Ten top tips for IHT planning

Those are stark statistics and push us to consider what would happen if the worst were indeed to happen to us?  

If an individual loses capacity, their bank accounts are effectively frozen and it would be necessary for a close relative (such a spouse or child) to make an application to the court for an order to access those accounts in order to pay bills and day to day living expenses.  

Clients will need to be thinking about what needs to be done in order to maximise the availability of this relief.

Getting court orders can be time consuming and expensive. So what can be done on a practical level to prepare for this?

We recommend that our clients put in place lasting powers of attorney (LPAs), one for property and financial affairs and one for health and welfare, as soon as possible.

LPAs are legal documents whereby the ‘donor’ appoints one or more people (known as ‘attorneys’) to make decisions on the donor’s behalf.  

Lasting power of attorney: property and financial affairs

The LPA for property and financial affairs gives your attorney(s) powers to take action on your behalf and for your benefit in relation to your property and finances including buying and selling investments, accessing your bank accounts and buying and selling property.  

The attorneys appointed under an LPA for property and financial affairs can act as soon as they are appointed, provided they are acting with the consent of the donor.

This can be useful in situations where a particular document requires an urgent signature, but the donor is overseas on holiday, for example.  

Lasting power of attorney: health and welfare

The health and welfare LPA gives your attorney(s) authority to make decisions about your healthcare and medical treatment, including where you live and day-to-day decisions about your personal welfare.

The attorneys appointed under an LPA for health and welfare can act only once the donor has lost capacity.     

Putting LPAs in place can be of great comfort because it allows the donor to select the most appropriate people to make decisions for them if they have an accident or an illness and cannot make their own decisions because they lack mental capacity.

3) Provision for yourself 

It is important to make sure that financial planning takes into consideration all aspects of a person's wealth and what the person intends to use certain pots of money for.

A pot of cash

It is always helpful to have an emergency pot of cash set aside for a "rainy day".