Do you have an up to date Will or LPA?
Making plans for when you are no longer around or able to make your own decisions is never a pleasant task. However, it is vitally important to secure you and your family’s financial future. The most common problem is that people delay arranging their Will until it is too late. This is often the same with Lasting Powers of Attorney. It is in our nature as humans to avoid the subject of death or incapacity, but unfortunately, it is a reality for all of us at some point in the future.
This guide will clarify the importance of Wills and Lasting Powers of Attorney and give you the information required to take the all-important next steps.
Why is it so vital to make a Will?
People say that the two inevitabilities in life are death and taxes. Effective Tax planning can reduce the impact of taxes on your wealth. Similarly, Wills allow you to control how your wealth is distributed when you die. Not only that, but in your Will you can state who you would like to care for your children provided they are under 18.
In modern families, there are often many complications such as step children, half siblings, cohabiting partners and ex-partners. This may mean that your wishes for your money when you die are not straightforward. Wills allow you to be as specific as you like in terms of how your wealth is distributed. This may include giving your most prize possessions to certain family members, such as a valuable necklace that has been passed down generations. Without a Will, these decisions are taken out of your hands and follow strict rules known as the ‘Rules of Intestacy’.
What happens if I die without a Will?
If you die without a valid Will, this is called dying ‘intestate’. In this case, the Rules of Intestacy dictate what happens to your money, assets and possessions. These rules for England and Wales are as follows:
If there IS a surviving husband, wife or civil partner:
- The husband, wife or civil partner is entitled to the first £270,000 of assets including property, and all the personal possessions
- Half of the remainder is also passed to the surviving husband, wife or civil partner
- The other half is then divided equally between surviving children (adopted children count, but not step children) – if there are no children then the surviving husband, wife or civil partner inherits everything
For example, John is married to Jane and they have 2 children, Ben and Claire. John dies with an estate worth £500,000. His estate will be distributed as follows:
- First £270,000 will pass to Jane, along with any personal possessions
- Half of the remaining £230,000 (£115,000) will also pass to Jane
- The other half (£115,000) will be split equally between Ben and Claire, with each receiving £57,500.
If there IS NOT a surviving husband, wife or civil partner:
In this event, the estate is split equally between the children of the deceased. If one child has already died, their children will inherit that section of the estate.
If the deceased also has no children, the estate will be split equally between:
- Parents
- If no parents, between brothers and sisters
- If no siblings, between half-brothers and half-sisters
- If no half siblings, between grandparents
- If no grandparents, between aunts and uncles
- Finally, if no aunts and uncles, between half-aunts and half-uncles
- Should the deceased have none of the above family members, their estate is passed to the Crown
As you will notice from the above, there is no rule that passes money to unmarried partners or step children. The only way for these family members to receive part of your estate is for you to write them into your Will. It is also worth nothing that being divorced does not invalidate your Will. If your ex-husband or ex-wife is written into your Will when you die, they will inherit your estate as per the terms of the Will. Once you re-marry, your existing Will is invalidated.
How do I make my Will?
It is possible to write your Will yourself, but for more complex Wills it is recommended that you seek advice first. At Consilium Asset Management, we offer a Will writing service in which we take the stress out of the process. Simply get in touch with us and we will arrange a meeting to fully understand your requirements, then we will do the rest.
What is a Lasting Power of Attorney (LPA)?
A Lasting Power of Attorney (LPA) is a legal document that allows you to nominate one or more family member or trusted friend to care for your affairs in the event that you lose mental capacity. There are two types and it is possible to have one or both at any one time:
- Health and Welfare – this refers to decisions being made regarding healthcare and medical treatments. An LPA of this type can only be used once you lose mental capacity.
- Finance and Property – this gives your nominated individual the ability to make decisions regarding your personal finances, investments and assets You are able to decide whether to use this before, or when, you lose mental capacity.
You may have previously heard of an Enduring Power of Attorney (EPA). These were replaced by LPAs although EPAs setup before 1st October 2007 are still valid.
What does it mean to lose mental capacity?
Losing mental capacity means losing the ability to make or communicate specific decisions when they need to be made. As a result, you would not understand the implications of any decision you make and why you need to make that decision. This will not necessarily apply to all decisions but would be most likely with more complex choices such as investments or house purchases.
It is not always the case that someone loses mental capacity and never gets it back. A short period of illness may result in a loss of mental capacity and therefore during this time an LPA can be used. Following recovery, mental capacity can return, allowing the person to make their own decisions again.
How do I make a Lasting Power of Attorney and what is the process?
At Consilium Asset Management, we offer the service of setting up and registering your LPA for you. Get in touch with us to find out prices. They vary depending on the complexity of the case.
You are also able to make a LPA online using the UK Gov website. Although you can set an LPA up online we would recommend discussing it with us beforehand. The forms are online to fill out and select who you would like your attorney or attorneys to be. Signatures are required by you (donor), your chosen attorneys, your chosen replacement attorneys and a witness (certificate provider) as well.
In order to register it and for your attorneys to make decisions on your behalf, the LPA must be registered. This is done by sending it to the Office of the Public Guardian. This service costs £82 in total but there are reductions and exemptions available. It can take up to 20 weeks for the LPA to be registered with the Office of the Public Guardian, but once this is done then your LPA is ready to use.
