Signing a Lasting Power of Attorney (LPA) document authorises someone to deal with matters on your behalf, should you become unable to do so yourself.
There are two types of LPAs, one covering property and financial affairs and one covering health and welfare.
It is possible to ask your attorney to deal with your property and financial matters while you are still capable, for example if you have limited mobility and find it difficult to get to your bank. Your health and welfare matters can only be dealt with by your attorney once you can no longer make decisions for yourself.
You can choose to sign only one type of LPA if you wish.
Who should you appoint?
You should choose someone whom you trust implicitly, as they will potentially have a great deal of say over your life and financial affairs.
Your attorney needs to be aged 18 or over and in respect of a financial and property LPA you cannot appoint anyone who has been declared bankrupt or who is subject to a debt relief order.
If you do not feel that you have a family member or close friend who can act on your behalf, it is possible to appoint a professional such as a solicitor, who will charge a fee to deal with your affairs and who will be under a duty to act in your best interests.
Once your LPA is registered with the Office of the Public Guardian (OPG), your attorney will be supervised by them. This could include a visit to you or contact to ensure your attorney is acting effectively. After the first year it is likely that the supervision will be fairly minimal.
What your attorney needs to know
You should ensure that your attorney is happy to be appointed, and that they know what responsibilities this will entail. For example, they will be required to submit an annual report to the OPG explaining the reasoning behind the decisions they have made on your behalf and why they believe the decisions were in your best interests, as well as submitting financial details such as bank statements.
Give your attorney as much information up front as you can, letting them know what you will expect them to do for you and the scope of what they will be dealing with.
Let them think it through carefully and without pressure so that they can make the right decision. If they do choose to act, then discuss your wishes with them so that when the time comes, they will know how you would like them to proceed.
It is a good idea to have a second-choice attorney in place, in case your first-choice is unable or unwilling to act when you finally need them to.
If you would like to discuss appointing an attorney, call legalmatters on 01243 216900 or email us at email@example.com.
When someone is classed as being domiciled outside of the UK, Inheritance Tax will only be payable on their UK assets.
A person’s domicile is usually their home or permanent place of residence.
However some people may claim the place that their father was born as their domicile, or if their parents were unmarried, then the place of their mother’s birth.
Even if someone was born, educated and works in the UK, it is still possible for them to be a so-called ‘non-dom’, ie. not domiciled in the UK. There are rules requiring an annual remittance to be paid to HMRC each year from the seventh year of residency onwards, but by way of benefit non-doms can avoid paying tax on foreign income or gains, provided the money is not brought to the UK.
Inheritance Tax benefits for non-doms
This benefit also extends to UK Inheritance Tax liability. Property outside of the UK can be excluded when calculating Inheritance Tax liability if the deceased was classed as a non-dom at the time of their death. For those classed as domiciled in the UK, Inheritance Tax is payable on all assets, wherever in the world they may be situated.
Property excluded from Inheritance Tax payments
- Property situated overseas
- Property situated overseas and held in trust where the settlor was not domiciled in the UK
- Foreign currency bank accounts
- British government securities, national savings and War savings certificates
How to benefit from non-dom status
If you have non-dom status, then by setting up an excluded property trust such as a discretionary off-shore trust can protect your assets from UK Inheritance Tax.
This can be beneficial for those who may have lived in the UK for more than 15 out of the previous 20 years, as it will mean that they are considered as UK-domiciled.
By setting up an excluded property trust, assets will not attract Inheritance Tax even if the settlor then acquires UK domicile.
To talk to one of our experts about tax planning, call legalmatters on 01243 216900 or email us at firstname.lastname@example.org.
When making a Will, it is possible to leave someone a life interest in your property or assets.
It may be more prudent in certain circumstances to leave your spouse or partner a life interest in your assets rather than giving them outright ownership.
In particular this can be advantageous if you want to make sure any children you have receive something in the future.
Possible problems in leaving assets outright
Married couples often make duplicate Wills, leaving everything to each other and then after both their deaths, to their children.
The problem with this is that after the death of the first parent, unforeseen circumstances could mean that either the Will becomes invalid or the money in the estate is spent before it can be inherited.
For example, if the remaining parent remarries, any previous Will automatically becomes invalid. If the parent fails to make a new Will, their assets will pass under the Rules of Intestacy, with the majority of the estate going to the new spouse, who is then free to leave it elsewhere in their own Will. Even if they intend to honour an intention to pass the money to the children, it may be spent, for example on care home fees.
Similarly, if a new Will is written, any previous Will is superseded. This could mean that after the death of the first parent, the remaining parent is free to leave the whole estate elsewhere and not to the children.
Finally, if the remaining parent moves to a care home, then assets in the estate can be swallowed up in fees. At present the local authority will only step in to assist with payments when the patient’s total worth falls below £23,250.
How a life interest works
By leaving someone a life interest, you can be sure that ultimately your assets will pass to those you choose.
For example, you can leave your spouse a life interest in your home, which means they can live there as long as they want, but once they have died or left, your share will pass in accordance with your Will and cannot be given elsewhere.
This also prevents your share being used to pay their care home fees.
Similarly you can leave a life interest in other assets, including cash and shares. This allows your spouse access to money and interest for living expenses, but means that the money remaining after their death will go to your children, or whoever you have chosen.
If you would like to discuss whether leaving a life interest in your Will might be suitable for you, call legalmatters on 01243 216900 or email us at email@example.com.