Published on: 17th July 2017

General planning

The following is a theoretical example of why it is so important to plan for the worst. Mr & Mrs Smith are a couple with a young child. They own multiple properties jointly and their Principal Primary Residence (PPR) is owned solely by Mr Smith. Unfortunately, Mr Smith has lost capacity and no Wills, Lasting Powers of Attorney or Trusts have been set up. In other words, no Estate Plan has been prepared. Once somebody has lost capacity, a Lasting Power of Attorney can no longer be created and instead one has to apply to the Court of Protection for a deputyship. This can be a very lengthy and ultimately, very expensive, process.

• To find out more about creating a Lasting Power of Attorney, please click here.

As a result, Mrs Smith is unable to access and assist Mr Smith with his financial matters. This could potentially cause bills to be unpaid and debts to arise. Furthermore, if Mrs Smith was to pass away before Mr Smith, they could potentially lose their properties to cover the costs of care. As the properties are owned jointly, these would pass into Mr Smith's sole name upon Mrs Smith's passing. Therefore if, or when Mr Smith receives care, each property could be assessed by the local authority to cover the cost of his care fees. This could potentially result in their child inheriting (much) less than they expected. As Mrs Smith has not created a Will, she has not elected a guardian for her young child and therefore if she passes away first, Mr Smith would not have the capacity to care for the child. This could result in the Court of Protection deciding what is best for the child and the child not being cared for by the people his mother may have chosen.

• To find out more about guardianship, please click here.

Since Mrs Smith approached us, we have been able to create Lasting Power of Attorney documents for her and also a Will. Mrs Smith has also changed the way the properties are owned to be enabling her to protect some of the family assets using Trusts.

• To find out more about Life Interest in Property Trusts please click here.

Unfortunately, as Mr Smith has already lost capacity, we are unable to create Lasting Power of Attorney documents and a Will for him. As a result, Mr Smith will pass away intestate. The rules of intestacy often are not how a family wishes to distribute their assets. Fortunately, we are able to now help Mrs Smith. If we had been involved earlier we could have helped Mr & Mrs Smith to a greater extent. Should you wish to discuss any of the topics covered in this example please feel free to contact us here.

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