Why should I have an LPA?

What Is Lasting Power of Attorney

A Lasting Power of Attorney (LPA) is “… a way of giving someone you trust the legal authority to make decisions on your behalf if you lack mental capacity at some time in the future or no longer wish to make decisions for yourself.” – Age UK. There are two types of LPA, one that covers financial decisions, and one that covers health and welfare decisions. To understand a little more about what an LPA is, please do read our article here.

However, even if you know what an LPA is, you may not be sure if you should bother setting one up just yet. If you’re thinking like that, here’s some food for thought.

  • An LPA is only valid if you had the mental capacity to set it up when it was set up – Once it reaches the point that your mental capacity cannot be verified, it is too late.
  • Mental and physical incapacity can hit at any time – This isn’t written to scare you, it’s just one of those things. Accident or illness can strike without warning. If you do not have either type of LPA in place, your family may struggle to gain access to your bank accounts, pay your bills, or make payments on your behalf for your mortgage, etc.
  • Delays and expense – Without an LPA relatives can face long delays and suffer considerable expense if they have to apply through the Court of Protection to get access and control of your assets and finances. This is likely to be the last thing they want to have to deal with when times are tough.
  • The LPA system makes things easier – LPAs are designed to be recognised by official bodies like care homes, HMRC, banks, local authorities, pension providers etc. Once an LPA has been verified, taking action on your behalf becomes much easier for your attorneys.
  • They are not expensive to set up – A small cost to you now will save your family a lot of money in the long term.
  • A financial LPA enables you to retain a lot of control over your affairs – You can, of course, give your chosen attorney(s) free reign, or you can restrict their decision making capacity by specifying your wishes clearly.
  • You don’t need to be incapacitated for a financial LPA to operate – This can be very useful. For example, if you’re on holiday and something happens to your home, your nominated person can take action on your behalf.
  • A health LPA enables you to retain a lot of control over your welfare – You can be very specific about your care, even on day to day matters. For example, you can set out what your day to day routine should be, what you should be given to eat, and who can visit you.
  • An LPA is a legal document that has to be verified – This will give you peace of mind. They have to be signed by a certificate provider or solicitor, which means they are ‘vetted’ by qualified specialists. Plus LPAs cannot be amended or set up by someone else. You are in control.
  • If you don’t have an LPA in place it is the court that decides for you – A court will follow a set procedure, which may limit the amount of power your relatives have. This can make life difficult for them.
  • A court may insist a solicitor is involved – This can make things very expensive.

For more guidance and information on setting up a lasting power of attorney, please do contact us. It’s worth making an informed decision now.

What is an Lasting Power of Attorney (LPA)?

Lasting-Power-Of-Attorney

When you hear talk about Wills, you often next hear talk about LPAs as well – Lasting Powers of Attorney. It’s not so much that they go hand in glove, it’s just that the rationale for having a Will actually points towards the need to have LPAs in place too. So we thought it would be a good idea to give you some information on these useful, and very important, legal documents to complement our article on why it’s important to have a Will (read here).

But what is an LPA?

“A lasting Power of Attorney (LPA) is a way of giving someone you trust the legal authority to make decisions on your behalf if you lack mental capacity at some time in the future or no longer wish to make decisions for yourself.” – Age UK

There are actually two types of LPA. Both fulfil different roles and are not interchangeable. They are:

  1. An LPA for financial decisions

This type of Lasting Power of Attorney can be used while you still have mental capacity. An attorney, a person to whom you give permission to make decisions on your behalf, can generally do so on things such as:

  • Buying and selling property
  • Paying the mortgage
  • Investing money
  • Paying bills
  • Arranging repairs to property
  1. An LPA for health and care decisions

A Lasting Power of Attorney for health and care decisions covers healthcare and personal welfare. It’s important to note that it can only be used once a person has lost mental capacity. A nominated attorney can generally make decisions about things such as:

  • Where you should live
  • What medical care you should receive
  • What you should eat
  • Who you should have contact with
  • What kind of social activities you should take part in

What can I specify in an LPA?

