Wills and LPAs

Why make a Will?

By making a Will, you are making provision for the winding up of your affairs after death. This not only has advantages for those who will find themselves administering your estate, but also gives you peace of mind, knowing that you have selected as executors the individuals best suited for the role and have given them the necessary instructions. 

End-of-life planning is a topic which is hard to address and easy to put off. Many people find it challenging to make a Will or think about making a Will as it can raise some difficult issues and questions. Set out below is the very real benefits of making a Will and outlines what the process will involve. It is hoped that this information will demystify Wills so as to encourage you to make a professionally drafted Will without further delay, which will mean that you can get on with living your life in the knowledge your affairs are in order.

You may also be asking yourself if your Will needs to be prepared by a solicitor or professional Will writer (with the cost that that entails) or whether you can use a more ‘DIY’ option. Almost without exception, a professionally drafted Will is the better option. Not only can you be confident that your estate will pass according to your wishes and instructions, but you will be guided in thinking about your assets and family circumstances to ensure that all matters are appropriately dealt with.

The form of a DIY Will is likely to be limited, and your particular estate and circumstances may benefit significantly from a particular form of Will. For example, some people may be well advised to set up a trust in their Will for reasons of asset protection or flexibility and this would certainly require professional and careful drafting. Without the assistance of a solicitor or professional Will writer, you may be missing the opportunity of leaving your estate in the most secure and efficient way possible.

Benefits of making a Will

These include:

1. to avoid your assets being distributed in accordance with the intestacy rules which could mean, for instance, your spouse not inheriting all of your estate
2. helping you focus on and think about what your assets and liabilities may be if you die—this helps you put your affairs in order today and allows you to think about what assets and liabilities may arise on your death and who these pass to (eg life insurance or pension benefits may be payable on your death
3. to ensure that those you wish to inherit your assets on your death actually get them 
4. to nominate executors of your choice to deal with the distribution of your estate in the certain knowledge that they will comply with your wishes
5. to nominate your preferred guardians of your children to avoid disagreements or family upsets 
6. allowing you to make gifts to particular people or charities/organisations that are important to you 
7. ensuring your estate and what you leave behind is maximised by using tax planning and tax reliefs appropriately, particularly in relation to inheritance tax 
8. securing benefits which arise in relation to particular assets you may have, for example:
9. a foreign property (eg if you have a home abroad, it will be important to establish how and to whom this will pass on your death and to ensure to the extent possible this is in accordance with your wishes and not local law
10. business property (eg if you are a company or business owner, preparing a Will would allow you to consider and plan the succession to the business (so that it does not have to be sold following your death), and to maximise any possible tax reliefs for passing the business to the next generation
11. farming or agricultural land (as above, if you own or manage farmland a Will would allow you to do succession planning and also maximise tax reliefs
12. allowing you to the opportunity to discuss your estate planning with your family which will significantly reduce the prospect of disputes arising after your death leading to a Contentious Probate.

Other possible benefits (depending on individual circumstances) 

1. to explain why a possible beneficiary is being excluded 

2. to ensure the continuation of a family business 

3. to ensure that 'first' and 'second' families are treated fairly 

4. to reflect lifetime rearrangement of assets 

5. to give specific guidance to executors 

Some thought needs to be given a number of issues that will come up during discussions about why you should make your Will and why you should put particular provisions in it. 

After we write your Will, we would suggest that you register it with The National Will Register.

Why should I register my Will?

In a survey commissioned by The National Will Register, two thirds of children would not know where to locate their parents’ Wills. The passage of time, house moves, and new relationships are all contributing factors to this statistic.

Writing a Will and regularly reviewing it is one of the most important things you can do for your loved ones. Therefore, ensuring that your family can find it when you have passed on is essential. If a Will cannot be found after your death then your assets will be distributed in accordance with the intestacy rules, not necessarily in the way you would have wished.

We hold your Will safely, but we record its location with The National Will Register so that beneficiaries can always locate it when the time comes.

Contact us to Register your Will with The National Will Register.

Inheritance Tax

Inheritance tax is essentially a tax charge on the value of your assets when you die. There are a number of well-known reliefs and exemptions (such as the spouse exemption, where leaving your estate to your spouse means there is no inheritance tax payable). The inheritance tax charge is usually paid out of your estate by your executors when they are administering it

However, the application of inheritance tax rules is not straightforward. As set out above, a significant benefit of getting a professionally drafted Will is ensuring that you leave your estate in such a way so as to minimise any inheritance tax charges (or other tax charges).

Reviewing and updating a Will

Once your Will has been signed, this will give you peace of mind that your estate will be dealt with according to your wishes.

