Whenever we spot a new wrinkle or grey hair, we often pause for a moment and consider how the years are rolling by. Most of us at some point will also worry about how our health might deteriorate in our later years.
In a recent study by a national law firm, 75% of respondents said they worried about getting older and 70% were specifically concerned about developing dementia. Surprisingly, despite these worries, only 5% had made plans to deal with such an eventuality.
When someone develops an illness such as dementia, or is involved in an accident that takes away their capacity to make decisions for themselves, someone else needs to make decisions for them. But nobody has the automatic right to do so. Neither your partner nor your children nor your closest friends and relatives can, unless you have specifically given them permission in advance in the form of a Lasting Power of Attorney (LPA).
An LPA can only be made while you have the mental capacity to do so. If you lose capacity to make your own decisions and there is no LPA in place, your loved ones will need to apply to the Court of Protection to appoint a deputy to make your decisions for you. They can apply to be appointed as your deputy, but it will be the court that makes this decision rather than you.
It costs £82 to register an LPA with the Office of the Public Guardian.
On the other hand, the costs for setting up a deputy via the Court of Protection are more expensive. The application fee is £400 for each type of deputyship: health/welfare and property/financial affairs. An appeal, if required, is another £400 and if the court decides a hearing is required, that’s a further £500. In addition, there is an assessment fee of £100 for new deputies and an annual supervision fee.
No-one likes to consider what may befall them in the future. It’s a much easier job to plan for though if done in advance. The financial and emotional cost for your family to deal with it after the event can be significant. Perhaps most importantly of all, LPAs allow the individual concerned to document their wishes around what happens to them at a later date and decide who will make those decisions on their behalf.
For help preparing an LPA, please call legalmatters on 01243 216900 or email us at email@example.com.
Last Friday, news broke of the sad death of Sir Bruce Forsyth. The former Strictly Come Dancing host and all round National Treasure passed away at the age of 89, following a lengthy battle with illness.
Reports in various national papers have since detailed the star’s alleged estate planning which, according to ‘a friend’, was done in an effort to “avoid it being gobbled up by the taxman”. By all accounts, Sir Bruce has left all of his £17million estate (didn’t he do well?) to his wife outright where it has then been widely reported that his widow Wilnelia will then “be able to transfer up to £650,000 to each relative tax free to avoid inheritance tax”.
Whilst is it true that legacies to spouses are free from inheritance tax by virtue of the spousal exemption, legalmatters shakes its head at the level of misinformation reported. Quite frankly it doesn’t even know where to start with dissecting what a flawed and short-sighted piece of alleged tax planning this represents, but here goes.
So what is the actual position (if indeed these were his wishes) and why might it be regarded as a potentially reckless and ineffective idea?
First of all, the tabloid press have been quoting the figure of £650,000 supposedly available for Wilnelia to generously distribute ‘to each relative’ once Sir Bruce’s legacy has been transferred. Each relative!?! If this was the case, then the majority of estate planners would be out of a job and considered, surplus to requirements.
It would appear that the press have confused the level of transferrable nil rate band available to the surviving spouse on death with what an individual is able to give away tax free during their lifetime. Whilst Wilnelia would indeed be able to benefit from her late husband’s inherited nil rate band of £325,000 to combine with her own on her death, her late husband’s nil rate band is not something that she would be free to make use of during her lifetime. The articles also totally disregard the newly established ‘residential nil rate band’ that this tax year alone would have increased the late entertainer’s tax free allowance by an additional £100,000 (but latterly would allow a combined nil rate band of £1,000,000 if left to lineal descendants).
Any legacy left to a spouse is free of tax by virtue of the spousal exemption. Wilnelia is, of course, free to make gifts to whoever she likes during her lifetime. As long as she were to live another 7 years following such gifts (of any monetary value) these would also be inheritance tax ‘free’. Quite honestly, she could gift the full £17 million equally amongst his 6 children (or whoever she so wishes) as soon as she had received the monies from probate, should she be so inclined, but therein lies the issue.
If indeed this is the arrangement, there is NOTHING obliging Wilnelia to carry out the ‘wishes’ of her late husband. Outright gifts by their very nature, leave the recipient free to do whatever they like with the legacy. Despite ‘wishes’ or ‘instructions’ from the deceased, there is nothing legally binding to see that these are fulfilled. The deceased is simply requesting the recipient to make distributions and is hoping that this will be carried out. Whilst this level of trust is admirable, the private client practitioner knows more than most that trusting your relatives to ‘do the right thing’ on your death is a dangerous assumption.
