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Elizabeth Middleton Solicitors

Do You Pay Inheritance Tax on Lifetime Gifts?

Conveyancing | Equity Release

27th September 2020

Making gifts to your family and friends while you’re alive is a great way to reduce the value of your estate and lower the impact of inheritance tax. Estate and tax planning is a complex subject. It’s important to understand the options available to you and the best way to do this is through sound professional advice.

In this post, we’ll go through what gifts are subject to inheritance tax and how you can make lifetime gifts that are tax-free.

Giving to Your Children and Other Family Members

To ensure that what you give your children or other family members is tax-free, it’s essential that you plan when to make the gift.

As long as you live more than seven years from when you make the gift, your children or family won’t have to pay inheritance tax on your gift when you pass on. Be aware that any income made from this gift would still be subject to capital gains tax. However, if you don’t live more than seven years after making the gift, your family members may have to pay inheritance tax.

The gift is considered a potentially exempt transfer when it is first made. If you die within seven years, it becomes a chargeable transfer and is subject to inheritance tax. We’ll discuss potentially exempt transfers in more detail later in this post.

Note that married couples and civil partners are allowed to pass their estate to their spouse tax-free when they die, meaning the surviving spouse can inherit the entire estate without having to pay Inheritance Tax.

Gifting to Charity

Any cash or physical asset you leave to a qualifying charitable organization either in your will or during your lifetime is exempt from inheritance tax. This is a great option if you’re looking to give back while still maximizing the value of your estate.

Gifting to charity can also reduce your inheritance tax rate from 40% down to 36%. This lower rate only applies if the gift to charity accounts for 10% of the net estate at the time of death.

Annual Gift Allowance

While you’re alive, you have a £3,000 ‘gift allowance’ each year known as an annual exemption. This means you can give away assets or cash up to a total value of £3,000 each tax year without it being added to the value of your estate for inheritance tax purposes.

You can carry over any unused portion of the exemption to the following tax year but it can’t be carried over to a second year.

Tax-Free Gifts

There are a variety of gifts you can make that will not be subject to inheritance tax. This includes:

Wedding Gifts

Wedding gifts are free from inheritance tax provided they meet the following requirements:

  • Gifts to children are worth £5,000 or less
  • Gifts to grandchildren or great-grandchildren are worth £2,500 or less
  • Gifts given to another relative or friend are worth  £1,000 or less

Gifts That are Worth Less Than £250

You can give as many tax-free gifts up to £250 to as many people as you want. However, you cannot give tax-free gifts to anyone who has already received a gift of your whole £3,000 annual exemption.

Gifts to Help With Living Costs

Gifts used to help pay the living costs of an ex-spouse, an elderly dependent, a child under 18, or a child in full-time education might be exempt from inheritance tax.

Gifts From Your Surplus Income

If you earn a high enough income to easily maintain your standard of living, you can make gifts from your surplus disposable income. For example, you can pay into your child’s savings account or pay a life insurance premium for your spouse. These gifts must be made regularly, so you need to be able to commit to keeping up with the installments. It’s important to keep detailed records of these gifts if you plan to use this exemption as the rules are complex.

Potentially Exempt Transfers

A potentially exempt transfer (PET) enables you to make gifts of unlimited value that will become exempt from inheritance tax if you survive seven years from the time of the gift.

If you don’t live for seven years after the gift, the PET becomes a chargeable consideration and is added to the value of your estate for Inheritance Tax purposes. If the value of the estate (including the gift) is over the Inheritance Tax threshold of £325,000, then tax may be due.

To be “Potentially Exempt”, lifetime gifts must meet certain conditions and are subject to certain exceptions. The gift must be made from an individual to another individual or to a specified trust. This means that the gift cannot be made to or from a company.

Gifts that you maintain an interest in don’t qualify as a PET no matter when they are given. For example, if you continue to live for free in the house you gave your child more than 10 years ago, the house would still be considered as part of your estate for inheritance tax purposes.

The 7 Year Rule

The 7 Year Rule helps determine the rate at which inheritance tax is charged. Gifts given within three years of your death are taxed at 40%.

