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Frequently asked questions about Elderly Client Matters

Here you can find frequently asked questions (and the answers) about Elderly Client Matters.
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Questions

  1. What is a Living Will?
  2. What is an Enduring Power of Attorney?
  3. What happens if someone does not have the mental capacity to make a Power of Attorney?
  4. Why do I need to make a Will?
  5. What is a trust? Can it save me tax?
  6. When should I review my Will?
  7. What is Inheritance Tax?
  8. When does Inheritance Tax have to be paid?
  9. Can a Will be varied after death?

Answers

1. What is a Living Will?

A Living Will is a document that you can sign to say what you would like to happen to you if for example you suffered with a terminal illness or were in a coma.

2. What is an Enduring Power of Attorney?

This is a document that allows someone to act on your behalf for a particular purpose or generally. You can also put restrictions on the power, for example that it is only to operate if you are physically or mentally incapable of acting for yourself. The power will continue to operate if you become mentally incapable hence the term 'enduring', but ceases on death of the person who gave it. It is important to use a Solicitor to draft this document to help prevent possible abuse occurring.

3. What happens if someone does not have the mental capacity to make a Power of Attorney?

To be able to deal with someone's assets in this case an application has to be made to the Court of Protection. There are a number of forms to be completed and this process can take several months. We have a particular expertise in this area and can guide you through the process.

4. Why do I need to make a Will?

You should think about making a Will if you want to be able to control who will receive your assets when you die. If you do not make a Will then the law determines who is entitled to what and this is not flexible and can cause complications and delays in administering your estate. By making a Will you can determine who gets what, when, how much and who is to control your assets and be the guardians of your children. We believe that everyone over the age of eighteen should make a Will.

5. What is a trust? Can it save me tax?

If there are certain people you would like to leave money to but feel that they may not be able or wise enough to handle the money, then you can protect it by creating a trust. You then appoint certain people who administer the trust money called trustees. They control how the money is invested and given to the beneficiaries as per your instructions to them. One common form of trust is to allow your partner to have your half share in your property for their lifetime and then when they die it goes to your children. This means that should you die before your partner and he or she remarries you know that one day your children will inherit something (namely half the house when the surviving partner dies).

You can also have a Discretionary Trust in your Will. This is a means by which a married couple or civil partners can save Inheritance Tax by making used of their combined allowances for Inheritance Tax. We explain how they work fully in the interview and in a report which goes with the draft Wills.

6. When should I review my Will?

You should review your Will if your family circumstances change in anyway, for example if someone in your Will dies or you get married or divorced or do not want someone to benefit under your Will. It is also important to review your Will if your assets increase as this may affect the Inheritance Tax position. You may also wish to increase or decrease someone's entitlement or make a gift to charity.

8. What is Inheritance Tax?

This is the tax that is payable on death on all your assets over and above the Inheritance Tax threshold (currently £285,000). It is payable by your executor(s) at the rate of 40% over the threshold i.e. if your net estate was worth £300,000 then £15,000 of your estate would be taxable at 40% which means a potential tax bill of £6,000. There are certain exemptions for couples, business assets and agricultural property but you need to review the matter with us to see whether you have made full use of these exemptions.

9. When does Inheritance Tax have to be paid?

Some Inheritance Tax has to be paid before probate is granted. This can come from the deceased's bank accounts. If there isn't enough money available a loan may have to be taken out by the executor(s). The next payment is then due six months from the date of death.

10. Can a Will be varied after death?

Within two years of someone's death it is possible for any of the beneficiaries to vary their entitlement in the Will by way of Deed of Variation. This can help save Inheritance Tax or reduce the amount in the beneficiary's own estate. We have particular expertise in this area and would be happy to discuss the possibility of entering into a Deed of Variation with you.