What are the two important documents
As adults, we lead busy and often complex lives. In particular, modern families are often more nuanced than they were for our parents or grandparents, with children and stepchildren often living under the same roof. With that in mind, it’s important that individuals consider drawing up two important documents – a Will and a Power of Attorney.
Why make a Will?
When you make a Will, you set out your wishes for how your estate is distributed after you die. Without a Will, an estate is subject to the Rules of Intestacy, which distributes your wealth according to a strict order of succession. Only direct relatives will inherit, meaning that if you have a partner to whom you’re not married, or you have stepchildren who you would like to pass assets to, they could be entirely overlooked.
Making a Will gives you the opportunity to name beneficiaries – and equally to ensure that those whom you may not want to pass assets to do not inherit. It’s advisable to consult a professional such as a Kent tax advisor before making your Will, so that the value of your estate can be accurately calculated. This also provides a chance to look at ways to reduce your Inheritance Tax liability, should your estate exceed the £325,000 tax-free threshold.
Why have a Power of Attorney?
A Power of Attorney is a document that specifies who can make decisions on your behalf should you lose the capacity to do so. If, for example, you were to suffer a serious injury or fall victim to a condition such as dementia, a Power of Attorney ensures your nominated attorney can make medical and/or financial decisions that are in your best interests.
Many people assume that a Power of Attorney is made in old age. While that is often the case, it can be made at any time. It has no bearing on your affairs until such a time as you cannot manage them yourself.
Establishing Power of Attorney within your estate plan
Many individuals engage in estate planning before making a Will. However, the significance of estate planning goes beyond a simple valuation of your assets and a list of beneficiaries. By incorporating Power of Attorney, you can ensure a trusted individual can make the necessary decisions on your behalf if you lose the capacity to make them yourself.
Estate planning is especially important for high net worth individuals and non-domiciliaries, as these statuses can create complex tax positions. Experts such as Nick Hughes have the experience to ensure those with intricate affairs are able to distribute their wealth in a tax efficient way, and that they have a Power of Attorney in place should the circumstances require.
Estate planning can also make things easier for the executor of your Will. If, for example, you have used a particular Kent accountant for probate services and estate planning, that same professional can help your executor to ensure all the relevant taxes and fees are paid, and that your estate is distributed as you wish. To find out more, contact a reputable accountant today.
