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The Importance of Wills and Lasting Power of Attorney
Many people believe making a will and arranging a Lasting Power of Attorney (LPA) is something that only affects us later in life. That it is a concern for the elderly. The reality is that accidents, critical illnesses and even death can hit at any time. And, if you are not prepared, it can have devastating effects on you and your loved ones.
According to figures from Opinion Research, more than half (60%) of UK adults do not have a will – which accounts for 31 million people. The figures show that those over the age of 55 are most prepared for the future, with 63% having written a will, yet this number significantly drops to 28% for those aged between 35-54 and just 16% of 18-34 year olds.
The same online survey found that participants cited a variety of explanations for not having a will. The most popular excuse was “I plan to make a will when I’m older”, while other reasons included not having valuable enough assets, it simply not occurring to them, and not knowing how to go about it.
The benefits of making a will
Though people often avoid thinking about death – particularly in their youth – what may seem like an inconvenience now could protect your legacy and save significant time and money in the future. There are a number of reasons why making a will should become a priority, regardless of age…
1. To ease the strain on loved ones
Having a will in place can make it easier and less stressful for family and friends during an upsetting time.
2. To maximise your assets
A well-considered will can help reduce the amount of tax due on savings, investments and property.
3. To communicate additional wishes
A will can also include directions such as burial or cremation instructions, and plans for the future of dependent minors
How to go about it
A will can be as simple or as complex as a client’s needs. Start by identifying the assets you plan to leave and to whom you plan to leave them. Our qualified paralegal at Vintage Wealth Management can talk you through the process and arrange the will best suited to your individual situation.
There are three main types of will. A simple will most often leave the estate to one person, appointing them as executor, and making a provision for issue should the main beneficiary predecease. For clients who are divorced or have children, or wish to leave parts of the estate to those beyond the immediate family, a complex will is sometimes more appropriate. In addition, a specialist will often involve more intricate assets such as trusts or overseas properties, or tailored tax-planning advice.
A will is particularly important for those with an unconventional family situation or those who are divorced or have dependents. The reality is, if you do not have a will, your assets will be divided in a standard way as defined by the law, which may not be in keeping with your wishes and could potentially leave your loved ones in financial hardship.
Making a will also involve appointing an executor (or more than one) to take charge of organising the estate upon your death. The executor(s) will do their best to carry out the instructions in the will, as long as they are within the law. However, occasionally this will not be possible – for instance with the decease of a beneficiary before probate is completed.
Probate is the process of administering the will and dealing with the assets of the deceased. It can be a complex and lengthy undertaking – particularly if there are challenges to the will or disputes from executors, beneficiaries, creditors or HMRC. This is why executors often elect to hire a solicitor to oversee the process.
Lasting Power of Attorney
A will protects your interests after death, but it is important to ensure your wealth and welfare are protected while you are still alive. If you lose the capacity to manage your own financial matters or make medical decisions yourself, it is advisable to have a trusted friend or family member to deal with these matters on your behalf. Many people believe the power of attorney is automatically granted to a partner or close family member when they lose capacity, but this is not the case.
The Office of Public Guardian (OPG) launched a campaign this year – Your Voice, Your Decision – to draw attention to the importance of arranging a Lasting Power of Attorney. The OPG’s research sampled 25000 people across England and Wales. It found that 73% of people believe if a couple has a joint bank account and one account holder can’t make decisions for themselves, their partner can legally make decisions on behalf of both of them. In addition, 72% of people believe their next of kin would automatically get the final say in treatment decisions if they were unable to make those choices themselves. Neither of these are the case.
Setting up a Lasting Power of Attorney (LPA) involves appointing a representative (or more than one) who can be trusted to make decisions with your best interests in mind should you lose the capacity to do so. Attorneys have the power to act on the donor’s behalf in two separate areas: property and finances, and health and welfare.
An attorney appointed to oversee the property and financial affairs have the power to deal with financial matters on the donor’s behalf when the donor loses capacity. Similarly, an attorney for health and welfare deals with medical and welfare issues on the donor’s behalf when the donor loses mental capacity. Restrictions can be applied in both cases, and written guidance can also be provided in advance. The LPA for property and financial affairs can be revoked at any time if the donor feels it is being misused.
To ensure the donor is of sound mind at the time of arranging an LPA, a certificate must be provided in order to confirm that the donor has mental capacity, is able to understand and retain information, and fully understands the nature and effect of the LPA in accordance with the guidelines of the Mental Capacity Act 2005.
It is time to stop putting it off. Creating a will and arranging an LPA are two of the most important ways to help safeguard your future and that of your loved ones. To discuss the options best suited to your situation, contact our qualified paralegal at Vintage Wealth Management today.