You may wonder how best to protect yourself and your family, both during your lifetime and after death, to ensure you wishes take effect as intended. We recommend the following:
- Having an up-to-date Will in place making sure it has been signed and witnessed correctly and disposes of your whole estate (no partial intestacy).
- Having Lasting Powers of Attorney for property and financial affairs and/or healthcare matters in place and consider whether to include safeguards such as third parties overseeing the attorney accounts once a year or taking out an insurance bond in case an attorney went rogue during your lifetime: www.gov.uk/power-of-attorney and http://www.securitybonds.co.uk/
- Having a Digital Assets List and set up Legacy Managers for social media accounts such as Facebook.
- Having an Emergency Contacts list.
- Making a note of where to find your assets (especially if online only accounts are held).
- Making a note of any current liabilities and important dates/deadlines.
- Putting a property alert in place at HM Land registry for any property owned but not lived in and a Royal Mail Redirection of any post addressed to you at that property (service of notices by HM Land Registry for example or if someone was trying to get ID fraudulently sent there to sell it). Property Alert - GOV.UK (www.gov.uk)
- That you check your online Credit Record regularly to spot for any fraudulent activity such as cards or loans being taken out in your name such as Credit Score or CheckMyFile.
- That you take advice as to your current estate value and whether you should consider Inheritance Tax planning where your estate exceeds your available allowances.
- That you take financial advice if you have not done so recently with an Independent Financial Adviser (who is not tied to any particular investment product) and preferably that is STEP qualified or Chartered for extra protection.
- That you keep details of any large gifts made historically (over the annual exemptions in the last 7 years or 14 years if you have made gifs into trust during lifetime).
- Where you are remembering your children equally in your Will and one has already received a large gift during lifetime making it clear in your Will whether this sum should be brought back into account (rather than relying on advancement or double portion rules applying which could cause arguments).
- That you consider the implications of the Inheritance (Provision for Family & Dependants) Act 1975 if you are not remembering certain family members and take advice. You can view the legislation here: Inheritance (Provision for Family and Dependants) Act 1975 (legislation.gov.uk)
- Where you have estranged children and are not remembering them that you keep a note of the reasons why, any funds they have had during lifetime already and if you have a class gift to children in your Will changing this (otherwise they would still be included as part of the class gift) or if a grandchild is estranged whether to exclude Section 33 Wills Act 1837 (the presumption of gifts over to issue of a child who died before you)
- Where you have disabled, or vulnerable, beneficiaries consider including a Trust in your will to protect any existing benefits and appoint trusted trustees who can use the money for their benefit.
- Where you are on a second marriage/civil partnership and wish to protect assets for future generations considering whether to include a Life Interest Property Trust over your property or part of your estate if you died first or a Discretionary Trust or gift outright on the first death to ensure your children or grandchildren received something then.
Your Will
Do you have one? if not, the Intestacy Rules determine where your estate goes and can be found here: Intestacy - who inherits if someone dies without a will? - GOV.UK (www.gov.uk) The Statutory legacy for spouses or civil partners is due to increase from £270,000 to £322,000 by the end of this month.
Having a Will in place makes things easier for your family and friends as an executor can act immediately with authority of the Will pre-Grant whereas some asset holders will not liaise until a Grant of Letters of Administration has been received where there is no Will in place and intestacies can take a lot longer to be received at the Probate Registry. Wills can take up to 16 weeks, Intestacies 6 to 12 months in some cases.
You can prepare a Will yourself, known as a home-made Will, but we recommend against this as a lot could go wrong and end up costing your estate (beneficiaries) money or mean the chosen beneficiaries sadly do not inherit as intended (we have seen this happen). Will writing is not currently regulated so anyone can hold themselves out to prepare and advise on Wills. It is good to get a professional that has insurance to draft your Wills to protect your beneficiaries if anything went wrong. For extra protection consider instructing a professional that is STEP qualified (Society for the Trust and Estate Practitioners) or a member of Solicitors for the Elderly (soon to be called Lifetime Lawyers to reflect that we advise all generations not just the elderly).
Is your Will a reflection of your current wishes? Does the Will take into account any recent change in a family member or beneficiary’s circumstances? For example, is anyone divorcing, in financial difficulty with creditors, or are they vulnerable to financial abuse, or in receipt of means-tested benefits where a trust may be better suited rather than an outright gift?
Are you in a long-term relationship but not married or in a civil partnership? If so, be aware that there is no such thing as common law marriage and gifts to a partner are not free of tax (whereby a gift to a spouse or civil partner for IHT is free of tax on death). The Inheritance Tax allowances will also not be transferable between you as partners, whereas they can be between spouses or civil partners, and where you have been together for a significant period you may wish to marry or enter into a civil partnership to protect these additional allowances to enable up to £1 million to pass free of tax on the second death. How Inheritance Tax works: thresholds, rules and allowances: Overview - GOV.UK (www.gov.uk)
Have you been widowed and remarried where your first spouse left some of their estate to you? If so, you have extra allowances that can be used if you do some tax panning (bearing in mind that on death your executors can only claim to transfer one full Nil Rate Band) and need to make sure that if you died first you used up your first spouse’s allowance so that on the second death you have not wasted the same. If you die second, and have not planned ahead, then your executors can only choose your first or second spouse’s allowance to claim up to one full Nil Rate Band.
Could your Wil be challenged? Are you diagnosed with a health condition or on medication that could affect your mental capacity? If so, do you want to ensure a belt and braces approach by getting independent evidence of capacity by your Will being professionally prepared (and your beneficiaries covered by insurance should anything go wrong with the drafting) and/or a medical report from a suitably qualified practitioner to put with your Will just In case?
Does the Will take into account the recent changes in legislation? For example, post 2017 then Residence Nil Rate Band where you are passing property to direct descendants (includes children, step-children, legally adopted and fostered children and spouses of those who have died before you and not remarried BUT not children of partners if you are unmarried). If not, you may need a Codicil to ensure any allowance is available to be claimed given the strict restrictions in place where you have survivorship clauses (sometimes this can be saved but not always if the gift over is not absolute) or contingent ages in your Will and no right to income has been given (immediate post death interest).
Having Wills and Lasting Powers of Attorney in place and a plan of action and where to find things and who to contact going forwards is the best protection you can give you family for peace of mind. Please contact the Wills and Estates team at Rowberrys in Crowthorne should you wish to review your Wills and/or have these professionally drawn up and should you require tailored legal advice for preparing Lasting Powers of Attorney.