Gifts made between three to seven years before your death are taxed on a sliding scale known as taper relief. Below are the different tax rates, based on the years between the gift and death:

Years between gift and deathTax paid
Less than 340%
3 to 432%
4 to 524%
5 to 616%
6 to 78%
7 or more0%

Be aware that taper relief doesn’t reduce the value of the gift, it only reduces the tax payable.

Professional Tax and Estate Planning

Wills and trusts are an important part of planning your estate and minimizing inheritance tax. This area of law is complex and it’s always best to seek professional advice to make sure you are on the right track.

Elizabeth Middleton Solicitors has the experience to ensure that your estate is as tax-efficient as possible. Contact us today to learn how we can help you and your family plan for the future with expert estate planning, will writing, lasting power of attorney, and conveyancing services.

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Elizabeth Middleton Solicitors

Care Home Fees And Your Will – What You Can Do To Protect Your Assets

Care Home

19th September 2020

With care costs increasing dramatically, people continue to lose more of their savings, investments, and property to the cost of care than ever before. There are ways you can use your will to protect your estate from care home fees, but this is never something you should attempt to do without expert legal services from a professional solicitor.

In this post, you’ll learn how care home fees can affect you and your family and what you can do today to protect your assets for the future.

Rising Care Home Fees

Research from Prestige Nursing and Care has shown that the average annual cost to stay in a residential care home has increased by £1,536 (5.6%) to £30,926 in the past year.

The average rise is more than 10 times the £156 average increase in pensioners’ income over the same duration. On average, pensioners earn  £14,456 a year which would cover less than half of a year’s worth of care.

This is causing concern for many people about the possible costs involved with paying for any necessary care fees in the future and the impact this could have on reducing the value of inheritance received by children after both parents have died.

Consider the following example:

Mr. and Mrs. Jones were in their 60s and had two adult children. Their joint estate was worth roughly £250,000, primarily made up of their home worth £240,000 and  £10,000 of savings. They wanted to plan for the future while keeping everything simple and straightforward, so they put in place standard mirror wills. These wills leave everything to the other when the first dies and then to their children in equal shares after the surviving spouse dies.

A few years later, Mr. Jones passed away and his estate passed to Mrs. Jones in accordance with his will. Mrs. Jones continued to live independently over the next few years. Unfortunately, Mrs. Jones suffered a stroke which meant she required residential care. She was financially assessed by the Local Authority who determined that the value of her assets was  £250,000. Because this exceeded the maximum threshold, she would have to pay the cost of her care in full.

The residential home fees added up to £30,000 a year and her matrimonial home was sold to pay the costs. She continued to live in the home for five years until she passed away. During this time, she had incurred £150,000 in care costs (5 years x £30,000) which reduced the value of her estate to £100,000 when it passed to her children.

This is a common scenario as couples who aren’t properly prepared don’t realize the impact care costs can have before it’s too late

Protecting Your Assets

If you need to move into a care home in the future and you have more than £23,250 in savings or assets, including the value of your home, you will usually have to pay for the full cost of your care.

If your savings or assets are valued between £14,250 and £23,250, you will usually have to pay a contribution to your care, with the Local Authority paying the remainder. When your assets are below £14,250, the Local Authority will take over paying the fees for your care.

As the cost of care continues to increase, people are seeing their hard-earned assets dry up at an alarming rate. With the average house worth £213,927, if just one spouse needs care, you could lose nearly all your assets to care costs in roughly six years. This would mean you have nothing to leave to your children or grandchildren.

Care Fee Trust Will

Fortunately, there are steps you can take to prevent this from happening. Instead of leaving all your assets to your partner in a mirror will, you can make a Care Fee Trust Will which allows you to leave your assets to your partner for the duration of their life, and then to your children or whoever you choose.

A Care Fee Trust Will requires that the family home is held as tenants in common rather than as joint tenants. This means that each spouse owns 50% of the property rather than owning the home together in a single indivisible share.

With a Care Fee Trust Will, your partner can use the share of the home during their lifetime. Should your partner ever need care, the Local Authority cannot take your share to pay for care fees since your partner does not technically own it. This can help preserve the value of your estate before it is passed to your children.

Wrapping Up

Elizabeth Middleton Solicitors offers the legal expertise you need to plan for the future and protect your assets. We understand that everyone’s circumstances are different and our friendly and approachable legal team works to develop wills, lasting powers of attorney, and tax and estate planning suited to your unique needs.

