Getting Your Personal Affairs in Order: A Guide for 2025
Published byNicola McGorm
As we step into the New Year, it feels like the perfect time for restoration and preparation—a moment to pause and ensure the essentials in our lives are aligned.
Among these priorities is the need to review and organise our legal affairs. If you haven’t already, now is the ideal time to consider putting key documents, such as a will and power of attorney, in place. Doing so can not only safeguard your future, but offer peace of mind to both you and your loved ones.
A will is much more than a legal document; it is a statement of your wishes and a way to protect those you care about most. Having a will allows you to maintain control over the distribution of your assets. Without one, your estate is distributed according to Scottish intestacy laws, which may not reflect your intentions. It also can ensure guardianship for your minor children, enabling you to appoint someone you trust to care for them should the unexpected happen.
By setting out wishes clearly, you can minimise the risk of disagreements among your loved ones. Sorting specifics such as proper estate planning can help reduce inheritance tax, leaving more for your beneficiaries.
However, a will is not just a straightforward list of who gets what. Life is rarely so simple. For instance, if a beneficiary is mid-divorce, their inheritance could inadvertently become part of their divorce settlement. Similarly, if your partner remarries after your passing, assets left to them might ultimately go to a new family rather than your children. With thoughtful planning, you can create a will that provides greater protection for your family’s future.
For business owners, having a will is particularly crucial. It can establish a clear succession plan for your business, ensuring continuity and reducing the likelihood of disputes. Whether yours is a small sole trader business or a Murdoch-style empire, succession can be a tricky path to navigate.
While many understand the necessity of a will, fewer realise how vital a power of attorney (POA) is. A POA enables you to appoint someone you trust to make decisions on your behalf if you are unable to do so. There are two types of POA: a Welfare POA, which empowers your chosen attorney to make decisions about your medical treatment, care, and living arrangements should you be unable to deal with them yourself; and the Continuing or Financial POA, which grants authority to manage your finances, from paying bills to selling property. You can usually incorporate both types of POA in one document.
Many misconceptions surround POAs, which often lead people to delay creating them. For instance, some believe they are not old enough to need a POA. Incapacity, however, is not exclusive to old age. Accidents, illnesses or unforeseen events can strike at any time. During the pandemic, for example, many younger individuals found themselves temporarily incapacitated, underscoring the need for POAs.
Others assume that having a will eliminates the need for a POA, but a will only comes into effect after your death. Until then, a POA ensures trusted individuals can act on your behalf during your lifetime if needed. There is also a common misconception that “next of kin” automatically have the authority to make decisions on your behalf. Legally, they do not. Without a POA, even your closest family members might face significant legal and financial hurdles when trying to assist in managing your affairs.
Some believe that joint accounts remove the need for a POA but there can be issues in operating a joint account if both parties do not consent to transactions. Without a POA, resolving these issues can be a lengthy and expensive process.
We see the consequences of not sorting this side of life out all the time. Embrace the possibility that a lot will change in 2025 and prepare for it. Whether it is drafting a robust will or setting up a power of attorney, these steps are invaluable investments in your and your family’s peace of mind. If you are unsure where to start or need guidance, don’t delay in contacting your solicitor. It is our duty to ensure your wishes are respected, your loved ones are protected, and your future is secure.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at January 2025. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 319 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.
