No one likes to dwell on death or mental incapacity. But if you haven’t written a will, you leave your estate to the rules of intestacy – and that could mean it won’t go where you’d hoped.
A will and power of attorney are important legal documents that you can (and usually should) put in place to protect you, your dependants and beneficiaries. Here is a quick look at the main points of each document and how it can help you.
A will – articulating what you want to happen to your assets after you die
There can be a lot riding on a will, depending on your circumstances: your family home, how your minor children are cared for, how your wealth is divided, or whether you just want to leave some or all of your money to charitable causes.
A will is a legally-binding document that, when written correctly, provides certainty to all these issues. It’s as simple as that.
What’s not so simple is if you do not have a will when you die.
Dying without a will
In this circumstance, the rules of intestacy apply. And this can have unforeseen consequences: consequences that are too late to reverse.
For instance, if you own a home and live in it with an unmarried partner, they have no entitlement to it. None at all – even if it is what you would have wanted.
Neither do friends or carers, for instance, have any right to inherit – whatever your wishes may have been.
Even if you are married, intestacy is not straightforward. Yes, your spouse is first in line to inherit. They will inherit a minimum of all personal belongings, the first £270,000 of the estate and 50% of the remaining estate above £270,000.
If there are no surviving children and grandchildren, a married partner will get everything. But if there are surviving children, then they are entitled to the other half of the excess estate above £270,000. This could have inheritance tax implications. Grandchildren may have some direct entitlement, but only in certain circumstances.
After these scenarios are played out, close relatives could benefit. But this is in a prescribed order of entitlement which you mightn’t well have agreed with. This means that your estate may not end up with the people you would want it to.
Where there are no surviving relatives, your estate goes to the Crown.
Power of attorney – allowing trusted people to act on your behalf if you are mentally incapacitated
Wills and power of attorney are often talked about hand-in-hand, because while a will is triggered by death, a power of attorney offers protection in the event of a loss of mental capacity. This could be from a sudden accident or illness, or a decline into dementia.
As with a will, the key point is to have one in place before this happens, because afterwards it’s too late and affairs become much more complicated to arrange:
- Partners can lose access to joint bank accounts,
- Important bills may not be able to be paid,
- Unwelcome medical decisions can be made…
…to name just three unwanted outcomes.
Types of power of attorney
There are two types of power of attorney – one covering property and finance, and the other health and care.
Like a will, they need to be prepared correctly in order to be legally valid. And, also like a will, they may seem like an unnecessary expense at the time but will prove invaluable if they are called upon.
Secure your family’s future
As well as getting these important documents in order, it’s important to consider protectivity insurance in the event of illness or death.
If you have any questions about income, mortgage and family protection, our experts will be happy to help.