At the start of every New Year many of us make bold resolutions to get our affairs in order, both financially and personally. Specialist Wills & Probate solicitor Paul Lindsey of Harding Evans explains the importance of putting these plans in place.
1. Why should I consider an Enduring Power of Attorney?
In the event that you became unexpectedly incapable of managing your own property and affairs, through illness or accident, your appointed attorney or attorneys would be able to act on your behalf in relation to your cash, investments and your house.
2. What if I became incapable of managing my affairs and didn’t have an EPA in place?
This would involve an application being made to the Court of Protection for the appointment of a Receiver. The Receiver could be a member of your family or a friend but, if there is nobody willing to act, somebody may be chosen by the Court. At the same time, the procedure for appointing a Receiver is significantly more costly and time consuming than that required to create an EPA.
3. What about decisions regarding my welfare and medical treatment?
EPAs do not authorise appointed attorneys to make decisions regarding a person’s welfare or medical treatment. However, Lasting Powers of Attorney, which were expected to come into force in April of this year, would empower attorneys to make such decisions. It is expected that Lasting Powers of Attorney will now become available in the Autumn, although they will not affect the validity of EPAs already in existence at that time.
4. Do I really need to see a solicitor to prepare my Will? Surely I can make one myself?
The simple answer to this question is that ‘No’ you do not need a solicitor to prepare your Will. However, there is a real risk that if the Will is drafted incorrectly or in an ambiguous way, this could lead to disputes as to your intentions after your death.
At the same time, if the Will is not executed and witnessed correctly, the court may deem it invalid and, as such, your estate would pass to those entitled under the Intestacy Rules to people whom you had perhaps not intended to benefit.
5. I have been living with my partner for some years but we have never been married. What happens if either of us dies?
Currently, when one partner of an unmarried couple dies without leaving a Will, the Intestacy Rules will apply and these do not confer any rights on the surviving partner to benefit from the deceased’s estate.
If you live with a partner and intend them to benefit from your estate after your death, it is vitally important that you make a Will to make your intentions clear. This is also important in order to avoid potential disputes arising after your death, which may have to be resolved by a court. The same applies in relation to same-sex couples who have not yet entered into a Civil Partnership.
6. Yes, but I am married. I don’t need to make a Will because my spouse will inherit everything anyway.
This seems to be one of the most common misconceptions amongst married couples in this area of law. If you die without leaving a Will your spouse or civil partner will only inherit what the law dictates. Currently, this would include the first £125,000 of cash and assets in your sole name, plus your personal effects.
The remainder of your estate would be split in half with one share passing to your children and the other being held in trust for the benefit of the surviving spouse during their lifetime, providing them with an income. Any assets owned jointly would, of course, pass to the surviving spouse.
7. We have quite a large estate – is there anything that we can do to reduce the amount of inheritance tax that might have to be paid when we die?
During the current tax year, the first £285,000 of your individual estate passing under a Will or the Intestacy Rules will not be subject to inheritance tax as it falls within the Nil Rate Band. Although the Nil Rate Band will be increased to £300,000 in 2007/08 any surplus above that limit will be liable to tax at 40%.
However, with an appropriately drafted Will, it is possible to ensure that couples who are married or in a civil partnership make the most of their individual Nil Rate Bands so that £600,000 of your combined estates can pass to those that you intend to benefit under your Wills, free of tax.