4 important documents you should create today to give your family peace of mind
Planning for the future can feel like a daunting task, particularly when it involves thinking about possible scenarios where you may not be around anymore to look after your family.
It’s precisely for this reason that having a plan in place is so important: as well as the practical element of ensuring your family will be OK, it also provides peace of mind for everyone, including yourself.
To begin building your plan and preparing for the future, there are four key documents that you should consider putting in place now.
1. A will
Your will sets out what you would like to happen to your estate when you die, including any properties, savings, investments, and assets you own.
It’s important to note that your will must be written according to UK law for it to be valid. This means that you must:
Be aged 18 or over
Make your will voluntarily
Be of sound mind
Make it in writing
Sign it with two witnesses present, both of whom must be aged 18 or over
Have the will signed by your two witnesses in your presence.
Since you need to be of sound mind to write your will, it’s worth thinking about this sooner rather than later in case you were to fall ill and lose your mental capacity.
If you die without a will in place, your assets could be distributed according to intestacy laws, which might go against your wishes. Under these laws, assets may not go to your stepchildren or your partner if you’re unmarried, so if you’d like to make provisions for them, you’ll need to state this in your will.
Dying without a will in place can also cause additional stress for your loved ones. One reason for this is that it could lead to higher Inheritance Tax (IHT) bills, since leaving your home to a child or grandchild could allow them to make use of the residence nil-rate band.
Once you have written a will, it’s important to review it at key milestones in your life, especially if you get married or have a child or grandchild. It’s also worth noting that if you marry or remarry after writing your will, the document is considered invalid, so you would need to review and update it at that point.
2. A Lasting Power of Attorney
A Lasting Power of Attorney (LPA) lets you appoint someone to take care of your personal matters if you lose mental capacity due to injury or illness.
There are two different types of LPA that you can register:
A Property and Financial Affairs LPA gives your nominated attorney the authority to manage your finances, such as paying the bills and managing your investments.
A Health and Welfare LPA allows your chosen attorney to make decisions about your day-to-day life, such as any medical care you may need.
Your family aren’t automatically allowed to do this, so if you lose mental capacity without an LPA in place, they may need to apply to the Court of Protection to be able to help you with your finances or healthcare decisions. This can be costly and cause delays.
An accident or illness could leave you unable to make financial decisions at any time, so having an LPA in place ensures your loved ones can still pay bills and manage household finances.
The most important thing to note is that an LPA must be written before you lose mental capacity. After this has happened, you won’t be permitted to create one, so registering one sooner rather than later is key.
3. An expression of wish form
An “expression of wish” sets out what you want to happen to your pension after you die. Since a pension is usually considered to be outside of your estate, you can’t say what you would like to happen to it in your will.
This is a simple form to complete, but 2022 research reported in MoneyAge showed that a staggering 72% of UK adults hadn’t completed one.
On your death, the trustees of the pension scheme will use your expression of wish to decide where the benefits should be paid. While it’s not a guarantee that your pension would be distributed exactly as you’d like, it does provide a helpful guide for the trustees.
If you die without an expression of wish in place, the pension provider won’t have any indication of how you’d like your pension benefits to be distributed. As such, it’s much more likely that they might act against what you would have wanted.
4. An “in case of emergency” document
The executor of your will is responsible for making sure your wishes are carried out after you die, but if they aren’t aware of where you have money or assets accumulated, this could be a lengthy and difficult process. This is where an “in case of emergency” (ICE) document comes into its own.
While not a technical document, having a list of all of your accounts and how to access them could be very helpful if you fall ill or pass away.
You should consider including:
Contact details of family and friends who might need to be contacted in an emergency
Care details for your pets
Your doctor’s name and address
Contact details for professional connections, including your financial planner, solicitor and accountant
Details of your savings, investments, insurance policies, and pensions
The location of key documents such as your passport, birth certificate, property deeds, LPA, insurance policy documents, and mortgage
Details of your utility companies and any subscriptions that may need to be cancelled
Any funeral plans or wishes you have.
It's important to ensure that the ICE document is securely saved and can only be accessed by those who will need it. Additionally, ensure that you haven’t included any sensitive information, such as your PIN or password, for any logins.
You can download a free template of an ICE document to use from our website.
Get in touch
If you’d like help organising your plans for the future and ensuring that your family would have everything they need if the worst were to happen, we can help. Email theteam@fortitudefp.co.uk or call us on 01327 354321.
Please note
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.