The importance of a Will and Lasting Power of Attorney cannot be overestimated.
Estate planning can take a number of different forms. The late Stephen Pollan, who was acknowledged as one of America’s most trusted financial advisers, famously published books, among others, entitled ‘Live Rich’ and ‘Die Broke’.
Whatever you plan for your estate you would be wise to leave clear instructions for those who will be administering it after you are no longer able to do so. This might be during your later life or after your death.
A good plan is essential
‘Be mindful of the uncertainty of life’ a quote from Robert (Bobby) F. Kennedy’s will.
A will is the foundation of all inheritance planning. A will does two things:
- Provides a set of instructions to your executors as to how to distribute your assets on your death.
- Appoints guardians if you have children under the age of 18.
Anyone can make a will if …
Anyone can make a will if …
- You are of sound mind possessing ‘testamentary mental capacity’. This means that you know the nature, meaning and effect of the document being written. Yes, the will must be in writing.
- You (the testator) are at least 18 years old or 16 if you are in the armed forces.
Couples generally write wills together. This makes sense as you are likely to have assets in common.
If you die without a will – ‘Intestacy’ is dying without a will. Intestacy is the condition of the estate of a person who dies without having in force a valid will.
State dictates – intestacy means that the state dictates how your estate would be distributed.
Little regard for your wants – the laws of intestacy have little regard for your family structures, finances or relationships.
Common-law spouse – there is no such thing as a ‘common-law spouse’, so if you’re living with someone, the survivor could be in for a rough time if either of you died intestate.
Lasting Power of Attorney
However good the plans that you have made, they can easily fail to achieve their objectives if you lose the ability to make ongoing decisions concerning them.
Such inability can come about as the result of a number of situations but our concern here is the loss of mental capacity to make such decisions. In the main this can occur as the result of advanced age but this is not always a contributory factor. It is also important to realise that many older people can get to a point where they simply no longer wish to cope with the complicated and fast changing world of finance.
Proper financial planning seeks to put things in place well before they might be required in the way that a good vehicle driver looks well ahead when they are driving. Just as the good driver gives themselves as much time as possible to anticipate what might happen and to stop accelerating, brake, accelerate, change lane or change direction, so good financial planning involves putting plans in place to deal with as many eventualities as possible.
I encourage everyone over the age of 50 who is on the journey towards prosperity to set up a Lasting Power of Attorney. This will usually involve appointing your spouse or partner as your attorney and one or more of your children as a fall back attorney.
For further information please visit Lasting Power of Attorney
Links to more information
- Inheritance Tax
- Unsure about Inheritance Tax?
- Gifts to reduce Inheritance Tax
- How to calculate Inheritance Tax
- The family home in Inheritance Tax planning
- Ways to reduce Inheritance Tax
- HMRC notes on Inheritance Tax
- UK Government notes on Making a Will
- UK Government notes on a Lasting Power of Attorney
- If you need personal financial advice on Inheritance Tax then I am happy to introduce you to Flying Colours Life who have access to independent financial advisers throughout the UK
This information does not constitute personal advice and should not be treated as a substitute for specific advice based on your circumstances.
Information given relating to tax legislation is based on my understanding of legislation and practice currently in force. Whilst I believe my interpretation of current law and practice to be correct in these areas, I cannot be responsible for the effects of any future legislation or any change in interpretation or treatment. In particular you are warned that levels of tax and tax reliefs are subject to alteration and, in any case, the value of such reliefs and benefits may depend on an individual’s circumstances.
If you are in any doubt as to whether any course of action is suitable for you, then you should discuss the matter with a suitably qualified independent financial adviser or other specialist.