That conversation we aren’t dying to have

There’s a commercial airing on TV at the moment where a man brings his girlfriend to meet Nana for the first time. The girlfriend lavishes praise on Nana’s home before wondering aloud how much it must be worth. Cue shocked faces all round. It’s humorous because most of us would never dream of asking such a question. Especially asking our parents or grandparents. Uncomfortable as the thought of such a conversation may be, the reality of not discussing money matters such as having a Will, Lasting Power of Attorney, or Inheritance Tax brings far greater pain. Without the correct legal documents in place, the estate (your home, savings, valuables) that you assumed would pass directly to your spouse or children can end up in legal limbo or being sold to pay an overly large Inheritance Tax bill that could have been avoided.

Lasting Powers of Attorney

A Lasting Power of Attorney is a legal document that grants someone else the power to act on your behalf. It’s usually a family member, such as your spouse or adult children, but could be anyone you decide. In the event that you are unable to manage your affairs, your nominated person can legally act on your behalf. This may take the form of managing your financial affairs or agreeing to the type of medical treatment you receive if you fall ill. Now, unless your hobbies involve sky diving, racing motorcycles, or alligator wrestling, you probably feel that the day you can’t manage your own affairs is many decades in the future. However, statistically age is no guarantee of ongoing good health. The age group with the greatest increase in incidences of cancer is the under twenty fours1. Men under 75 are 58% more likely to die than women2. And, according to Government statistics, 63.8% of adults aged 18 years and over in England are estimated to be overweight or living with obesity3.

A Lasting Powers of Attorney should be viewed in the same way most people view having life insurance. It’s not something you hope ever to use but, should the worst happen, you and your loved ones will be relieved that you have one in place.

Wills

My Grandfather always refused to shake the hand of the local undertaker, considering it bad luck. Making a Will carries the same stigma for many people. Having to think about a time after we’ve passed away is naturally upsetting, yet not having a Will brings avoidable suffering to families at a time when they are grieving. If you die without a Will your estate will have to go through a legal process called Probate. This involves proving what assets (property, money, shares, etc.) the deceased person owned and also who is entitled to inherit it. Not only does the process take months to complete but it can also prove costly. If you don’t leave a Will, your children from a previous marriage may not be entitled to inherit anything. Again, the best way to think about having a Will is that it’s the same as having life insurance. It cannot prevent the grief of losing a love one but it will ensure that your family don’t have to face the stress and financial burden of probate and legal disputes.

Inheritance Tax Planning

Inheritance tax is not the preserve of the fabulously wealthy. With the average property price is South East England now over £480,0004 and the average life insurance policy paying out over £73,0005, it quite common for people’s estates to exceed the £325,000 threshold before Inheritance Tax is paid. At the 40% Inheritance Tax rate, the example above would bring a tax bill of £91,200. In the case of property, probate must be granted before it can be sold. Plus, HMRC will charge you 7.75% interest on any money owed. It’s a vicious spiral: you can’t sell the property to pay the tax bill and the tax bill is increasing daily, reducing how much money will be left once the property is sold. With the right financial planning you can ensure that the bulk of the estate you worked your whole life building goes to the people you love.

To find out more about Lasting Powers of Attorney, Wills or Financial Planning, call us at B&L Solicitors on 020 8288 3522 to arrange a consultation.

References

1. https://www.cancerresearchuk.org/health-professional/cancer-statistics/incidence/age

2. https://www.gov.uk/government/statistics/mortality-profile-march-2023/mortality-profile-commentary-march-2023

3. https://www.gov.uk/government/statistics/obesity-profile-update-may-2023/obesity-profile-short-statistical-commentary-may-2023

4. https://www.rightmove.co.uk/house-prices-in-South-East.html

5. https://www.forbes.com/uk/advisor/life-insurance/life-insurance-statistics/

Legal disclaimer

The articles published on the website are intended to be for general information purposes only. These articles do not constitute legal advice, nor should they be used as a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to their accuracy, and no liability is accepted for any errors or omissions. Before acting on any of the information contained in any of these articles, expert advice should be sought.

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