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Wills and Trusts
What is a Will?
Everyone should have a Will in place.
A Will is a legal document that appoints a chosen representative to execute your wishes in the event of your death. Without a Will, your estate will pass through Probate in accordance with The Rules of Intestacy.
Essentially, this would mean that a court would be allowed to decide the outcome of your Estate in accordance with the Intestacy Laws and this could result in the beneficiaries being different to those whom you would have wished to inherit. Probate is a complex and lengthy process which could mean your beneficiaries do not receive their inheritance for some time, which could result in financial difficulty for them in the event that debts such as a mortgage fall to their responsibility.
A Will is estate planning in its most basic form. It will dictate the distribution of any property that is in your name, the care of any minor children and details the legacies you may wish to leave for vulnerable loved ones. It does not include any assets held in Trust.
What is a Trust?
At Haven Protect Limited, we would recommend most of our clients to consider putting a Trust in place.
A Trust differentiates from a Will due to the fact it is a legal arrangement that covers only that which is held in the name of the Trust. A Trust does not have to pass through probate and once an asset has been placed into Trust it is considered outside of your estate.
Assets can be placed into Trust before, upon or after your death. Those that are placed upon or after your death will still be taxed under Inheritance Tax laws however, the assets won’t be included in your beneficiary’s estate. This means in the event of their death; the assets will not be taxed again preventing what is known as Generational IHT.
There are benefits to placing assets into Trust both prior to or in the event of your debt. We will discuss these in further detail with you during your initial appointment.
Assets held in the Trust are looked after by a third party, known as the 'Trustee', who is intended to ensure the assets pass only to those whom you wish to inherit.
Having the asset held in trust and therefore outside of the beneficiary’s estate also provides ‘Bloodline Protection’. This protects their inheritance from being included in divorce settlements as anything held in the trust is not considered to be the beneficiary’s. A Trust is a complex document that can be used to plan for care costs or to provide savings on taxes.
Wills and Trusts are useful estate planning devices that serve different purposes, and both can work together to create a complete estate plan.
Lasting Powers of Attorney
In the event that you should lose your mental capacity who would you want to make decisions for you? A loved one? Or the Court?
One of the most crucial elements we put into place when addressing the subject of a Will is a Lasting Power of Attorney. This is a powerful legal document which allows an individual to appoint a person of their own choice, to look after their affairs should they at a later stage no longer wish to make these decisions or lack the capacity to manage their affairs themselves.
There are two Power of Attorney documents that can be filed. One for Property and Financial Affairs and another for Health and Welfare.
If you were to suffer an accident and be confined to bed or hospital, contract an illness, have a more serious accident that permanently incapacitates you or suffer mental incapacitation for any reason, then without an LPA in place, the only way your financial affairs can be managed is by an application being made to the Court of Protection for Deputyship.
This process costs a considerable amount of money and can take anything between 12 weeks and 10 months, by which time your finances could be seriously damaged.
Even worse, a Judge will make the final decision as to who is appointed as the Deputy and this may not be who you would have wished to manage your affairs.
If you want your loved ones to be able to care for you and make decisions on your behalf, you should ensure that you make an LPA while you are still able to do so.