WILLS
Why do you need to make a will? Put simply, your will confirms what you wish to happen to your money, property and possessions after your death.
While you can write your will yourself, it is strongly advised that you obtain independent legal advice, for example from your solicitor, to make sure your will is interpreted correctly.
In order for your will to be classed as legally valid you will need to get it formally witnessed and signed.
If you want to update your will, you need to make an official alteration (called a codicil) or make a new will, either of which will also have to be witnessed.
If you don’t make a will, you cannot control who will inherit your money and property.
If you die without making a will, your property will be distributed according to the law of intestacy, which is likely to be against your personal wishes and it is possible that the people you want to inherit your possessions may not benefit. By making a will you can determine precisely who will inherit – and what.
Complex law
The law of intestacy is complex but, broadly speaking, the bulk of your estate would go to your spouse (including a registered civil partner) or, if none, to your children (whether or not they are adults) and, if you were childless, to other blood relatives.
However, the effect of the rules depends partly on the size of your estate. If your estate is large (currently more than £250,000 where there are children – even if they are adults – and £450,000 where there are none), less than you expect may go to your spouse. So it’s always prudent to have a valid will rather than rely on the intestacy rules.
If you’re not married and have not made a will, your partner may receive nothing. If you’re not married but are living with your partner and you want him or her to inherit your estate, it is particularly important that you make a will. This is because the rules of intestacy make no provision for cohabitation or unmarried partners (other than registered civil partners). If you died without making a will, your partner might not be legally entitled to anything from your estate.
By making a will you can determine who will handle your affairs after your death. If you died intestate, the management of your affairs would be placed in the hands of administrators appointed by the court and the administrators would distribute your estate according to the rules of intestacy (see above).
By making a will you can name a legal guardian for your children. If you have children under the age of consent, you can name a guardian to care for them in the event of their being left without any parents. Since a guardian takes the place of a parent, making a will gives you the ability to confirm the name of the person you believe will offer the best care for your children if you’re not around.
It’s important to make a new will if you get married or divorced.
Once you have made your will, changes to your circumstances (e.g. marriage, separation, divorce, having a child or moving house) can make parts of the will invalid or unfair and open to a successful claim under the Inheritance Act. You should, therefore, review your will regularly to reflect any major life changes, preferably every five years.
Divorce and/or re-marriage are not the only reasons why you should review your will on a regular and ongoing basis.
It is also possible to die partially intestate. This occurs if you fail to deal with all of your property in your will, or if someone who was due to inherit in your will dies before you or if, having divorced, your ex-spouse’s legacy becomes invalid as a result.
Saving inheritance tax
Making a will gives you the opportunity of saving inheritance tax liability. This is particularly important if you have substantial assets. You can maximise Inheritance Tax reliefs and exemptions if your estate might be worth more than the Inheritance Tax threshold. The current threshold is £325,000 and will remain so until 2014-15.
However, it is always recommended to speak to a financial adviser in this regard to make sure you are planning appropriately.
By making a will, you can express your preferences for the manner in which you are buried or cremated and for donating organs – or indeed your entire body – for medical purposes, if you wish.
POWER OF ATTORNEY
Why do you need power of attorney? Hopefully, I have been able to explain the importance of writing a will to make sure your loved ones are provided for when you die, but what happens if you are left mentally unable to make decisions because of accident or illness?
With an ageing population it can happen more than most people think – and if you do not have power of attorney, specifying who can look after your affairs, you will have to go through the Court of Protection which was set up to protect the assets of vulnerable people without a personally-appointed power of attorney.
In 2007, as a result of the 2005 Mental Capacity Act, the new Court of Protection replaced the former office of the Supreme Court and was given an extended jurisdiction.
More personalised approach
According to The Ministry of Justice, these changes have resulted in a more personalised approach, giving most people who deal with the court greater flexibility over how money is spent, while still safeguarding vulnerable people.
However, the court is still seeing high levels of complaints and in December the President of the Court of Protection, Sir Mark Potter, announced that he was setting up an ad hoc committee to review the Court’s rules once again.
There is an easy way to avoid the Court of Protection, and that is to grant someone you trust lasting power of attorney, giving him or her the right to look after specific aspects of your financial affairs, or welfare (or both), should you lose the capacity to do so.
You can obtain copies of the forms needed to complete either a Property and Affairs Lasting Power of Attorney covering money matters, or a Personal Welfare Lasting Power of Attorney covering medical matters, from the Office of the Public Guardian.
You can chose to appoint anyone you trust as long as they are over 18 and not bankrupt.
You need to fill in the forms and have them signed by all relevant parties (yourself, an independent third party called a certificate provider who verifies your capacity, and the person you are appointing power of attorney).
In addition you should list one or more people whom you want notified of the application.
If you list no one, an additional certificate of capacity must be provided. Common people to notify are one’s children, or other family members, or a trusted professional adviser.
Registration currently costs £120 per form. However, it may be prudent to pay a little more and seek expert legal guidance on this important issue.
The Lasting Power of Attorney must be registered before it can be used. If you want to, you can save its use until a time when it is needed.
However, the advice is to have it registered as soon as you can: firstly, to avoid the long registration waiting period in emergencies and, secondly, because if a mistake has been made and it is declared void it will be too late.
Prior to 2007 it was possible to make Enduring Power of Attorney. This was a simpler document but did not include some of the important safeguards against fraud which are built into a Lasting Power of Attorney. Whilst it is no longer possible to make an EPA now, any that were made prior to 2007 are still valid.