An LPA is a powerful document that enables you to retain control over your life. You can specify exactly what decisions your nominated attorney(s) can make. So you can allow them to make all decisions on your behalf, or restrict them to only certain types of decision. Thinking these things through carefully now, therefore, is worth doing before it’s too late.

One thing to bear in mind is that if you are setting up an LPA for financial decisions, the person you nominate must keep accounts. You can request regular reports on expenditure and income. And if you then lose mental capacity, you can specify that these reports are sent to your solicitor or a family member instead. They must also make sure their money is kept separate from your money. So check that this is possible with them in advance.

When is a lasting power of attorney valid?

IMPORTANT NOTE: An LPA is only valid if:

  • You had the mental capacity to set it up when it was set up
  • You were not put under any pressure to create it

To ensure this, the LPA has to be signed by a certificate provider. When a certificate provider signs the document, they are confirming that you understand what the LPA contains and that you haven’t been put under any pressure to sign it. They are typically someone you know well, but can also be a professional person, such as a doctor, social worker or solicitor.

Once these criteria have been met, the LPA must then be registered with the Office of the Public Guardian (OPG) before it can be used.

A final word…

As you can see, LPAs are important documents that facilitate critical decisions being made on your behalf if you’re no longer to do that for yourself. For more information on why you should have an LPA, please do read our article here or feel free to contact us to discuss your requirements.

What happens if I don’t leave a Will?

protecting a family

First things first… what is a Will?

“A Will tells everyone what should happen to your money, possessions and property after you die (all these things together are called your ‘estate’).”

What does a Will cover?

Most importantly, a Will sets out two things, though it can cover additional aspects like your funeral too. These are:

  1. How your money, property, and possessions are to be distributed when you die i.e. what, and how much, goes to whom.
  2. Who is in charge of administering your estate (referred to as your executor(s)); this can be more than one person, and may include a solicitor but doesn’t have to.

Sounds complicated? It doesn’t need to be, though everyone’s circumstances are different. The best thing is to discuss your circumstances with an advisor.

What is ‘intestacy’?

If you die without having made a Will, this is called dying intestate.

The law varies slightly depending on whether you’re based in England, Wales, Scotland and Northern Ireland, but there are some issues that are common to all.

  • If you’re not married and not in a civil partnership, without a Will, your partner is not legally entitled to anything when you die.
  • If you’re married, without a Will your husband or wife may inherit most or all of your estate and your children may not get anything (except in Scotland). This is true even if you are separated but not if you’re divorced.
  • If you have children or grandchildren, how much they are legally entitled to will depend on where you live in the UK – but if you make a Will you can decide this yourself.
  • Any Inheritance Tax that your estate has to pay may be higher than it would be if you had made a Will.
  • If you die with no living close relatives, your whole estate will belong to the Crown or to the government. This law is called bona vacantia.

What happens if I don’t leave a Will?

Well, if you don’t make a Will those who are administering your estate have to turn to instructions set out in law to work out how to distribute your money, possessions and property. This will include who is eligible to receive a share, and how much they get. If you think your spouse and children automatically get everything, then you’re very likely to be wrong. And if you’re not married, but you have children, it may be that everything goes to your children and your partner gets nothing. To add complication, if you have a second family you may not end up providing the financial support where you think it’s needed most. To understand a little more about why you should have a Will we’d suggest you read our article entitled “Why should I make a Will?” here.

In summary, therefore, a Will isn’t something to leave until you’re ‘old’. Having a Will really does make things easier for family and friends during a difficult time. And it’s something that you should put in place as soon as possible if you haven’t got one.

Why should I make a Will?

organizing-your-will_estate-planning-bogin-munns-florida

First things first… what is a Will?

“A Will tells everyone what should happen to your money, possessions and property after you die (all these things together are called your ‘estate’). If you don’t leave a Will, the law decides how your estate is passed on – and this may not be in line with your wishes.”

The simple answer to the question is that it makes things much easier for your family and friends. But obviously there are aspects that you may not be aware of that explain why this really is the case.

