Many people put off making a Will and perhaps don’t consider setting up a Lasting Power of Attorney (LPA) until it is too late.
Recent months have shown that now, more than ever, it is wise to keep your assets protected and to ensure that your family are aware of your future wishes.
Whilst a Will details how you would like to pass on your assets and takes notes of special requests, it is prudent to make provision in case there is a time when you can no longer look after your health and financial affairs in the form of an LPA.
None of us likes to think about making a Will, let alone the time when it’s actually needed.
But by taking a few hours to plan things now, you could make an already difficult time for your loved ones much less stressful.
Making a Will means that your requests are carried out the way you want them to, rather than leaving it all to be decided by someone else.
By writing a Will you can:
- Leave family heirlooms and gifts to the people you want them to go to, ensuring treasured possessions are given to those who will cherish them.
- Appoint guardians to look after your children if they are under 18 and make financial arrangements for their benefit, whatever their age.
- Make financial arrangements for their benefit, whatever their age.
- Ensure any children from your first marriage get a share of your estate if you have remarried.
- Incorporate trusts to protect the inheritance of your loved ones.
- Protect your estate from Inheritance Tax with careful planning.
- Protect your estate from those you do not wish to inherit, estranged relatives, for example.
- Provisions for your pets can be made.
- You can leave a legacy to a favourite charity or organisation, either monetary or a specific gift such as an item of jewellery.
- Detail your funeral wishes, including whether you would prefer to be buried or cremated.
So, what happens if you die without making a Will?
In legal terms, you will die ‘intestate’ which means your property and belongings may not go to the people you wanted them to. In this case, there are special rules called the Laws of Intestacy that determine how your estate will be distributed.
These rules are the same for everyone. This means the people you actually wanted to leave an inheritance to might not be considered. Similarly, estranged relatives could inherit from your estate.
The Laws of Intestacy state (amongst other things) that:
- Your partner could be forced to sell the family home in order to divide up the estate.
- If you and your partner are unmarried, they will inherit nothing from your estate.
- If you’re separated from your spouse but not yet divorced, he or she will inherit your estate as they would have done prior to your separation.
Updating your Will
You should generally be reviewing your Will every five years or whenever there are any major changes in your life, such as:
- Marriage: Usually, when you marry, your Will is automatically revoked (in England and Wales, but not in Scotland)
- Divorce: When a divorce takes place, however, it does not automatically revoke a Will. If you want to ensure that your ex does not inherit, then you should update your Will.
- The addition of a new beneficiary: New additions to your family may mean you wish to change who receives certain items or re-think how your estate will be divided between your beneficiaries
- Death: If someone named in your Will has passed away
- Finally, if you’ve produced your Will yourself, then there are a number of reasons it may not be valid, so get it checked by a professional
If your existing Will is out of date and/or requires a number of changes, then starting afresh with a new one might well be less complicated. It could also reduce the likelihood of people contesting your Will when the time comes for it to be executed.
How to have your Will written
Making a professionally written Will is the most reliable, legally binding way you can provide for others when you are no longer here to do it yourself.
Lasting Power of Attorney (LPA)
A Lasting Power of Attorney (LPA) is a recognised legal document that allows you to appoint those you trust the most (your attorneys) to make decisions on your behalf, should you ever need them to.It’s really important for you and your dependents that you arrange them now while you are fit, well and able to.As we get older, accidents or illness can strike at any time. In fact, the Alzheimer’s Society states there are currently around 850,000 people with dementia in the UK (40,000 are under 65). This number is set to exceed one million by 2025.So, if a time does come when you can no longer handle your own affairs the way you want to, your LPA will ensure your spouse/partner, children or a close friend can handle all these important matters for you
Types of Lasting Power of Attorney (LPA)
There are two different types of LPA.
- Property & Financial Affairs LPA
- Health and Welfare LPA
Property & Financial Affairs LPA
Your Property & Financial Affairs LPA allows those you choose to manage your finances at any time of your life.
You might not want to handle all (or certain parts) of your finances yourself any longer, or you may prefer a safeguard should you become unable to manage them.
You can also state in your LPA that you’d only like it to come into force if you lose capacity.
Your Property & Financial Affairs LPA can ensure decisions are made about:
- Paying your bills
- Collecting your income and benefits
- Selling your home
- Drawing down further funds from your equity release plan
- Investing money
Whilst it isn’t mandatory for you to have a Lasting Power of Attorney in place when you take out an equity release plan, we do strongly recommend to anyone choosing a ‘drawdown’ lifetime mortgage to arrange their Property & Financial Affairs LPA.
We do this because if you’re single, or the equity release plan is solely in your name, then you may be unable to request further drawdowns yourself if you have an accident or start to lose mental capacity.
If you’ve taken out a joint drawdown plan, the same applies. Both of you need to agree and sign the papers every time you apply to release further funds. It’s not enough for just one of you to be able to sign unless an LPA is in place.
A valid LPA will allow your chosen attorney (your spouse, perhaps) to sign the papers on your behalf, enabling further releases in the future.
What happens if I do not have an LPA in place?
If you’re married or in a civil partnership, you may think your spouse will automatically be able to deal with your bank accounts and pensions if you lose the ability to do so.
But this isn’t the case.
Even if you both have a joint bank account, if one of you loses mental capacity, then the other does not automatically have the right to access the account.
To do so, there needs to be a valid LPA in place naming them as an attorney.
Your Health and Welfare LPA
Most of us assume that if we ever lost our mental capacity, our spouse or partner will be legally able to make the decisions for us. But this isn’t the case.
Because if such a situation does happen to you and you don’t have a suitable LPA in place, then any decisions about your healthcare will be made by doctors who will make them based on your best interests. They will consult your family, of course, but the final decision will rest with medical staff.
But by appointing your loved ones as your attorneys now, it will ensure their decisions, made on your behalf, are adhered to.
At Bower, we understand this is a sensitive but important matter.
Health and Welfare LPA guidelines
Your attorney can only use this type of LPA when you no longer have the mental capacity to make decisions for yourself. They will help you by making decisions about things such as:
- Where you live or where you are treated
- Day-to-day care including your diet and medication
- Whether to accept or refuse life-sustaining treatment
- Who can and cannot have contact with you
Who can be an attorney?
It is entirely your choice who will be your attorney(s). However, they must be over 18 and cannot be paid care workers.
People often choose their spouse, partner, children, sibling or a close friend to fulfill this role, but you can ask an accountant, solicitor or other professional. Do bear in mind they are likely to charge for their time.
Final points to note:
- You do not have to appoint the same people on both LPAs
- For a Property & Financial Affairs LPA, your attorney(s) cannot have been declared bankrupt