It is that time again when we make our New Year’s Resolutions for the year ahead. Perhaps you intend to learn a new skill or take more exercise. But what about looking beyond the next 12 months… have you made plans to look after your finances, your family and your health in your later years?
Our private client team in Heathfield, East Sussex has suggested five essential considerations you should plan for in your New Year’s resolutions:
Hilary Hughes highlights how you could easily find yourself having 30 or 40 years of “old age” following retirement, so it is vital to plan how much income and capital you will need to fund your lifestyle and future plans. You may want to help family members who are struggling financially or put something aside for your grandchildren.
Using your inheritance tax allowances wisely is crucial. You have a yearly personal allowance for tax free gifts but some larger gifts will only be tax exempt if you survive for seven years. Take legal advice to make sure you have planned properly for retirement and your relatives do not face a heavy inheritance tax bill when you are gone.
Power of attorney for property and financial affairs
Cerrig Parr outlines how making a lasting power of attorney for property and financial affairs means that you can appoint a loved one to make decisions for you if you became mentally incapable in the future.
A finance lasting power of attorney will cover decisions such as selling your house, paying your bills and managing your bank account.
If you are unlucky and lose the ability to make these decisions for yourself, then without a lasting power of attorney in place, your family will have no option but to apply to the Court of Protection to decide who should make these important decisions for you. This procedure is lengthy and expensive, costing approximately £2,000 – £3000 initially and the court may not appoint the person of your choice.
Paying for care
Dee Benians reminds us that although we are living longer, our bodies are still deteriorating physically and mentally, meaning that more of us will require professional care in our later years.
Your priority might be to protect your home from being used to pay your care fees so that you can pass it on to your children. If this is the case, you may wish to investigate the use of a trust in your will.
Alternatively, your main concern might be to ensure you can afford to live in the care home of your choice without being reliant on your children for financial help. Either way, you will need to plan your finances and make sure they are arranged in a tax efficient way.
Power of attorney for health and welfare decisions
Ruth Weaver highlights how important it is to let people know your wishes and feelings about issues such as hospital treatment, physical illness, mental impairment, permanent unconsciousness and the receipt or donation of organs and other tissue.
A lasting power of attorney for health and welfare can cover decisions such as where you live, who can visit you and what medical treatment you receive.
If you want to refuse certain kinds of medical treatment in the future, you can also make a legally binding advance decision. This is a specific document, sometimes called a living will, or it may be set out in a lasting power of attorney.
You may also wish to specify where you would like to die; at home, in a hospice or in hospital. The only thing you cannot do legally is ask for your life to be ended.
Making a will
Sadvi Baichoo emphasises how the purpose of a will is to clarify your intentions to the people you leave behind. Without a will you could leave problems for your family to sort out after you die. People living longer are more likely to remarry with second or even third families to provide for, and disputes can arise in the absence of clear instructions.
There may be a charitable cause that is close to your heart, but will your family feel the same way if you leave it for them to decide?
Your will not only sets out your wishes for who will inherit your property and finances, but you can also specify your funeral arrangements, who will look after minor children, what will happen to pets and who will make sure all your wishes are carried out.
If you do not make a will, the intestacy rules will determine who receives your assets. These rules are very often problematic and do not make use of inheritance tax allowances effectively. The intestacy rules also do not cover guardians for children, funeral wishes or arrangements for pets and this is an additional area where disputes can arise.
It is important to plan ahead to make the financial, legal and practical consequences of old age, illness and death much easier for you and your family to deal with. Addressing these issues at an early stage will give you the peace of mind that you can enjoy your life, right up to your 100th birthday and beyond.
If you would like help with your future plans, please contact our private client team in Heathfield, East Sussex on 01435 890 101 or email firstname.lastname@example.org for more information about lifetime gifts, advance decisions, lasting powers of attorney, wills and trusts.
This article is for general information purposes only and does not constitute legal or professional advice. Please note that the law may have changed since the date this article was published.