Your Will Matters

Wills and Inheritance issues

Monthly Archives: February 2009

Do unmarried couples need a Lasting Power of Attorney?

Unmarried couples and Lasting Power of Attorney

Are you unmarried partners without a Personal Welfare Lasting Power of Attorney (LPA)?

What happens when an unmarried individual lacks the mental capacity to make their own choices. Normally, it falls to their next-of-kin, which could be parents if they are alive, or children, or failing that then a brother or sister and so on. Whoever it is will be called on to make important and maybe difficult decisions.

So without an LPA in place it is quite possible that a relative who is unclear of the wishes of the individual concerned is left to make very important decisions on their behalf.

For an unmarried individual without an LPA, the process of selecting who is to make decisions on their behalf should they lose mental capacity is out of their control, to a certain degree.

What’s different between an unmarried couple without an LPA and a married couple or civil partners without an LPA?

For a married person or civil partner, the next of kin is always their spouse or civil partner. This is straightforward as the decision making will vest in them. It is still advisable to have an LPA in place to allow the individual to retain control over who should be given decision-making powers on their behalf. Importantly, it gives an opportunity to select additional people to act as an attorney and the also option to name replacements in the event that an attorney is unable to act.

A partner who is not a spouse or a civil partner will not normally be ‘legally’ able to make decisions, on behalf of their partner in the event of lost mental capacity.

How does having a personal welfare LPA help?

By having a personal welfare LPA an individual can dictate who is to make decisions about them, should they lose mental capacity. They can name their unmarried partner as an attorney with the requisite legal authority. Thus a personal welfare LPA gives an unmarried couple the opportunity to put themselves in the same position as a married couple or civil partners in relation to the decision making in the evnt mental capacity is lost. So it can help to remove the a layer of uncertainty and vulnerability that can affect an unmarried individual later in life.

When should I make an LPA?

It can be too late to make an LPA. That’s because an LPA can only be drawn up whilst still mentally able to do so. Once a person is deemed to be mentally incapable it is just too late to do it. At this stage the normal recourse is through the courts which can be stressful and expensive.

Do you have a disabled child?

For parents with a disabled child.

Any parent with a disabled child will be concerned about providing for that child’s special needs after his or her death.

By making a Disabled Discretionary Trust you appoint someone (i.e. one or more trustees) to make financial decisions regarding the inheritance for your disabled child. There must be more than one potential beneficiary or the trust cannot be discretionary in nature. Your wishes are expressed through a ‘letter of wishes’ which gives the trustees guidance, but is not binding. Yet again if the letter of wishes was binding there would be no discretion and therefore no discretionary trust.

Most importantly it is designed to conform with current legislation to ensure it does not affect your disabled child’s entitlement to benefits.

It is of prime importance that the trust is set-up correctly or it may fail and deprive your child of the full benefit of the inheritance you had planned for.

Intestacy distribution rules have changed

New rules for distribution of an estate following intestacy.

New Intestacy Distribution Rules are now in force.

The new statutory limits for Intestacy are:

As of 1 February 2009 there are a new set of figures for distribution of a deceased person’s estate following intestacy.

£250,000 (from £125,000) where there is a surviving spouse or civil partner and children.

£450,000 (from £200,000) where there is a surviving spouse or civil partner and parents or siblings, but no children.

In each case, for estates with a valuation lower than the statutory limit, the spouse or civil partner will inherit the entire estate.

Application of the statutory limits

When the estate exceeds the minimum (i.e. the statutory limits) the rules apply as follows:

For a spouse or civil partner, and children:

The spouse or partner gets the personal chattels, the first £250,000 and a life interest in half of what is left.

The children of the deceased, share between them half what is left straight away, if they are 18 or over; and the other half when the surviving parent dies.

For a spouse or civil partner, and relatives but no children:

The spouse or partner gets the personal chattels, the first £450,000 and half what is left.

The parents of the deceased, or if they have died, the siblings or their descendants, share the other half of what is left.

If there is a spouse or civil partner, but no other relatives:

The surviving spouse or partner gets everything.

If there are children, but no living spouse or civil partner:

The children share everything equally.

If there is no spouse, civil partner or children:

Everything goes to the next available group of relatives.

Finally, if there are no available relatives the estate in its entirety goes to the State.

The Justice Minister, Bridget Prentice, commented that many people wrongly assume that when their partner dies, they will automatically be entitled to everything. Clearly this is not the case and the importance of making a will cannot be over-emphasised. In other words Intestacy can be a problem!