for my gas and electricity. I understand that I may make a saving by getting both from one provider. But, as prices are constantly changing, how can I be sure I am making the right decision?

A: You can't be absolutely sure but prices seem to have stabilised for the time being. So, if you choose a provider offering you an immediate saving, that should last for a while. As a general rule, you save money by paying for dual fuel by direct debit and possibly more for agreeing to online billing.

* John Husband answers your personal finance questions every month in his 'Money clinic' column in Saga Magazine.

Read John's latest money Q&A on page 158 of Saga Magazine's May 2008 edition.

* Email John your personal finance questions at web.editor@saga.co.uk. John's opinions are his own and for general information only. Always seek independent financial advice.

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