Ian Macdonald: Making a will and putting a PoA in place means your instructions will be paramount
As a solicitor, I would always recommend people have a will in place. Obviously, thinking about a will involves contemplating your own mortality, so understandably, it’s a topic not everyone wants to discuss.
However, it’s extremely important to have one in place, particularly if you have children or a spouse, to ensure your affairs can be taken care of in the way you’d like them to be when the time comes.
If you already have a will in place, I’d recommend reviewing and updating it regularly. Many think once they’ve organised a will, they don’t need to think about it again, but circumstances change. People’s family situations change, as do their finances, so it’s important to keep on top of your will and ensure the instructions you’ve specified are appropriate and up to date.
The legislation surrounding wills in Scotland has remained largely unchanged in recent years, with the exception of new tax allowances for houses. If a parent leaves a house to their child, the individual allowance rate has changed since earlier this year, and is set to increase again to £175,000 in April 2020, meaning no inheritance tax will be paid on the property until it reaches that value.
However, this can be extremely complicated with a lot of conditions and variables surrounding the circumstances. It does mean that certain arrangements made previously using trusts with children as beneficiaries may no longer qualify under the new allowance. If this applies to you, or if you have an estate affected by inheritance tax, it’s certainly worth revisiting your will.
Secondly, I’d advise everyone to ensure they have a power of attorney. A POA is a legal document in which you appoint one or more people to make decisions on your behalf should you ever be unable to make your own. This allows you to have more control over what happens to you should you be in a position where you lack mental capacity, for example as the result of an accident or illness.
POAs are even less commonly discussed than wills, likely because people tend to shy away from thinking about being in the situation where one is required, but this doesn’t make it any less important.
Until 2001, the standard arrangement was that someone had one power of attorney, who would oversee all aspects of that person’s matters. However, new guidelines have since been introduced which enable people to appoint a financial power of attorney who would look after investments and bills, as well as someone to make decisions about care and welfare matters.
When this new legislation came into play, many still opted to make purely financial POAs, leaving the care and welfare side of things out. Then, as more people gradually decided to do both, we would create two separate documents. However, nowadays, POAs are sophisticated enough to cover both aspects in one document.
Many people are now being much more specific about who they’d like to take care of individual aspects of their affairs. In the past, it was standard for a POA to be around three pages long. These days, however, it’s not unusual for one to be eight or nine pages. People are assigning particular aspects to different power of attorneys, for example one person will be in charge of making gifts and tax planning, and another will have a say about health matters.
So, if you made a power of attorney some time ago, I’d recommend reviewing the document to ensure you’re still happy with every aspect.
While it may be a difficult thing to think about, many will find that once they’ve opened up the conversation, it gets much easier. If it’s something you’ve been putting off, as you head into the New Year, I’d recommend taking those first steps and visiting your solicitor to ensure these matters are taken care of.
Ian Macdonald is a partner at Wright, Johnston & Mackenzie LLP