Contact us today to learn how our services can help you and your family prepare for the future and protect your estate.

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Elizabeth Middleton Solicitors

Do I Really Need a Lasting Power of Attorney?

Do I Really Need a Lasting Power of Attorney

13th September 2020

Thinking about being in a condition where you are no longer able to take care of yourself can be uncomfortable. Yet, it’s important to protect your future by planning ahead in the event that something were to happen to your mental or physical faculties. If you are in a situation where you can no longer make decisions for yourself, you need a way to ensure that your wishes are being met. This is where Lasting Power of Attorney comes in.

What Is Lasting Power Of Attorney?

Lasting Power of Attorney (LPA) is a legal document that enables someone else to act on your behalf and make decisions for you in a situation where you are longer able to do so yourself. There are two types of lasting power of attorney, one for your health and wellness, one for your property and finances. With these types of LPA, you choose a person known as an attorney who is then able to make decisions on your behalf.

Health and Welfare LPA

A health and welfare LPA grants your attorney the right to make decisions regarding your medical care and daily routine. Here are some examples of the decisions that your attorney could make on your behalf:

  • Your medical treatment including life-sustaining treatment
  • Where you live and if you should move into a care home
  • What to buy and where to shop
  • What you eat and how you spend your day

A health and welfare LPA can only be used if you lose capacity. You are not able to have someone else make these decisions for you simply because you don’t want to.

Property and Financial Affairs LPA

A property and financial affairs LPA allows you to appoint an attorney to make decisions regarding your finances and property. This includes:

  • Handling your taxes
  • Paying bills
  • Maintaining your property
  • Investing your savings into stocks or other assets

With a property and financial affairs LPA, you can specify when you want your attorney to be able to act on your behalf. Unlike a health and welfare LPA, you can choose to have your attorney make decisions for you even if you haven’t yet lost capacity to do so.

What Is Mental Capacity?

Every day, we all make decisions about our lives. The ability to make these decisions is considered mental capacity. People may not be able to make decisions some or all the time. This could be due to a brain injury, dementia, a stroke, or a learning disability. In these cases, a person is deemed to not have mental capacity.

It is important to be aware that living with a mental health condition such as depression, schizophrenia, or bipolar disorder doesn’t necessarily mean that someone lacks mental capacity.

Who Decides If Someone Has Mental Capacity?

The Mental Capacity Act 2005 is used to establish standards for mental capacity. It states that a person is unable to make a decision if they can’t do one of the following:

  • Understand information relevant to a decision
  • Retain that information long enough to make the decision
  • Use or weigh that information
  • Communicate the decision

When you make a Power of Attorney in England and Wales, a ‘certificate provider’ decides if you’re capable of making that choice. This can be someone you’ve known for two years or someone with relevant professional skills such as a doctor or a lawyer.

Why Lasting Power of Attorney Is Important?

Establishing an LPA is essential to ensuring you and your loved ones have their preferences honored in case you are no longer able to decide for yourself. You can’t just assume that a doctor will listen to your family’s opinion even if you don’t have an LPA.

While healthcare professionals often consult with a person’s ‘next of kin’, they are not obliged to act on their suggestions. This is because a next of kin doesn’t have any legally binding influence on decision making.

You can address the fact that your next of kin doesn’t have automatic control of your care by formally appointing an attorney in a health and welfare LPA. Making an LPA is the best way to ensure that your loved ones have the authority to legally act upon your wishes. Without it, their input could be dismissed which can lead to frustration for them as they are the ones most likely to speak for you as you would have spoken for yourself.

What To Do If Someone Has Already Lost Capacity?

If someone is unable to make decisions for themselves but did not set up an LPA in advance, you can apply to the Court of Protection to ensure their interests are in the right hands. The court will appoint a deputy, usually a family member or close friend, to make decisions for the person. There are personal deputies for both property and financial affairs, and health and welfare.

While filing for a deputy can put the decision making in the hands of a loved one, it can be a long and expensive process. We highly recommend that you set up an LPA before you lose capacity to ensure that a loved one is able to make important decisions on your behalf.