Let us assume that, despite having no legal obligations to do so, the recipient of the legacy has every honourable intention of making these posthumous gifts. They themselves would need to survive another 7 years which is always a risky proposition. What instead, if they were to lose mental capacity and unable to make such transfers? Michael Schumacher’s tragic accident and resultant circumstances have shown that age, wealth and level of fitness have nothing to do with a lack of mental capacity and inability to manage your own affairs. How can we be sure that Wilnelia shall live a long and untroubled life, free of illness and incapacity? Her ability to make gifts from her late husband’s fortune and to therefore share the wealth and to reduce her own liabilities to inheritance tax is dependent on her being mentally fit and well; certainly, any attorneys that she may have appointed won’t be able to undertake such tax planning ventures without court authority (another common misconception).
So what might Sir Bruce have done to make provision for his children and grandchildren (and indeed he could well have done, because we are commenting on the reporting, not on actual events)?
Lifetime gifting would have been the best starting point. If carried out wisely and cautiously, after careful advice and taking all needs of the parties into due consideration, then lifetime gifting is an excellent way of reducing your tax bill.
And what about the use of trusts? Despite trusts having their own particular tax regimes, they are immensely useful structures to protect and preserve assets against unknown circumstances. Tax shouldn’t necessarily always be the driver, particularly where significant wealth is concerned.
Finally, any charitable giving would have the double benefit of not only being exempt from IHT for the legacy itself, but it could also have reduced his IHT rate to 36% if he had left 10% or more of his total estate to charity. A Brucie bonus if you will.
For the papers to glibly report that Sir Bruce has ‘in one fell swoop’ cannily avoided inheritance tax and at the same time ensured that his wealth lands where he would wish is, in our humble opinion, grossly underestimating the risks and potential issues at hand and is in any event based on apparent mis-reporting of the facts.
Make sure that your wishes are adequately enshrined in the correct, binding, legal documents as the road to court is paved with good intentions. Nice to sue you, to sue you, nice. Speak to a member of the team at legalmatters on 01243 216900 or email us at firstname.lastname@example.org to find out more.
As Game of Thrones season 7 is fully underway, the shenanigans of the inhabitants of Westeros are attracting viewers in record breaking numbers. Whether or not this fictional romp of dragons, zombies and war is your cup of tea, once you remove the fantasy element, you are left with the very bread and butter of a private client practitioner’s workload; family relationships, wealth and death. A tenuous link? Perhaps, but undoubtedly these universal themes are very much at the heart of both worlds.
Admittedly, the level of death is a little more frequent and varied than the average probate practitioner’s workload. Her Majesty’s Courts and Tribunal Services have a difficult enough job processing paperwork without having entire family dynasties wiped out in one fell swoop (one can only imagine the Oath drafting…)
But on a serious note, the programme highlights that death will not always present itself in the chronological order of a family tree. Even despite the wealth of information in the public domain, we are still faced with clients who do not have a Will as they believe their wealth will automatically be inherited by their children on their death. The Intestacy Rules will only go so far in handing down your estate to your lineal descendants but, of course, there is so much more to a Will then simply enshrining this course of events.
Warring offspring? Dubious marriage choices? Unruly illegitimate children? All in a day’s work in the Seven Kingdoms yet in the real world, these issues are just as much cause for concern for our clients today. If you are worried about protecting the family wealth (however big or small) correct estate planning can prepare for such eventualities and ring fence funds for your intended recipients without the worry of funds falling into the wrong hands.
Indeed, so many of the show’s main conflict points could have been easily avoided and managed had the characters’ legal affairs been put in order.
Had the ‘Mad King’ been furnished with a fully registered Lasting Power of Attorney, then his appointed attorneys could have stepped it at the first sight of faltering capacity and a much cheerier (and less bloody) outcome could have been achieved by all.
A Lannister always pays their debts, and loans and gifts are indeed an excellent form of estate planning if done in the right way. A flexible family trust is a great way of allowing for loans and repayments to be made to and from the family pot of money. Running out of blood descendants? A trust also allows for the person setting it up (the ‘settlor’) to add friends or charities into the mix.
There is certainly a stark solution for making provision for ‘blended families’ (with children born from different relationships) in a straightforward manner, without having to lose your head.
