The start of a new year is a great time to plan for the future - Ian Macdonald

People often use the start of a new year to plan ahead and think about their future, so it makes sense to use some time to review your legal affairs and get everything in order, such as a will, power of attorney, and any tax liabilities.

It’s important to have these documents in place so when the time comes, family members aren’t left with more to worry about than necessary.

Many people think once they have their will and power of attorney in place, they don’t need to think about them ever again. However, I’d always recommend reviewing these documents regularly to ensure they remain up to date.

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Power of attorneys are much more sophisticated and allow greater flexibility than they once did. Nowadays, you can appoint one or more people to make decisions on your behalf, allowing you to have more control over what happens to you should you ever be in a position where you lack mental capacity.

Ian Macdonald is Partner and Head of Private Client at Wright, Johnston & Mackenzie LLP.Ian Macdonald is Partner and Head of Private Client at Wright, Johnston & Mackenzie LLP.
Ian Macdonald is Partner and Head of Private Client at Wright, Johnston & Mackenzie LLP.

You can also appoint various people to look after individual aspects of your affairs, such as financial, care and welfare. It’s not unusual for power of attorneys to be fairly lengthy these days, so it’s important to ensure yours is up to date and fit for purpose as circumstances evolve.

The cost of living crisis means many people are under greater financial strain now than for some time, so financial planning is more important than ever. It can be helpful for people to consider inheritance tax and gifts and ways in which their finances can be restructured in a tax-efficient manner.

A substantial reduction in capital gains tax allowances was announced in the last Autumn Budget, bringing the maximum amount of gains an individual can make before paying tax down to £6,000 from the current £12,300, from April. The intention is to cut this again to £3,000 from April 2024.

This reduction is likely to have an impact on investors’ behaviour and people may consider reorientating investments tol afford them more freedom. Some will need to be prepared to pay more tax than they have previously. It’s always worth seeking advice from an expert on, for example, more tax-efficient ways of hosting investments such as ISAs and pensions.

A consultation has also been launched on proposed changes to the Trusts and Succession (Scotland) Bill, which seek to modernise succession laws and the way trusts operate. Ultimately, these will change how trusts are administered and managed, as well as changing the order of rights to inheritance when someone passes away without a will.

It’s been a long time since these areas of the law were last updated, and while succession law underwent minor changes in 2016, there’s still no definitive answer to who inherits what when no will exists. Present arrangements lack clarity, and the process can often be long and drawn-out.

Changes to the Bill will substantially increase the automatic entitlement of the surviving spouse or partner, simplifying the process.

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Changes to the way trusts operate are set to make them more flexible and will allow trustees to take account of changing circumstances and reflect these in the way their trusts are set up.

If you’re considering getting your legal affairs in order, it’s always advisable to speak to an expert who can provide bespoke advice tailored to your circumstances.

Ian Macdonald is Partner and Head of Private Client at Wright, Johnston & Mackenzie LLP. www.wjm.co.uk.