Where there’s a Will…
The start of a new year traditionally brings hope of a fresh start and better times. With 2024 expected to be another year of political and economic uncertainty, planning for the future and preparing for the unexpected has never been more important.
Katie Love is a Lawyer and Associate in the Private Client team at RDP Law, specialising in complex estate planning. Katie is a member of the Society of Trust and Estate Practitioners and The Association of Lifetime Lawyers.
Here, Katie explains why estate planning should be a top priority this year.
Where there’s a Will
The tumultuous nature of recent years has highlighted, for many, the importance of taking control of your affairs and planning for the future. The prospect of making a Will is not something relished by most, and it is often a topic that people are reluctant to discuss. However, putting off this vital task can be a costly and sometimes stressful oversight.
A report from The Institute of Fiscal Studies has indicated inheritances received by households over their lifetimes are set to grow in importance across subsequent generations; from an average of around 9% of lifetime household income for those born in the 1960s, to around 16% of lifetime household income for those born in the 1980s, inheritance is going to play an important role for future generations. Despite rumours of changes to inheritance tax rules in the spring budget, no changes have been announced to date.
It is a common misconception that the entirety of your estate will pass by default to the most obvious beneficiaries in your life (be it a spouse or children), but that is not always the case. The rules surrounding intestate estates (i.e. where a person has died without leaving a valid Will in place) are complex, and family members are often overwhelmed by the challenges of administering an intestate estate following the loss of a loved one. Making a Will with a suitably qualified professional ensures that your wishes are met and that your estate passes to those who you wish to benefit.
A recent report from the Society of Trust and Estate Practitioners (STEP) further highlighted the risks in using unqualified Will writers. The report cemented the importance of seeking a professional with the relevant skills and knowledge to provide bespoke and tailored advice when making a Will. Some 79% of members who responded confirmed cases where they had encountered poorly drafted Wills with errors and, worryingly, over 50% of members further reported having concerns about incompetent advice resulting in an increased tax bill.
Love and Marriage
It is particularly important to give thought to your Will planning when extended families and second marriages are relevant. Without a correctly drafted Will in place, children of the family from the first marriage could find themselves completely disinherited. Seeking advice from a specialist can safeguard against such an eventuality and provide you, and your family, with peace of mind.
Planning for the unplanned- Lasting Powers of Attorney
An equally important issue to consider when planning for your future is what will happen to you in the event that you lose the capacity to manage your own affairs. Contrary to popular belief, it is not the case that next of kin will automatically get a say in their loved one’s affairs if that loved one loses the ability to act for themselves. Without a registered Lasting Power of Attorney (‘LPA’) in place which nominates who you would like to appoint to act on your behalf in relation to either your financial or welfare affairs, your family could face a lengthy and expensive court process to obtain permission to manage your affairs or make health and welfare decisions on your behalf.
If you are a business owner, then putting in place a Business LPA will allow you to appoint an appropriate person or persons to make decisions for your business in the event that you were unable to do so. This helps protect business continuity and provides you with the peace of mind of knowing that an appropriate person with the relevant knowledge and understanding, could step in an manage your business affairs. Whilst it is possible to have a single LPA appointing your attorneys to manage both your personal and business affairs, it is often the case that it is more appropriate for separate documents to be created and separate attorneys appointed to ensure that attorneys have the relevant expertise and to avoid a conflict of interest situation.
For more information regarding estate planning, or to discuss your requirements, please contact Katie Love on 01633 413500 or by email at katie.love@rdplaw.co.uk.