It is anticipated that around a third of British people have written a will. Those that have dealt with this may therefore be satisfied that they have made appropriate arrangements to ease the burden for their family at the end of their lives. But, is a will enough?
A will only comes into effect when you die. What happens if you have an accident or illness that is life changing but not fatal? Or if illness or old age mean that you cannot live independently? A lifetime’s earnings could be spent in a few short years on care home fees. Your family will not be able to deal with your financial arrangements on your behalf or protect those family assets. With this in mind, it is wise to hope for the best, but prepare for the worst.
Care Home Fees
If you have more than £23,250 in capital (savings account, property, cars, etc) your local authority will not make any contribution to your care home fees. If you have a joint bank account, you are usually assessed as having half of the balance. If you give away the assets to put yourself into a better position to be eligible for funding for care home fees this may be viewed as deliberate deprivation; the local authority uses its discretion to judge the timing and motive of transferring assets, so if this is something you intend to do, advance planning is crucial. There are other options available to protect your assets and ensure that your loved ones will still have an inheritance.
Lasting Power of Attorney
Without an LPA your loved one’s hands will be tied if you lose mental capacity and they wish to help you deal with your finances and practical arrangements. If you become ill or get dementia, your relatives have to apply to the Court of Protection to be appointed as your deputy – this takes time, costs up to £2,500 and still has restricted powers in comparison to an LPA. Making an LPA at Frettens costs from £300 plus VAT, takes very little time to administer and is much easier to activate if it becomes needed.
The difference between a will and a good will…
Assets left to children or grandchildren in the wrong manner could mean that they actually become disinherited if they divorce or remarry. Your will can also be written to specify how your assets will be treated to ensure that your estate pays no more inheritance tax than is absolutely necessary. Using a trust in your will can also protect some of your estate against being swallowed up on your partner’s care fees after your death.
Lee Young, Head of our Wills & Tax Team, says "This is just a snapshot of the pitfalls to avoid; most people appreciate being guided through the maze of decisions by an expert while they have full mental capacity to decide what happens to them if they need to be looked after and what happens to their wealth after they pass away."
Our Wills & Tax Team, based in Christchurch, also cover Bournemouth, Poole and the New Forest. If you have any questions, you only have to ask us at Frettens. Please call 01202 499255 and Lee, or his team, will be happy to chat about your situation.