Nine reasons you need a Will…

  1. If you die intestate (i.e. without having made a Will) then the process for dealing with your estate is time consuming. Matters can be complicated to deal with, which can make things more costly than necessary if your family need legal advice and help to sort things out. But putting aside both the financial impact and time consuming nature of what has to be done, you are potentially adding to the burden of sorting your affairs out at a time that is already stressful and upsetting. If you have a Will in place, you are helping your family to keep going.
  2. Without a Will, it is the law who defines who gets what… not you. If you don’t write a Will, everything you own will be shared out in a standard way defined by the law – which isn’t always quite how you want things to be. Your spouse, children and other dependents may not get as large a share of it as they need to live because other relatives may be able to put in a claim for a share too. Having a Will reduces this risk significantly. And remember, this can include charities etc., as well as family and friends.
  3. If you have a partner but are not married or in a civil partnership, your partner is not legally entitled to anything when you die. If you make a Will, however, they can be included.
  4. If you are separated but not divorced when you die without a Will, then your estranged spouse will still inherit from you.
  5. A Will can help reduce the amount of Inheritance Tax that may be payable on both the value of your property and money you leave behind. It’s likely that you’ll need to take advice on this because there are certain criteria that need to be met to achieve this.
  6. Having a Will does potentially help to avoid disputes. Much as you don’t want to think of family and friends bickering over your assets once you’re gone, sadly it does happen. Family rifts are the last thing you want to cause in the event of your death and having a Will helps to reduce the risk of this.
  7. If you die without having made a Will and you have no relatives, your estate will go to the Crown or the Government. This law is called bona vacantia.
  8. Having a Will can help to protect your assets for future generations. You can’t dictate forever what happens to things that have been in your family for generations, but setting out your wishes in a Will can help to achieve this.
  9. It’s an opportunity to express your wishes for your funeral. For example, you can state whether you’d prefer to be cremated or buried, and what type of service you’d like. Details such as whether you’d like people to donate money to a cause rather than send flowers can even be included.

For advice on your Will & Estate planning needs please contact us for a no obligation chat.

Do you need home insurance?

Do you need home insurance?

Regardless of whether you have a mortgage or not, if you own your own home you’ll need some sort of home insurance just in case it gets damaged or needs a repair. If you’re a landlord, it’s important to note that it’s actually your responsibility to have it… not your tenants’.

So, what is home insurance?

The term home insurance is actually a generic term that covers to very different types of insurance. Namely:

Buildings insurance – which covers damage to your building eg. walls, the roof etc, as well as permanent fixtures and fittings in kitchens and bathrooms.

Contents insurance – which covers items in your home, like furniture, electrical goods like fridges and TVs, personal belongings and some types of flooring including carpets

It’s important to note that you can get separate policies from different insurance companies if you wish, but people often actually prefer to take out a joint policy.

So, what does buildings insurance cover?

The purpose of buildings insurance is to provide cover for the cost of repairing or rebuilding your home if it’s damaged. The details will vary from policy to policy, so you do need to read the small print carefully, but on the whole you will be covered in the event your home is damaged by:

  • Storms and floods
  • Fire and smoke damage
  • Explosions
  • Vandalism
  • Subsidence
  • Falling trees
  • Water damage from leaking pipes

If you need cover for your garage, fences and other outside structures, check with your financial adviser which providers offer insurance for this.

But what does buildings insurance not cover?

For a start, general wear and tear is not covered. Depending on the provider, you might find that frost damage and damage from leaking gutters isn’t covered either. Storm damage to fences and gates is often excluded, as are many other things – so check your policy carefully.

It’s also worth noting that many policies will not cover you if the property is left unoccupied for more than 60 days (though that may be as little as 30 days with some providers). If you know there will be periods time when you’ll be away and the property is empty, then it’s worth speaking to your insurance company to see if they do provide separate cover for this.

So, do you need buildings insurance?

If you have a mortgage, your mortgage company will require you to have buildings insurance. If you rent out a property, you will need to have it as it’s your responsibility to maintain the building as a landlord. But it really is sensible to have buildings insurance even if neither of those things apply. Your home is often the biggest investment you make in your life and if it’s not covered by insurance and disaster strikes… you may find yourself facing a big bill.

