LOOKING AFTER YOUR LEGACY

Transcription

1 LOOKING AFTER YOUR LEGACY IN ASSOCIATION WITH KEY RETIREMENT EDITED BY DAN HYDE A guide to Wills and Lasting Powers of Attorney

2 Contents 1. Why you must make a Will 2. Writing your Will 3. Planning for the future 4. The role of a Lasting Power of Attorney 5. The risk of doing nothing About the author Dan Hyde is one of Britain s most respected financial authors. He is editor of Money Mail and a renowned campaigner on behalf of the over-50s. An award-winning journalist, he is a specialist in retirement planning. Copyright Daily Mail The information in this guide is correct at June 2017, based on our understanding of the laws in England and Wales. The Daily Mail and Key Retirement accept no liability for decisions taken on the sole basis of this information and would always recommend you take personal advice. ABOUT THIS GUIDE This guide explains the importance of making a Will and, crucially, how to arrange one that ensures your wishes are carried out without a hitch. It will also arm you with the tools to set up your Powers of Attorney the vital documents that let a loved one step in to manage your finances and make important decisions about your health and welfare when you no longer can. WHO SHOULD READ IT Every adult should have a Will, regardless of their age, but many people reach their 60s and realise they simply never got around to it. So if you don t have a Will yet this guide should be right up your street. It aims to take you through the process in simple language. If you already have a Will, you should flick through to make sure it still ticks all the right boxes. Once arranged, your Lasting Power of Attorney lasts as long as you live and can be activated at any time, including in emergencies. WHAT TO DO NEXT Seize the moment! First, read this guide. Then, seek out specialist advice. It only takes a tiny error in a Will or Power of Attorney to cause chaos and rising costs. An expert will make sure everything runs smoothly. You will find more information on getting this advice at the end of the guide. 2 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 3

3 1. Why you must make a Will WHEN you die you need to ensure that your wishes will be carried out. You also want to remove any uncertainty and clarify who you want your assets and possessions to be passed on to, as well as make funeral wishes clear. Writing a Will is the only way to guarantee that this will happen. And writing a Will has never been more important. Many families are getting into arguments over inheritances. Rising house prices are partly to blame. Properties bought for a modest sum decades ago have increased in value, turning beneficiaries of an estate into wealthy people overnight. Modern families also complicate matters. Today divorce and second marriages are common. There are often stepchildren and half-brothers and sisters. The more extended the family, the more likely the chance of a row. Families can also be spread around the world, leaving some beneficiaries hard to track down. On top of this, people are living longer, allowing for more second marriages among widows and more time for families to fall out over the care of loved ones. Without a Will with clear instructions, arguments are inevitable. Yet more than half of parents in the UK have not made one, according to charity Will Aid. Failing to leave a Will can have repercussions for the people you leave behind. If you live with your partner but are not married or in a legal civil partnership, they are not automatically entitled to anything when you die. Your estate would be divided according to the Laws of Intestacy. Solicitors typically recommend you look at your Will every five years. If you do update it, be sure to destroy the old document to avoid any confusion 4 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 5

4 Once you ve made your decision about how to store your Will for safekeeping, it s essential to make sure that your executors know where it is and how to get it SO WHAT HAPPENS IF I DON T LEAVE ONE? If you don t leave a Will, then you are said to have died intestate. Visit the gov.uk website and use the handy tool there to find out who gets what if you die without making a Will. If there are no living relatives, everything will go to HM Treasury instead of any close friends or a favourite charity, as you might have preferred. Your Will is also where you leave instructions as to who will look after dependent children without these, they could be left to the discretion of the courts. A Will is also not something that should be written once and then forgotten. It needs to be updated whenever a significant event occurs in your life that could affect it: for example, when you have children, if someone named in the Will dies, if you divorce, separate, get married or remarry. You will also need to keep track of changes to tax rules, such as the new family home inheritance tax allowance, to make sure your relatives aren t landed with a big bill. It s also crucial to talk your family through your wishes while you are alive to prevent any surprises after you die. While it may not be a conversation that anyone wants to have, it will help to avoid arguments between relatives later down the line. STORING YOUR WILL If anything happens to your Will, or if your executor doesn t know where to find it, you might as well not have written one. You need to decide how to look after your Will then let your executor know where it is. So once you ve made your decision about how to store your Will for safekeeping, it s essential to make sure that you write down where it is and how to get it. Make sure you have a copy of this information as well as your executor. If a solicitor writes your Will, they will usually store the original free of charge. But you should ask, just to be sure. If you use a Will-writing service, some may store it for free, while others charge extra so always check the fee before you commit. The rest of this guide takes you through the process of writing a Will, as well as preparing for a day when you may no longer be able to look after your own affairs. At the end, we ll point you towards the support you need to make these crucial financial decisions. 6 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 7

