News & Updates

Time to Spring Clean your Legal Cupboard?

14th March 2024

Time to Spring Clean your Legal Cupboard?

With spring approaching now is a good time to literally dust the cobwebs off your legal documents and check they continue to reflect your current financial position and wishes.

A Will is one of the most important documents that you will ever make and keeping it up to date is just as important. Your Will narrates who you wish to inherit your assets on your death and if you die without a Will your assets will pass in terms of intestacy laws and might pass to a beneficiary you would not have chosen had you made a Will.

If you and your spouse or partner have children from different relationships, you may want to ensure that your spouse or partner can benefit from your estate during their lifetime but that your estate ultimately passes to your children and the best way to reflect this is in a properly drafted Will.

Even if you have a Will in place it is important to ensure it is up to date and while your financial or family circumstances might not have changed the legislation surrounding inheritance tax may have changed and your Will would benefit from being reviewed.

Is now the time to consider having a Power of Attorney put in place? I recommend a Power of Attorney to all of my clients regardless of their age as accidents can happen or illness strike at any age and you and your family will benefit from a Power of Attorney being in place should something happen and your capacity be affected.

In granting a Power of Attorney you are able to decide who you wish to be appointed to manage your property and finances and make health and welfare decisions on your behalf.

If you lose capacity without having a Power of Attorney your family would need to petition the Court to appoint a guardian and this can be a long and expensive process.

Making a Power of Attorney means your attorneys will be able to step in to assist you straight away so that you can avoid such a period of ‘limbo’.

In reviewing your Will and Power of Attorney requirements it is sensible to also consider your exposure to inheritance tax.

Do you know the current value of the assets you own? When did you last have your property valued? The value of your assets may have crept up without you realising and your estate may be subject to inheritance tax on your death.

With proper estate planning advice, a solicitor can assist you with ways to reduce your estate for inheritance tax purposes. Such planning can be woven into your Wills and other lifetime measures can also be taken.

A solicitor can also assist where you have inherited a substantial sum which will cause your own estate to become taxable on your death.

Finally it is important that you also consider the assets that you have that will not pass via your Will. This includes death-in-service benefits that your employer may provide on your death or funds in your pension scheme. You are able to nominate who should receive these on your death and you should make sure such nominations have been completed and are up to date.

It may be appropriate to set up a trust to receive these funds instead of giving them to individuals outright (for example if the individual should not hold funds in their own name for whatever reason or for tax planning purposes) and a solicitor can assist you with this.

If you have life assurance in place, this can often be written in trust to avoid the funds forming part of your estate for inheritance tax purposes. You may have done this with the life assurance company when you took out the policy and your solicitor can review whether this has been done properly.

Finally, any assets that you own jointly with somebody else will not pass via your Will (such as property owned jointly where the title contains a survivorship clause and joint bank accounts and investments). As your share of these will pass to the surviving owner on your death you should consider whether this is what you want. If it is not, the form of ownership can be changed.

In particular, if you have a blended family and have chosen to use a trust in your Will to ensure that your assets eventually pass to your own children, you should ensure that property and bank accounts are not held in joint names so that these pass into the trust you have created on your death instead.

 

This article first appeared in Wire magazine

The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at March 2024. 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: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.