Have you thought about estate planning? Or is it something you’ve not thought about yet because, let’s be honest, we all think it wouldn’t happen to us.
But what happens if you don’t have plans in place should something happen to you? Who will look after your children? What will happen to your assets if your estate is deemed intestate and has to be distributed under the Courts and by rules dictated by the Government?
Estate planning is not just after-death planning either. What would your wishes be should you have a dementia-type illness, fall into a coma or become incapacitated? How will you ensure decisions on your health and welfare are what you want and dictated by Social Services or the Court of Protection?
There is proof that estate planning has become more prevalent and closer to the forefront of people minds in recent years. Just within the 25 – 34-year-old age group, we’ve seen an increase in estate and lifetime planning of between 20-30%.
At The Online Mortgage Guru, we’re working with partners Honey to help you with your estate planning needs.
What is estate planning?
Estate planning is the process of anticipating and arranging, during a person’s life, for the management and disposal of that person’s estate in the event the person becomes incapacitated and after death.
The documents within that plan will set out who has the power to make healthcare and financial decisions on your behalf during your life, and who receives your assets at death.
Plans are made up of several documents including:
- A Will – The absolute minimum that everyone should put in place, to help make sure the government don’t receive the assets that have already been taxed during your life! We know we need one but surprisingly, few ever get round to having one prepared.
- Lasting Powers of Attorney – documents that you can put in place to ensure that your finances and health needs, can still be managed by trusted people, should you not be able to manage these anymore. LPAs aren’t often spoken about, but these documents are incredibly important!
- Will Trusts (Enhanced Wills) – Will Trusts are Wills that have Trusts within them. For example, should a person own a property that they wish to protect for their loved ones, but want this property to not be touched by third parties, a Will Trust would be the ideal solution. These offer more protection than a standard Will.
Why should you create an estate plan?
The questions we posed above are questions where the answers could be determined without your input or wishes in mind if you don’t have estate plans in place.
The ‘what if’s’ aren’t something we want to think about but having a plan in place means we know what will happen if the ‘what if’s’ do happen.
Feedback from Honey’s customers shows that once they’ve made their Will they have a huge sense of relief, knowing that in doing so they have legally recorded how they want their assets divided after their death.
Not having a Will means you won’t have any say in who will inherit what you own at the time of your death and, consequently, your property will have to be distributed in accordance with the rules of intestacy.
It means that it will be left to the government to sort out, and in certain situations, they may even inherit your whole estate themselves!
Not having Lasting Power of Attorney appointees can also mean that bank accounts are frozen and bills are unpaid, assets can come under the control of the Court of Protection, decisions on which home you go to will be down to Social Services or the Court of protection and medical professions can’t consider your medical preferences i.e. when you’d like to be ‘let go’.
Having a plan in place gives you complete control and the final say over important issues that can arise over your lifetime and upon your death.
What’s included in estate planning
- Your Will
Everyone knows what a Will is and what it does, in the most basic of sense. At its very basic level, a Will is a set of instructions of how a person wants their estate to be distributed after they’ve gone.
Within your Will, you’ll be able to decide how you’d like your assets and estate to be distributed and to who, express your wishes as to who you’d want to look after any of your dependent children or pets and say how you wish your body to be treated on your death or any funeral plans.
You can include anyone you wish in your Will but you must appoint Executors. These are people who will be in charge of your estate and administering your Will after your death and can either be a loved one or a professional Executor.
2. Creating a Will Trust
Will trusts are enhanced wills that cater for more complex circumstances. These documents are Wills with protective measures in the form of Trusts, within them.
Effectively you are planning for your estate to be placed in the control of appointed trustees to allow you to protect the property you hope to pass on to family.
For example, you may wish to place your share of a property into Trust, so that your partner or child can keep living in that property after your death.
Trusts could be in the form of:
- Lifetime Interest Trust
- Protective Will Property Trust
- Discretionary Will Trust
- Right to Reside
They may also include additional documents such as:
- Severance of Tenancy
- Letters of Wishes
3. Giving Lasting Powers of Attorney
Lasting Powers of Attorney are documents that appoint others to act on behalf of you.
There are two types of Lasting Power of Attorney:
- Property and Financial Affairs – grants the appointed attorneys the power to make decisions, and act, on behalf of you that are relevant to your property and financial affairs.
This means they could:
- Open and close your bank and building society accounts
- Pay your household, care and other bills
- Claim, receive and use your benefits, pensions and allowances
- Make or sell investments
- Buy or sell your home
- Health and Welfare Decisions – gives the appointed the power to make decisions, and act, on behalf of you that is relevant to your Health and Welfare needs. Whilst you have mental capacity and are still conscious, all health and welfare decisions will still be made by you. It will only become effective and usable after registration if you have either lost mental capacity through an abnormality of mental functioning, or you have lost consciousness through a coma for example. This means the appointed could:
- Instruct medical professionals what tests/treatments not to perform depending on your religion, beliefs and allergies.
- Decide which residential care home you live in or if you are cared for at home
- Discuss care plans with doctors and social services
- Decide on life-sustaining treatment
Ensuring all these documents are done correctly and registered is extremely important so having guidance in the process that is simple and accessible can reduce the stress that comes with making difficult decisions.
In working with Honey we can provide client-focused and comprehensive planning assistance.
Recommendations are personalised and dependent on your circumstance. The review asks you some simple questions about your life including:
It takes a few minutes to answer the questions and generate your report with a choice of packages.
Protect what’s important to you and start your estate planning now.