5 REAL-LIFE CASE STUDY WE ARE BELIEVERS THAT PLANNING FOR THE FUTURE IS ESSENTIAL Planning for the future MR AND MRS MEEKS, from Wiltshire, understood the importance of planning ahead and putting the legal documents together to protect their family. Being an ex-policeman in a small village, a lot of residents come to me for advice on various matters, including estate planning, says Mr Meek, so I ve always understood the importance of it. When my wife and I got married two years ago, we knew that our Wills would need rewriting and that we also needed to start planning for the future. We both have children from previous marriages and have been all too aware of the issues caused when future plans are not in place. This is why we wanted to arrange both our Lasting Powers of Attorney at the same time as rewriting our Wills. We came across an advert in the Daily Mail and were impressed with the information. Not only that, but the price was lower than we had seen elsewhere. When we contacted them, the process was so simple. It s a relief to get our wishes down in writing and in a legal document. As we have always said, it is not about us when we pass away, it is about the people left behind and making things a little bit easier for them. We are believers that planning for the future is essential. 2. Writing your Will A Will does not have to be fair. You are entitled to leave your estate to whoever you like. But you need to ensure that your wishes are followed through and to do that you need to make sure that it is binding. The cost of making a Will depends on who you get to do it and how complex it is. You can use a DIY Will-writing kit, which may cost as little as But this can be fraught with danger. You may use language that is wrong or too vague or misspell something. You may not get it witnessed properly. All could lead to your estate not going where you intended it to go. More importantly, you may not realise the legal consequences of anything you say, and your relatives will have to live with the repercussions. This is why many people seek advice when they write one. Using a solicitor or seeking independent help may cost more, but it does offer peace of mind. An estate planner, for example, will discuss with you exactly what you want to achieve and whether your Will reflects that. They will also make sure you don t fall into any tax traps. 8 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 9

6 keep it safe. Solicitors or the specialists you appointed should store it for you and you can keep a copy at home. You can make a simple change to your Will by adding a codicil. This is an additional document and should not be attached or stapled to your Will. CAN A WILL BE CHANGED AFTER DEATH? It is possible to change a Will up to two years after someone s death. You can apply for a deed of variation, but for this to be approved, beneficiaries left worse off by the changes have to agree. More information can be found at gov.uk/alter-a-will-after-a-death. Or you can challenge it. The key is to prove the person making the Will was not in his or her right mind when they made it and wouldn t have done so in normal circumstances. You will need medical evidence or testimony from witnesses indicating the person was too confused to make a Will and didn t understand what they were doing. YOU LL ALSO NEED WITNESSES AND EXECUTORS Witnesses do not have to read your Will, merely witness you signing it. They cannot be beneficiaries of your Will. Executors are the people who carry out your wishes after you die. They may be family members and can benefit from the Will. It s best to choose someone who is comfortable dealing with organisations, paperwork and numbers. Make sure you ask them before naming them and keep track of them if they move. Banks and solicitors can do this and it can be expensive. Some charge fees of 2.5 per cent plus VAT, or more that is 15,000 on a 500,000 estate. Some even doublecharge, saddling the estate with an hourly fee, as well as taking a proportion of the estate. Of course, some will charge much less. If you have appointed a professional executor, look very carefully at the contract and be cautious of clauses that allow them to charge a proportion of the estate s value. Banks have a particularly bad reputation. Some offer very cheap Will writing if they are named as executor. This is a false economy, because two or three hundred pounds saved on Will writing can lead to bills of many thousands of pounds later even if the estate is very simple. You should look to name a relative or friend as executor but stipulate that you are happy for them to use professional help if they need it. Then they can call in a solicitor or specialist for any complex tasks and pay by the hour. Once your Will is written, you need to Three events that may mean you may need to change your Will: 1 Marriage if you marry or remarry, your previous Will becomes obsolete (in England and Wales). 2 Having children or grandchildren you want to make sure new additions to your family are included. 3 Divorce a divorce doesn t automatically revoke a Will. So, if your circumstances change, you should review and update your Will. 10 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 11

