How to write a will and set up lasting power of attorney

Many Britons are failing to put their affairs in order before they die, and potentially leaving their families to face an inheritance nightmare.

A fifth of people say their parents definitely haven’t made preparations or drawn up any documents relating to their death, according to research by the investing platform Hargreaves Lansdown. 

One in four people have no idea whether their parents have made any preparations or not.

Completing a will, setting up lasting power of attorney, creating an assets register and writing a letter of wishes are key issues being neglected, according to the research.

Only two in five people are certain their parents have a will, while a third who know their parents have a will don’t know where to find it.

‘We owe it to our families to spare them the agony of wondering what we would have wanted, and to get the paperwork done so they don’t end up inheriting a headache,’ said Sarah Coles, personal finance analyst at Hargreaves Lansdown.

‘If your parents have written a will, they’re already in the minority of the most organised.

‘It makes a huge difference, not only because it divides their estate exactly as they want, but also because whoever is left distributing the estate knows they’ll be carrying out their loved one’s wishes.

‘But once you’ve drawn up a will, the job is only half done, because there are other vital documents to consider, from a lasting power of attorney to a register of assets which reduces the seemingly endless admin that comes with tying up an estate.’

What are the risks of not making a will?

If someone dies without a will their estate is divided according to intestacy rules, which may not match their wishes.

For example, if someone is not married, their partner may inherit nothing when they pass away.

By not making a will, you also forfeit the ability to lessen the inheritance tax burden placed on those left behind as well as the opportunity to choose a legal guardian whom you trust for any children under the age of 18. 

Power of attorney: You have the chance to choose who will have access and control over your money and assets if you are too ill to deal with them

‘Without a will, you’re unable to control who your assets are distributed to when you die,’ said Elaine Roche, director at Solicitors For The Elderly.

‘This means that if you had wanted to leave money or other assets to a close friend or relative that is not a direct descendant, such as a niece or nephew, or perhaps your favourite charity, they would be entitled to nothing.

‘On top of that, if there are any disagreements between family, this can cause hardship, worry and even incur unnecessary legal expenses, whilst you could also miss out on receiving important advice on how to reduce your inheritance tax bill.’

What about lasting power of attorney?

Just one in five say their parents have a lasting power of attorney in place, according to Hargreaves Lansdown’s research.

A lasting power of attorney is a legal document that enables you to appoint someone you trust to make decisions on your behalf were you to lose the mental capacity to do so.

Although your will is what matters when you die, a lasting power of attorney is vital in protecting your affairs whilst you are still alive.

It can be beneficial to set up two – one for health decisions and one for your finances.

If you don’t have a lasting power of attorney in place and you become too ill to deal with your own affairs, someone may be chosen to deputise and a court will decide the limit of their powers.

This is likely to cost more, due to the court process and annual fees involved.

‘If there’s no lasting power of attorney in place and you later lose capacity to manage your affairs, it’s expensive for someone to apply for a “deputyship order” – where a court application has to be made to ask the court to appoint an attorney,’ said Dan Garrett, chief executive of Farewill.

‘This can be a stressful and long process, leaving your family in a difficult situation.

‘Leaving it to the court could also mean they choose someone you don’t want as the person responsible for dealing with your affairs.’

What are the benefits of making an assets register?

Fewer than one in ten think their parents have a register of assets, which could include bank accounts, investments, pensions and insurance policies for example, meaning many families may struggle to untangle finances.

Listing out your assets ensures that everything is easy to find when you’re gone.

An assets register is a list showing all of a person’s belongings and assets, where they’re located and the details of ownership.

‘Without a register, it will be up to your loved ones to trawl through all your affairs and try to work out what you have and where it is held – it can be an onerous burden at a time when they’re going through so much,’ said Coles.

‘Your loved ones could overlook assets when your estate is going through probate – or miss debts that have to be repaid.

‘They could also be unaware of life cover due to be paid out.’

How will a letter of wishes help your loved ones?

Only seven per cent of people say their parents have a letter of wishes alongside their will, according to Hargreaves Lansdown.

This is where someone leaves private details for the executors that they’d prefer not be made public in the will.

It’s also often where people leave details of who should receive personal belongings.

‘In some situations, it’s especially important to make known your personal intentions behind the legal provisions in your will,’ said Garrett.

‘For example, if you’ve intentionally left someone who might otherwise expect to receive an inheritance out of your will or left them less than they may expect.

‘A letter from you explaining why can sometimes avoid a dispute altogether or give your executors and ultimately the court your point of view.’