Summing Up

We know that thinking about the future can be stressful. We believe that everyone should be treated with respect, kindness and receive a personal service that meets their needs in a relaxed, un-rushed environment. Elizabeth Middleton Solicitors is here to help you prepare for the future and ensure your wishes are followed, which is why our expert legal team specializes in Lasting Power of Attorney, Wills, Probate and Conveyancing. Don’t wait for life to happen – Get in touch today to learn more about our LPA services and gain the peace of mind that your future is taken care of.

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Lasting Powers of Attorney

What Are The Different Types Of Lasting Power Of Attorney

Lasting Powers Of Attorney

17th August 2020

Lasting Power of Attorney (LPA) allows someone to act on your behalf or make decisions for you if you’re no longer able to or no longer want to do so on your own. The person (or people) that you choose is referred to as your “attorney”, and you determine the decisions they are allowed to make for you (the “donor”).

There are two types of LPA. One type covers decisions about your health and welfare, and the other covers decisions about your property and finances. You can choose to use both types or just one. You are able to appoint the same attorney for each or you can opt for different attorneys. An LPA must be registered at the Office of the Public Guardian (OPG) to be valid.

There’s a lot to consider when looking into LPAs. This guide to Lasting Power of Attorney will examine the two types of LPAs so you are able to plan effectively.

Health and Welfare LPA

A Health and Welfare LPA allows your attorney to make decisions regarding your health and welfare on your behalf. There may come a time when you do not have the mental capacity to make important decisions for yourself. This could be the result of an accident, illness, or old age. With a Health and Welfare LPA, your attorney can make decisions about medical care and your daily routine. Here are some of the decisions your Health and Welfare attorney can make:

  • Where to live and whom to live with.
  • Who may visit and who may not.
  • What to buy and where to shop.
  • What clothes to wear.
  • Running the home, choosing decoration and furniture.
  • Treatment and welfare care.
  • Decisions regarding terminal illness treatment and care.
  • Determining where the donor may like to die and making funeral arrangements.

You are also able to give your health and welfare attorney the power to refuse or accept life-sustaining treatment on your behalf. The required paperwork will ask if you wish to provide this power or not and you’ll need to clearly state your intention.

It’s important to understand that this decision can affect any advance decision you have previously made. If you give your attorney the power to make decisions about life-sustaining treatment, it will overrule your advance decision. However, if you choose not to give your attorney this power, your advance decision will stand.

A Health and Welfare LPA can only be used when you don’t have the mental capacity to make decisions on your own. Without it in place, no one will have the legal authority to make decisions for you. This can result in you being cared for in a way that you would not have wanted, as the ability to make decisions is not in your loved ones’ hands.

Property and Financial Affairs LPA

A Property and Financial Affairs LPA covers decisions about your property and finances. If a time comes where you can no longer manage your finances, you can grant an attorney the power to do it for you. Here are some of the decisions your Property and Financial Affairs attorney can make on your behalf:

  • Paying bills, including your rent, mortgage, or other household expenses.
  • Opening, operating, or closing any bank or other financial accounts.
  • Handling your tax affairs.
  • Receiving any income, inheritance, or other entitlement on your behalf.
  • Insuring, maintaining, and repairing your property.
  • Deciding whether to buy or sell a home.
  • Investing your savings into stocks, mutual funds, or other financial instruments.
  • Making limited gifts on your behalf.
  • Paying for private medical and residential care or nursing home fees.

With a Property and Financial Affairs LPA, you get to choose when you want your attorney to be able to act. This could be the moment the LPA is registered or at some point in the future, such as any situation where you’re no longer able to make these decisions for yourself. You are also able to limit the decisions the attorney is allowed to make or place conditions on what they are able to do.

A big difference between a Health and Welfare LPA and a Property and Financial Affairs LPA is that with the latter, you can appoint an attorney to manage your affairs at any time, not just when you are no longer able to decide for yourself.

Let’s consider a situation where this might be useful. If you have assets in England and Wales but are planning to leave the country for an extended period of time, you may want someone still in the country to manage your financial affairs while you’re away. Another example is those with mobility issues: While you may still have the mental capacity to make decisions for yourself, it would be more practical to allow someone you trust the authority to handle certain tasks for you.

Conclusion

The best way to protect your future is by planning today. By making a Lasting Power of Attorney for finance and health you are ensuring that your affairs are handled by someone you trust. Elizabeth Middleton Solicitors wants to help you prepare for the future with our friendly and client-driven approach. Contact us today to learn more about our Lasting Power of Attorney services.