7 3. Planning for the future MANY older couples are worried about the burden their funeral will impose on their loved ones. Today the average cost of a basic funeral is 3,897, according to research from Sun Life. Older couples also want to ensure that their family get specific instructions about the kind of send-off they would love to have. A funeral plan is a prepaid, fixed-cost plan that enables you to take the worry out of the planning of your memorial. Funeral costs are increasing, but these plans allow you to have a service at today s prices no matter when you pass away in the future. And it s an increasingly popular option. The number of funeral plans sold in 2004 was 56,748. In 2016, this figure jumped to 210,700. Today, there are more than a million plans in place, according to the Funeral Planning Authority. Many people are also worried about the indignity of being kept alive artificially, with little or no quality of life. This is where a Living Will can come in. This is a document that allows you to refuse life-sustaining treatment and is a particularly practical option for those who fear death less than being a burden on their families, or of having no quality of life. You make this out before you fall seriously ill and it is, essentially, a declaration of your wishes in specific circumstances. It doesn t allow you to request anything illegal (such as assisted suicide, for example). You also won t be able to refuse pain relief, or food and drink, and it doesn t give someone else the authority to make decisions for you (we ll come to the document that allows someone to do this later). KEEPING YOUR FINANCES PROTECTED There are legal steps you can take when you write a Will that can ring-fence some of your property or money for a particular reason. An interest in property trust alters the way in which a property is owned. Each partner owns a proportion of the value rather than owning 100 per cent of the property together. The practical point of this is that when one partner dies they are able to pass on their share to whoever they want. This, effectively, takes it out of the estate of their partner. When they pass away they will only have their share of the property to pass on. This is particularly useful for people who are worried about going into care, families where one or both partners have children from different relationships, couples where there is a big age gap, and those couples who are keen to manage their finances before death. An alternative to this is a discretionary Will trust, which allows you to leave funds to someone in your Will. For this to be effective, two trustees have to be appointed to manage the trust fund and they must have very clear instructions as to how and when the money must be used for the people it was intended for. This is a practical solution to help you pass on your assets to the people you want, but you need to take into consideration that whoever you leave it to may have to ask to spend the money that was left to them. And the trustees are not obliged to follow your instructions. There could be a good reason for this for example, you may intend to leave it to a grandchild for a house deposit, but they don t need it for that any more. The trustees could then decide how the money is spent in these circumstances. New inheritance tax (IHT) rules have complicated matters, however. Families now get an additional tax-free allowance when they bequeath their main residence to children or grandchildren. This is 100,000 in 2017, 125,000 in 2018, 150,000 in 2019 and 175,000 from 2020 to It s offered in addition to the 325,000 IHT allowance for every individual. Couples can pass allowances and assets to each on death. So the surviving partner could feasibly pass on a 1 million property to their direct descendants tax free from However, assets held in trust are excluded from this allowance. So anyone who has written a trust into their Will may want to review their plan. It s worth getting advice. 12 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 13

