25 February 2016
Why planning makes perfect
As B P Collins celebrates its 50th anniversary this year, Insight is taking a look at 50 Things To Do Before You’re 50. We’ll be picking the brains of both the private client and corporate teams to find out the key issues that you need to think about sooner rather than later, and show why taking qualified legal advice will stand you in good stead for the future.
In this first Insight of 2016, we begin with tips, advice and words of wisdom from the private client team as Craig Williams, partner and expert in litigation and dispute resolution, wills and probate, is joined by estate planning and trust specialist Vicky Johnson, plus Christine Moore, senior associate in the wills, trusts and probate group. Future issues will cover other relevant topics.
“As you approach 50, you start to become the responsible adult in the family,” says Craig. “Your parents may be getting elderly, you’ve probably experienced the loss of at least one family member or close friend, and the chances are you’re being asked to become an executor or think about things such as Power of Attorney and estate planning.
“At the same time, your own children will be growing up fast, going to university, buying homes and even having families of their own.
“From a legal perspective, there are plenty of things you should be doing to set your affairs (and those of your family) in order and the milestone of reaching 50 is an excellent time to do this. Our goal is to make these steps as simple as possible and explain how taking professional advice can help you protect yourself against future conflict and expense.”
Take out a Power of Attorney
You shouldn’t wait until you’re 50 for this one. A PoA isn’t just for the elderly or infirm, if you become incapacitated for any reason and can no longer make your own decisions, then without a PoA in place, the Court of Protection will appoint someone to look after your affairs. The most likely person to be appointed as a deputy will be a family member, but the process of a court appointment is likely to be more expensive and protracted.
If you have elderly parents, a PoA will help ensure you can take control of their financial and welfare needs when they are no longer able to do so.
Be wary however, says Christine, if several siblings are involved, this can cause conflict, so it pays to take professional advice.
Make a will
Making a will is something everyone should do - yet at least half of adults don’t have one. That means if you die intestate (without a will) your assets will be divided by the rules of intestacy rather than going to the people you wanted to inherit.
Craig says: “The most important reason for making a will with a professional is to ensure that the people you want to inherit after your death are the ones that actually do so.
“Talk to your family about your plans and keep them up-to-date if you change your mind. If you shroud your testamentary wishes in secrecy you are simply storing up problems for the future. This is especially important if there are going to be any surprises, if you’re leaving gifts to people outside the family, or if promises are being made which are unlikely to be kept.”
In addition, making a will allows you to choose your own executors to handle your affairs and is an opportunity to set out other information, such as detailing your funeral wishes.
Avoid potential disputes
The rise of DIY and online will packages is well documented but if you think that’s a cheaper option - think again. Contentious probate cases are rising fast and you will spend far more on fees if a case goes to court, than you ever would on professional fees in the first place.
Craig says: “Contested probate is one of the fastest growing areas of the law and a poorly drafted will, will always be open to interpretation.
“Making a professionally-drafted will with a solicitor ensures everything is recorded and on file in the event of a potential dispute. It is also extremely important when an elderly or infirm person is making a will as it’s essential to ensure an individual has the testamentary capacity to do so.
“An experienced solicitor will also be able to advise you about any potential claims that might be made against your estate by family and dependents for reasonable financial provision, and how you might be able to avoid those claims.”
Consider getting married
“Unless you are married, intestacy rules mean that your closest family will inherit your estate and that could leave your partner of many years potentially without a roof over their head or money in the bank,” says Vicky.
If you marry or divorce then remember that this revokes existing wills and you need to make a new one.
Appoint a legal guardian
If you have children under 18, it’s essential to make arrangements for their care in the event of your death. After all, if the worst happens, you will want to have made an informed decision on who is best placed to look after them.
Be an executor
If your nearest and dearest ask you to be an executor, make sure you understand what this entails. An executor can be held personally liable if things go wrong, so don’t take on the role lightly. It can help to work alongside a lawyer as a co-executor.
Be wary also of the fact charges vary for estate administration, some organisations will charge a percentage of the value of the estate, others charge by time and others charge a combination of the two.
Talk to your parents about estate planning for the future and have honest discussions about their likely future financial and care needs. Grandparents can put money into trusts for grandchildren under 18 and reap tax benefits.
Set up a trust
Good financial and legal advice can pay for itself and the earlier you start the better. Setting up a tax efficient trust is a good move for both parents and grandparents as it can take care of costs such as school or university fees, but specialist advice is required to ensure it is right for your circumstances. Vicky warns that, as with executors, you must think carefully about who you appoint as a trustee, as it may be expensive to try to alter that in the future.
Providing financial support
Given the high cost of housing, it’s not unusual today for the bank of mum and dad (or grandparents) to lend or gift money to adult children to help them get on the housing ladder. Vicky says it’s essential to have a legal loan agreement drawn up and ensure the property title is appropriately held, or Mum and Dad could lose out in the future if relationships falter or circumstances change.
“There is no substitute for seeking professional advice from a specialist lawyer,” concludes Craig. “When consulting a legal firm, ask about their expertise in issues such as probate and estate planning: it is no longer the case that one lawyer can be an effective expert in all types of law and it’s far too important a decision to make without someone who understands all the issues likely to be involved.
“Working with an organisation such as B P Collins gives you access not just to wills and probate experts, but to our other specialist legal teams as well. We have the breadth of services available to meet all the legal needs that you and your family are likely to have.”