If you own the leasehold to a flat, you’ll need to check whether the freehold owner has the responsibility to take out cover or not. Your solicitor will be able to advise you on this. If the leaseholders of a block of flats jointly own the freehold too, then buildings insurance will need to be arranged by the group.

If you’re a tenant, you won’t need to worry about buildings insurance, but you may want to consider taking out home contents insurance cover.

What should I watch out for?

As with any insurance policy, take advice from an adviser before taking out home insurance. There may be unusual aspects to your property that need to be treated differently, and with insurers adding more and more exclusions as time goes by you need to make sure you get the right cover.

Excess limits are also something to watch out for. Often subsidence has an excess as high as £1,000. Plus, flooding in the area may have an impact on this too. The key is to take advice before you buy.

One final point… make sure you’re not underinsured. This can be very costly in the event of a disaster. Your adviser is the best person to discuss this with to make sure you have the level of cover you need.

Other types of insurance to consider…

If you’re interested in finding out more about the different types of insurance available to you, click the links below:

Do you need income protection insurance?

Do you need income protection insurance?

You may already have a life insurance policy that provides for your family in the event of your death. However, it’s also worth considering a different scenario to understand if you need income protection too.

Introduction

Imagine if you couldn’t work due to serious illness? Could you and your family make ends meet on just your sick pay and/or savings? If you’re concerned about this, then take advice from your financial adviser. It might be that you should consider income protection insurance.

So, what is income protection insurance?

Put simply, income protection insurance will help you in the event that you are ill or injured and cannot work for a period of time.

What does it do?

  • It will replace a portion of your income if you can’t work due to illness or disability.
  • It will continue to replace this portion of your income until you are able to work again, or until you retire, reach the end of the policy term, or die – whichever is sooner.
  • Be aware, you have to wait a certain length of time before the payments start. For example, payments may start after your sick pay ends.
  • It covers most illnesses that leave you unable to work, either in the short or long term, however this will depend on the policy and the definition of being unable to work. You should discuss this with your financial adviser.
  • You can make more than one claim on a policy. Basically, the cover is there for you for as long as the policy lasts.

So, do you need it?

Income protection insurance can provide peace of mind whether you have a family or not. So, it’s worth considering carefully. If you’re concerned that you won’t be able to pay your bills if you fall sick – you should discuss income protection insurance with a financial adviser.

If you are self-employed, or your employer doesn’t offer you anything other than statutory sick pay if you are ill, then it’s possible that you’re even more likely to need income protection insurance.

However, there are instances when you might not need it. If you’re comfortable at the thought of getting by on just your sick pay or your partner’s pay, government benefits, your savings, or even the prospect of taking early retirement, then you may not need it.

What affects the cost of income protection insurance?

Obviously, every policy has it nuances, but income protection insurance can cover a wide range of illnesses. Factors that affect the monthly cost of your policy, include:

  • Your age
  • Whether you are a smoker
  • Your medical history and current health
  • Your occupation
  • How much of your income you’d like to cover

Things to check…

Different providers and different policies offer different types of cover, so it really is important to consider getting advice from a financial adviser.

You should bear in mind that income protection insurance is not the same as critical illness insurance, which pays out a one-off lump sum if you have a specific serious illness. And it’s also not the same as short-term income protection, which although also pays out a monthly sum will only do so for a limited period of time (normally between two and five years).

Other types of insurance to consider…

If you’re interested in finding out more about the different types of insurance available to you, click the links below:

 

 

Do you need critical illness cover?

Do you need critical illness cover?

It can get a bit confusing, all this talk about insurance cover and protection. It’s possible you already have life insurance (more information available here, if you don’t). You may also have income protection. But there’s another type of protection that will pay out a tax-free lump sum as a one off payment to help cover debts like your mortgage, or cover the cost of make changes to your house to accommodate wheelchair access, for example, should you need it.

So, what is critical illness cover?

Critical illness cover specifically covers a set of medical conditions or injuries that are listed in the policy. It doesn’t cover every medical condition, and it can depend on how serious the condition is before it pays out. If/when required, the policy will pay out once and then the policy ends. There are variations on this, however, so it’s a good idea to discuss your requirements with your financial adviser.

