7 minute read
Letters of love
Consider this, do you want your will to be the last communication you have with your kids? Here, Colin Lawson, explains the importance of having a ‘letter of love’ in place.
Death, impairment and incapacity are always difficult things to face up to, yet here at Equilibrium we never duck the difficult decisions. We bring them front and centre to ensure that whatever happens to you, during your life and on your death, your affairs are not just in order (avoiding leaving a mess), but everyone knows exactly what you want to happen and why.
Of course, there are multiple legal documents needed such as powers of attorney, wills, pension nomination forms, trust deeds etc. The problem is they are full of legal speak and are therefore by definition dull, boring, and full of incomprehensible jargon.
So, let’s start off by looking at these documents and how we can help bring them to life.
Lasting Power of Attorney (LPA)
The first legal document that your family (or representatives) might need to deal with is your LPA, which, if you have prepared thoroughly, will be in two separate documents - health and welfare; and property and financial affairs.
Health and welfare
The most important and often overlooked one is your health and welfare LPA, which sets out how you want to be treated by health professionals and what powers your attorneys have.
Our website article, ‘Hope for the best, prepare for the worst’, highlights the importance of having this LPA and a poignant example of a client without one.
What a health and welfare LPA doesn’t spell out, is your feelings about what you truly want. Imagine if your representatives had a letter from you, expressing your hopes, your fears and how you would like them to act - wouldn’t this give greater clarity and meaning?
Take this real-life example from one of our clients:
“I do not wish to go into a ‘home’ and unless I tell you otherwise, this is to remain my intention. Obviously, if I become a danger to myself and others through dementia you will have little choice; the considerable pension I enjoy from Dad should cover 24-hour care and nursing in my own home. Please do not feel you can save money by doing this yourselves as this is unrealistic and will lead to unhappiness for both the family, carer and me.
“If eventually and in extremis you all decide I cannot live at home, then I expect the care home to be of an extremely high standard with excellent food and wine.
“I hope for entertainment that does NOT include sing-a-longs of ‘The Lambeth Walk’ (1937) or ‘It’s a Long, Long Way to Tipperary’ (1912). Why carers assume you know the words to songs that were current, years before one was born, I do not understand.
“I would also like fresh flowers, fresh coffee (in bone china cups) and good wine in a large glass.”
You can literally picture this scene in your mind, helping the representatives no end in terms of expectations and budget. Who could possibly go against these wishes?
Property and financial affairs
When it comes to the financial LPA, you could express some guidance as to how you want the money to be invested. Many of our clients, without any nudging from us, have gone as far as saying please take guidance from Equilibrium.
Wills
Your will is the last communication you will ever have with your loved ones and if you have ever tried to read one you will appreciate that an interpreter is often required. We recommend writing an accompanying letter which provides an opportunity to simplify things, share your thoughts or even explain some of the things you’ve found hard to say in life. The best bit is that it will all be in your own words.
Many people like to explain the background as to how their money arose and how they managed it:
“As a child I grew up in poor circumstances but through hard work and good fortune, I have
managed to accumulate a degree of wealth, the disposal of which is dealt with by my will and the terms of the various family trusts.”
They go on to explain the detail of how they hope the money will be used and the benefits it will bring:
“I hope the inheritance I have left you will enable you to have financial freedom to enjoy life, travel to far-away places and spend quality time with your family and friends.”
These letters can explain as little or as much as you like. For instance, why you didn’t spend more, changes you made regarding inheritance tax, your wishes for how they spend their inheritance, or even how to protect it:
“I wish for you to have a prenuptial agreement in place before you marry simply because, in the unhappy event that the marriage breaks down, I would want to ensure that the funds I have accumulated and gifted to you, will stay within our bloodline or be left to charity.”
Pensions
Pensions do not form part of our wills and therefore need a separate nomination form which we can guide you through. For tax reasons, we often recommend nominating multiple generations including grandchildren and great grandchildren (highlighted in our website feature, ‘Future fortunes’).
The issue this brings with grandchildren, is early access to the money, as captured by the stick and the carrot approach here:
“As you are over 18, you could technically withdraw this money immediately and blow it all very quickly.
“The purpose of this letter is to encourage you to do the opposite. This was my pension, which I built up over many years, and I hope you will use as your own pension pot. I hope that you will keep it invested and let it grow tax-free so that you can enjoy a great retirement like I did.
“There is also a significant sum of money held by the family both personally and in trusts, and I have made it clear that your access to further funds from these sources will depend entirely on how responsibly you manage this pension.”
Trusts
Most trusts are discretionary, which means the range of beneficiaries can be virtually anyone on the planet. Providing guidance to the trustees through a further document known as a ‘letter of wishes’ is fairly standard but again it’s usually in legal speak rather than from the heart. Once again, a letter can really help in sharing your hopes and intentions:
“I have set up a discretionary trust, naming you both as the beneficiaries. This is for you to use wisely, whether you need a sustainable income from it or to go towards a new house or extension. The trust is for yours and your family’s benefit but also gives me the peace of mind that the money I’ve worked hard to accumulate, stays within our family.”
Your letter of love and your will should be kept together and reviewed regularly, ideally every two to three years, to ensure changes in your personal circumstances, or legislation are considered. You can amend or replace your letter of love as often as you like as it’s free to do.
Remember this is your legacy, let’s make it a powerful one!
If you would like to view the referenced website articles, visit www.equilibrium.co.uk.
Death rehearsal
Once we have guided a client through making sure they have all the right documents and letters in place, we will then host a death rehearsal. If it’s a couple, we will choose whose death to rehearse and whilst both will be in the meeting, logically the dead cannot speak.
This process can be invaluable in highlighting any issues or problems early and ensures that when the inevitable does happen, everything is as stress-free as possible for those left behind.
We will amongst other things:
1. Check whether you wish to write a letter of love. 2. Check all the legal documents and insurances are up to date. 3. Check and note where important documents are stored. 4. Calculate any inheritance tax. 5. Make sure we have all the documents needed for probate. 6. Demonstrate who will receive what in monetary terms. 7. Highlight how income will increase or decrease for the survivor. 8. Discuss who needs to be notified. 9. Ask how we turn off social media such as Facebook or LinkedIn. 10. Enquire as to which funeral directors/ songs/ poems/ readings you wish to use.
