3 life-changing documents most people don’t have, and why you need them

By Chancellor

The last two years have been life-altering for the majority of people. The Covid-19 pandemic arrived unexpectedly, causing disruptions to almost every aspect of our lives.

As you were faced with various challenges during these years, you may have begun to re-evaluate what’s important to you and your family.

One aspect of life you might have thought about during this period of uncertainty is your family’s future.

According to government data, the pandemic has, so far, taken the lives of almost 200,000 Brits. Although this is a difficult concept to reckon with, it is important to consider how well-protected your family would be if an unexpected death or illness occurred.

Luckily, there are documents you can put in place that could provide relief to yourself, your family, and your estate in the event of a death or serious illness.

Although these documents are available to everyone, many people have not taken the simple steps necessary to strengthen their family’s financial wellbeing. As a result, they could be vulnerable to administrative stress and financial difficulty.

Read on to find out three life-changing documents most people don’t have, and why you need them now more than ever.



1. A Lasting Power of Attorney (LPA)

If you have a next of kin, you might assume that, in the event of an illness or injury that rendered them incapacitated, you could assume control of their financial affairs.

In fact, if your spouse or other next of kin became incapable of making their own decisions, you would be unable to access important financial documents in their name, including:

  • Their personal bank accounts
  • A mortgage in their name, even if you live in the property and contribute to payments
  • Their insurance policies, such as income protection or private health insurance.

There is one document that can allow you to access all these crucial pieces of administration: a Lasting Power of Attorney (LPA).

An LPA is a document in which you can name an “attorney” (or “attorneys”) who, in the event of your incapacitation, such as a dementia diagnosis or a brain injury, assume control of your financial affairs. This attorney can be a spouse, family member, or trusted professional.

If you have never heard of an LPA, or don’t have one in place, you aren’t alone. Research from Lloyds Banking Group reveals that 80% of over-55s don’t have an LPA, and are vulnerable to having their financial affairs assumed by the court of protection if they can’t make their own decisions.

In this instance, members of your family could apply to be a “deputy” and handle your affairs that way. However, there is no guarantee that the court of protection will grant them access, and this process can be both lengthy and expensive.

Your financial adviser can put you in touch with trusted legal professionals who can help you make and register an LPA. That way, if you became unable to control your own assets, you know your wealth will be placed in the hands of someone you trust.



2. An “expression of wish” form

An “expression of wish” form, also known as a “pension will”, informs your pension provider of how you would like your pension to be divided and passed down when you die.

Many people assume this will be included in their will, but in fact, you need a separate “pension will” to let the trustees of the pension know how you’d like your retirement fund to be distributed.

This could be especially important because, unlike much of your wealth, your pension will generally fall outside the value of your estate and so will not be subject to a 40% Inheritance Tax (IHT) charge. So, your beneficiaries could receive your pension fund tax-free – if you have the right documentation in place before you pass away.

Once again, although an “expression of wish” form is available to everyone, MoneyAge reports that 72% of UK adults don’t have one.

If you want to decide how your pension savings are passed down to the next generation, your Chancellor financial adviser can help you fill in or update your “expression of wish” form.



3. A will

Everyone has heard of a will, and you may already have one in place. However, you might be surprised to learn that more than half of UK adults don’t have a will, according to Canada Life research.

Indeed, some people wait until they are already elderly or ill to make a will. Meanwhile, others might want to have a will in place but feel they don’t have the time to draw one up.

In any case, having a will is a crucial part of planning for your family’s future. If you pass away intestate, your hard-earned wealth will be divided according to intestacy law, instead of in line with your wishes.

So, in a simple example, if you die without a will, and you have a partner and you’re not married, they may receive none of your assets.

Plus, beginning the estate planning process as early as possible could help you lessen your IHT bill. By working with your financial adviser to complete and update a will, your adviser can provide guidance on how to organise your estate to decrease the IHT your beneficiaries might pay.

You can read about why it’s important to complete the estate planning process as a family on our website.



Get in touch

If you want to protect your wealth and your family against unexpected events, get in touch. Your adviser can help you achieve valuable peace of mind in these difficult times, and can provide support as you plan for a more financially prosperous future.

Email info@chancellorfinancial.co.uk or call 01204 526 846 to speak to an adviser.



Please note

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investment can fall as well as rise and is not guaranteed.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.