Managing Client Wealth - Estate Planning Flashcards
(19 cards)
What is power of attorney?
A legal document whereby a person gives another person the power to make decisions regarding their financial affairs and health.
What are the 3 main types of power of attorney?
Ordinary Power of Attorney (OPA)
Enduring Power of Attorney (EPA)
Lasting Power of Attorney (LPA)
What does ordinary power of attorney allow for?
Make decisions for a temporary period or specific task
Is revoked when mental capacity is lost
When is ordinary power of attorney useful?
When an individual is temporarily incapacitated e.g. away or short hospital stay
What was an enduring power of attorney?
Could be used to appoint someone to manage financial affairs when the person loses mental capacity
They are still valid but no longer issued
no longer in issue as of Oct 2007
What is lasting power of attorney?
Can appoint someone to make decisions on your behalf if you lose mental capacity
Replaced enduring power of attorney in 2007
How does LPA differ from EPA?
LPA allows for two different kinds of attorney
1) Property & Affairs
2) Health and Welfare
How is power of attorney cancelled?
A deed of revocation (so long as the donor is still mentally capable)
because power of attorney appoints someone in advance of losing capacity
What is a will?
A statement which expresses how an individual would like their estate to be divided
also allows for things like funeral plans
What has to be done first before the wishes of a will can be carried out?
1) Pay off debts
2) Pay funeral costs
3) Pay IHT (if due)
What conditions must be met for a will to be valid?
1) Must be in writing
2) Must be signed
3) Must be witnessed (witnesses cannot benefit from will)
What does divorce do to a will?
Revokes benefit to spouse (but does not cancel will)
What is a statutory will?
A will made by the court of protection for someone lacking mental capacity
What is dying intestate?
Dying without a will in place - estate is divided under the rules of intestacy
How is an estate divided: Surviving spouse + no issue
under rules of intestacy
100% of estate goes to spouse
How is an estate divided: Surviving spouse + issue
under rules of intestacy
£322k to spouse + chattels + half of remainder
rest split between children
£322k is index linked to CPI and adjustd every 5yrs
How is an estate divided: No surviving spouse
Given in this order
1) Children
2) Parents
3) Brothers Sisters
and so on - until eventually the crown are last in line to receive if no family members
What is the statutory amount a spouse receives under the rules of intestacy?
£322,000
this is index linked to CPI and adjusted every 5 years
How does the process of administering an estate work?
1) Register Death
2) After a month apply for probate
3) Pay IHT - then can administer