Examples of conditions that might be covered include:

  • Heart attack
  • Stroke
  • Certain types and stages of cancer
  • Conditions such as multiple sclerosis

What does critical illness not cover?

A critical illness policy will not cover a condition if it’s not listed in the policy. Also, it’s likely that any pre-existing health problems you have will not be covered either. And one final point is that it’s not life insurance, so it isn’t designed to pay out in the event of your death. It’s important, therefore, to pick your policy carefully and understand exactly what you’re paying for. Your financial adviser will be able to give guidance on this.

So, do you need it?

If you’re concerned that you won’t be able to pay off your mortgage, for example, if you fall prey to a critical illness, then this type of cover is something you should consider. However, you might not need it if you have adequate savings to rely upon to cover your mortgage, your partner can cover your living costs adequately in the event that you fall ill, or your employer offers benefits that do this too.

What affects the cost of critical illness cover?

Factors that affect your monthly premium include:

  • Your age
  • If you’re a smoker
  • Your current health and medical history
  • Your occupation
  • The amount of cover you want

Other types of insurance to consider…

If you’re interested in finding out more about the different types of insurance available to you, click the links below:

Do you need life insurance?

Do you need life insurance?

This may sound daft, but many people don’t stop to ask themselves this question. And it is one that needs to be asked. So, here’s a little information on the subject to help you understand what you need to consider in order to be able to decide for yourself.

Introduction

First things first, not everyone needs life insurance. However, if your family depend upon either just you, or you and your partner, for income to cover your mortgage and other living expenses, then you need to at least consider it. In the event of your death, it will help provide for your dependents.

So, what is life insurance?

You won’t be surprised to learn that there are many different types of policy available to you. However, in essence, a life insurance policy is designed to provide your family with either a lump sum, or regular payments, in the event of your death. How much they will receive depends on the amount of cover you take out. And it’s worth noting that you can take out policies for specific things like your mortgage if you’d prefer. The best thing to do is discuss your particular circumstances with your financial adviser so that they can point you towards the most appropriate product for you.

What does life insurance not cover?

As the title suggests, it covers only death. So it isn’t a policy designed to provide for you and your family in the event of illness or disability.

Also, you should be aware that many policies will have certain exclusions. For example, if you die as a result of drug or alcohol abuse, this may not be covered. Risky hobbies may require an additional premium. And if you already have a serious health problem, this may be excluded too. Make a note of everything and talk it through with your adviser. There may be other types of policy available to you to cover exclusions, long term illness, and critical illness, which might meet your requirements better.

So, do you need it?

The question to ask yourself first is this: ‘What will happen to my family’s ability to pay the bills and mortgage if I die?’. The government cannot be relied upon to take care of them in the manner in which you’d probably like them to be looked after. And if this is the case, then you really do need to consider a life insurance policy.

However, if you’re single or your partner earns enough for your family to live on, you may decide that life insurance isn’t necessary.

Is it expensive?

It’s not really appropriate for us to answer that directly, because the answer is relative to your circumstances and approach to your family’s finances. However, many people deem it to be good value. For just a few pence a day, you may have access to a policy that will provide your family with the protection they need in the event of your death. Though, of course, this is always subject to your age and health status.

First off, ask your financial adviser to provide examples of the cost of different policies. Premiums do vary, and they will know which institutions can offer the best products for your situation.

What affects the cost of life insurance?

There are many different factors that can affect the size of the premium. However, examples include:

  • The sum you wish to cover
  • The length of the policy
  • Your age
  • Your health
  • Your lifestyle
  • Whether you smoke, etc.

Things to check…

Before you decide to take out a life insurance policy, it is worth checking if your employer already provides one. However, if you find you do have some sort of cover as a benefit, then it’s also worth checking that it provides enough. If it isn’t enough, there is no reason you can’t take out an additional life insurance policy to make up the difference. Of course, if you stop working for that employer in the future, you won’t have the benefit of their policy any more.

Other types of insurance to consider…

If you’re interested in finding out more about the different types of insurance available to you, click the links below: