Solicitor-Drafted Wills & LPAs: The Gold Standard for Your Future

Solicitor-Drafted Wills and LPAs: The Gold Standard for Protecting Your Future

Estate planning is one of the most crucial steps you can take to protect yourself and your loved ones from life’s uncertainties. As highlighted in The Martin Lewis Money Show Live yesterday on 11 March 2025, professionally drafted Wills and Lasting Powers of Attorney (“LPA”) are essential tools to safeguard your financial and personal interests. With the risks of Death, Divorce, and Dementia (the "3Ds"), it is vital to plan ahead with expert guidance.

1.    The Importance of Making a Will

A Will is the only way to ensure that your estate – your money, property, and possessions – are distributed according to your wishes. Without one, the law decides who inherits, which may not reflect your intentions.

Key Benefits of a Will:

• Clarity and Control – Specify exactly who should inherit your estate.
• Appoint Executors – Choose trusted individuals to manage your estate.
• Provision for Dependents – Appoint guardians for minor children and make financial provisions for loved ones.
• Tax Efficiency – A well-structured Will can help reduce IHT liabilities.
• Avoid Disputes – Prevent conflicts by making your wishes clear.
• Support Charities – Leave a legacy to causes you care about.
• Funeral Wishes – Outline your preferences for your final arrangements.
• Peace of Mind – Knowing your affairs are in order brings reassurance.

Key Will Considerations:

• Pensions are not usually included – Review your pension beneficiary nominations separately.
• Marriage revokes a Will – Ensure your Will is updated after marriage or civil partnership.
• Limited or no rights for unmarried couples – Cohabiting partners do not automatically inherit without a Will.

Regularly reviewing and updating your Will is essential, particularly after key life events such as marriage, divorce, the birth of children, or changes in financial circumstances.

2.    Lasting Power of Attorney (“LPA”): More Important Than a Will?

Martin Lewis has stressed that LPAs may be even more crucial than Wills. An LPA allows trusted individuals ("Attorneys") to make decisions on your behalf if you become unable to do so. There are two types:

• Property and Financial Affairs LPA – Covers managing finances, paying bills, and making investment decisions.
• Health and Welfare LPA – Covers healthcare decisions, living arrangements, and medical treatment preferences.

Why Set Up an LPA?

• Maintains Control – You choose who manages your affairs.
• Avoids Court Intervention – Without an LPA, loved ones must apply for a Deputyship Order, a costly and time-consuming process.
• Prevents Family Stress – Clear authority reduces disputes and confusion.
• Ensures Care Preferences Are Honoured – Attorneys make health and welfare decisions according to your wishes.
• Not Just for Older People – Most people have separate finances, so an LPA is essential for everyone.

Key LPA Considerations:

• 51,000 LPA applications were rejected last year – A solicitor can help you get it right the first time.
• Enduring Powers of Attorney (“EPA”) are still legal – Review if yours is still relevant.
• Seek professional advice – Particularly if you have complex finances or are a high-net-worth individual.

3.    Inheritance Tax (“IHT”): Minimising Your Liability

IHT is charged at 40% on estates exceeding the £325,000 nil rate band. However, proper planning can help reduce this burden.

Strategies to Reduce IHT:

• Get married or enter a civil partnership – Transfers between spouses are 100% tax-exempt.
• Utilise the Residence Nil Rate Band – An additional £175,000 allowance may apply when passing property to direct descendants.
• Use Gifting Strategies:
  • 7-Year Rule – Gifts made more than seven years before death are exempt.
  • Taper Relief – Gifts between three and seven years before death may be subject to reduced tax.
  • Annual Exemptions – Give away up to £3,000 tax-free per year.
  • Small Gift Allowance – Give unlimited gifts of up to £250 per person annually.
  • Wedding Gifts – Tax-free gifts of £5,000 to children, £2,500 to grandchildren, and £1,000 to others.
  • Regular Gifting from Income – Gifts made from surplus income can be IHT-free if a pattern is demonstrated.
• Trusts and Charitable Giving – Placing assets in trusts or leaving 10% of your estate to charity can reduce IHT to 36%.

Key IHT Facts:

• 6% of estates will pay IHT – Proper planning can reduce or eliminate this liability.
• Potential exemptions of up to £1 million – Utilising all available allowances can significantly reduce your tax burden.

4.    Take Action Now

Planning for the future ensures that your wishes are carried out and your loved ones are protected. Whether it’s drafting a Will, setting up an LPA, or structuring your estate to minimise IHT, seeking professional legal advice can help you make informed decisions and secure your financial legacy.

If you have any questions or wish to discuss your estate planning needs, contact us today by calling 0800 413 463 or email IPT@biscoes-law.co.uk.