A fresh start: Ensure your legacy with a New Year’s will
The beginning of the new year offers the perfect opportunity to review your personal legal affairs. Ensuring your affairs are in order is crucial for safeguarding your future and providing peace of mind for you and your family.
Two key components of this process are creating a will and establishing lasting powers of attorney (LPA). This article will guide you through the importance of these documents, how to create them, and what to consider along the way.
Wills
A will is a legal document outlining your wishes regarding the distribution of your assets and the care of any minor children after your death. Here are some reasons why having a will is essential:
Control Over Asset Distribution: Without a will, your assets will be distributed according to the laws of intestacy, which may not align with your wishes.
Guardianship of Minor Children: A will allows you to appoint a guardian(s) for your minor children, ensuring they are cared for by someone you trust.
Minimise Family Disputes: Clearly outlining your wishes can help prevent disputes among family members.
Tax Efficiency: Proper estate planning can help minimise the tax burden on your estate.
The intestacy rules are outdated and do not protect modern family structures such as co-habiting partners and blended families. They also do not provide any protection if a beneficiary is not capable of managing their inheritance after age 18.
Many people are intimidated at the thought of putting a will in place and put it off again and again. However, creating a will involves some thinking and possibly some slightly uncomfortable ‘what if’ discussions, but it should be a relatively straightforward process overall and you will feel better once it is done.
It’s important to review and update your will regularly, especially after major life events such as marriage, divorce, the birth of a child, or significant changes in your financial situation. Regular updates ensure that your will remains accurate and reflects your current wishes.
Lasting Powers of Attorney (LPA)
A lasting power of attorney is a legal document that allows you to appoint someone to make decisions on your behalf if you become unable to do so. There are two types of LPA:
Health and Welfare LPA: This allows your appointed attorney(s) to make decisions about your medical care, living arrangements and other personal welfare matters.
Property and Financial Affairs LPA: This allows your appointed attorney(s) to manage your finances, including paying bills, managing bank accounts and selling property.
Common Misconceptions about LPAs
“I’m not old enough to need an LPA.” Incapacity is not only caused by age-related diseases such as Alzheimer’s or dementia. It could result from an accident, illness, stroke, or heart attack. Incapacity might also be temporary, as seen during the pandemic when some patients were put on ventilators for extended periods of time.
“I Have a Will, So I Don’t Need an LPA” Your will appoints people to deal with your affairs after your death. Until that time, your chosen executors have no powers and your beneficiaries have no rights. An LPA appoints people to act for you during your lifetime if you lose physical or mental capacity.
“My next of kin will deal with everything” Without an LPA, your next of kin does not have the automatic right to make decisions on your behalf, whether financial or health-related. This can be distressing for families during a medical emergency.
“Everything is held jointly so I don’t need an LPA” Banks usually freeze a joint account if one party loses mental capacity. This can cause significant stress and cashflow issues. An application to the Court of Protection can take at least nine months and cost a significant amount of money.
Having both types of LPA in place is crucial and protects not only you but also your family. An LPA:
Ensures Your Wishes Are Respected: An LPA ensures that decisions made on your behalf align with your preferences.
Prevents Legal Complications: Without an LPA, your loved ones may need to go through a lengthy and costly court process to gain authority to make decisions for you.
Peace of Mind: Knowing that someone you trust will manage your affairs if you become incapacitated provides peace of mind.
How to Create an LPA
Creating an LPA involves completing the LPA forms with your chosen attorneys' names, addresses, and dates of birth. It is possible to make these online on the Gov.uk website. Using a suitably qualified solicitor can help as they can advise on your choice of attorney and on what powers and guidance you would like to include in the LPAs. They can also act as your Certificate Provider or attorney if you do not have suitable family or friends to appoint.
Just like a will, it’s important to review your LPAs regularly. Changes in your personal circumstances or relationships may necessitate updates to your LPAs to ensure they remain relevant and effective.
Conclusion
Getting your personal affairs in order by creating a will and establishing lasting powers of attorney is a vital step in planning for the future. These documents provide clarity, ensure your wishes are respected, and offer peace of mind to you and your loved ones.
By taking the time to understand and implement these legal tools, you can safeguard your legacy and ensure that your affairs are managed according to your wishes. You will also be setting an example for adult children and/or elderly parents. Estate planning and asset protection is not usually achieved by one generation. It is important that each generation takes advice and puts documents in place which are appropriate for their personal circumstances and assets.
So, use this as your call to action. If you do anything this January, take some time to review your existing documents or seek advice on putting new documents in place.
Please don’t hesitate to contact me if you would like an initial chat.
