As the recent Martin Lewis Money Show highlighted, "dealing with the D's" is becoming increasingly important, but what are the D's that we have to deal with in life?
The D's are – Death, Dementia and Divorce. Although we may not want to think about it or admit it we will all die so being properly prepared for this and planning in advance for death has never been more important especially as we are living longer. The second D is dementia. Sadly more and more people are suffering from dementia culminating in advanced planning for that being another very important step. The third is divorce. Nearly one in two marriages now end in divorce but the most troubling aspect is the increase in the number of people living together who are not married. When their relationships come to an end only then do they realise that there is no such thing as a "common law husband and wife" and this can cause severe financial problems on a relationship breakdown or death within the relationship.
Death
If you die without making a Will your estate is dealt with under what are called the Intestacy Rules. This is a very complicated list of people that would inherit starting from a spouse and leading to children and more distant relatives but ultimately the State receiving the monies if there are no relatives in the Intestacy Rules list. Making a Will is therefore absolutely essential.
There are many other advantages of having a Will rather than leaving it for the Intestacy Rules to apply. The first is to ease the administration of the estate for relatives that are already going through a grieving process. Intestacy is much more difficult than dealing with a Will. As part of making a Will inheritance tax planning can also be looked at as well as a general review of a person's financial position and plans.
Neale Grearson, Partner of Clapham & Collinge and head of the Family Department said:
"Whilst people can make their own DIY Wills we would strongly recommend a Will being drafted by a Solicitor. It can then be properly prepared but also another essential element is that it is signed in the appropriate way otherwise it could be invalid. Wills do not have to be very expensive but trying to save charges on this can often be a false economy."
Dementia
It is a sad but realistic fact that more and more people are suffering from dementia especially in later life. That means they are unable to deal with their financial affairs. In the past Enduring Powers of Attorney were entered into which were replaced by Lasting Powers of Attorney. LPA's can cover finances and/or health and welfare so there could be two LPA's that are needed. At the time of making a Will we strongly recommend that people also complete LPA's.
An LPA enables an Attorney or Attorneys to be appointed. It is important that who you appoint as the Attorney is carefully thought out and the appropriate person(s) appointed. If the person making the LPA (Donor) is unable to deal with their own affairs the Attorney can step in. Without this the danger is that if someone loses capacity and cannot deal with their own affairs a Deputy has to be appointed through the Court of Protection and not only can this take a long time but also be very expensive.
Neale Grearson, said:
"Having LPA's in place both for finances and health and welfare is very important to plan for the possibility of losing capacity. It is rather like an insurance policy and whilst everyone would hope they would never need it the risk is increasing, at the time that an LPA is needed it may too late to make one. With elderly relatives this conversation about completing an LPA can be a very difficult one but it is important that such things are talked about and the future is planned for. This is especially the case if people are not married. It is always the case that it is better that prevention is looked at rather than cure".
Neale Grearson, said:
"There is still a large part of the population that assumes that once you have lived together for a period of time you obtain rights as "common law husbands and wives" which is completely false. For non-married couples the risk is that on death or their relationship ending they find this out with startling consequences. Firstly it is essential that they each make a Will. The second is to look at their financial positions and have a Cohabitation Agreement dealing with the financial repercussions should they split up. If they buy property together having a Declaration of Trust and holding the property in a way that protects their respective contributions may be not just advisable but common sense."
