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Q What shall I do to prepare for the time when I can no longer look after my own finances and make decisions for myself?  I have recently heard some bad reports about the Court of Protection in the press.
A

David Kitcat
March & Edwards
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The recent critical articles on the Court were unfair.  They generally do a good job although they can be a bit slow.  When someone loses their capacity to deal with their finances, then the Court will appoint a family member or another suitable person to act as their Deputy to manage their finances.  This is a lengthy process and the reporting and insurance requirements that the Court places on the Deputy are also quite onerous. 

It is far better to make a Lasting Power of Attorney. While you are still capable, you can appoint one or more people that you choose to have the authority to look after your finances and to make decisions about your health and welfare. The process normally takes a couple of months because the Lasting Power of Attorney cannot be used until it has also been registered at the Court. The registration process itself takes at least six weeks. 

If you already have an Enduring Power of Attorney that you made before October of 2007, then it is still perfectly valid.  Please do make sure that your family know where it is stored in case it is needed.
Q A few years ago, we made Wills that included the Nil-rate Band Discretionary Trust to hold a half of our family home in order to reduce the chance of our estate being liable for Inheritance Tax.  Are these still valid?
A

David Kitcat
March & Edwards
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Prior to October of 2007, many couples made Wills with Nil-rate Discretionary Trusts in order to avoid Inheritance Tax where their combined estate was worth more than the Tax free Nil rate Band.  Now the Government has changed the rules to allow the widow or widower to “inherit” the unused Tax free Nil-rate Band of their husband or wife.  This makes Nil-rate Discretionary Will Trusts redundant from an Inheritance Tax aspect.  However, there are still instances where they can be useful.  Where the survivor is already in care (or is likely to go there soon) and where a beneficiary is having matrimonial or financial difficulties, then there is an advantage to keeping some assets safe in the Trust, which can be used for the survivor or held back for the beneficiaries. 

Add to this the fact that you can break up the Trust within two years after the death.  Then the Trust is treated as never having been in existence and all of the assets can be passed to the surviving spouse, who also gets to benefit from the unused tax free Nil-rate Band. 

If you have gone to the trouble and expense of making Wills with Nil-rate Discretionary Trusts then you might as well keep them as they stand until you  need to change your Wills.
Q I was widowed five years ago and I have decided to remarry.  My husband also lost his wife.  We both have children from our previous marriages.  We have decided to sell our separate properties and buy a new home together.  We want to make sure that the survivor can live in the property for the rest of their life, but we also want to protect our own childrens’ inheritance.  How should we do this?
A

David Kitcat
March & Edwards
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I would suggest you consider holding your new home as tenants in common.  This means that you each own a separate share which you can leave under your Will.

The next step is to include an “interest in possession trust” (or “life interest trust”) in your Will.  You leave your half share of your home to your Executors, who will hold it on trust for your husband who can live there until he dies.  He will have the responsibility for maintaining and insuring the property.  You can also include provision to allow him and the Trustees to sell the existing property and to invest in a smaller property which, in turn, results in the release of extra cash for him if he needs it.  Any surplus funds from your own share of the property can be invested to provide an extra income for him. 

If he has to go into care, then obviously he will need to fund it from his own assets, but your half of the property will remain in the Trust.  The income will go to support your husband, but the capital representing your half share of the property will be held back and will ultimately go to your children when he dies.
 
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