Straight Talk Financial Planning

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Families of the future

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I had an interesting conversation with a solicitor today (yes, that happens). Among many other things we spoke briefly about the ever-changing nature of family.

In our line of work we often see the beginnings of these changes, the trickles before the waterfall. And what is it we’re seeing at the moment? 3 generations in one household is becoming more and more common. It started with the increases in the cost of living forcing young people to stay with parents longer and longer.

Now we are seeing young couples with children of their own choosing to pool resources with parents to purchase larger properties and live together sharing the financial and practical responsibilities of the home. And I for one can only see this as a beautiful thing, an act of cross generational support. I hear more and more that phrase “it takes a village to raise a child”, and I hear more and more about older generations wishing to stay in their homes for as long as possible. It looks like we are returning to our “villages”.

I’m sure this will increase post-covid, when we try to figure out our new normal after a life of really getting to know our neighbours again, of being suddenly and drastically separated from our grandparents and older children or seeing our young children missing their grandparents.

But my experience of this is grown children so anxious to protect the financial investments their parents have made in their homes. “If something happens to us, what happens to mum?” is something I’m hearing more and more. And the answers can be simple, the answers can give you real peace of mind, but they might not always be what you think. Effective estate planning along with good financial planning (which is so much simpler and cheaper to put in place while you’re young) can really put everyone at ease and ensure you’re all protected, no matter what your futures hold.

Can you sign and witness your Wills effectively during Coronavirus? Yes. You can.

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Its undoubtedly true that COVID-19 has had a massive impact on all of our lives and made some things more difficult. At STEP we are still working, from home, but there have been impacts on our process for sure.

One of the questions we are most frequently asked at the moment is can you still get your Wills signed and witnessed correctly during coronavirus? And the answer is Yes. You can. Associates up and down the country, not just here in Hampshire, are carefully working in outside spaces to make sure your documents can be signed effectively and safely.

Its even being written about by the good old BBC!

Here I am talking about the challenges, and comedy, of signing your Wills and observing Social Distancing:

https://youtu.be/pxIsRQfS-VI

If you would like to talk to a member of our team about signing your Will during Coronavirus do be sure to chat to us.

Residential Nil Rate Band

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Many of us know about the Nil Rate Band – the £325,000 relief we all have available to us as estate we can pass to anyone free of inheritance tax (IHT). And of course for married couples and those in a civil partnership this is transferable (i.e. your spouse or civil partner can ‘inherit’ your NRB) leaving you jointly with £650,000 to pass free of IHT.

But what about the Residential Nil Rate Band (RNRB)? This is an additional amount you can leave free of IHT that is applicable only to your main residential property and can only be utilised by your direct decedents – i.e. children (including grandchildren, stepchildren and adopted children).

Currently the amount stands at £150,000 per person and will raise again in April 2020 to £175,000 per person. It is not set to rise after this. As with the Nil Rate Band (NRB) it is transferable between Married partners and Civil partners. This will bring their total IHT free band to £1mill.

This sounds great, but it’s worth noting that unmarried couples and those without children cannot benefit from the relief. You should also be mindful of the RNRB if you are considering any trusts, either in your will or as part of your investment planning.

Some trusts – usually Discretionary Trusts – will mean you can’t utilise the RNRB, potentially negating the benefit of setting the trusts up in the first place. That doesn’t mean these trusts are not a good idea (they can be fantastic for protecting assets from divorce settlements, and for beneficiaries receiving disability benefits who need to ensure those benefits don’t get wiped out), but it does mean you need a Will writer that will go through all the pros and cons of writing a trust with you to make sure you can make the best informed decision for your family.

The myth of the common-law spouse

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The shape of families is changing. Many of us now, for so many valid reasons, decide marriage is not for us and raise our families together as unmarried couples, and why not? However, not surprisingly, the law has not kept pace with modern times and the idea that your life partner will be treated as a spouse is a myth.

Life partners are not considered next of kin in the eyes of the law. They do not benefit from Spousal Exemption for tax purposes, they do not count as a direct decedent so you will not be able to apply the Residential Nil Rate band for inheritance tax on your property.

