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Planning for the Future - Myth Buster Guide

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Myth: I don’t need a Power of Attorney. My family are next of kin and will look after me as they know what I want.


If you’re married or in a civil partnership, you may think your spouse or family can automatically access your bank accounts and pensions, and make decisions about your healthcare if you lose the ability to do so. This is not the case.


If you don’t have the mental capacity to make or communicate your own decisions, and you haven’t created a valid lasting power of attorney or enduring power of attorney, then the Court of Protection may become involved.


The Court of Protection can:


• Decide whether you have the mental capacity to make a decision
• Make an order relating to the health and care decisions or property and financial decisions of someone who lacks mental capacity
• Appoint a deputy to make decisions on behalf of someone who lacks mental capacity.
• An application fee of £400 is payable when you apply to become a deputy.


Our solicitors can act as a Deputy and provide independence and peace of mind in looking after that person’s affairs.


Myth: I’m not paying for care, I don’t see why I should have to


The average care costs for a residential care home are around £29,700 each year, with nursing home care costing £39,300. While there is local authority care, they carry out a means test to work out how much you should pay towards your care home fees. If you have more than £23,250 of capital in savings and property then you must pay the full fees.


This is why it’s so important to think about how you want to live your life long term. You may have a large property which you want to sell and downsize to be mortgage free, and you may want to leave assets to the next generation.


How you want to live at 65 and at 85 can be very different. Often people may sign the house over to their children, but then find they need that money. It’s about making a judgement on what’s best for that person.


You may think about giving away some of your savings, income or property to avoid higher care costs. However, under insolvency laws if the council thinks the action you’ve taken has been to avoid paying care fees they can still assess you as if you still had the money or property you have given away.


Myth: I don’t need a will, my next of kin will inherit


Wills do not take long to prepare and are inexpensive, yet most people die “intestate”, meaning they never actually made a will.


This means the law decides how the estate is distributed according to set rules, without any regard for what might have been intended. At worst, this could mean loved ones receiving nothing.


Making a will allows you to decide exactly what happens when you die. In many instances, a will can dramatically reduce your liability to Inheritance Tax. A will is especially important if you have children or other family who depend on you financially, or if you want to leave something to people outside your immediate family.


If you’re not married and not in a civil partnership, your partner is not legally entitled to anything when you die unless you state otherwise in your will.


Wills are not just for the old and infirm. Anyone who is married, in a civil partnership, living with a partner or has children should make a will.


Also increasingly common now is for people to also provide their solicitor with details of their online identity, such as online banking passwords, social media logins and Ebay accounts for example, which can be stored with their will so these accounts can be shut down on their death.


Myth: I don’t need probate


The person dealing with the estate of the person who has died is called an executor or an administrator. An executor is someone who is named in the will as responsible for dealing with the estate. An executor may have to apply for a special legal authority before they can deal with the estate (grant of representation). This is called probate.


Generally speaking you will need a grant of probate even if your loved one’s estate is small. However, if your loved one’s estate just contains Bank or Building Society accounts, there may be some scope to administer the estate without a grant. If there is less than £15,000 in an account, some Banks and Building Societies will close the account after being provided with a copy of the Death Certificate.


You also don’t normally need a grant if the estate either:
• Passes to the surviving spouse or civil partner because it was held in joint names, for example a savings account.
• If it doesn’t include land, property or shares.


It’s also worth bearing in mind that there are now new charges in place for the Probate Court. For an estate up to the value of £50,000 there is no fee, then for estates up to the value of £300,000 there is a £300 fee and it increases in increments thereafter.


People concerned about how beneficiaries will pay the probate fees could leave sufficient funds in a life insurance policy, and provided the policy is written in trust, it can be accessed immediately on death, without the need for probate.

Need more help and advice about planning for your future? Contact our Probate team at Hibberts Solicitors on 01270 624225 or email enquiries@hibberts.com


 

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