8 4. The role of a Lasting Power of Attorney THERE are currently 850,000 people in the UK living with dementia. And according to the Alzheimer s Society, 225,000 will develop dementia this year that s one every three minutes. Within eight years the total is expected to hit a million and then reach two million by At the same time, almost 340,000 people in the UK are diagnosed with cancer every year a number of whom may be unable to manage their finances at some point during their illness. WHAT IS A LASTING POWER OF ATTORNEY? An LPA allows you to legally appoint the people you trust most to make decisions on your behalf, should you no longer wish to do so or if you become unable to make the decisions yourself. Without an LPA, your loved ones will find it very difficult to manage your affairs for you, as they do not have legal authority to do so. There are two different types of LPA, covering different areas of your life: Property and Financial Affairs This allows you to nominate those you choose to act on your behalf to make decisions about your finances and property. They can organise paying your bills, managing your bank account(s) and pensions, and selling your home on your behalf if necessary. Health and Welfare This type of LPA allows your attorneys to make decisions about your health and welfare, which may include deciding where you live, your long-term care needs and agreeing to your medical treatment. This type of LPA is only used if you are unable to make decisions for yourself. Based on our understanding of the laws in England and Wales. HOW TO SET UP A LASTING POWER OF ATTORNEY The first thing to consider is who you would like (and trust) to manage your affairs. That 14 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 15

9 person will be appointed your attorney. They must be over 18 years of age and you have to arrange them before you lose your mental capacity. It s a good idea to speak to a specialist firm to set one up this can be especially useful if your affairs are complicated, as filling in the paperwork can be quite arduous. You can have more than one attorney and can insist they make all decisions together or allow them to act independently. Or you can specify they act together when making some big decisions such as selling your house but not on others. You can also add a replacement attorney. They won t make any decisions unless your original attorney is no longer able to. You will need an additional person to sign the form they are known as the certificate provider. It s a good idea to speak to a specialist firm to set one up this can be especially useful if your affairs are complicated, as filling in the paperwork can be quite arduous This must be someone you have known for at least two years, but not a family member. The certificate provider s job is to make sure you understand what you are agreeing to. With a Property and Financial Affairs LPA, your attorneys can act on your behalf straight away if you want; however, with a Health and Welfare LPA, they only step in after you lose mental capacity. You can also add extra instructions or guidance for your attorneys, such as whether they can make gifts or how you prefer to invest. By law, attorneys are limited as to what gifts they can make. They can give birthday and wedding presents to family and close friends and donate money to charities you have previously given to but this is 16 LOOKING AFTER YOUR LEGACY

10 bound by inheritance tax laws. Your attorney cannot make unusually large donations or give out interest-free loans to family members for house deposits or school fees. Registering a Lasting Power of Attorney typically takes up to 14 weeks, so registering one early, before you actually need to use it, can help further down the line. You will need to pay a fee to register the LPA with the Office of the Public Guardian. The good news is that the fee has been reduced from 110 to 82. It costs 164 in total to register both a Financial Affairs and a Health and Welfare LPA you pay once for each type. If you make a mistake on the forms, you ll have to resubmit your application and pay the fee again. This is the case even for simple errors, such as getting the postcode wrong for one of your attorneys. A specialist adviser should cover any extra costs incurred due to errors on their part. Once it s done, your Lasting Power of Attorney documents are stamped and returned to you and can be used to prove your attorney has the authority to manage your affairs. Registering a Lasting Power of Attorney typically takes up to 14 weeks, so registering one early, before you actually need to use it, can help further down the line Your appointed attorney can register the form after you have lost mental capacity. However, at this point, if something is wrong on the form, you won t be able to change it. You can also cancel the Lasting Power of Attorney at any time, provided that you have not lost your mental capacity. A Lasting Power of Attorney used to be known as an Enduring Power of Attorney, but this changed in However, any existing Enduring Power of Attorney forms can still be registered. Similar arrangements are available in Scotland and Northern Ireland. 5. The risk of doing nothing IF a loved one suddenly finds themselves unable to look after their affairs and there is no Lasting Power of Attorney in place, a relative will have to apply to the courts if they want to take control. They will need to be appointed a deputy by the Court of Protection a process that can take up to six months, or even longer, during which time their loved one s finances will be frozen. Many families find this a trying and stressful process and dealing with the courts can prove very difficult. While you wait for the Court of Protection, someone will have to pay for their care costs, and there will be no way of stopping direct debits and other payments. IT costs 400 to submit an application to the Court of Protection. Then there is a 100 assessment fee to pay if a deputy is being nominated. There is also an annual supervision fee to pay every March. This is 320 for a Property and Financial Affairs LPA for estates valued at over 21,000. The costs can spiral if the proposed deputy is not acceptable to the court or if no deputy is put forward at all. In these cases, the court will usually appoint a professional deputy, normally a solicitor. This costs 1,800 in the first year and 1,422 a year from then onwards. There will also be an annual charge for preparing a report for the court. You may be entitled to a fee reduction worth up to 50 per cent if the person has income of less than 12,000. Your family will also need to pay for an insurance policy that covers any losses as a result of someone else taking control of your finances. How much this will cost depends on your assets but can be thousands of pounds for the wealthy. 18 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 19