It is a good idea to review your Will at least once every five years in order to ensure it still accurately reflects your wishes. For example, many things may change between the date of your Will and the date of your death from your personal and family circumstances to your asset base.

In particular, if you get married after you have made your Will (and the marriage was not contemplated at the time), this will automatically revoke your Will and you must ensure that you prepare a new Will. If you get divorced, it is also advisable to prepare a new Will to reflect your changed family circumstances.

It is also important to remember that inheritance tax rules can and do change. It may be advisable for you to involve the solicitor or professional Will writer who originally drafted your Will so that they can advise you on whether there have been any changes to the law which would result in a different inheritance tax outcome than the one anticipated when the Will was drafted. Once a Will has been drafted, it is not usually the obligation of the draftsperson to keep you up-to-date with any changes, which reiterates the need to seek professional advice when the time comes to review the Will.

Why make a Lasting Power of Attorney?

MAKING PROVISION FOR MENTAL INCAPACITY

Whereas a Will makes provision for the winding up of your affairs after death, there are also opportunities available to make provision in advance for the possibility of you becoming incapable of managing your own financial and welfare affairs during your lifetime. This becomes increasingly important as the risk of supervening mental incapacity grows through longevity, illness or accident. 

An ordinary power of attorney is not an effective provision because it is automatically revoked by mental incapacity – just at the time when it is most needed. The Court of Protection has power to appoint people to manage your affairs, but the procedure can be costly and time-consuming. More importantly, you will have lost the right to choose who will have the responsibility for looking after your affairs at a time when it is vital that they are dealt with efficiently and sympathetically. 

Until 1 October 2007, it was possible to appoint someone to safeguard your interests and to act on your behalf in respect of your financial affairs by an Enduring Power of Attorney (EPA), which remains valid even after the individual granting the power (the donor) becomes mentally incapable. A simple procedure enables the attorney to register the EPA with the court and then to proceed as before with little further court involvement. EPAs made prior to 1 October 2007 will remain valid and be capable of registration for as long as the donor is alive, so EPAs will be around for many years to come. However, an EPA enabled an attorney to deal only with financial affairs. In addition, it was felt that the relatively simple procedures could result in the system being abused. Therefore, a more complex and robust system was introduced to enable attorneys to be appointed not only to look after a person’s financial affairs, but also to make decisions on their behalf relating to health and welfare issues. These types of document are known as Lasting Powers of Attorney (LPAs). 

LASTING POWERS OF ATTORNEY 

At the time the power is given, the donor must be capable of understanding its nature and effect for it to be valid. It will be necessary to make separate LPAs, one dealing with ‘property and affairs’ and the other to cover ‘personal welfare’ decisions. LPAs were created by the Mental Capacity Act 2005 (MCA 2005), which covers England and Wales only. MCA 2005 provides a statutory framework to deal with situations where adults lack capacity to make decisions for themselves or who have capacity, but want to make preparations for a time when they may lack capacity in the future. A Code of Practice supports the MCA 2005 and provides guidance and information to all those working under the legislation. Certain categories of people are obliged to have regard to the Code of Practice, including attorneys and those acting in a professional capacity, such as STEP members. 

Property and financial affairs LPA.

These are designed for you to appoint attorneys to make a range of decisions including the buying and selling of your house and other assets, dealing with your tax affairs, operating bank and building society accounts and claiming benefits on your behalf. These can be used at your direction while mentally capable and also by the attorneys if you lack capacity to make these decisions. 

Health and welfare LPA.

Attorneys appointed under this document can make decisions relating to your living accommodation and care, consenting to or refusing medical treatment on your behalf, and on day-to-day matters such as diet and dress. This can only be used, however, if you have lost the capacity to make decisions for yourself. 

Provisions common to both forms 

Although there are two separate prescribed forms, both contain certain common provisions including statements to be completed by you setting out your details, the attorneys to be appointed and how they are to act, and details of any persons to be notified on the application for registration. 

The attorneys must state that they understand their duties and obligations. In addition, the legislation has introduced a person known as ‘the certificate provider’, either someone who knows you well or a professional person. The certificate provider must sign the form to confirm that they have discussed the contents of the LPA(s) with you on your own (if possible) and that they can state that you understand the purpose and scope of the LPA, no undue pressure or fraud is involved in the decision to make an LPA and there are no other factors preventing the creation of the LPA. 

Registration

Both types of LPA must be registered with the Office of the Public Guardian (OPG) before they can be used by your attorneys and both can be registered while you still have mental capacity (unless it specifies to the contrary). Registration can be by you or your attorney. The OPG do charge a small fee for the registration process.