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Planning to protect your family and document your wishes

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Basic Wills

A Will is a legal document you create that clearly sets out who will inherit your estate and what you would like to happen after you die. It includes your funeral wishes, how you would like your possessions to be distributed and who you would like to deal with your Estate. If you have children and you have parental responsibility, you can also appoint guardians of your children. Your Will is a legally-binding document - but if you don't prepare it properly, it may not be valid. It is estimated that over 60% of people haven’t made a Will. If you die without one, your estate will be distributed according to strict rules, meaning the people you care about may lose out.

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Lasting Power of Attorney

If you’re married or in a civil partnership, you may have assumed that your spouse would automatically be able to deal with your bank account and pensions, and make decisions about your healthcare, if you lose the ability to do so. This is not the case. Without an LPA, they won’t have the authority the same also applies to your adult children or other relatives.

The guidance from the British Bankers’ Association states that if one joint account holder loses mental capacity then that Bank can decide to restrict the use of that account to essential transactions only e.g living expenses and residential care or medical bills. They could even freeze the account until a Court of Protection application has been registered which is an expensive and time consuming application process.

 

A lasting power of attorney (LPA) is a way of giving someone you trust, your attorney, the legal authority to make decisions on your behalf if you lose the mental capacity to make you own decisions or are unable to make your wishes known because you are not conscious due to an injury caused by an accident or other illness to do so in the future, or you want help with finances from someone else. There are two types of LPA:

 

  • LPA for financial decisions

  • LPA for health and care decisions

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Life Interest Trust Wills

Property Ownership

Many people in don’t realise that you can own property with other people in different ways. The way you own your property can have a significant impact when writing your Will. There are two main ways of owning a property jointly. These are known as Joint Tenants and Tenants in Common.

 

How do Joint Tenants vs Tenants in Common differ?

If you own your property with someone as Joint Tenants it means that, upon death, the 100% ownership of the property rests with the surviving owner and it does not pass under the terms of your Will. However, if you own your property with someone as Tenants in Common, it means that you own a specific share of the property, which means that, upon death, the share of the property that you own can be included in your Will and go to the beneficiaries you choose.  As Tenants in common you can make a Life Interest Trust Will.

Life Interest Trusts For Couples

These types of Wills can be useful for older couples who want to prevent the whole of their property being used to pay care fees, or for younger couples to ensure that the deceased’s share of the property benefits their children and not the survivor’s new spouse should they remarry in future.

How does a Life Interest Trust Work?

A Life Interest Trust Will protects your share of a property, placing it into a trust after your death. Your surviving spouse or partner retains the benefit of using your share of property for the rest of their life, but importantly without giving them ownership of it. After their death, the trust can be wound up and your share of the property is passed to your named beneficiaries, normally your children or other family members.

How Does A Life Interest Trust Protect A Couple Against Future Care Fees?

The government have said they are looking to replace the current system, however, If the survivor of you both has to enter residential care, a financial assessment will be used to calculate their ability to pay fees. Currently, if their total assets are greater than £23,250, they will have to pay their full care fees.  If your surviving spouse received your share of the property, then the whole of the value of the property would be considered in the financial assessment and in these circumstances, your surviving spouse will pay care fees until their assets fall below £23,250. If, however, your share of the property was placed into a Life Interest Trust, by your Will, then your share of the property would not be considered in the financial assessment. In these circumstances your share is ring fenced and can be passed on to your children or other named beneficiaries after your surviving spouse or partner has died.   

How does a Life Interest Trust Protect Your Children If Your Spouse Remarries

If you die and your property passes to your partner or spouse there are a number of issues which you may wish to consider.  The survivor could intentionally or unintentionally leave everything to their new spouse after they die, potentially leaving nothing for your children. Your share of the property is ring fenced and can be passed on to your children or other named beneficiaries after your surviving spouse or partner has died.