Two vital documents
Iwould encourage all readers to make a will or update your existing will. The importance of protecting your estate and ensuring your assets pass on to your intended beneficiaries, in the most tax-efficient manner, cannot be stressed enough. If you don’t have a will, the rules of intestacy take effect on your death. This means your relatives are divided into classes (spouse, children, siblings etc) in order of priority and, once a person has been identified in a class, all individuals in lower classes are excluded. Contrary to popular belief, the estate will not necessarily all pass automatically to your surviving spouse.
Your will should reflect your wishes. It really is that simple and having control over your wishes is not to be underestimated. You should be able to freely choose who is to benefit from your estate and to what they should be entitled. You can also decide who oversees administering your estate (an executor).
Having a professional prepare your will reduces the risk of disputes. A solicitor can ensure that a will accurately reflects your wishes and, more importantly, is executed properly.
Where someone has children from a previous relationship, the use of a trust protects the property as an asset for those children, while allowing their current partner to reside in the property (a life interest trust). Without a will, the rules of intestacy and rules of survivorship for co-owned property may mean all marital assets pass to the current partner while the children do not receive anything. Similarly, a discretionary trust is a useful tool to allow someone to manage the inheritance left to a vulnerable beneficiary. A will also allows you to appoint guardians for your minor children should something happen to both parents.
Around 60 per cent of people do not have a will and even fewer have Lasting Powers of Attorney (LPAs). Life is unpredictable and a person may lose mental capacity as the result of a stroke, accident or dementia, for instance. LPAs are therefore vital and can be of use now, not just in later life. You prepare LPAs before you lose mental capacity, so the earlier the better, which gives power to another person (your attorney) to act in your best interests and on your behalf when you are unable to do so.
It is a common misconception that a spouse will automatically be able look after the affairs of their partner. However, without a valid LPA this is not the case and you will be unable to assist them regarding their property, finances, and welfare issues. Without an LPA, you would need to apply for a deputyship order from the Court of Protection, which is often costly, time consuming and stressful.
Adam Kaye is a private client solicitor at Solomon Taylor & Shaw in Hampstead, London. To discuss any of the above, contact adamk@solts.co.uk or 020 7431 1912 quoting ‘the JC’ for a free, no-obligation meeting. Solomon Taylor & Shaw is a Legal 500 firm of solicitors who also offer corporate and property services as well as employment and immigration. www.solts.co.uk