Are you cruising through life without giving much thought to the unexpected? Whether you’re focused on work, socialising with friends, or building a career, everything can seem fine—until the unforeseen happens. No matter your profession—whether you’re an IT professional, NHS worker, entrepreneur, or anywhere in between—having solid legal planning in place is crucial to protect yourself and your loved ones from life’s surprises.
While financial planning, like pensions and investments, can help secure your future, legal planning is the key to safeguarding you and your family from potential challenges both now and in the future.
In this post, we’ll explore 4 creative legal planning tips that anyone, from any walk of life, can adopt to ensure a safe and secure future.
Power of Attorney (POA)
One of the most important legal documents to establish early on is a Power of Attorney (POA). Acting sooner rather than later ensures you’re prepared for the unexpected. A Lasting Power of Attorney (LPA) typically comes in two types: one for health and welfare, and another for property and financial affairs.
The POA will help you appoint an attorney who will make decisions on your behalf regarding your finances and healthcare when you are critically ill or mentally indisposed. However, to make your LPA valid you need to get it signed by a certificate provider and register it with the Office of the Public Guardian.
A certificate provider is an independent individual who will testify that the donor is not signing an LPA under duress or coercion of the attorney(s).
Health and Welfare LPA
This LPA will enable you to give power to an attorney who will make decisions about your daily routine, life-sustaining treatment and medical care facilities and moving into a care home. This LPA will come into being only when you cannot make decisions on your own.
Property and Financial Affairs LPA
Even when unwell or mentally incapacitated, you still need someone to manage your finances. This LPA empowers you to do the same. Your chosen attorney will make decisions regarding managing your bank accounts, paying bills, collecting benefits or even selling or renting your property.
Making a Prenup
You don’t need millions of pounds in your bank account to sign a prenup. A prenuptial agreement is signed at least a month before the wedding. This legal document will help you divide your individual and mutually acquired assets in case you are headed for divorce. A prenup will also touch upon your children’s well-being in case you and your partner go your separate ways.
A prenup can be revoked by the court if the judge finds that the prenuptial agreement is unfair to any one of the parties or it is harming the children’s rights and living conditions post-divorce.
Forming a Trust
A trust is an important part of your estate planning and can also help you save a considerable amount in inheritance tax, while also providing an opportunity for creating intergenerational wealth for your future generations. To create trust in the UK you must undertake the following steps:
- Make a list of all the assets and their corresponding values that you want to include in the trust.
- Select the board of trustees; you too can be part of the trust during your lifetime.
- List the beneficiaries and the percentage that each would be entitled to receive.
- Create the terms and conditions of the trust and how everything will be managed.
It is important to consider that unlike a POA or a will, forming a trust is an irreversible decision. However, the many advantages of forming a trust outweigh this drawback.
By forming a trust fund, you have better control over your assets. A trust can also help with providing financial protection to vulnerable dependents like children below the age of 18 or even elderly relatives.
It is best to consult with a legal advisor before forming a trust, who can guide you through the nitty-gritty details.
4. Wills
Creating wills can be a great way to distribute your assets as per your wishes instead of letting the court decide. If you leave intestate, that is die without making a will, the probate court will decide the division of your wealth and properties as per intestacy laws.
However, with a will, you can allocate your estate how you deem fit. For a will to be considered valid, it must be signed by two adult witnesses who are of sound mind and do not benefit from the will. You can select an executor, who will ensure every action is taken as per your wishes upon your death.
In Summary
Legal planning should be done by every adult and not just the elderly, or rich individuals. No matter the size of your property or the amount of money in your bank account, legal planning will help ensure your property is properly distributed.
Most importantly, legal planning ensures that your wishes are respected and carried out, whether you’ve passed on or are unable to make decisions yourself. Have you started planning for your future yet?