In the realm of financial wellbeing, many focus on accumulating wealth, managing investments, or saving for retirement, but there is one critical aspect that is often overlooked: ensuring that your loved ones are taken care of when you’re no longer around. This is what I refer to as the fifth pillar of financial wellbeing—providing clarity and security for those we leave behind. A key part of this is having the proper legal documents in place, such as wills and lasting powers of attorney (LPAs).
Reflecting on my personal experience, losing two aunts within a year has reinforced the importance of planning for the unexpected. While their passing was brief, I realized that had the necessary legal paperwork been completed, the process might have been smoother for everyone involved. Many of us are guilty of putting off such life admin, but I hope this article serves as a reminder of the importance of making sure your loved ones are protected and your wishes are clearly outlined.
Why Having a Will is Essential
Legacy planning can mean different things to different people, but at its core, a will is the legal document that lets you determine how your assets—money, property, and possessions—will be distributed after your death. Without a will, you are considered to have died “intestate,” meaning the state will decide how to distribute your estate. The laws governing intestacy are complex and vary based on where you live, your relationship status, and your family structure.
If you don’t yet have a will, I highly recommend prioritizing this task. You can learn more about intestacy laws on the GOV.UK website, but trust me, it’s better to make a will than to rely on the state’s laws to distribute your estate. My aunt was very clear about her wishes, but when she suddenly had only two weeks left to live, we were able to organize a will in time, though it took away precious moments she could have spent with loved ones. For many people, though, being able to make a legally binding will isn’t always possible when they’re faced with a short life expectancy.
Understanding Lasting Powers of Attorney (LPAs)
A lasting power of attorney (LPA) is a legal document that allows you to appoint someone, or multiple people, to make decisions on your behalf if you’re no longer able to do so yourself. There are two types of LPAs:
- Health and Welfare: This allows someone to make decisions about your medical treatment, including life-sustaining measures, when you’re unable to communicate your wishes.
- Property and Financial Affairs: This allows someone to manage your finances, such as paying bills or handling investments, if you lose mental capacity.
Both types are equally important, as they give you the power to choose who will make decisions for you in difficult times. Without these in place, your loved ones may need to go through the Court of Protection to obtain permission to act on your behalf, which can be both time-consuming and expensive.
From a financial perspective, the absence of an LPA can be problematic. If your assets are solely in your name and you lose the capacity to manage them, your spouse or partner may not have the legal authority to access those funds, which could lead to delays in paying bills or covering necessary expenses. Ideally, a good financial planner will help you plan to avoid this situation, ensuring that your finances are structured in a way that protects you and your family.
Once an LPA is drafted, it must be registered with the Office of the Public Guardian (OPG), which can take up to 20 weeks. In my second aunt’s case, she didn’t have an LPA in place. Thankfully, the NHS was excellent in supporting our family’s end-of-life care requests, but legally, we didn’t have automatic authority to make decisions on her behalf.
The Importance of Planning for the Unexpected
As much as we may wish to avoid it, life is unpredictable, and ensuring that your estate is well-organized can provide peace of mind for both you and your family. Having a valid will and up-to-date LPAs in place doesn’t just help in the event of your death; it also protects your family and assets during your lifetime if you lose the capacity to manage your affairs.
Taking the time now to create these essential documents is a vital step in protecting your legacy and ensuring that your wishes are honored when it matters most.
