Don’t leave it to chance
MOST of us trust our nearest and dearest with our personal finances, but the consequences can be dire in the rare cases where that trust is abused.
The threat has been highlighted by the recent case of Richard Willis, 66, who plundered his elderly mother’s savings to the tune of £700,000.
The prospect of a large inheritance, or the fallout from an acrimonious divorce, can tempt many to cheat their loved ones. It therefore pays to put your finances on a proper legal footing, just in case.
HAVE YOUR SAY
While Audrey Willis lay seriously ill in a care home, her son Richard raided her savings to buy himself a new home and flash cars, including a Jaguar, over a four-year period.
In 2015, he was sentenced to six years in jail and although he is now out on licence, the courts have just ordered him to repay £566,365 or face a further 40 months inside.
Willis was angry after discovering he would get little in his mother’s will and Andrew Wilkinson, partner in the contentious probate team at Lime Solicitors, said family disputes can quickly turn sour.
He said you must talk to your loved ones when writing your will, and explain any decisions: “Nasty surprises can cause resentment, so explain why you have excluded or included people.”
Family members can be resentful if they receive less than expected, or if large sums go to charity: “You should explain why you chose a charity and what it means to you.”
Discussing issues in advance can reduce both disputes and challenges to your will.
WRITE IT DOWN
You can write a DIY will for as little as
£10, but the ultimate cost could be much higher if you make mistakes. Wilkinson warned: “You might save a few hundred pounds on solicitors’ fees, but that could cost your estate thousands when you are gone.”
You should review your will at least every five years, and after major life events such as deaths, weddings, births and divorces. Then keep your will in a secure place, such as with a solicitor: “Make sure your loved ones know where it is and who to contact.”
GET THE POWER
Too many families put themselves at risk by making informal financial arrangements, often with relatives who are not their spouses, research from Co-op Legal Services shows. Three quarters of people aged between 65 and 74, and two thirds in the 75 to 84 age group, have failed to set up a vital legal document called a Lasting Power of Attorney (LPA).
This gives close family members or friends control over your finances in case you lose mental capacity, with a separate LPA for health affairs. It is increasingly important as dementia cases rise.
However, many are simply shifting money into joint bank accounts instead, and relying on family goodwill to see them through. That is despite the fact that one in 10 worries about relatives borrowing money for themselves when short of cash, while a further 5 per cent suspect that a family member has taken money without asking.
Gavin Holt, head of probate at the Co-op, said informal arrangements may seem convenient but can often cause significant problems that only come to light after death: “Sadly one of the most regular problems is financial abuse. This can add months, if not years, to the probate process.”
HIDDEN WEALTH
Another common family problem sees partners hiding assets from each other in bitter divorce cases.
Simon Dawson, managing director at Quanta Capital, said growing numbers are storing wealth online in cryptocurrencies such as bitcoin and it takes time and money to track this down: “Sometimes clients have to use investigation services and forensic accountants to locate, value and assist in getting these assets back.”
Resist the temptation to hide assets yourself: “Courts take this very seriously and you could be penalised heavily.”
Honesty is the best policy, especially when dealing with those you love the most.