During these uncertain times, we are finding many clients taking stock of their legal affairs and using it as an opportunity to review key documents or to put them in place, if they have not done so already.
Aaron Spencer, Partner & Head of our Private Client team at Furley Page sets out some top tips to help you get your affairs in order and give you some peace of mind.
1. Make or update your will
Making a will is the most important step you can take to protect those you leave behind. If you die without a will, known as dying intestate, you have no say in what happens to your assets. You might think everything you own (your estate) will be divided between your closest family, but this is not guaranteed. Instead, the intestacy rules will apply, meaning the government decides who inherits what.
Making a will ensures your estate is shared according to your wishes and avoids an unnecessary burden on loved ones. Writing a comprehensive and legally accurate will is a complex process. Mistakes in wills can make them invalid, and lack of clarity can lead to family disputes. There are also tax issues to be considered.
It is a good idea to have your will regularly reviewed by your solicitor to make sure it still reflects your wishes. This is particularly important if your circumstances change in any way. For example, if you get married or enter into a civil partnership your existing will is no longer valid.
2. Think about a letter of wishes
There may be things you want loved ones to know after you die which do not belong in your will, for example funeral requirements, advice to guardians on raising your children, or an explanation of why someone has been excluded from your will. These are usually put into a letter of wishes, which can explain your thought process when making your will and provide guidance to your executors and family. A letter of wishes can include anything you like, but it must not conflict with your will.
3. Put in place a lasting power of attorney
A lasting power of attorney (LPA) is a legal document allowing people of your choice to make decisions on your behalf if you become unable to. You cannot make an LPA once you lose mental capacity, so it is important to seek legal advice at an early stage. There are two types of LPA:
- Property and affairs: this covers decisions about your finances and property, like managing investments or selling your house.
- Health and welfare: this covers decisions about where you live, day-to-day care, and medical treatment.
Having an LPA in place will make things easier for your family. If you become unable to make decisions and do not have an LPA, it will be expensive and time-consuming for them to get authority to act on your behalf.
4. Consider an advance decision
An advance decision or living will allows you to put in writing your wishes about medical treatment if you lack capacity. An advance decision is legally binding, which means the people caring for you must follow your instructions. It cannot be used to request certain treatment or for your life to be ended. The rules on advance decisions and how they interact with LPAs are complicated, and your solicitor can advise you on what best reflects your wishes.
5. Seek inheritance tax advice
Inheritance tax (IHT) does not just apply to the very rich. With rising house prices, more people become liable to pay the tax each year. IHT is charged at 40 per cent, but there are lots of ways that the burden can be reduced. With careful forward planning and sound legal advice, you can ensure that your loved ones receive everything you want them to, without having to sacrifice more than necessary in taxation.