A Will is a pivotal legal document that ensures your assets and belongings are distributed according to your wishes after your passing.
However, as life changes, so do your circumstances and relationships, so it’s crucial to keep your Will updated. Think of it as a ‘living document’.
This blog discusses the importance of updating your Will, when, and how.
The first scenario of when it’s appropriate to change your Will is after significant changes to your life circumstances and those of your beneficiaries.
Secondly, it’s wise to change or update your Will after significant asset changes, such as:
Core inheritance tax regulations have remained fixed for many years. Still, changes to the regulations, including the tax threshold and reliefs available, should prompt a reassessment of your Will.
This will ensure that your estate is distributed tax-efficiently and that you take advantage of new methods to lower the tax bill through reliefs and gifting.
So, how do you go about updating or changing your Will?
As your circumstances change throughout life, you’ll likely need to update or change your Will several times.
While updating it maybe appropriate for smaller changes, others might require you to make a new will.
Collaborating with Will and probate specialists can help ensure your Will meets your current and future requirements.
Life is uncertain. Events that may prevent us from making vital decisions about our finances, health, or welfare can unfold.
In such circumstances, a power of attorney (PoA) becomes invaluable. This legal document, rooted in the Powers of Attorney Act 1971, ensures that your decisions are made according to your wishes, even if you’re unable to make them yourself.
A power of attorney is a legal document wherein you, the ‘donor,’ appoints one or more persons, known as ‘attorneys,’ to make decisions on your behalf.
The circumstances under which they act, the scope of their powers, and the type of decisions they make can vary based on the type of PoA in place.
There are various types of power of attorney:
Remember, LPAs can also appoint replacement attorneys to step in if primary ones become unavailable or unable. Additionally, you have the power to cancel your LPA as long as you have the mental capacity to make that decision.
For those who set up an Enduring Power of Attorney (EPA) before October 1, 2007, it remains valid but is limited to property and financial decisions only.
The primary benefit of planning ahead with a power of attorney is peace of mind.
Knowing that someone you trust will handle your affairs if you’re incapacitated alleviates the stress for both you and your loved ones.
It’s crucial to seek legal advice when setting up a PoA. Solicitors with specialist knowledge in power of attorney can provide tailored advice to guide you through the process.
They have expertise in elderly client law, ensuring that your best interests are safeguarded.
In essence, powers of attorney are more than just legal documents; they’re a bridge to ensuring that your wishes are upheld and your interests protected.
Given the unpredictability of life, making provisions for unforeseen events is not only prudent but essential.
Investing time now to secure your future might be one of the most significant gifts you give to yourself and your loved ones.
Batt Broadbent offers bespoke advice on all forms of power of attorney. Contact us here to learn more about how we can help you.
April 2017 will see the introduction of a new inheritance tax exemption which links to someone’s main residence. The ‘residence nil rate band’, as it will be known, will start at £100,000 and will increase by £25,000 for four years so that in 2020/21 estates may be able to claim an exemption of £175,000 to set against the value of a property.
This exemption will be in addition to the current nil rate band of £325,000 and, in the same way as the current nil rate band, can be transferred between spouses or civil partners. This means that by 2020/21 if a widow or widower dies having inherited everything from the first spouse to die they may be able to claim two nil rate bands and two residence nil rate bands. This means that the total exemption available will be £1 million.
The residence nil rate band can only be claimed in certain circumstances. The property will need to be left to ‘lineal descendants’ which, in this case, is defined quite broadly. The definition includes children, grandchildren or step children. It also includes sons and daughters in law and foster children.
Additionally, the residence nil rate band will be tapered if an estate is worth more than £2 million. While this sounds quite high, the value that is used to see whether the estate qualifies for the residence nil rate band is the value before any additional reliefs (such as business property relief) are applied.
Having certain types of trust within a Will may prevent the residence nil rate band being claimed. This is because the property has to be ‘closely inherited’ i.e. pass to someone directly rather than via trustees. It is worth remembering that this will only apply for certain trusts so it makes it particularly important to review the content of your Will so you know where you stand.
It is advisable to review your Will regularly or if circumstances change. The introduction of the residence nil rate band provides such an opportunity. It might be the case that no changes are necessary but it is better to by fully aware of the circumstances than to miss out on being able to claim this new exemption.
For more information contact Jo Clements or Alison Bamber in our Will, Estates and Trusts department on 01722 41 11 41 or 01249 47 24 44
“I recently re-married and have two children from my first marriage. How can I ensure that my estate will pass to them when both me and my husband have died?”
This is a relatively common scenario and my client was naturally concerned that if she died first and simply left her estate to her husband in her Will, he could disinherit her children in the future.
She could of course leave her estate to her children, by-passing her husband altogether, but she felt that would be unfair, not to mention heartless!
My advice was to create a Will leaving her husband a life interest in her estate, including her share of the marital home.
Her husband would have the security of knowing that he can remain in the property for the rest of his life (he can even move if he wants to, and a different property can be purchased on the same basis). He would also be entitled to the income on any cash assets in her estate for the rest of this life.
On his eventual death, the capital in her estate – whether it is her half of the property or the cash investments – will pass to her two children as she wanted. In this way she has looked after both her husband’s interests and those of her children.
If you feel that a life interest trust may be appropriate for you, please do contact Alison for further information.