If you pass without a Will (i.e. intestate) your partner will receive jointly owned assets and that is it. Which is an even more critical consideration if your property is not owned jointly.

Under the rules of intestacy, any children (from the current or previous relationships) or their issue will inherit the estate. If there are no children, the partner still does not inherit. The courts would look for surviving parents or siblings or even the Crown before considering the partner.

So what’s the answer? Get married and write your wills is the obvious solution, and if you’re not sure if you will marry or not, a simple contemplation of marriage clause into your mirror wills means your marriage will not invalidate any wills you make together. But if marriage is simply not on the cards good quality Wills are even more essential.

The kids are alright- guardians and inheritance

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Many of us write wills to protect our children when we are no longer around to do so ourselves. We want to be sure we have left them adequate financial resources to be at least comfortable and stable, and that its been left in such a way that it won’t be ravaged by the tax man.

And we want to ensure they will inherit at a time in life when they are perhaps more settled, and have worked any wild and reckless impulses out of their system. The assets we have spent our lives carefully nurturing are important to us, and we don’t want them squandered or perhaps preyed on by less than scrupulous partners. A well written will can protect from these eventualities.

But what about the most precious asset anyone could ever possess – the children themselves?

No one likes to think about what could happen if we pass whilst our children are still young, but sadly we should. We need to be sure we have nominated guardians we know will raise our children as we would wish, and if you can its always worth appointing reserve guardians as a back up.

Leaving a potential custody decision to social services gives absolutely no guarantee the eventual guardian will be someone we approve of. It can also be difficult if more than one family member would like to take on guardianship and your instructions are not clear.

What if you pass at a young age and your surviving spouse eventually re-marries? There are simple trusts that will ensure your half of the assets you have worked hard to grow together will be protected for your children, and not end up passing to a new spouse and any children they may bring with them to the family table.

Writing wills with our associates is a simple and painless process that can put all of these protections in place and give you real peace of mind, so the only question is what are you waiting for?

Getting around to it

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How often have you thought about writing your Will, known you need to write it, but then somehow it just doesn’t happen? Well you’re far from alone.

Straight Talk expanded their services to include Estate planning services like Will writing some years ago. Our aim was to accommodate clients in need of these services who simply struggled to fit time to visit a solicitor into their already busy working schedules. This can be especially challenging for working couples. We can offer out of working hours appointments in your own home.

It’s also common for people to have a sense of unease when it comes to will writing. It’s understandable that addressing your own mortality doesn’t come high on most people’s lists of fun ways to pass an hour or so, but the sense of relief all of our clients feel once everything has been put in order far outweighs their concerns at the start of the process. As one client told us recently

“We were both very worried about doing a Will – don’t know why, but you put us both at ease, and we very happy with what we decided.”

Its also important to have confidence in the services you are being provided with. Straight Talk offer free consultations which allow you to meet with us and be sure of us before committing to work. This is also a useful service for anyone who already has a Will in place and wishes to review it with an expert to ensure it still meets their needs.

The different Powers of Attorney

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Today I’d like to look in a bit more detail at the different kinds of LPAs available. Its important to note that the person writing the Power of Attorney is the Donor, and the people they appoint to make decisions for them are the Attorneys.

The two main kinds are Health & Welfare and Property and Financial Affairs.

Health & Welfare confers powers relating to the type of health care and medical treatment for the donor, which can include where they live, day to day matters such as diet, routine and even life sustaining treatment. The powers under this type of LPA only become useable once the donor no longer has the mental capacity to make their own decisions.

Property and Financial Affairs confers powers to the attorney to make decisions relating to financial and property matters of the donor. The key difference here is that you the donor can grant your attorneys the power to make decisions for you as soon as the LPA is registered with the Office of the Public Guardian (i.e. before you have lost mental capacity) which can be particularly useful if you need financial, property or business matters attended to whilst you are out of the country.

An Attorney has a legal duty to act in the donor’s best interests and failure to do so could be a criminal offence. So donor protection from unscrupulous attorneys is implicit in the LPA document itself. Also an attorney cannot use the LPA to change the donor’s will.

