It's that time of year. You have started building a model car from a magazine in just 256 instalments. You have that gym membership card in your hands. The bacon roll has been swapped for the muesli.
All great ambitions to start the decade. But what other steps can you take to make a real difference for your family and loved ones after any new year resolutions have fallen away? Well, here are some (and they're not too daunting).
Make a will. Take control of who will inherit your estate and on what basis (e.g. making sure appropriate trust provisions for young or vulnerable beneficiaries or where asset protection is important). This helps avoids unexpected results (for the default rules of succession might not be what everyone would think they should be) and unexpected costs and tax. A will can be an important building block in ensuring your loved ones are protected.
Have anup-to-date will. Are the beneficiaries correct? Are the executors appropriate for the decision making roles they will have? Are the executors in anyway conflicted (e.g. where there are (family) business interests involved)? Have the family and financial circumstances changed for you? Who will look after young children if both parents pass away? Have the tax rules changed since you made your will?
The "assets" people might not think about.Death benefits associated with life policies, (employment) death in service or pensions can be very, very valuable. You should ascertain what these benefits are and the best way for these to be dealt with on death. With recent changes to pensions rules, this an area which should be reviewed to make sure your arrangements are up-to-date. This is certainly one area where we cannot help alone and the input of good financial advice is fundamental to arriving at the correct and joined up solutions for protecting and securing death benefits to best help your loved ones.
Everyone must have a power of attorney. Without one assets can be frozen and welfare decisions cannot be taken while e.g. a spouse begins the (slow) process to obtain a guardianship order from the sheriff court. Spouses/civil partners and children have no default power as "next of kin" to make decisions on your behalf if you lose or have diminished capacity. Only granting a power of attorney can help you and your loved ones take control of managing affairs in a more straightforward and efficient way if capacity is lost.
Title to your house. Alongside having an up-to-date will, your title deeds should be up-to-date and consistent with your will. A title to a house which is held e.g. by "husband and wifeand the survivor" may benefit from a change to simply "husband and wife". This can have asset protection benefits in wills.
Do you cohabit with a partner but are unmarried/ not in a civil partnership? The default rules in this area are really quite unhelpful and can readily cause significant financial and emotional stress for all involved if a cohabit passes away. It is very important that cohabitants put in place wills rather than allow the default succession rules to take effect.
Do you wish to favour one child over another in your will?Do you wish to "skip" a generation and have your grandchildren inherit? Is a spouse's entitlement under a will to be restricted in some way (perhaps for asset protection for the surviving spouse)? Scots succession law provides certain "protections from disinheritance" or "forced heirship" rules. These are called "legal rights" and apply to spouses/civil partners and children. These are automatic and fixed entitlements which arise on death. Where the intention is to e.g. exclude a child from inheriting, legal rights must be carefully considered.
Shareholder and business partner protection. If one of your fellow shareholders or partners dies or suffers from a severe illness, your business may well be faced with serious questions about retaining control among the other shareholders or partners. At the same time the beneficiaries of your deceased business partner will expect a fair value for their interest in the business. Many businesses will have insurance policies in place to produce the necessary cash. However, equally important is making sure that this cash is available in the "right" way, at the "right" time for the "right" people and the business. It is this latter issue that may need particular attention. From time to time we find that the cash is not available for the "right" people and often crucially (and inadvertently) the business does not benefit at all. We looked in more detail at this important topic in this blog.
Finally, attention at this time of year often turns to sunnier climes. For those with foreign assets within the EU, EU-wide (broadly) changes to succession law came into force in August 2015 which opened up the possibility that Scots law (and thus your Scottish will) can be selected to apply to govern succession to a foreign asset rather than the law of the country in which the asset is situated. However, Brexit needs to be factored into this and is something we have blogged on.
Take action to protect family and loved ones
So, as the new year opens and we are full of new aims, projects and tasks, some of the above will be important ones to tick off. Get in touch with the Brodies team to talk about what you should be doing.