What's the difference between a Will and Lasting Power of Attorney or LPA? Well, it's a great question and something most people will if you haven't already have to think about at some point.
The answer is relatively simple;
Continue reading and let's look at these in more detail.
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We have written extensively about the different types of Wills. A Will enables you to say legally who is going to inherit your estate, your money and your possessions when you die.
Sadly, one of the only facts of life is you are going to die at some point. So everything you have worked so hard to build or create will need to go somewhere.
If you have kids or relatives and you want to give them each something of value (probably best to allocate of equal value, this is how family feuds start), then you allocate this in your Will.
But, what if you have kids that are under the age of 18?
Well, in your Will you can state you would like to legally take responsibility of your children and where you would like them to live.
These are massive decisions and shouldn't be taken lightly, especially if you are deciding who will be legally responsible for your children.
We have spoken to lots of families about this here at Money Savings Advice, and the general feeling was, if kids are old enough to understand and deal with the subject logically, it's probably a good idea to discuss with them before confirming in your Will
However, this is a personal matter and needs to be considered carefully.
Before deciding if you should make a Will think about the consequences of not making a Will and that will probably make your mind up for you.
If you don't make a Will, the government will decide what happens to your estate, property and money.
This means your family have zero say on who gets what and the government decide.
If you don't make a Will and your children are under the age of 18, the government will decide who takes legal responsibility of them.
This means your extended family and your children have zero control who is now legally responsible for them.
If you don't make a Will and you a not married but live with your partner, then they will not be recognised under government rules to receive any of your estate, money or property.
This means, even if you have lived with your partner for 20+ years, they will have no legal right to anything you own if you die.
The above also relates to stepchildren.
All of these scenarios are factual. The government will decide on everything should you not have a Will in place and it falls under what is known as 'Rules of Intestacy'.
There are a fascinating read and downloadable book which can be found here which explains in more detail Intestacy Rules and includes an excellent section on inheritance tax.
Or you can go to the Intestacy section of gov.uk website and take their survey – both great resources to understand more about 'Rules of Intestacy'.
So the long and short answers to should I make a Will is probably a good idea, yes!
Now moving on to What are LPAS?
A Lasting Power of Attorney (LPA) is a legal document that people sign granting another person the legal right to make decisions on their behalf.
But why do people put these in place?
Sadly every in the UK over 100,000 have a stroke, and a percentage of these people will be left with severe disabilities, including not being able to communicate or have the mental capacity to make decisions.
Other illnesses can also cause people to become incapacitated – we just used a stroke as an example.
It's sad, but sadly, it's a fact of life
This is where an LPA come into play. There are two LPA's available
One covers Health and Welfare, and the other covers money.
The Health and Welfare LPA covers everything about your personal health, medical treatments and where you live.
The Property and Financial LPA covers everything to do with you money and estate.
People who have LPA's in place usually allocate somebody who has their best interests at heart.
Somebody who is going to make decisions that have far-reaching consequences based on the best advice provided so they can judge what is the best solution for that individual.
Well, sadly things can get very complicated, expensive and can rumble on for a long time.
An example; If one of your family members doesn't have an LPA but then, sadly becomes incapacitated
You will not be able to access their bank account to make financial payments on their behalf.
You will not be able to contact their utility companies on their behalf to pay their bills.
You will not be able to arrange rent or mortgage payments on their behalf.
This list of things you can do is endless, and you can see why it can become extremely complicated.
The only option your loved ones will have is to apply to the Court for a Deputyship Order; more can be found out on the Gov.uk website
But this is a long, drawn-out process where the Court decides on who has the legal responsibility for both financial and health.
But, even when the Court makes the decision other family members could appeal to have this overturned, and you all go back to square one.
So this could sadly rumble on for years, and the person the family members and Court are trying to help and protect will have to muddle through – not a pleasant situation.
So long and short answer, should you get a Lasting Power of Attorney in place, probably yes!
Both Wills and Lasting Powers of Attorney are essential, and it's undoubtedly worth starting to explore both in more detail.
We have outlined the costs of Wills & LPAS in another article (insert link to both), so really the decision is now down to you.
Here at Money Savings Advice, we have partnered with one of the UK’s leading Will-writing companies, and they are members of The Society of Will Writers, and they have already helped thousands of our readers get the right Will in place.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
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