Death is often a topic people don't like to speak about, with many putting off plans for their funeral or how their assets will be split until their health deteriorates.
Our legal experts at Knights advise that this is the worst time to begin arranging funeral plans or inheritance tax planning, as stress from health issues, long wait times and high costs can all plague the process.
So when should you begin writing up your will? And what do you need to know before starting?
Alexandra Milton, a partner in the private client team in our Weybridge office, explains what you need to know when planning your estate.
"Estate planning in good time is vitally important to ensure you save money, time, and are not making important decisions in distress - or even worse, leaving your loved ones to work things out once you are gone,” says Alexandra.
“Planning your estate shouldn’t be a confusing and expensive process like most think. If I were to advise you to consider any two documents, it would be your Will and your Lasting Power of Attorney (LPA)."
What is a will?
A will is a document that lets your family and friends know where you would like your money, property and possessions to go after your death. For a will to be valid, it will need to be signed by yourself in front of a witness.
A will can be made by anyone over the age of 18, who is of a 'sound mind', and can be updated at any time through an official alteration, or a 'codicil'. It is important that you have a will in place before you lose capacity to write it or before you die, otherwise the law will decide where your assets will go.
Alexandra says, "A well-written Will is the foundation of your estate planning, setting out who should manage your estate and what should happen to your assets, from guardianship of children to funeral wishes and personal legacies.
"It helps to avoid common pitfalls, such as assets being redirected under intestacy rules or lost in divorce proceedings. It can also safeguard children’s inheritance, support vulnerable beneficiaries, and balance the needs of blended families.
"It’s a vital tool for inheritance tax planning, helping you maximise what goes to your loved ones and minimise what’s lost to tax. Currently, applying to estates over a certain threshold without careful structuring can result in a significant portion of your wealth being lost.
“Similarly, property or investments passed on will also be subject to capital gains tax, and income tax can also impact wealth passed onto trusts or minor beneficiaries. And for those concerned about care home fees, a Will can help protect wealth while maintaining a spouse’s standard of living."
What is a Lasting Power of Attorney?
A lasting power of attorney (LPA) is a legal document that lets you appoint people to help you make decisions, or to make desicions on your behalf, should you end up in a situation where you lack the mental capacity to make your own decisions.
There are two types of LPAs:
- Property and financial affairs - your attorney can make decisions in regards to selling or repairing your home, your mortgage and your bills.
- Health and welfare - your attorney can make decisions in regards to where you live, your medical treatment and the care and support you receive.
You can set up LPAs for both types of decisions, and these can be cancelled at anytime
“The second must-have document is an LPA. It ensure your finances are looked after should you become mentally incapacitated and aren’t able to make informed decisions about your estate. If you suffered a stroke, a car accident or dementia, then your estate will be in a much better position to be managed on your behalf.
“If you do not have an LPA in place and something happens, then the other option is a deputy order - an expensive, time-consuming, and generally stressful process that would be much better avoided.
“Thinking about end-of-life planning shouldn’t be something that fills you with negativity; it should be about bringing peace of mind, knowing your loved ones are looked after. If you’re unsure where to start, it’s always best to reach out for legal advice to ensure every detail is covered.”
It is always recommended to set up a Will or Lasting Power of Attorney to ensure you are properly protected from future disputes or challenges, particularly if you have any complex financial situations or family structures. To find out more information, get in touch with one of our legal experts here.