Whatever your family situation, legalmatters will find the right solution for you to ensure that your death does not leave any nasty surprises for those left behind.
An appropriate, professionally prepared and properly executed Will can provide security for your family, during an already emotional time. There is a time and a place for drama and conflict, and your death shouldn’t be one of them. Make a Will, make your wishes clear, because goodness only knows transferring the ownership of a dragon is an administrative nightmare at the best of times!
With dementia continuing to rise, the importance of Lasting Powers of Attorney (LPA) cannot be overstated. An LPA can be a vital tool, giving a friend, loved one or solicitor the power to make decisions on your behalf should you reach a position where you are unable to.
Safeguards are built into them to ensure they are used appropriately, but there are steps you can take to ensure things do not go wrong.
Choose the right attorney
If you want to prevent any future issues with an LPA, then choosing the right attorney at the outset is crucial. There are many duties involved in acting as an attorney for someone, so you need to pick someone responsible and organised, as well as someone who knows you well and can be trusted to act in your best interests.
You may want to select more than one attorney – this will make abuse of the powers associated with an LPA much harder.
If you do choose more than one attorney, you can set out whether they need to act together or separately for certain issues.
Informing loved ones
One important safeguard is the fact that the ‘donor’ (the person handing over their powers to their attorney) can name up to five people who must be informed before the LPA is registered. It’s important to do this – these loved ones can then step in and dispute the registration, should they believe that the donor was put under undue pressure or the attorney is set to behave in an inappropriate way.
It’s a good idea to speak to your friends and loved ones who aren’t named on the document in advance of organising an LPA too. You can explain why you are doing it and how you want the powers to be used – this can help reduce the chances of fraud and should also reduce the chances of conflict between family members later on.
Another safeguard is the ability for donors to have certain guidance for the attorney written into the LPA. For example, this may suggest that they meet a couple of times a year to go through bank details and discuss financial arrangements for the next six months. This should also make it harder for any fraud to take place.
Organising an LPA can give you peace of mind that you will have someone you trust making decisions for you, should you lose the ability to do so.
Choosing the right attorney, and getting the right LPA in place, can take some time, but it is time well spent.
If you’re struggling to choose an LPA or would like advice on how to appoint one, call us on 01243 216900 or email us at email@example.com.
How we look after older people requiring care is at the top of the national agenda at the moment, as the Government grapples with the care funding crisis.
More people than ever before need care in their old age, with dementia a growing problem. According to the Alzheimer’s Society, there are now 850,000 people in the UK living with dementia, and that’s only set to grow.
With so many people reaching the stage where they can no longer make decisions for themselves, an increasingly useful option is a Lasting Power of Attorney (LPA). An LPA is where you appoint someone as your ‘attorney’ to make decisions on your behalf, should you reach the stage where you can no longer do so.
The different types of LPA
There are two main types of LPA. The first is the LPA for financial decisions. This will cover things like buying and selling property, paying the mortgage, investing money and arranging repairs for your property.
There is also an LPA which covers health and care decisions. This allows your attorney to make decisions about things like where you should live and your medical care.
You can set up separate LPAs to cover these two areas, or a single LPA to cover them both if you wish.
Is one LPA enough?
Choosing a person to be your attorney can be difficult. You need to find someone who you trust to always act in your best interests, but who can also be relied upon to deal with the responsibility and administration that comes with the role.
Generally, people will choose a loved one, like their spouse or child. However, you can also appoint a professional, like a solicitor.
In fact, you can select more than one attorney – a main one, and a replacement. The replacement attorney can step in and make decisions for you if the original attorney is unable. As an example, you might name your partner as your attorney and your child as the replacement. This way, should your partner end up in a position where they are no longer able to make decisions on your behalf, perhaps because of their own health issues, your child can take over the responsibility.
With dementia such a significant problem across the UK, it is essential to put plans in place on how to deal with it should you develop issues. That should extend beyond an LPA and include a comprehensive Will. By putting a Will in place, can guarantee that your assets are divided exactly as you wish.
“If you’re unsure about what you need to do and whether you should be appointing an LPA, please call us on 01243 216900 or email us at firstname.lastname@example.org.
At breakfast this morning, a woman said to her husband: “My memory is getting really poor, I went upstairs yesterday to get something and by the time I got to the top of the stairs I had forgotten what I was going for.”
The husband said: “How bad is your memory?”
