There is a myriad of things to consider when trying to get your affairs in order. We have compiled a shortlist of several key elements to estate planning from a legal perspective. This will cover protecting your wishes both once you have passed away and while you are alive, as well as how to protect your assets.
Step 1: Protecting your wishes after you’re gone
Usually, the first step in estate planning is writing a Will.
Your Will is your opportunity to explain what your final wishes are in this world. Sadly, most accounts show that around two-thirds of all Britons die without a Will. This means their estates fall under the rules of intestacy. Frankly, these rules are outdated and do not suit modern life. This can lead to loved ones losing out on their inheritance, and it can lead to quarrelling families and expensive litigation – something we, as primarily a litigation firm, know all about. Getting a Will in place and ensuring it is up to date is a key first step in estate planning.
When you are considering drafting your Will, there are several key elements to consider:
Who will be the executor of my estate?
The executor is the person that will be responsible for following the wishes you’ve outlined in your Will, as well as probating your estate. This is a very important role and has a serious responsibility attached to it, and it is also very time-consuming. Therefore, you must choose your executor wisely and also discuss this with your potential executors before you appoint them. Often, individuals appoint their partner or a close family member to be their executor. However, it is also an option to appoint professional executors, such as solicitors. Executors can also be beneficiaries in your Will.
Who will look after my children if I die?
For many younger individuals, appointing a guardian to take care of their children is the most important reason for them making a Will. As in your Will, you will have the opportunity to appoint guardians to take care of your children. This avoids Social Services making this decision for you. It’s important to choose guardians of an appropriate age to take care of your children, or to review it at regular intervals.
Most individuals do not appoint joint guardians unless they are a couple. This is to avoid your child become the centre of a dispute when they are grieving and to help make the transition as smooth as possible. For example, if one was to appoint both Grandmothers, although in normal circumstances they probably get along but what happens when they have joint guardianship? Whom do they live with? What type of discipline do they get? Which school do they go to? Which church do they attend? Dance practice or football? The list is endless.
Again, it’s important to discuss your intentions with your potential guardians to ensure they want this responsibility and have the ability as well.
Does my partner inherit everything automatically?
This isn’t as clear-cut as many individuals imagine. In certain circumstances yes, in many others no. For instance, if you are married or civil partnered and have an estate worth less than £270,000 (in England and Wales), they will inherit your estate. However, complications arrive when you are not married, have an estate above this amount, or have children from a different partner.
Sadly, although many individuals think of their long term partner as a common-law husband or wife, this counts for nothing when you die! Without a valid Will, unmarried couples will not automatically inherit from each other. Unmarried couples, however, may be able to make claims under the inheritance act – please contact us if you would like to discuss inheritance claims.
What happens to my pet after I’m gone?
An impressive 51% of British adults own a pet. As a firm, the majority of our staff have pets (some cuties featured in the picture below) and we understand the importance of making provisions for our extra special loved ones. Within your Will, you can appoint carers for your pets and even set aside a legacy payment to provide for their needs.
Where do I store my will?
So you’ve got your Will, it is written, witnessed and signed. What next? Where a Will is an essential first step, but making sure this is store correctly so individuals can access this when you’ve passed is key. Sadly, we’ve seen many cases of missing Wills – ones that have been lost, damaged or destroyed or intentionally removed from individuals properties. Therefore, we’d recommend keeping it with a professional service, such as your solicitor or bank. But make sure you let your loved ones know!
We provide bespoke advice to ensure all our clients’ needs are addressed and supported. Speak to our team today to get started on your estate planning checklist.
Step 2: Protecting your wishes while you’re alive
After arranging a Will the usual next step in estate planning is appointing an attorney to take care of your wishes while you are alive.
