We all worry about our parents; do they have the financial protection in place for their future? Are they aware of the options available? Have they even thought about what happens if they were to pass away? It's horrible thinking about such things because our parents are a hugely important part of our lives; they've been there through all the good times, the difficulties we've faced and it's only natural to want to protect them like they have protected us. We all ask ourselves "how can I help my parents plan for the future?", and I am going to show you a few ways that you can do this.
I would imagine we all know what a Will is and the reason for having one, but for anyone that doesn't know I'll explain it. A Will is a legal document that is created by a person (called a testator or testatrix) stating how they want they estate to be shared upon their death. Their estate is everything they own, a house or property, cars, books, antiques or any money they have either in savings or bank accounts. Normally people want their estate to go to loved ones or friends but people can ask for it to go to charities or even towards looking after their pets. A person must be of sound mind when creating and signing a Will and they must also have 2 witnesses. The witnesses are used to declare the signing of a Will meets certain requirements and they must be over 18 years old and shouldn't be named as a beneficiary in the Will. So, we now know what a Will is, but we don't know how a Will can protect our parents. I will go over several situations where a Will is a must have item.
If your parents have separated but are not divorced then it can cause issues if one dies without a Will. Dying without a Will is known as dying intestate. There are rules that have been created and are legally enforced in such cases. These rules don't recognise separation or even common law partners, only marriage, divorce and blood lines. The rules state that a married partner gets the estate, and depending on the value of the estate it may also include the children but they have a minority amount. If your parents are separated it is probably for a good reason, it's also probable that they wouldn't want that the other one inheriting any of their estates. They would want it going to the children, grandchildren, great-grandchildren or anyone else they feel deserved it.
If they are separated and in another relationship then unless they state in their Will that they want that new partner to receive something they receive nothing. Intestacy Rules don't recognise partners in this case.
Maybe they are separated and have remarried. The main issue here is that the parents direct children have the risk of receiving nothing. If your parent dies without a Will then the estate moves to their new husband or wife. If they then pass away without a Will the estate moves onto their bloodline leaving you with none of the estates. This is not what your mother or father would have wanted.
As terrible as family disputes are it's very common for families to have them, and money has a way of bringing out the ugly side of humans. Both of which can lead to expensive and time-consuming complications when it comes to someone leaving an estate behind. Although a Will can be contested, the fact that a parent has taken the time to have a Will created and witnessed makes it much harder for that to happen. It clearly sets out who is to receive what, and if there are any situations that may be argued such as a random person receiving a gift or a family member is cut out it can be covered in a Letter of Wishes explaining the reasons behind it.Ultimately, a Will is a simple and effective way of a parent making sure that their estate is divided in a way they would want. It's not an expensive thing to do and going through a recognised and well-known Will Writer such as a Will Associates consultant will make the entire process worry-free and easy. For a real life story of what can happen if you don't think through and seek proper advice see our blog post regarding Lynda Bellingham.
Not many people have heard of a Lasting Power of Attorney or an LPA as it's also known and even less actually know what they are and what they are designed for.
A Lasting Power of Attorney comes in 2 forms. There is the Health and Welfare LPA, and the Property and Financial LPA. You can also get a Business LPA that is designed specifically for business owners but the first two are the main ones talked about on the .gov.uk website.
An LPA is designed to give a chosen person, known as an attorney, control over someone else's decision making. The person making the LPA is known as the donor. Why would a parent want someone to take control? Age-related illnesses such as dementia, Parkinson's or Alzheimer's are some of the main reasons. Falls that result in injury and the inability to make decisions or even just falling victim of scams such as mail fraud.
A finance LPA gives you control over their finances to stop them falling victim to potential scams or conmen. It gives you the ability to pay their bills and manage their incoming and outgoing finances. A Health and Welfare LPA is there so you can make medical decisions for your parent or even choices over care homes. They are designed to give you control over your loved one's life to make sure they carry on living in a manner you and they would want.
I know, it's not nice thinking about the funeral of someone that you can't even imagine losing, but the sad fact is that we will lose those that are important to us. The problem is that funerals are getting more and more expensive and the pressure is on those left behind to pay for it. Could you afford over £8,000 for a funeral? That's what a funeral can cost by the time you add it all up. A funeral plan is a way of paying for a future funeral at today's prices. Your parents choose the plan that they feel best suits them and the payment method, and at the time of their passing, you have the money to pay for the funeral they chose. It saves you having to worry about finding the funds as well as wondering if the funeral is what your parent would have wanted. I know it sounds like a funeral plan is more for you than your parents but they won't want to think about you having to deal with paying and planning a funeral when you should be grieving.
There are many ways of describing what a trust is but I find the best way is that it is basically a safety deposit box that your parents can put in their valuable assets such as property. This safety deposit can then be passed on to others to manage and the goods inside belong to the box and not the person that put the assets in there.
Quite simply because it means that there is less risk of their estate being degraded over time. They can make sure that as much as possible is there to pass on to their children or family. They still keep control over the assets inside the Trust but if they lose the ability to make decisions for themselves then chosen trustees can step in and take over without the need for an LPA. LPA's are still recommended for any bank accounts or assets outside of the Trust. Due to Trusts being quite complicated it's always best to speak to a Will Associates consultant as they will be able to discuss what benefits a Trust can provide you and whether it suits your needs.
There are other reasons that the above options could help with, but the best thing you can do it to sit down with your parents and talk to them. Do they already have a Will? Is it up to date? Where is it kept? What funeral requirements do they have? It's a hard conversation to have, but it is worth it.
I hope this has helped you answer the question "How can I help my parents plan for the future?" and if you would like to arrange an appointment with one of our consultants you can do so by phoning 0800 9500 700 or using our contact our page and request a call-back. You can download the information pack that holds more information on the services we offer.