Writing or updating your will should be your top priority to avoid potential problems later on, writes Dianne Paterson
New Year, new resolve. Or so we like to think.
A new year has always been a time for reforming old habits and achieving new goals.
Of course, the success in fulfilling any resolution depends, to a large extent, on the nature of the resolution and the determination of the person making it.
If you have struggled in the past to keep your resolutions, why not ditch the trivia and make writing a will and arranging a power of attorney your top resolutions for 2016.
As much as we might wish to ignore it, we all know we are going to die one day. For this reason alone, most of us know that we should write a will.
Without question the most important reason for making a will is the certainty it can bring in allowing you to control who will inherit what. Without a will (intestacy) the law sets out certain rules as to how the estate should be divided. These rules dictate the distribution of the estate to spouses, civil partners, and children.
This can mean that in certain cases the amounts laid down by the law will not exhaust the total estate left or, alternatively, that the spouse or civil partner will scoop the lot, leaving nothing for the children. In addition, complicated rules apply to cohabitees requiring them to make a claim on an estate within a set period of time.
Without a will, the law determines not only who inherits but also the amounts of that inheritance.
A will also enables you to appoint Executors who are responsible for carrying out your wishes and ensuring your estate is wound up in a timely and efficient manner. Without a will, Executors are appointed by the Court, an appointment which might not meet with your total approval.
Anyone who has young children should make a will to ensure that their wishes for guardians are recorded rather than leaving such a decision to relatives or the courts.
A will can also provide the perfect vehicle for some tax planning. By distributing assets in a tax-efficient way or by creating a trust within a will, they can sometimes be protected and, at the same time, inheritance tax be reduced. If you run a family business, a will can provide an opportunity to ensure that the business lives on long after your death.
Not having a will can mean lengthy delays in winding up your estate, which could leave those closest to you in a difficult financial position, in some cases for years.
Whilst there is nothing surer than death, and therefore, in turn, the need for a will, some might argue that the need for a Power of Attorney is not quite as pressing. However, the fact is that while people are undoubtedly living longer now, they are not necessarily doing so in good health.
Add to this the formalities that are now required by financial institutions to allow access to a person’s accounts, should that person become incapacitated, and it is easy to see why Powers of Attorney have now become essential to the smooth running and regulation of a person’s affairs.
Like the absence of a will, issues can arise where there is no Power of Attorney in place. Without one, an application to the court for an order to regulate a person’s affairs might just be required. Not only is such a process expensive and time consuming but it might also be that the guardian appointed to manage your affairs might not necessarily have been a person of your choosing.
If nothing else, by planning ahead and making a will and arranging a power of attorney you will have some peace of mind in the knowledge that, when the time comes, you will have done all that you could possibly have done to make life as simple and as straightforward for those left behind.
Arranging these documents in advance of death or incapacity is really something you do for the people you care about most.
• Dianne Paterson is a partner in Russel + Aitken LLP www.russelaitken.com