In later life, spending quality time with family and friends is a much more appealing prospect than putting your legal affairs in order, but planning for the end of your life will be of huge benefit to loved ones. In May 2018, Dying Matters Awareness Week and Dementia Action Week are encouraging people to think about what they want as they reach the end of their lives and the provision they would like to make for relatives, friends and charities.
Make or update your will
Making a will is the most important step you can take to protect those you leave behind. If you die without a will, known as dying intestate, you have no say in what happens to your assets. You might think everything you own (your estate) will be divided between your closest family, but this is not guaranteed. Instead, the intestacy rules will apply, meaning the law decides who inherits what.
Making a will ensures your estate is shared according to your wishes and avoids an unnecessary burden on loved ones. Writing a legally accurate will is a complex process. Mistakes in wills can make them invalid, and lack of clarity can lead to family disputes. There are also tax issues to be considered.
It is a good idea to have your will regularly reviewed by your solicitor to make sure it still reflects your wishes. This is particularly important if you get married or enter into a civil partnership, if you get divorced, when children are born who you wish to benefit, or when you buy a property.
Think about a letter of wishes
There may be things you want loved ones to know after you die which do not belong in your will, for example advice to guardians on raising your children, or an explanation of why someone has been excluded from your will. These are usually put into a letter of wishes, which can explain your thought process when making your will and provide guidance to your executors and family. A letter of wishes can include anything you like, but it must not conflict with your will.
Put in place a lasting power of attorney
A lasting power of attorney (LPA) is a legal document allowing people of your choice to make decisions on your behalf if you become unable to. You cannot make an LPA once you lose mental capacity, so it is important to seek legal advice at an early stage. There are two types of LPA:
- Property and affairs: this covers decisions about your finances and property, like managing investments or selling your house.
- Health and welfare: this covers decisions about where you live, day-to-day care, and medical treatment.
Having an LPA in place will make things easier for your family. If you become unable to make decisions and do not have an LPA, it will be expensive and time-consuming for them to get authority to act on your behalf.
Seek inheritance tax advice
Inheritance tax (IHT) does not just apply to the very rich. With rising house prices, more people become liable to pay the tax each year. There is no IHT payable if you leave your estate to your spouse or civil partner, and an additional allowance introduced in April 2017 means you can leave more tax free to your children and grandchildren. IHT is charged at 40 per cent, but there are lots of ways that the burden can be reduced. With careful forward planning and sound legal advice, you can ensure that your loved ones receive everything you want them to, without having to sacrifice more than necessary in taxation.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances