Top ten tips to organising your personal affairs in later years with Alan Innes, partner at legal, financial and property company, Pagan Osborne.
When most of us consider financially preparing for the future, we immediately think of investing for retirement. While our pensions are important there are, however, other pieces of the puzzle. It could be worth addressing topics such as deciding who to leave in charge of finances and researching care options.
Alan Innes has over 20 years experience as a solicitor helping clients stay in control of their legal and financial affairs. He provides advice on such topics as Wills, Powers of Attorney, Tax Planning, Trusts, Strategic Property Transfers and Retirement Planning.
Here are his top ten tips to organising your personal affairs for whatever the future holds.
1. Financial Power of Attorney (POA)
A POA is a legal document that allows someone (an individual or an entity) to conduct business on someone else’s behalf.
Having the conversation with family and friends about what should happen to any money, assets or bank accounts can be a good first step in establishing a financial POA. This is a necessary preparation to make in case anything happens that leaves you in too poor a physical or mental state to deal with your own financial affairs. This might include day to day matters such as paying bills, checking and signing documents or form filling.
A financial POA can be either ‘durable’ or ‘nondurable’. It is important to know the difference and when one or the other is needed. Most people consider durable POA’s when there is a chronic illness involved.
2. Welfare Power of Attorney (POA)
Organising a welfare POA will, in the event of reduced mental capacity, ensure that a friend or family member, who knows your wishes, makes the decisions around issues such as living arrangements or future courses of medical treatment.
3. Downsizing your home/reducing outgoings where possible
In order to ensure the most is being made from any savings and assets following retirement or inability to work due to illness, it may be worth considering downsizing property. For example, think about how necessary it is to continue living and maintaining the family home.
4. Ensuring you’re receiving all the relevant benefits and the correct amounts
The latest figures from the Department of Work and Pensions (DWP), which refer to 2009-2010, reported over £16 billion of state benefits went unclaimed.
Finding out about eligibility for any financial assistance can result in an important additional income. Financial specialists at Pagan Osborne are able to assist in the process of working out who’s able to claim and how much.
5. Looking at Trusts
A Trust is a way of managing assets (money, investments, land or buildings) for people. There are different types of Trusts and they are taxed differently.
Trusts can be set up for a number of reasons, including passing on assets after death, when someone is too young to handle their own affairs or when someone can’t handle their affairs because they’re incapacitated. For that reason they can be very adaptable, for example, to help pay a grandchild’s school fees.
A solicitor will create a Trust ensuring all the paperwork is taken care of, that any agreements are legally sound and the proper tax considerations are brought to bear.
6. Tax Planning
Tax planning can be used to help better protect what you have. Get proper legal advice from a solicitor to make sure that you are taking full advantage of all available tax reliefs, whether they apply to Income Tax, Inheritance Tax (IHT) or Capital Gains Tax.
There are various mechanisms which can be implemented to reduce the value of an estate for IHT purposes from the simple to the more complex. The first step, if possible, is to ensure that a gifting regime is put in place to make use of the small and annual gifting exemptions.
It’s a common misconception that IHT is only taxable on assets held at death – this is not the case as it also impacts on gifts made to individuals and transfers into most Trusts during a person’s lifetime.
7. Financing care at home
Creating a plan to be able to afford the cost of living at home, as well as any extra care assistance required, can be aided with the use of Self Directed Payments.
This allows people to receive a direct payment (in lieu of a service) which they can spend as they choose, rather than accept the care or service organised by their local authority. The right to claim a direct payment is enshrined in law, through the Social Care (Self-directed Support) (Scotland) Act 2013.
8. Moving to a care home
Visiting care homes is a great way to see for yourself how they work and you can even put your name on the waiting lists. If a place becomes available before you’re ready you don’t lose out by saying no.
When looking at how you will afford the price of care homes, your doctor can arrange for assessments which can result in a referral to Social Services. If you’re eligible, they provide free personal or nursing care which covers the costs to a certain level.
9. Ensure your Will is up to date
A Will is a vital piece of paperwork that will ensure a person’s hard earned wealth and anything of personal importance will be passed on to the people of their choice.
A solicitor can offer expert advice to help with the creation of a bespoke Will that takes full account of any personal circumstances and wishes.
10. Advanced Medical Directives
Commonly known as Living Wills these have become more popular in recent times as people choose to take control of their medical treatment rather than leaving it to family and medical staff to make important, and sometimes, difficult decisions.
(A Living Will enables you to set out personal medical treatment choices in advance and is often known as an Advance Directive. The British Medical Association supports the use of Living Wills.)