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Wills

Aren’t I Too Young To Write A Will?

Lawyer at desk doing paperwork

9th August 2020

When you’re young, thinking about death is probably not something you do very often. That’s understandable. You may think you’re too young to have a will, however it’s something all adults should have drafted for some very compelling reasons.

A will controls how your estate is handled and who benefits from it when you die. If you die without a will, the rules of intestacy apply. This means you cannot choose how your estate is divided because it must be distributed according to the law. Without a will, you give up all control as to how your estate is handled after your passing.

If that sounds undesirable to you, you’ll want to consider writing a will. We recommend that you have a will or review your existing will at significant moments in your life.

Let’s take a look at some of the scenarios in which it’s important to have a will and how not having one prepared can affect your loved ones:

1. You Have Children

The moment you have children, you must consider what would happen to them if you die during their childhood. Using your will to appoint a guardian to raise your children allows you to maintain some control over their care if you are no longer alive. The importance of this can’t be overlooked. If your wishes are not known, your children could find themselves in the middle of a disagreement between family and friends at a very trying time.

2. You Live With An Unmarried Partner

Common law marriage doesn’t exist in the UK, even if you have lived with your partner for years. If you die without writing a will, the intestacy rules would mean that your partner would receive nothing from your estate.

You also need to consider how you own your home. If you and your partner own your property as ‘joint tenants’, your partner would automatically own the home in their sole name if you were to die. However, if you two own the property as ‘tenants in common’, your share of the home would become part of your estate and would pass to your beneficiaries according to your will or the intestacy rules.

Your will can also include certain rights to enable your co-inhabitant to live in the home for a specified period of time. This will allow them to maintain their residence while ensuring that the asset still passes to your chosen beneficiaries.

3. You Have Pets

Pets are part of the family and you’ll want to to make sure they’ll be cared for if they outlive you. In your will, you can nominate someone you trust to take care of your pets.

You’ll want to find someone willing and able to take on this role. You can also choose to leave behind money to the nominated person so they won’t have to cover all of the related expenses out of pocket.

4. You Want To Give Someone Access To Your Digital Assets

Digital assets such as photos, social media accounts, music collections, email accounts, and more may not be physical possessions, but they can still hold a great deal of sentimental and monetary value. In your will, you can make specific provisions for these assets or select a particular person to handle them.

You’ll want to list out all your digital assets in your will so that the executor knows what they are. Without doing so, you risk the assets going unclaimed by anyone as people may not even realise they exist.

5. You Have Specific Provisions For A Relative Or Friend

Do you have any special items you wish to pass down to a particular person? It could be a family heirloom like a piece of jewelry you want your niece to inherit, or a comic book collection you want your friend to have. Writing your living will can help ensure these items go where you intend them to.

You can also use your will to  allocate a set sum of money from your estate. For example, maybe you want to leave £10,000 to your cousin.

6. You Want To Make Sure Someone Doesn’t Benefit From Your Estate

If you have separated from a partner but have not dissolved your marriage or civil partnership, under the law they will still inherit a considerable portion of your estate if you were to die. These rules are fixed and you can’t get around them. If you want to ensure that a previous partner doesn’t benefit from your estate, you need to have a will that clearly states this and provides who should benefit instead.

While your will could be contested, writing one helps establish your wishes and intentions in the event a claim is made.

7. You Have Funeral Wishes

Discussing your funeral may be an uncomfortable conversation you may not want to have. In your will, you can provide instructions regarding your funeral arrangements. For example you may have religious practices you want followed or perhaps you prefer to be cremated instead of buried.

Be aware that funeral wishes are not binding and executors are not required to follow them. However, setting out your preferences beforehand can help avoid family disagreements and make it easier for your loved ones to decide.

Conclusion

You are never too young to write a will. Making a will and keeping it up-to-date is the best way to make sure your assets are distributed according to your wishes after you die. Not having a living will can create some uncomfortable situations for your family and friends when the time comes. We know that thinking about your death can be unsettling. This is why Elizabeth Middleton Solicitors offers a friendly and approachable team to help you plan for the future with ease. Contact us today to learn more about our will writing services.

