Case Study – Wills and LPAs

Mr and Mrs Jones came to us just recently retired who have spent decades building their wealth, which includes property, investment portfolios and a pension. They have 2 adult children Peter, a married electrical engineer and Sarah, a single marketing executive.

Peter has recently been experiencing marital difficulties with his wife, Lucy, and there is a possibility that they will divorce in the future. Mr and Mrs Jones are worried that, without proper estate planning, their assets could become entangled in a divorce settlement if Peter inherits directly from them.

We advised that they should do 2 things:

1. Review their existing Wills to include discretionary trusts
2. Prepare Property and Financial Lasting Powers of Attorney and Health and Welfare Lasting Powers of Attorney

1. Wills

Rather than leave their estates to their children outright when they have both died we advised that they should update their Wills to leave their estate to a discretionary trust. The trust is managed by trustees who have full discretion over distributions, preventing Lucy claiming any interest in the assets during a divorce.

If Peter remains married, the trust can provide for his needs while maintaining asset separation from his spouse. Upon Peter’s passing, the remaining assets in the trust will pass to his children ensuring multi-generational protection.

A letter of wishes was also drafted to guide the trustees in managing the assets according to Mr and Mrs Jones’ intentions. It also highlighted that the trustees should seek legal advice within the first 2 years following their deaths to make sure any possibilities for inheritance planning were undertaken.

2. Lasting Powers of Attorney

We also advised that Mr and Mrs Jones should prepare Lasting Powers of Attorney to ensure that their affairs could be managed by someone they trusted if they were not able to make decisions themselves. If they lost mental capacity and were not able to make Lasting Powers of Attorney then someone, most likely Peter and Sarah, would have to apply to the Court of Protection for a Deputyship Order which is expensive, time-consuming and restrictive compared to a Lasting Power of Attorney.

There are two types of Lasting Powers of Attorney; Property and Financial LPAs which enable your attorneys to manage your bank accounts, pay bills, handle investments, and even to sell property if required. A Health and Welfare LPA allows your attorneys to make medical and care decisions including where you live and what treatments you receive.