Misconceptions about Wills, Trusts and Lasting Powers of Attorney

Author: Munazza Hollingsworth – Partner for RHJ Devonshire solicitors.

Some of the most common misconceptions that are often heard by us, at RHJ Devonshire Solicitors:

Misconception number 1: A Lasting Power of Attorney can be used after death. No. Upon a person’s death, a Lasting Power of Attorney loses any, and all, authority possessed during a person’s life. Whether a Lasting Power of Attorney for Health and Welfare, or one for Property and Finance, both documents, expire upon death. Neither document allows for anything to be done after death. Such decisions remain strictly in the hands of the Personal Representative/Executors under a Will or a Trustee under a Trust.

Misconception number 2: A Will avoids probate.  No.  However, Wills do not have to go through probate if your Estate is below a certain threshold. Probate is also a legal process where the Court recognises the authority of someone to administer the Deceased person’s estate. The Will is like a letter to the Probate Registry telling the Registry how you want your assets distributed.  The Registry will interpret the Will. After your death your Personal Representative must prove to the Probate Registry that all your assets and liabilities are ascertained and the taxes have been paid (or part of them are paid), before your assets can be distributed to your beneficiaries.

Misconception number 3: Your Will remains private.  No. Once a Will has been lodged with the Probate Registry it becomes a public document, and anyone can apply for a copy. However, if a Grant of Probate is not needed, your Will remains private between your Executors and the beneficiaries named within it.

Misconception number 4: All lifetime gifts are exempt even if you retain a benefit.  No. A gift of property made by an individual on or after 18 March 1986, whereby the recipient does not enjoy possession of the gifted property is known as a gift with reservation. If there is a reserved benefit within seven years of the donor’s death, then the gift is caught by the gift with reservation rules and the effect is that the gifted property is treated as part of the donor’s estate for inheritance tax purposes.

Misconception number 5: A Will Trust avoids probate.  No. A Will Trust is a Trust created at your death by direction of your Will for a specific purpose. Your Will and estate still must go through the probate process.

Misconception number 6: Trusts are only for the wealthy. No. Many people, often without realising it, will come into contact at some point in their lives with a trust in one form or another.  A trust provides people with a mean of protecting their assets and controlling how they are used after they have been given away.

Misconception number 7: If I do not make a Will all my assets will pass to my surviving spouse or partner. No. This is not the case especially where you have children, or you are co-habiting. If a person dies without a valid Will, it means they have died “intestate”. When this happens, the intestacy laws of the country in which they reside will determine how their property is distributed upon their death.

Misconception number 8: My next of kin can act for me if I lack mental capacity. No. No one person can act on your behalf unless they are legally authorised to do so – whether this is to do with your assets or your health.

Misconception number 9: I have a Will so I do not need a Lasting Power of Attorney.  No. A Will sets out what happens to your estate after you die, whilst a Lasting Power of Attorney deals with what happens if you can no longer make decisions for yourself while you are still alive. As such, they are completely different documents that deal with very different circumstances and both are needed to protect you and your assets.

Misconception number 10: Assets abroad are not counted for UK IHT.  No. If you live in the UK and are domiciled here your entire estate worldwide will potentially be taxable on your death regardless of where it is situated.

If you want to ensure that you maximise the resources available to your loved ones, please contact the Private Client team at RHJ Devonshire who will be willing to review your existing Will and estate plan and advise you on any adjustments that need to be made to help you achieve your goals.

RHJ Devonshire Solicitors believe in developing trusting relationships with families for life. We do not just draft documents, we ensure you make informed and empowered decisions about life and death, for you and the people you love.

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