The need for Wills and Lasting Power of Attourney

TOO many people fail to consider properly what happens to their property when they die, and do not make a will. They either do not care, or wrongly assume that their surviving spouse will inherit everything automatically?
Well, they should certainly care; most people have worked for nearly 50 years to get to where they are. If they think their spouse will get everything then that has not been the case in the past and, for many people, it continues to be a mistake to think so.
How your estate is distributed if you die without making a will is set out in law. The rules have changed for deaths after 1st October 2014, but continue to depend on whether you have any “issue”, ie children, grandchildren or remoter descendants..
Without any issue, your spouse will now receive the first £450,000 (previously £250,000) of the estate plus half of the balance, the remaining half going to parents and/or siblings. If there are issue, then the spouse will receive the first £250,000 of the estate plus half of the excess (previously only a life interest in this), with the issue receiving the other half.
The changes are beneficial in several ways. Firstly, it avoids a trust being set up unless that is the wish of the deceased. Also, it increases the amount received by the surviving spouse. However, if you want your money to go exactly where you want it to then a will is still essential.
Whilst looking at the bleaker side of life, another example of head burying is that of “Lasting Powers of Attorney” (LPA)! Whilst a will is only relevant upon death, LPAs can be relevant to anyone at any age. Consider what would happen if you were involved in a road accident which left you mentally incapable of dealing with your own affairs. Unless you have prepared an LPA which can be successfully registered, then you will pass the management of your assets to the Family Court, and this is not only inconvenient but also expensive.
Two separate LPAs are required for each individual, one of which deals with health and welfare and the other with financial matters. Each needs to be registered before they take effect, and a fee is payable at this point. Whilst they must be prepared whilst the individual is of sound mind they do not need to be registered until they are needed. However, that does run the risk of them being rejected for what may be a very simple and innocuous omission or error, and if the person is no longer of sound mind then a revised LPA cannot be prepared.
Whilst primarily a legal matter WatkinsonBlack are pleased to advise on the financial aspects of these as well as other matters. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.