This is a story of two couples, Jim and Sadie and Willie and Margaret.
Both were happy couples. They were each the first generation in their family to own a property. They bought their home from the Council in the ‘80’s having lived in it for 20 years.
At least now they would have something to leave to their children and grandchildren to give them the leg up that they never had in life.
Jim and Sadie and Willie and Margaret thought they would do the responsible thing and plan for when they weren’t around. After all, no one lives forever and they were now people with property. Who knew what was round the corner? Their children’s marriages were a bit shaky and goodness knows what challenges their grandchildren might face going forward.
So Jim and Sadie organised a Will. Surely that would take care of it.
Willie and Margaret went that little bit further. They spoke to their financial adviser who said that maybe some proper estate planning would help. He couldn’t do it but he knew someone who could.
So Willie and Margaret had a chat with an estate planner. Not only did he organise a Will, but he advised them to arrange a Power of Attorney and as well as that to organise a Trust for their assets. A Trust for Willie and Margaret? Surely that was for those and such as those? And what about the costs? Folk like them couldn’t afford a Trust, surely.
But the Trust was affordable – less than the executry cost would be if they just arranged a Will (their estate planner explained that you don’t need to go through the Courts with all the expense and delay that entails when you have your assets in a Trust. That meant there was a few thousand more to go to the family rather than in legal fees!).
Then, a few years later, Life, as it can, played that unhappy trick of throwing curve balls to Jim and Sadie and Willie and Margaret.
Jim and Willie were diagnosed with Alzheimers.
Eventually Jim and Willie ended up in care. The family were worried. They had heard that the house would be taken by the Local Authority to pay for the care. But they found out it wasn’t a problem while Sadie and Margaret were alive because the house stayed protected but, as so often happens, the strain took its toll and Sadie and Margaret passed away first.
Now what would happen?
Willie and Margaret’s son and daughter were on the Power of Attorney so they were able to deal with their father’s financial affairs and speak to the Care Home and medical staff. Because the house had been passed into Trust, it no longer belonged to Willie but to his Trust and so it couldn’t be taken into account to pay for his care. Things carried on as normally as they could expect.
Jim’s family wasn’t so fortunate. Nothing could be done – the finances were in limbo; it was difficult to get care home staff or medical staff to talk to them meaningfully about their dad until a Guardianship order was put in place. That took 6 months of anxiety and cost £3000.Not only that, a few weeks after Sadie’s death the local authority started to put a charge on the house to cover the cost of Jim’s care.
Eventually, when both Jim and Willie died the estates were settled.
Jim’s family did escape executry costs but only because care costs were so much that there was only £16500 left to pass on to them.
Willie’s family received the full amount of the proceeds from the house which had been placed in Trust. It was distributed among the family as soon as the house was sold and there were no deductions for the legal fees for winding up an estate.
Willie and Margaret’s daughter did go through a divorce and their son had financial difficulties and had to declare himself bankrupt. But because they had inherited from their parents through the Trust, nothing of their inheritance was lost to the daughter’s ex-spouse or to the son’s creditors.
So what a difference a bit of planning can make.
Two similar families, two very different results and all because of a little extra planning at the right time.
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