Recently, Martin Lewis spoke about ‘future proofing your finances’ on the Martin Lewis Money Show Live, urging people to address those unpleasant topics of conversation with friends and family members to ensure their Wills are up to date and they get Powers of Attorney in place to avoid difficulties later in life.
What is the difference between a Will and Power of Attorney?
Put simply, a Will dictates what happens to your estate when you die whereas a Power of Attorney operates during your lifetime.
As part of your Will, you appoint Executors. These are the people who will be in charge of ensuring your estate is administered correctly when you die. A Power of Attorney appoints Attorneys who are in charge of making decisions on your behalf and in your best interests, should you lose capacity to do so yourself.
Two types of Power of Attorney can be made. One type relates to the management of your finances (for example, speaking to the bank to ensure bills are paid on time) whilst the other type relates to your health and welfare decisions (for example, whether you should receive a medical treatment).
A Power of Attorney ceases on death and this is when the Will takes over.
What happens if I don’t have a Will?
If you die without a Will, your estate will be distributed according to the Rules of Intestacy. These are set laws which dictate who is entitled to your estate and in what order, starting with a spouse, then children, before eventually moving to wider family members and eventually the Crown. It is important to note that unmarried partners and cohabitants are not entitled to any part of your estate if you die without a Will.
The estate administration process can be much longer, more onerous and costly for your loved ones if you die without a Will.
It is also important to ensure your estate is administered according to your wishes and goes to those people or organisations that you want. Only by making a Will do you retain that element of control. Please read our full article on this subject here.
What happens if I don’t have a Power of Attorney?
Without a Power of Attorney, do not assume that family members will be able to just deal with things in the event that you can’t. Particularly in relation to your finances, if you lost capacity without a Power of Attorney in place, your loved ones would need to make an application to the Court of Protection to obtain authority to deal with your affairs via a Deputyship Order. This process can take several months and can become costly – during which time, your bills continue to accrue and finances remain untouched.
Not just for the Elderly…
It is often the assumption that discussions about Wills and Powers of Attorney are only needed when we reach a certain age and are not something to worry about as a young and healthy person. Unfortunately, accidents can happen and the future is not certain. By ensuring you have your affairs in order now, you ease much of the stress that we put off to later in life. It is also important to ensure you do these things whilst you still have the sufficient capacity to do so.
Having said this, we reiterate Martin’s message to urge you to have those honest conversations with all family members to ensure that they have everything in place that they need to.
To discuss making or updating your Will or getting a Powers of Attorney in place, please get in touch with a member of our private client team on 0800 988 3650 or email willsandprobate@ramsdens.co.uk.
The above article is for illustrative purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any part of the information given.