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Bereavement benefit change for better or worse?

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Dealing with the financial affairs of someone who has died

When someone loses their most loved one the last thing they want to worry about is how the loss will affect their financial situation. The Department for Work and Pensions currently provide certain benefits for widowed individuals even more so for those with children.

As of the 6th April 2017 there are major upcoming changes with these benefits as the DWP plans to simplify the process by replacing three more complex benefits with one single benefit.

Under the current scheme individuals (generally under the state pension age) will qualify for the “bereavement payment” which is a tax free lump sum payment of £2,000.00 when their spouse or civil partner dies. In addition there is the “widowed parent’s allowance” in which a widowed parent of young children will also qualify for continual weekly payments. The payments will continue up until either the widow reaches state pension age, their children reach the age where they no longer qualify for child benefit or if they cohabit, re-marry or enter into a civil partnership. The general “Bereavement Allowance” is available for widowed individuals without children which consists of weekly payments for one year. The benefits are not means tested but are in fact calculated based on the deceased’s national insurance contribution.

The upcoming changes mean a widowed parent of a young child or children could be losing out on thousands of pounds whereas a widowed individual with no children will benefit in being entitled to a whole lot more than at present. Under the current scheme, weekly payments could continue for up to 20 years in comparison with the new scheme whereas the weekly payments will only be for a period of 18 months.

As of the 6th April an individual who has been left widowed with children will qualify for an initial lump sum of £3,500.00 followed by 18 monthly payments of £350.00. This is compared with an individual who has been left widowed with no children who will be entitled to receive an initial lump sum payment of £2,500.00 followed by 18 monthly payments of £100.00.

All widowed individuals will benefit from the increase in the initial lump sum payments but there are certainly no benefits in the long term for those with young children.

The DWP have provided the reason for the change being that the new system will be much more understandable to the public at one of the most stressful times in their lives.

If you wish to ensure your loved ones are securely financially provided for in your absence then please do not hesitate to contact our Wills and probate department for Wills and estate planning advice on 01616 966 229.