11 WHAT YOUR ATTORNEY CAN DO Once you have registered your LPAs, and you have the paperwork to show someone is acting as an attorney or deputy, they ll need to contact any financial company you have a relationship with and in most cases make an appointment. It is likely banks will need the original or a certified copy of the Lasting Power of Attorney or deputyship order, photo identity and proof of address, such as a gas bill. An attorney will probably need to sign a form, so that the bank has their signature on file. Most banks will allow an attorney to manage accounts by phone and online, though some have restrictions. Some firms will register your power of attorney by post. What exactly your attorney is allowed to do depends on whether any restrictions have been put in place. The attorney shouldn t need to take an official document every time they want to access the account they should be treated as if they are the original customer. WHAT A LASTING POWER OF ATTORNEY ALLOWS THOSE YOU NOMINATE TO DO Property and Financial Health and Welfare Act on behalf of partner Deal with bank accounts Deal with utility bills Deal with solicitors Deal with insurance policies Deal with investments Deal with mortgages Deal with loans/credit cards Discuss medical issues with doctors Make decisions about healthcare Make decisions about long-term care Deal with social services 20 LOOKING AFTER YOUR LEGACY LOOKING AFTER YOUR LEGACY 21

12 Why choose Key? You ve taken your first steps towards securing peace of mind for the future by requesting this exclusive Daily Mail guide, sponsored by Key Retirement. Key are committed to ensuring you understand your estate planning requirements and offer a FREE, no-obligation telephone consultation with a Will & LPAs specialist. What you can expect from Key: Hassle-free your Will & LPAs specialist will handle everything over the phone Bespoke service without the need to visit a solicitor No pressure to proceed if you decide to go ahead, you ll be guided through the process at your own pace Dedicated and experienced specialist you will have your own, dedicated, fully trained specialist Years of experience we ve already helped over 14,000 people A fixed price so you ll always know what you are going to pay Everything explained in plain English we understand the jargon so you don t have to Unlimited after sales care if you need any further help we are always only a phone call away Everything was explained brilliantly and done exactly the way I wanted it. The overall experience was excellent! To others considering this, I say do it! Mrs Glenys Thomas, 70, from Shirehampton, Bristol, knows it s essential to make Lasting Powers of Attorney (LPAs), from her experience of working with people who have Wills and LPAs dementia and their relations. I ve seen things from the other side, especially working in a dementia care home, and so many arguments with families; which is why you should put it down in writing, then there shouldn t be any, Gladys told us. I ve appointed my son and daughter as I know they re going to look after me, she told us about her Lasting Powers of Attorney (both Property and Financial Affairs and Health and Welfare). Glenys also made a Will. Everyone dreads doing this so they put it off until the last minute and then it s too late! But to Glenys relief, she found the process straightforward and convenient with Key. I was starting my Will from scratch, but the adviser was helpful and made it easy, plus I was able to do it over the phone. To arrange your Will and LPA today, call Key Retirement FREE on Lines are open Monday to Thursday 9am-7.30pm, Friday 9am-5:30pm and Saturday 9am-1pm

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