She responded: “Sorry, what were we talking about?”
Old jokes are always the best, but early signs of a loss of memory are an uncomfortable reminder of the aging process and certainly no joke. Some of us will inevitably get dementia or other debilitating conditions that could result in the loss of mental capacity.
Do you know you what happens if you or your partner becomes unable to make decisions for themselves due to old-age memory issues or dementia? Potentially you can find yourself in a position where you cannot pay for services or make decisions, without lawyers and something called the Court of Protection) being involved. It’s an expensive and long-winded process. That is, unless you have written a legal document called a Lasting Power of Attorney (LPA) in advance of your loss of mental capacity.
The Citizens Advice Bureau website says:
“You should make an LPA if you have been diagnosed with, or think you might develop, an illness which might prevent you from making decisions for yourself at some time in the future.
“The kinds of illness which might prevent you from making decisions for yourself include:
- mental health problems
- brain injury
- alcohol or drug misuse
- the side-effects of medical treatment
- any other illness or disability.
“You must make an LPA whilst you are still capable of making decisions for yourself. This is called having mental capacity”
At legalmatters, we are experts in writing Lasting Powers of Attorney and talking you through the pitfalls. Whilst no one wants to think about the potential of problems in later life, writing an LPA could save you and your family considerable cost and grief in the not too distant future.
Call us today on 01243 216900 or email us at email@example.com for a no obligation discussion about these issues.
More than 850,000 people are living with dementia in the UK today, according to the Alzheimer’s Society. That problem is only set to grow in the coming years, with thousands of people every day reaching the stage where they are unable to make decisions for themselves.
One option for those entering later life, who are concerned about the prospect of developing dementia, is to consider appointing someone to become a lasting power of attorney (LPA). An LPA allows your ‘attorney’ – the person you appoint – to make those decisions on your behalf when you reach the stage where you are unable to.
You can appoint an LPA to cover your property and finances, your health and care, or both.
It’s important to think carefully about who you want to appoint as your ‘attorney’, as they will need to make many important and occasionally difficult decisions.
Most people appoint a loved one, whether that’s a partner, a close friend, a child, or even a grandchild. However, you can also choose a professional, such as a solicitor, for the role.
When choosing who to pick, consider what you are asking of them. It will need to be someone that you trust to always act in your best interests, and who you can rely on. There will be many responsibilities as your LPA, so you need someone who is reliable and can be relied on to meet their duties.
If you pick a professional, you know that you will be able to rely on them to meet their responsibilities. You will likely have to pay for their services though.
If you pick a friend or family member, it’s likely they will know you well and will understand your needs. It will be difficult for them to make decisions at times though, as they will be having to deal with the emotional impact of the situation.
You can appoint a replacement attorney if you wish, who can make decisions for you should your original LPA be unable to fulfil the role. You are able to combine both a family friend and a professional if you choose.
Dementia is a growing problem across the country, so putting plans in place is crucial. That should extend beyond an LPA and include a comprehensive will. By putting a will in place, you ensure that your assets are divided among your loved ones exactly as you wish.
We can help you with this. Please call us on 01243 216900 or email us at firstname.lastname@example.org.
Dementia is a growing problem in the UK. According to the Alzheimer’s Society, there are currently 850,000 people with dementia, and that number is set to reach one million by 2025.
At some point, many people with dementia will reach the stage where they are unable to make decisions for themselves. As a result, it is very important that somebody is nominated to have lasting power of attorney (LPA).
An LPA allows that person – known legally as your ‘attorney’ – to make decisions on your behalf if you are no longer in a position to make them yourself. There are two types of LPA – a property and finances LPA and a health and care LPA. You don’t have to make both at the same time.
Choosing the right person to act on your behalf can be very difficult, so it pays to take your time and not rush the decision. They will have to be over 18, and if making financial and property decisions, cannot have been declared bankrupt.
You will need to appoint someone that you trust, who you believe knows you well and will act in your best interests. You also need to find someone who is reliable, and who has the necessary skills to take on the responsibility. There is little point picking someone who knows you well, but who will be unreliable in meeting their obligations. Your attorney needs to be someone that you can always rely on.
Most people pick a family member, such as their partner or child, but you can appoint a professional, such as a solicitor if you prefer. Bear in mind that they may charge for their time.
You should also consider picking a replacement attorney. This is the person you wish to make decisions on your behalf should the first attorney no longer be able to or is unwilling to carry out the role. So, if you pick your partner for example, you may choose to select someone younger such as one of your children as the replacement attorney.
