Thinking about Christmas usually conjures images of family and friends having fun, but it can also be a time of sadness, remembering those who are no longer with us, or caring for someone who is nearing the end of their life. It is therefore hardly surprising that, by New Year, many of us have resolved to get our legal affairs in order.

So, what does getting your affairs in order look like? There is more to it than simply thinking about your Will. What about Life Insurance, Death in Service Benefit, Inheritance Tax, and what would happen if you became ill and could not manage your affairs? Effective planning starts with an assessment of your estate, Inheritance Tax position, and understanding which assets pass by Will, and which assets do not. The best place to start is with a specialist solicitor. An initial meeting will usually explore the following points:

Power of attorney

Have you got a power of attorney, delegating decision-making during your lifetime? Losing the ability to make decisions can make life particularly difficult for your loved ones, possibly resulting in an application to Court for an order authorising an individual, or Trust Corporation, to manage your affairs. This is a costly and time-consuming process; a power of attorney can avoid this, and there are several types:

• Lasting Power of Attorney for Property and Finance
• Lasting Power of Attorney for Health and Welfare
• Enduring Power of Attorney for Property and Finance (pre-October 2007) and
• General Power of Attorney, although their use is limited

On the horizon is the possibility of a Global Representative Power of Attorney, spearheaded by the Society of Trust and Estate Practitioners (STEP) covering morethan one country. This is merely an idea at this stage however and it remains the case that people with assets in more than one country should think about a power of attorney in each country.

Death in service benefit

If you are employed, it’s possible your employer has a life insurance policy covering employees. The scheme administrators have discretion to whom insurance money should be distributed, although they usually follow your nomination form. People often overlook updating the form, particularly after a relation-ship breakdown, and it’s sensible to review the form when making a Will. Fortunately, no Inheritance Tax applies.

Life insurance

If you have a mortgage, you probably have life insurance, typically Term Assurance covering a certain period, or Whole of Life which pays out regardless of when you die. Many do not realise that the sum increases their estate and Inheritance Tax may apply. Writing the policy in trust can avoid this and ensure your loved ones have quick access to money without waiting for Probate. Most insurance companies provide a range of trust forms although cannot advise which is most appropriate nor how to complete the trust. A solicitor can advise and ensure any sum escapes Inheritance Tax.

Your pension

You can usually nominate who you want to receive your pension fund when you die, although there are different types of pension and benefits. Your solicitor will usually liaise with a financial adviser to guide you regarding planning for your pension.

Will

A surprising number underestimate the importance of consulting a solicitor and leave the process too late. In times of high inflation, and a cost-of-living crisis, it may be tempting to seek a cheap solution.

Unfortunately, ‘cheap’ usually equates to ‘poor service and advice,’ and likely exposes your estate to increased costs later. Successive governments have pledged to simplify Inheritance Tax, but what we have is anything but simple. Increasing complexity and traps for the unwary make seeing a solicitor essential.

Homemade Wills are fraught with issues, often throwing up issues about construction, adverse tax consequences and validity. It’s curious how much we spend on unnecessary luxuries in life although scrimp on what will be the most important final document. Solicitors add value and take the stress and uncertainty away.

Check if your solicitor is a member of STEP, a specialist organisation for which additional qualifications are needed. They can also put you in touch with lawyers overseas if you have foreign assets.

Although EU Succession Regulation 650/2012 Brussels IV still applies to the UK as a ‘third state’ and you can in theory have one Will covering more than one country, putting it into practice is far from easy, and legal commentary on its effectiveness is divided. The safest course of action remains having a Will in each country you own assets.

Aside from peace of mind, getting your affairs in order will make life a little easier for your loved ones; what better gift at a time of great loss?

E: nadia.cowdrey@dmhstallard.com

www.dmhstallard.com