Estate Planning Essentials... Thy Will Be Done!

Estate Planning Essentials... Thy Will Be Done!

You may have already realised that we’re much more interested in the health of your entire financial planning than merely your business accounts and taxes, hence the reason why we’re always looking for ways to help you more.  

In fact, over the past four months, we have duly been engrossed in estate planning reviews and the one thing we do need to tell you about is the very common theme we’re finding is that most client’s Wills are very poorly drafted especially in respect of ensuring their wealth passes to their intended recipients.  

Most clients we speak with are very insistent that they ultimately want their children (or grandchildren) to benefit from their estate whilst ensuring that their spouse is provided for, I guess you’re probably the same?

What people don’t always realise, is that unless they have carefully instructed their Will writer, this goal may not be actually achieved. I’ll try and demonstrate this simply as follows:  

This is what’s commonly put in place…

  • Husband wills everything to wife upon first death (very much the norm) or vice versa
  • All assets pass to the survivor upon death  

This is all good unless the survivor remarries and hey presto…

  • ‘All assets’ become joint with new spouse
  • Your assets are now potentially diluted for your children by the new spouses existing children/family  

It could get worse:  

If your surviving spouse predeceases their new spouse, all the assets could now transfer to the new spouse’s family…. meaning your children’s Inheritance is now down to the whim of the new spouse.  

If you know you aren’t at risk of the above then that’s great, however, if you fear you are running this risk isn’t it time to address this now rather than putting it off (perpetually) yes we all do it!   If you think it’s unlikely this could happen via your surviving spouse, how about the more statistically, more likely situation of this happening via your children divorcing. Your grandchildren could end up ‘losing’ their inheritance in a similar series of events to the above.  

Making the right precautions in your Will could avoid your wealth being lost out of your bloodline to for example a son-in-law or daughter-in-law.   It doesn’t need to cost a lot of money to get a properly thought through Will but it may do if your Will doesn’t cover some of the basics.   As I hope you would have come to expect, we can help you work your way through the decisions required to arrive at a proper legacy plan.

So to make this even less painful we’re offering a free Will review service for our clients and their family and friends. We’ll run through your circumstances, review your Will and then give you our thoughts on how best to protect your assets from ending up in the wrong hands.    

Powers Of Attorney

No one likes to think about losing the ability to manage their own affairs including handling bank accounts, claiming benefits, looking after tax affairs or transacting a house sale.  

For peace of mind it is more important than ever that you make Lasting Power of Attorney to nominate people you trust now, to make important decisions on behalf of you in the future. Completing the application forms can be difficult but you need to avoid mistakes to ensure the Lasting Power of Attorney paperwork is acceptable to the courts, who will promptly reject incorrectly completed documents. There are two different types of Lasting Power of Attorney available, most people choose to do both types in order to have complete protection:  

  • Property and Financial Affairs Lasting Power of Attorney (LPA PA) that looks after all your property, financial assets, pensions and investments etc.  
  • Health and Welfare Lasting Power of Attorney (LPA HW) that covers all aspects of your healthcare and personal welfare. Including controlling where you may live, medical administration and life-sustaining treatment, should you ever require care.  

Even joint bank accounts may be frozen if one of the account holders loses mental capacity.  

Recent newspaper articles have highlighted the plight of residents in care homes being uprooted from the home they love and dispatched, like a parcel, to unfamiliar new addresses. These issues may be avoided if the correct Lasting Power of Attorney is in place.    

Asset Protection Trust (including your home)

An Asset Protection Trust is created to protect your assets and usually when it includes your home it also protects your right of residence within your home.   The purpose is to ensure that your assets will pass directly to your chosen beneficiaries, after your death, with as little hassle and delay as possible. It may also remove your home's value from being included in a local authority means assessment for care home fees.  

How does the trust work?

A Trust is created immediately and your assets are transferred into the names of the Trustees of the trust (a legal requirement).  The Trustees may not sell your assets within your lifetime however if you wish to, say, move home then the Trustees must sell your home and buy an alternative property at your request.   Should the time come when you no longer need any of your assets during your lifetime - the Trustees will sell them and invest the proceeds to produce an income for you.   At the time of death (or the death of the survivor of a couple) the Trustees can close the trust and transfer the property or investments to your specified beneficiaries.   The trust property will pass outside of your will and so there will be no requirement to wait for a Grant of Probate the transfer is made to the beneficiaries. This saves a lot of time and legal fees.  

It must be stated that there are limitations of the Asset Protection Trust, so if this is of interest please contact us to learn more.

We are part of the Xeinadin Group. The firm of the future!