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Wills

Making a Will

Private Solicitors

18th July 2020

It’s easy to put off making a last will and testament. Yet when you sit and think about what happens to your money, property, and other assets, you’ll likely want to ensure they are distributed to certain important people in your life and don’t end up improperly divided or worse, property of the state. Without a will, you leave the matter open and your estate will surely not be dispensed as you wish. Why take that chance? Creating a will requires care and consideration, and with the right help from a solicitor can be a much simpler and more streamlined process.

Why Make a Will?

As stated, if you don’t create a will that spells out your desires for the distribution of your assets and possessions, the will may be distributed in a way that you have not approved and specified. Without a legally valid will, rules of intestacy come into effect when you die. The rules designate who can receive distributions from your estate, including married and civil partners and particular close relatives.

Unmarried partners that are not in a civil partnership can’t inherit under the rules of intestacy. This situation can cause disagreements and hurt feelings between your partner and other family members. Even without the partner involved, the loss of a loved one can be overshadowed by a fight over who is entitled to what, and the process usually ends up unfair to certain parties. A will resolves the issue by assigning money and property. While you can’t ensure that no one’s feelings are hurt after you’re gone, you can be assured that your wishes are followed to the letter and have been decided in advance to avoid further disagreement between your loved ones.

It’s important for every adult to make a will, but it’s especially critical if you have children, are a property or business owner, and / or have your own savings, insurance policies, property or investments. It inherently makes life simpler for your loved ones who are already grieving your loss. A will takes away some of the added pressure of sorting out the apportioning of your assets, a complicated and emotionally draining process during a time of grieving. Additionally, a living will can remove the burden of how to respond to medical decisions for you in the case that you are no longer able to speak for yourself.

In a will, you can further define other issues affecting life and the event of your death. Including a life interest trust Will helps you to protect a loved one’s ability to use your assets in a couple ways. It gives your identified party a life interest in your assets or property while they are alive. It allows the person identified in the trust to continue to live in their home or have access to certain assets, which are ring-fenced in this process. Through a life interest trust, considerations for long-term care of a spouse or child can be managed by disallowing the authorities to take all or a portion of your assets to pay for residential care home fees. An amount placed in the trust reserves it for the identified person to pass on to the next beneficiary at the time of death.

A similar scenario can occur when one remarries and has children from a previous marriage; a life interest trust will enables those children to receive the part of the inheritance that’s put in the trust.

How to Write a Will

The idea of writing a will is simple: determine all of your assets and debts to establish an estimated estate value, then decide how and to whom you want to divide your estate. It takes a bit of time to sort out what you want to do and to get it into the proper language, but this process is much easier and more understandable (not to mention ironclad) when choosing to go with a solicitor.

For your will, your estate value includes your home and any property you own, all savings accounts and bonds, insurance, pension funds with a lump sum death benefit, investments, vehicles, and personal items that have value. Subtract your debts such as mortgages, loans, credit card balances, and other money owed. The result represents your estate value.

Who do you want to benefit from your estate upon your passing? Most people have a spouse, partner, children, and other family members on their list of beneficiaries. Some people want a portion of their will to be donated to a designated charity. Specific items or amounts can be designated to named people, or money can be left to one person to divide among a group, for example, all the children in a family.

In your will, you will need to name an executor. It’s an important role that involves some work. How much depends on how large and complicated your estate is. Ask the person you’ll name if they’re willing to be your executor as some people are very willing to help while others don’t want the responsibility.

For legal reasons, you must sign and date your will in front of independent witnesses who must also sign and date it. Store it in a safe place such as a home safe, with your solicitor, or in a bank safety deposit box. Don’t attach any other papers to the will document. Notify your executor of your will location and make sure he or she will have access to it. You might want to make a duplicate; just know that these documents must be accounted for at all times.

Special Considerations

When you put a will together, review the current regulations regarding wills and trusts. You want to ensure that your loved ones, charities, and other designees receive assets according to your expressed wishes. You can write your own will, but there are multiple elements to it that must be written and signed appropriately. The same goes with professional will writers, nonprofit groups and banks that offer will writing assistance. If it’s not done correctly, the will may not be legally valid.