The Powers of Attorneys

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Most of us have some awareness of Powers of Attorney, but few of us really have a clear picture of what they are, who needs them and when they should be written. Today we are going to address exactly what are Powers of Attorney

Simply put, Powers of Attorney are you (the Donor) granting powers to people you know and trust (your Attorneys) to manage your affairs when you have lost the mental capacity to do so for yourself, either permanently or temporarily. There are two main kinds, ‘Health and Welfare’ and ‘Property and Financial Affairs’. We’ll dive into the details of how each of these can work in future posts, so watch this space.

Who needs them? In an ideal world, no one would ever need them. But sadly we don’t live in an ideal world and predicting who might lose their mental capacity and when is impossible.

When should you write them? As soon as you can. We often associate Powers of Attorney with the elderly, but sadly life is not always what we expect and sudden illness or accident does happen. Also your property and financial affairs LPA does grant you the power to allow your attorneys to act even when you have not lost mental capacity should you so wish. This can be useful for, for example, business owners who travel frequently and may need someone to manage affairs on their behalf whilst they are away.

Much like car insurance, the cost and time taken to set them up may feel like a nuisance but it’s something you should have in case the worst should happen.

And again like car insurance, if you don’t have your LPAs in place and then need them, it’s too late as power of attorney cannot be granted once you have lost mental capacity. In that situation the Court of Protection would appoint a Deputy to act in your best interests. However, this takes time, money and you have no control over who is appointed to manage your affairs.

Its all about timing…

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One of the most common questions I encounter is When should I write my will? And how often should I review it?


The will writing triggers are not age, but the big life events – the purchase of your first home, the birth of your child, blending your family and assets with a new partner’s (especially if you’re not planning to marry), or any other significant event that might impact on the way you think about your finances or guardianship of young children.


And what about those who have wills already? Ideally you should look to review your wills every 5 years. That might sound like a lot, but its surprising how much can change in a short period of time. Effective estate planning should be intimately connected to your financial planning; up to date with the ever changing needs of your family and, for example, current tax legislation.


Expert guidance from an associate knowledgeable in finance as well as inheritance law can prove an invaluable resource to protect your assets. Straight Talk offer free initial consultations and charge fixed fees for any items you may need to produce, so there are never any nasty surprises.


You should also keep track of exactly what assets you have and how your executors can access them, when the time comes. A single simple resource of information that will give them everything you need to administer your estate with as much ease as possible. Straight Talk can help here too. We have a clear and simple to fill in booklet “What I have and where I keep it” that our clients fill in and keep. Anything that will simplify the process of probate for your loved ones can give real peace of mind for you and them.
Our free “What I have and Where I keep it” booklet can be ordered from the Contact page.

The Kindness of Exclusion

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I’m sure many professionals regularly encounter misconceptions about their industry, or field of expertise, and wills and probate work is no exception. We certainly encounter a few at Straight Talk Estate Planning but some have more sticking power than others.

One of the more persistent misconceptions we encounter is that people exclude potential beneficiaries from their wills for negative reasons. Whilst, certainly, a significant falling out over a period of time can lead to exclusions, this is not always the driving reason.

There are situations where parents with multiple children have already given significant financial support to one child over and above the others so, with the child in question’s blessing, exclude them from receiving further in the will so that the remaining children may benefit from the family estate equally.

Similarly a family may mutually agree that some potential beneficiaries may have more means to outside financial support than others. Better paid work for example, or marriage into other more wealthy families, and there is a wish to ensure the estate will pass to those that need it most.

Decisions like these are made out of practicality and kindness and are the sort of considerations that would be railroaded by the process of intestacy (passing without a valid Will in place).

Similarly circumstances can change over time which would mean you need to review your will with regard to exclusions. Perhaps that wealthy family a child has married in to falls unexpectedly on hard times so they need to be brought back in to the will, for example.

Whatever the reason, if there are people who may reasonably expect to benefit from your estate and you would wish them not too, a valid and up-to date will is a must.

The views and opinions expressed are those of the individual and do not necessarily reflect those of APS Legal and Associates Ltd itself