We all want to live forever and never think about the consequences of dying, particularly not when you are younger. But you never know what is around the corner, whether you might be incapacitated or die unexpectedly and they can be some unexpected problems if either of these happen without a will or power of attorney in place, at best just time delays, at worst real financial problems as Money can't be accessed and important decisions can't be made.
When I get older losing my hair
Many years from now...
The sensible thing to do is not wait, make a will and prepare a lasting power of attorney agreement immediately, definitely when you start to have other people dependent on you and then also after significant changes in your life such as marriage, divorce, children.
You should be aware that The Financial Conduct Authority (FCA) does not regulate wills, will writing, Lasting Powers of Attorney or tax and trust advice.
There are many benefits to making a will. Simple benefits are that our estates can be distributed more quickly than if we die without one- known as 'intestate'. Also, our life savings will go to who we want them to instead of the standard intestate rules. This can be particularly important if we have a partner rather than a spouse and whether we have children. They can also be used to reduce or mitigate the effects of the current Inheritance tax liabilities that can occur on our death. With marriage and divorce now prevalent a well-crafted will can prevent 'second marriage syndrome' where our assets can end up with other people s children rather than our own. We offer an online will-writing service which makes the process quick and easy for you and only costs £100 + VAT for our assistance per will.
POWER OF ATTORNEY
Many of us have taken the first step of making a will but assume that sorting out a Lasting Power of Attorney (LPA) is just for much older people. In fact, anyone could have an accident or serious illness at any age and as we live longer more of us are prone to memory illnesses like dementia which can really make it hard for us to make financial and health decisions. LPAs determine who can make decisions for us if ever we are unable to. There are now two types- ' Health & Welfare' and 'Property & Financial Affairs'. If we don’t appoint an attorney, then a deputy will be appointed by the Court of Protection, and this could take some time. In the meantime, your family or partner or spouse may not be able to access your pensions or savings to pay for essentials or healthcare nor be able to make important medical or care decisions for you.
Most of us would like to think that our families will benefit from our estates and life savings when we are gone. What we aren't as happy about is the government taking their share of our estate in the form of inheritance tax (IHT) on our deaths and even on the money we have gifted in our lifetime. The current basic threshold is £325,000 (2017/18) increasing to £500,000 is your main residence is worth more than this. Above this 40% of your assets will be taken as IHT. Yet there are numerous ways to plan to mitigate and/or reduce this with some basic planning and annual gifts. For example, you have an annual allowance of £3,000 that you can give away each year which is completely tax-free and can help reduce your estate over time. Even planning via life assurance plans and pensions can greatly assist in reducing your need to pay excessive taxes.
One of the ways of mitigating taxes and ensuring that funds go exactly where we want them is to set up a trust during our lifetime or on our death. There are three main types of trust; bare, interest in possession and discretionary and each has different rules and consequently different implications. They will be set up with trustees who are responsible for maintaining and distributing the assets of the trust in line with their instructions. Any gifts made during our lifetime may be immediately chargeable to a lifetime rate of tax or maybe a Potentially Exempt Transfer which, if we survive seven years could be removed from the estate and avoid being taxed. Trusts and Trust Schemes can be effective ways to plan to pass on our wealth to future generations, even where we may still need access to some of it.
Money Honey Financial Planning is a trading style of 4 The Record Compliance LTD, registered in England & Wales, 20-22 Wenlock Road, London, N1 7GU. Registered Number: 08107961.
4 The Record Compliance LTD is authorised and regulated by the Financial Conduct Authority and is entered on the FCA register Number 772350. This can be verified via the online FCA register (www.fca.org.uk/register) or by contacting the FCA on 0800 111 6768
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