For help with this, call us on 01243 216900 or email us at email@example.com.
Alzheimer’s disease and dementia knocked heart disease off the top of the list for main causes of death in England and Wales for the first time. Here, we offer advice on planning for the future.
In 2015, 61,686 out of a total of 529,655 deaths registered in England and Wales were attributable to dementia, according to a report just published by the Office for National Statistics (ONS) – that’s 11.6%. The mortality rate for dementia has more than doubled since 2010 and the Alzheimer’s Society estimates that one million people will have the condition in the UK by 2025.
This statistic raises important questions for families around writing wills. When a person is diagnosed with dementia, it’s a good idea to get their legal and financial affairs in order and give a friend or relative lasting power of attorney. This helps in the future in case there is a point when the dementia sufferer can’t make decisions for themselves.
Indeed, the Alzheimer’s Society recommends this in its ‘Planning Ahead’ guidebook for people with dementia: “Once you have had a chance to adjust to manage another person’s affairs. So if a dementia sufferer hasn’t made an LPA, their loved ones will need to apply to the Court of Protection to become their deputy in order to manage finances on their behalf. It’s doable but it can be stressful, time consuming and expensive.
There are two separate categories of LPA – one around finances and another around health and care. Each has to be set up individually and registered with the Office of the Public Guardian.
You should take legal advice on these very important documents and certain wishes may have to be drafted carefully. Our lawyers at legalmatters have been safeguarding family’s futures since the inception of LPAs in 2007 and with their predecessors, enduring powers of attorney, before that. Call us now on 01243 216900 or email us at firstname.lastname@example.org for advice to ensure that, should you become incapacitated, your life is in the good hands of people you love.your diagnosis, take time to ensure your affairs are in order.
It may become more difficult for you to make decisions or choices about financial or legal matters as time goes on. Where possible, make these plans as early as you can with a trusted friend, family member or professional (choose someone who is likely to be able to support you as time goes on).”
One of the most important aspects of forward planning for everyone, particularly if dementia runs in the family is to investigate making a Lasting Power of Attorney (LPA). An LPA enables someone to choose who they want to make decisions for them, should they become unable. Those decisions could be around their financial and property concerns or their health and welfare. This may also cover deciding whether they should go into a care home.
If a person with dementia hasn’t made an LPA and loses the ability to make decisions, the situation for loved ones can be complicated – and distressing. In the case of financial decisions, for example, only someone with a formal legal power can completely
Thinking about Lasting Power of Attorneys (LPAs) is not just something older people need to do – everyone should write one.
Let’s be honest, writing a will and an LPA isn’t top of anyone’s to do list – it isn’t even at the bottom. But it’s important, not just so someone will have your best interests at heart should you fall ill or be in an accident, but also so your loved ones know who should be making the big decisions if you’re not able to. If you’ve lost your mental capacity, it’s too late and your loved ones may struggle to gain control of your affairs.
LPAs can also assist when you have been physically incapacitated, either long or short term.
It’s a grim truth that accidents or illnesses can happen at any age, which is why putting together an LPA is something young people should consider, as well as old, including the four in ten Britons who feel they’re too young and healthy to need an LPA, identified in recent research by SAGA.
So what is an LPA?
It’s a way of giving legal authority to someone you trust to make decisions on your behalf should you lack the mental or physical capacity to make them yourself. That could be a temporary loss of capacity – or permanent.
There are two types of LPA – one for health and care decisions and the other for financial. Under the former, your chosen attorney can make decisions about your medical care and where you live, whilst under the latter the choices will be around buying and selling property as well as paying bills. They have to be set up individually and registered with the Office of the Public Guardian, at a cost of £110 each. If only one is relevant, then only set up one – for young people the health and care decisions of an LPA is probably more relevant in case of sudden illness or accident, but their need for an LPA for property and financial decisions could be very relevant where there is no current spouse or partner.
You should take legal advice on these very important documents and certain wishes may have to be drafted carefully – for example, you may want to limit what your attorneys can do, which isn’t uncommon.
Our lawyers at legalmatters have been helping people write LPAs since their inception in 2007 and with their predecessors, enduring powers of attorney, before that. Call us now on 01243 216900 or email us at email@example.com for advice to ensure that, should you become incapacitated, your life is in the good hands of people you love.