You can take care to ensure that your assets go to the right people after your death by making a will. However, if you care enough about what happens to your assets after you die, then you should care even more about keeping them and yourself safe whilst you are alive. To do this, you can set up Lasting Powers of Attorney.

What is a Power of Attorney?

It’s a legal document that allows an individual (donor) to appoint a person(s) (attorney(s)) of their choice to look after their affairs should they, at a later stage, no longer wish to make these decisions or lack the capacity to do it.

Powers of Attorney

There are three different types of document:

• Lasting Power of Attorney (LPA) for property and financial affairs

• Lasting Power of Attorney for health and welfare

• General Power of Attorney (GPA)

These replaced Enduring Powers of Attorney in 2007.

Lasting Powers of Attorney

The LPA for property and financial affairs allows your attorneys to make decisions about paying your bills, dealing with banks and investments and even collecting benefits and selling property. The LPA for health and welfare allows the attorneys to make decisions around care issues, where the donor lives and even life saving treatment.

As the name suggests, both of these powers continue to be valid even after the donor loses capacity. When the LPA is registered, it can only be used if the donor has lost mental capacity.

The LPA must be signed by an independent person confirming that the donor understands what the LPA is. It must also be registered with the Public Guardian’s Office before it’s legal.

General Powers of Attorney

A GPA allows attorneys to make decisions and act in any matters relating to the donor’s property and affairs with the exception of their will or any gifts. It is effective immediately and remains in force until it is either revoked or the donor becomes mentally incapable and it’s automatically revoked.

Who can make an LPA?

Anyone over the age of 18 can make an LPA as long as they have mental capacity at the time.

Why do I need an LPA?

The main reason is in case you suffer an accident that incapacitates you or you become mentally incapacitated through old age or some other reason. The benefits of this are:

• You can plan in advance who you want to make key decisions for you

• The decisions you want them to make

• How you want your attorney(s) to make those decisions

What happens if I don’t have an LPA?

With an LPA in place, your attorneys will be able to look after your affairs. However, without one, the only way your financial affairs can be managed is by an application (by a relative or someone close to you) to the Court of Protection for Deputyship. This can be time consuming and costly and a judge will make the final decision so may not even appoint the person who you would want.

Around 55,000 people are registered with the Court of Protection as being mentally incapable to act on their own. Their affairs are under the jurisdiction of the court. This means that without an LPA, those seeking to care for you, have the added stress of having to deal with officials every time a decision needs to be made.

Who can act as an attorney?

You should appoint someone you trust – such as a relative or a professional. Anyone who is over the age of 18 and has mental capacity can sign.

How would you like your attorneys to act?

You will also need to consider how you would like your attorneys to act and you have three options:

Together: this means that attorneys make all decisions together. If one attorney disagrees, that decision can’t be made on your behalf. You might choose this option if you want to ensure all your attorneys are in agreement about every decision.

Together and independently: means your attorneys can make all decisions together or independently. You might choose this option if one of your attorneys is closely involved in your financial affairs and you trust them to make decisions on their own.

Together for some decisions and independently for others: this means they can make some decisions independently but must be in agreement for others. This might be an option if you want attorneys to make day-to-day decisions such as paying nursing home fees but be in agreement about significant decisions, like selling your home.

Registering your LPAs

Once you have made the decision to make an LPA, you must register it with the Office of Public Guardian (OPG) to make it valid.

Have you written a will? It’s estimated over 60% of people haven’t, preferring to put it off. It’s a natural thing to do as talking about the subject can be difficult, but planning ahead could save a lot of money and difficulty in the long run. As part of our new wills and estate planning service, we look at the benefits of forward planning.

The major benefit of effective estate planning is that you get control of where your assets go and who gets what – ensuring your wishes are carried out, potential problems are avoided and your assets are protected from extra inheritance tax and other costs (for example care home fees, bankruptcy and generational IHT).

If you die without a valid will this is known as ‘intestacy’. Without a valid will, your assets are divided to a set a predetermined rules – irrespective of any intentions you may have. This is something that happens frequently and in complicated cases (numerous high profile cases hit the news) disputes can still be going on decades later.

Writing a will gets more important as we get older – although worryingly recent statistics show that nearly half of people between the ages of 55 and 64 have never made a will.

However, while this is true, in reality anyone over the age of 18 should consider writing one – particularly if you have dependents such as children or other relatives to look after. Many people assume that wills don’t matter if you have children and plan to leave all your assets to your spouse. However, your husband or wife would only receive the first £250,000 of an estate, with the remainder divided based on current law.

When children are involved, it’s not just the assets that are a consideration, there is also the issue of appointing guardians. This should really encourage anyone with children to make a will because if you die before the age of 18, it may be up to the courts to decide who looks after them.

The overall message should therefore be to make a will and review it when your circumstances change. For example, you should look to update your will post any relationship break-up to prevent your estate going to the wrong person.

Planning your estate like this will give you control over your assets. It gives you time to think through whom you want your beneficiaries to be – individual or charity – and structure how you make the arrangements for them to benefit. You can also plan who you want to execute your will too.

To find out more about our wills and estate planning service, give us a call on 0871 271 1280 and arrange an appointment with one of our advisers.

It’s less than one month to go until the end of the current tax year on April 5th. If you haven’t already done so, now is the perfect time to make the most of your savings (very important in an era of low interest rates) by considering your options when it comes to keeping the amount of tax you pay to a minimum.

For those still to do this, two of the best tax efficient savings options remain ISAs (Individual Savings Accounts) and pensions. The ISA limit for the current tax year is £11,280 – which is an increase from 2011 when the maximum you could invest was £10, 680. It will rise again, slightly, from April 6 2013 to £11,520.

Up to half of this money (£5,640) can be invested in cash, so if you haven’t already done so it’s an easy and sensible move to make by April 5. The other half can be invested in a stocks and shares ISA – which includes most authorised unit or investment trusts, open ended investment companies (OEICs) as well as any share quoted on the stock exchange.

You could also consider a ‘Junior ISA’ which was introduced by the Government in 2011 to encourage children and other people to save on their behalf. Unlike other ISAs, the maximum that can be invested here is £3,600.

Any growth in the value of your savings or investments with an ISA will be free of capital gains tax and there is no liability to tax on any income taken from the fund.

Increasing your pension contributions is another action to consider. Increasing your contributions could help you to maximise the money paid into your pension by your employer. If you’re not asking your employer to do this – and make the maximum contribution to your pension – you’re essentially leaving free money on the table.

If you would like any advice on your ISA or pension contributions or any other investments, please contact us for a free initial consultation on 0191 281 9862 or email info@reeves.com and we promise to respond to your enquiry.

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