Four top tips on how you can protect your assets and look after your family's future
1. Set up a Property and Financial Affairs Lasting Power of Attorney
If in later life you become unable to manage your financial affairs due to mental incapacity and there is no suitable Power of Attorney in place, the court will appoint someone to act on your behalf as what is known as a Deputy. You have no control over who this will be and the application process is expensive and time consuming and the ongoing administration of a person’s affairs by a Deputy usually involves considerable cost, bureaucracy and delays. However, it is almost always the only option in the absence of a suitable Power of Attorney.
If you make a Lasting Power of Attorney in advance you choose who looks after your financial affairs and you decide the parameters of how the attorneys will act on your behalf should the need arise. We frequently see the havoc caused for the individual and their family where a person loses capacity without having made a financial Power of Attorney and we consider these documents to be as important as Wills.
If you do not have a suitable Enduring Power of Attorney or Property and Financial Affairs Lasting Power of Attorney in place, please speak to us.
2. Put a Health and Welfare Lasting Power of Attorney in place
If you lose mental capacity in later life, do you want your family or the State to decide if, where and when you need to go into a care home? If it is the former, you really should have a Health and Welfare Lasting Power of Attorney.
When Health and Welfare Lasting Powers of Attorney were first introduced they were often of limited benefit, with next of kin, medical professionals and social services making many joint decisions. The situation is now very different. Without a Health and Welfare Lasting Power of Attorney your next of kin will have no formal authority to make health and social care decisions on your behalf should you lack the capacity to do so. Unfortunately, we are seeing an increasing number of disputes over social care as the lack of funding in this sector forces social services and others to make resource based decisions that might not be in a person’s best care interests.
These documents also mean that often your family in consultation with your GP can make immediate decisions without the need for lengthy discussions with various professionals. They also allow you to empower your attorneys to make decisions over life sustaining treatment in the event you are unable to.
Much like financial Powers of Attorney, you can define in advance the parameters under which your attorneys operate should the need ever arise and we would be very happy to guide you in this regard and with making a Health and Welfare Lasting Power of Attorney generally.
3. Ensure your Wills provide protection against care home fees
Sadly, it is almost always too late for a couple to do anything to avoid care home fees after the first person has died and in recent years local authorities have become increasingly vigilant when it comes to assessing finances in respect of the cost of care and who should be picking up the bill.
We have seen increased scrutiny of historical transactions which means giving away assets during your lifetime to try to avoid care home fees will almost certainly fail. However, sensible planning within Wills can protect at least half of your combined estates for future generations from being used up in payment of care home fees.
Where appropriate, we recommend a form of trust in Wills which gives the surviving spouse or partner all the protection they need and which puts the assets of the first person to die beyond the reach of local authorities when it comes to assessing fees.
4. Review your Wills in light of the new Inheritance Tax legislation
New Inheritance Tax rules that came into effect in April may potentially have spelt good news for millions of homeowners by removing them from any liability. However, many still stand to miss out on this unless they update their Wills, which were drafted before the changes. You can read more on this subject in this edition of Law for Life.
By making simple adjustments, the extra allowance can be secured ensuring your estate does not pay more Inheritance Tax than is necessary. The legislation is full of strange anomalies meaning that a number of Wills made before the change in legislation will not benefit from the extra allowance unless they are updated. In some cases, it will be possible for the Will to be varied after a person’s death to ensure the estate qualifies for the allowance, but even if it can then this will almost certainly result in more expense and uncertainty than amending it now.