A Will is great at protecting your wishes after you’ve gone, but what protects your wishes while you are alive? A Lasting Power of Attorney (LPA) protects you if you become unable to make your own decisions. Alzheimer’s UK estimates that there will be approximately two million people in the UK suffering from dementia by 2051. This could mean that the key decisions for you will be at the mercy of the Courts or your Local Authority. Particularly as, sadly, the notion of ‘next of kin’ has no legal standing – so your loved ones will not be able to make these decisions for you without an LPA. For more information on LPA, check out our other blog below. Without an LPA, you need to apply to the courts for a Deputyship Order which can take around nine months to complete and incurs expensive court fees
Appointing a Power of Attorney allows you to maintain some control, over your decisions. It’s important to have conversations with your loved ones early on so that everyone is aware of your thoughts and feelings towards the key decisions that you’d need to make.
Who to appoint?
It is incredibly important that you choose someone you trust and someone with the capability to make decisions on your behalf. LPAs come in two types, property & financial and health & welfare.
For your property & financial LPA, they will be allowed to make decisions about your money, tax and bills, manage your bank accounts, property, investments, pension and benefits. Therefore it is essential to choose someone savvy with finances. Whereas the health & welfare LPA they have decisions to make regarding your medical care and consent, daily routine and where you live. Therefore it is important to appoint someone who has or can develop, a keen understanding of your health and welfare.
There is also the option to appoint a professional attorney to make the decisions for you. This can be a very tidy option to choose as professionals are incredibly well versed in making these types of decisions are can ensure that the best decisions are made. Professional attorneys can work alone and in addition to lay (family or friends) attorneys.
What is the alternative?
Without an LPA, if you were to lose capacity your loved ones would need to apply for a Court of Protection Deputyship Order (COP). However, applying for one of these is time-consuming as they take over nine months to complete, complex and, importantly, they are not guaranteed. Meanwhile, your decisions are out of your and your loved ones control while you wait.
Furthermore, in comparison to LPAs, they are far more costly. To apply for a COP, you’d need to first pay a fee of £365 for each type of COP (finance and health) and then an additional fee of £485 if the court decides you need a hearing. Furthermore, if your case goes to trial you may need to instruct a solicitor to act for you, which again will incur fees. Organising your LPA now is the safe bet to avoid problems, delays, and extra costs in the future.
Similar to a Will, LPAs must be kept in a safe place as only the original, signed, and validated copy is legally valid (or a certified copy may be accepted by some organisations).
Looking to get a key start on your LPA or need help with a COP application, get in touch today to get started on your estate planning checklist.
Step 3: Protecting your assets
Once you’ve protected your wishes for when you’re gone and while you’re still alive, a further step in estate planning is to ensure your assets are protected.
Mo[re] money mo[re] problems” – The Notorious B.I.G.
There are lots of lessons we can take from 90’s rap, but this one rings true when considering trusts. The more money and other assets you have the more money you have to pay. For example, you may incur extra costs in tax and care home fees as well as other areas. Placing assets in trusts helps you avoid this, subject to relevant legislation. Furthermore…
Put not your trust in money but put your money in trust” – Oliver Wendell Holmes US physician and author
Money, and other assets, are susceptible to a myriad of threats and risks. Trusts can be an excellent way to mitigate that risk. For example, you may wish to bequeath an asset to a young member of your family but are worried that they may “blow” their inheritance but you want to give them it as an investment. Putting this asset in a trust would enable you to have some control over how that asset is used. Trusts can also help protect assets from claims made by partners in divorce proceedings or financial institutions in bankruptcy proceedings.
Trusts are very powerful and can help in a variety of ways, however, they are very complex and therefore expert, personalised advice is needed. There has to be a legitimate reason for settling up a trust. A trust set up with the main purpose being to hide assets from creditors, spouses and to avoid paying care home fees for example are liable to be set aside under the law. Help is at hand. We can help guide you through the maze in this complex area. Message us today to arrange a call back from one of our Elder Client Estate and Asset Protection team members.
*Notice: This blog does not constitute legal advice*