Estate Planning is wider than just ‘The Last Will and Testament’. Whilst this is the most important document, comprehensive estate planning should also include making provision for the taking of important decisions on your behalf, should you lose the mental capacity to make these decisions for yourself.
A common misconception is that you need a large estate to benefit from Estate Planning, and if you don’t own expensive material possessions then there is no need to prepare a Will. However, if you have children under the age of 18 you should absolutely have a will and likewise if you own a house or a car, even have a bank account you should have a will.
The basic rule is that if you are over 18, and you have testamentary capacity you should make a will.
Life’s road can be unpredictable, but choose the Middle Path and you will arrive safely at your journey’s end.
Quite simply if you do not formulate a plan and document it in your Will, then you die intestate – your estate will be shared out based on the laws of intestacy. For smaller estates this means the spouse receives the majority (the first £270,000) and of the excess they also receive 50% and the other 50% is shared by the children.
So for larger estates, the children could end up with more than intended and this could cause unnecessary inheritance tax to be paid. If you have children from previous relationships or others that rely on you, making a will is the only way to ensure they benefit on your death.
Otherwise known as an LPA, this document is second on the list of vital Estate Planning documents, after a Will.
There are two types of LPA – one for Property and Finance and one for Health & Welfare. It is sensible to have both as they deal with very different aspects, and to put them in place when you are young as you are required to have full mental capacity – a higher standard than that of a Will.