Enduring Power of Attorney and Making a Will – A Vital Part of Your Wealth Management
When one thinks about wealth management, for most people, the first thing that comes to mind is money and managing your financial affairs, investments and so on during your lifetime. However, it is just as important to manage the succession of your wealth. The best way to do so is by making a will and also having an enduring power of attorney in place, just in case it is needed.
Let’s take a step back and refresh on both of these documents:
1. What is a will?
A will also referred to as a last will and testament, is a document that you create with the help of a wills and probate solicitor that expresses your wishes after your death. Having a will ensures that your estate is managed as you wish after your death.
2. What is an Enduring Power of Attorney?
An Enduring Power of Attorney is a ‘just in case’ document, that allows you to appoint a person(s) to look after your financial affairs and personal care decisions in the event where you lose your mental capacity and cannot make these decisions for yourself.
How can making a will help strengthen your wealth management plan?
The passing on of wealth is a complex matter requiring detailed legal and taxation advice. During a person’s lifetime assets can be actively managed and transferred from one person to another in circumstances. However, after a person’s death, in order to ensure that assets are passed to the right people (known as your beneficiaries), you need to have a valid will in place.
A will does not become effective until death and can be changed regularly during a lifetime. It is important that your will is carefully planned from a legal and taxation perspective. In addition, your will should be reviewed as part of your on-going financial reviews, at a minimum reviewed every three years. These reviews will ensure that if there has been any relevant change in circumstances the will can be revised. A will should always be reviewed immediately should any major life events occur e.g. death of a loved one named in the will, marriage (note your will revokes automatically upon marriage unless made in contemplation of same), divorce etc. To sum up, where there’s a will, there’s a way for you to ensure your wealth is managed as you wish after your death.
How can an Enduring Power of Attorney help you manage your wealth?
Another vital aspect of your wealth management is to put in place an Enduring Power of Attorney (EPA). A will deals with end of life, while an EPA deals with end of capacity to make your own decisions during your life. The person(s) you appoint to manage your financial affairs, in the event you cannot do so yourself, is called your attorney(s). If you have an enduring power of attorney is in place, in the event of a loss of capacity, your chosen attorneys can act to continue to manage your wealth actively.
If you do not have an enduring power of attorney in place, and you suffer a loss of capacity whereby you cannot make your own financial decisions, there is no one legally authorised to make financial decisions for you. In this event, there is a legal process that must be followed (wardship process), and until you have been made a ward of court and the court appoints a committee to manage your financial affairs, your wealth cannot be managed at all. The wardship process takes a number of months and from a financial perspective, during this time investments often cannot be managed actively and can devalue. An enduring power of attorney is one way to ensure that this does not happen!