Planning for the future - Wills and LPAs
None of us want to think that one day we may not be here or that we may no longer be able to make decisions about our finances. However, by planning ahead, you can ensure that any wishes that you have now can be followed in the future.
The most important documents to reflect your wishes will be Wills and Powers of Attorney.
What should your Will reflect?
Ultimately, it should be the final record of how you wish your assets should be distributed according to what is important to you.
For some, it will be to protect children or grandchildren from a large inheritance at too young an age, either including a trust in a Will that can push the “pause button” to delay the age at which a child will inherit. If there may be on-going concerns about an inheritance, you can include a trust to ensure that a child can benefit from their inheritance while never allowing them full control of the money.
For others, it will be about looking at wealth protection to ensure that assets may be ring-fenced from future unforeseen expenditure; for instance, care home fees.
There may be other considerations, such as a second marriage. Especially if you want to guarantee that any children you may have from a previous marriage will receive their full inheritance while wanting to allow your spouse or partner to have full use of any of your assets – particularly property – for the rest of their life.
For some people, it could be that they have a simple Will already in place. However, they want advice regarding Inheritance Tax-friendly assets or how to leave assets to Inheritance Tax-exempt people or groups.
Have something in place!
Regardless of your reasoning, the most important thing is to ensure that you have something in place, because if you die intestate - that is, without leaving a Will - then you subject your family to antiquated laws regarding the division of your assets.
Remember, a properly drafted Will provides certainty after your death and allows you choice:
- Choice to appoint someone who you trust to gather in your assets and distribute them to the people you want to benefit
- Choice as to who will benefit from your property after your death and in what proportions and, where applicable, at what age
- Choice as to the most tax-efficient structure to pass on your assets, minimising tax wherever possible.
Why should you consider making a Lasting Power of Attorney?
We all hope that we will remain capable, both physically and mentally, to manage our own affairs during our lifetime. However, in the event that life decides something else for us, who would you want to manage your finances and personal welfare? Isn’t this something that you would like to decide for yourself? Making a LPA means that you can choose the person or people you trust to always act in your best interests.
What happens if you don't have something in place?
An application will need to be made for someone to be appointed as your Deputy by the Court of Protection. This can be a very drawn out and expensive process, with a medical report required and details of a person’s finances needing to be disclosed to the Court before the Order is made. This can be a difficult and confusing process for your loved ones to go through at a very difficult time.
The cost of a Deputyship Order and the on-going expenses can easily exceed three or four times the cost of preparing a LPA. Preparing a LPA is sometimes seen as an insurance policy - a small premium to pay now to cover a potentially expensive event in the future.
What should you consider when making a LPA?
There are two main types of LPA:
- Property and Affairs - to deal with your property and finances, and
- Health and Welfare - to deal with medical and welfare decisions
When preparing either of these documents you will need to consider who you want to appoint to manage your affairs. This person is known as your attorney. Where you appoint more than one attorney, you can decide if they should always act together or whether they can also act independently. You can also name replacement attorneys in case something should happen to those you have appointed.
You can consider whether you wish for your attorney to deal with all of your affairs or whether you wish to include any restriction of their powers. You can also include specific guidance for your attorney (although this is not legally binding).
When should you make a LPA?
Now! Some people think that a LPA is a document that the elderly need. Too often it is left too late and a person cannot make the document if someone independent is unable to certify that they fully understand the document. It’s not only old age can that can cause incapacity; it could for example come as a result of a car accident.
Registration of a LPA?
A LPA needs to be registered with the Office of the Public Guardian before it can be used by your attorney, for which the court fee is currently £130. We would recommend that the document is registered soon after it is completed, particularly as the registration process can takes on average three months.
This article was prepared by PURPLE LEGAL ® who are ICAEW’s appointed partner for the ICAEW Legal Helpline, offering ‘free’ legal advice and support to all members of the ICAEW. For more information visit www.purplelegal.co.uk/ICAEW
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