Wills and power of attorney are essential legal documents that ensure your wishes are respected and your assets are protected. Many people put off creating these documents because they don’t like to think about their own mortality or because they believe they don’t have enough assets to make it worthwhile.
However, regardless of your age or financial situation, creating a will and power of attorney can provide peace of mind for you and your loved ones.
Wills
A Will, also known as a Last Will and Testament, is a legal document that outlines how an individual’s assets and property should be distributed after their death. It is an essential document that ensures that an individual’s final wishes are carried out and that their loved ones are taken care of.
Having a Will is important because it allows an individual to have control over who inherits their assets and property. Without a Will, the distribution of assets and property would be determined by the laws of intestacy, which may not align with an individual’s wishes.
This could result in loved ones being left out or receiving less than what the deceased would have wanted.
Furthermore, having a Will can help to avoid disputes and legal battles among family members and beneficiaries. It provides clarity and can help to prevent misunderstandings or disagreements about what the deceased would have wanted.
If an individual dies without a Will, their estate is said to be intestate. In the UK, the distribution of assets and property in an intestate estate is determined by the rules of intestacy. This means that the deceased’s assets will be distributed according to a set formula, which may not be what the individual would have wanted.
For example, if an individual is survived by a spouse and children, their spouse may not inherit everything, as the children may be entitled to a portion of the estate.
In addition, without a Will, there may be delays in the distribution of assets and property, as it may take time for the laws of intestacy to be applied and for beneficiaries to be identified. This can cause financial strain and emotional stress for loved ones during an already difficult time.
Powers of Attorney
A power of attorney is a legal document that allows an individual (the donor) to appoint someone they trust (the attorney) to make decisions on their behalf. There are different types of powers of attorney, each with different levels of authority and control.
There are a few different types of power of attorney, but the most common is a lasting power of attorney (LPA). This is a comprehensive document that allows the attorney to make decisions on the donor’s behalf, even if they lose mental capacity.
There are two types of LPA: one for finance and property and one for health and welfare. The finance and property LPA allows the attorney to manage the donor’s finances, such as paying bills and managing investments.
The health and welfare LPA allows the attorney to make decisions about the donor’s care and medical treatment.
The benefits of having a power of attorney are numerous. Firstly, it allows the donor to choose someone they trust to make decisions on their behalf, rather than leaving it to the courts to decide. It also ensures that decisions are made in the donor’s best interests, as the attorney has a legal duty to act in their best interests.
Having a power of attorney can also be helpful in situations where the donor is unable to manage their affairs, as it can prevent delays and ensure that bills are paid on time.
What to consider when creating a will and power of attorney
- Choosing the right attorney: When setting up a power of attorney, it is important to choose someone who is trustworthy and capable of making decisions on the donor’s behalf. The attorney should be someone who is familiar with the donor’s values and wishes, and who will act in their best interests.
- Identifying assets and beneficiaries: When setting up a will, it is important to identify all assets and beneficiaries. This includes identifying any bank accounts, property, investments, and personal possessions. It is also important to identify who will inherit these assets and how they will be distributed.
- Updating regularly: It is important to update the will and power of attorney regularly to ensure that they reflect the donor’s wishes and current circumstances. Changes in family circumstances, such as births, marriages, and deaths, may require changes to the will and power of attorney.
- Seeking legal advice: It is recommended to seek legal advice when setting up a will and power of attorney. This can ensure that the documents are legally binding and that they reflect the donor’s wishes. Legal advice can also help to avoid any potential disputes or challenges to the will.
- Considering tax implications: When setting up a will and power of attorney, it is important to consider any tax implications. This includes inheritance tax, capital gains tax, and income tax. Seeking advice from a financial advisor or tax professional can help to ensure that the donor’s assets are distributed in the most tax-efficient way possible.
Conclusion
Creating a Will and power of attorney is an important step in protecting your assets and ensuring your wishes are respected.
It’s never too early to start planning for the future, and putting these legal documents in place can provide peace of mind for you and your loved ones.
Don’t wait until it’s too late to create a Will and power of attorney.