It’s best to consult an experienced solicitor, more specifically one that’s a specialist in wills and lasting power of attorney, to assist with your will. If you want a solicitor that emphasizes the care, respect and attention that clients deserve, contact Elizabeth Middleton Solicitors in Woodley, and rest assured that your family and your estate will be attended to properly.

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Lasting Powers of Attorney

Why Should I Have a Lasting Power of Attorney?

lawyer reviewing lasting powers of attorney

10th July 2020

The autonomy to make your own decisions about financial and health matters is something you cherish, but it is not something you can afford to take for granted. After all, despite the veneer, there is much in life that is beyond our control. When the unexpected happens, not having a plan already in place can create extensive and difficult complications for you and your loved ones.

Say something tragic and unforeseen such as a devastating accident takes away your mental capacity for making important decisions. Or maybe an illness brings the same terrible result. Longevity presents these challenges as well. With the average lifespan in developed countries continuing to rise, there are more people suffering the debilitating effects of conditions such as Alzheimer’s and dementia.

These are things no one wants and few expect, but they happen, and when they do, serious legal problems can follow. If you own a business, who will operate it and continue making important decisions regarding your company? Who will decide how to manage your property and other assets? Who will make health and welfare decisions about treatments, medications, assisted living, and more?

For these considerations, designating a lasting power of attorney is indispensable, and here we will provide a brief but informative guide to understanding the concept.

What Is a Lasting Power of Attorney?

Lasting Power of Attorney, or LPA, is a legally recognized way of assigning one or more persons to make financial and health decisions for you in the event that you no longer can. The person appointing this responsibility to another is the “Donor,” and the recipient is the “Attorney.”

There are two categories of LPA. Lasting power of attorney for property and financial affairs (Property & Financial LPA) is one, and a lasting power of attorney for health and personal welfare (Health & Welfare LPA) is the other. With the former, you can opt for assistance even if you are still capable, and the latter goes into effect if you have lost your mental capacity for making those decisions.

One of the most common questions about LPA is who can be designated with it. The answer: almost anyone that you trust. Most often, this means a spouse or civil partner, a sibling, an adult child, a close friend, or a legal professional.

Another common question is whether there can be only one person designated with LPA or if multiple people can be selected. You can certainly designate a single person for everything, but you don’t have to. One option available is to designate different people for different things (maybe your nurse cousin would be best to handle health decisions while your accountant younger sibling would be well-suited for decisions about finances, for example).

There is also the option to designate multiple people for the same matters so that decisions are group ones and not left in the hands of a single person. That second one can also make sense when you consider that the unexpected can occur to anyone. You as the Donor are far from the only one who could face diminished or lost capacity to make critical personal and financial decisions.

How Does It Work? How Do I Make Sure It Isn’t Abused?

A common misconception about LPAs is that once you designate one, you have instantly and forever signed away all control of your affairs. This is not the case at all, and there are several safeguards that protect you:

  • You cannot be forced into making an LPA. When you go through the process, a professional or trusted acquaintance acts as the Certificate Provider, officially verifying that you were of sound mind when establishing the LPA and that you were not coerced to do it.
  • Only after you register the LPA with the Office of the Public Guardian will it go into effect.
  • You establish the terms under which the LPA goes into effect.
  • As discussed previously, you determine who will have LPA status, how many will, and in what manner (individually or collectively) decisions will be made.
  • While you retain your mental faculties, you can change terms, replace designated people, and add new people.
  • If there is suspicion that the Attorney is not acting in the best interests of the Donor, the Court of Protection can invalidate an LPA and the Office of the Public Guardian can investigate.

The Care and Expertise of Elizabeth Middleton Solicitors

The subject of mental incapacity is one many people would rather not think about, but it represents an unfortunate reality for many people at some point in their lives. Since even the young and strong can experience catastrophe, it is also not a subject to put off until trouble starts to present itself.

Elizabeth Middleton Solicitors provides compassionate, professional assistance with the process of creating an LPA. We will be with you every step of the way, from discussing options and terms to helping you determine whom to designate with such great responsibility. We are here to help make sure that decisions regarding your health and assets aren’t needlessly complicated, nor apart from your wishes if the time ever arises. In establishing an LPA, you are looking after not only your well-being but that of your loved ones and your estate. Contact us today to get started on establishing peace of mind for you and those love you most.