It’s time to look ahead to the year before us…. and to make resolutions. We often give up on them quickly. Got the trainers but too cold for a run. Drinking a litre of water a day, but coffee gets you started in the morning. Healthy eating and yet chocolate is so nice. Apparently the key to successful resolution-keeping is manageable bite-size chunks (but not of chocolate- well, maybe a small piece).

So, here is a bite-size chunks way to get your personal affairs in shape. A resolution your loved ones will be pleased you kept…. and one that should not be too onerous.

Unusually for new year resolutions, these steps might lead to you and your family gaining pounds or at least protecting them.

THE FUNDAMENTALS

Make a will. Take control of who will inherit your estate and on what basis (e.g. making sure appropriate trust provisions for young or vulnerable beneficiaries or where asset protection is important). This helps avoids unexpected results (for the default rules of succession might not be what everyone would think they should be) and unexpected costs and tax. A will can be an important building block in ensuring your loved ones are protected. Over the festive period the BBC reported on the “biggest inheritance boom of any post-war generation” and that should be protected.

The “assets” people might not think about. Death benefits associated with life policies, (employment) death in service or pensions can be very valuable. You should ascertain what these benefits are and the best way for these to be dealt with on death. With significant changes to pensions rules, this an area which should be reviewed to make sure your arrangements are up-to-date. This is certainly one area where we cannot help alone and the input of good financial advice is fundamental to arriving at the correct and joined up solutions for protecting and securing death benefits to best help your loved ones. It is all too easy to ‘disinherit’ family members and loved ones or to miss out on tax efficiencies and choice. We have written about these issues before – death benefits are important.

Everyone must have a power of attorney. Without one assets can be frozen and welfare decisions cannot be taken while e.g. a spouse or children begin the slow process to obtain a guardianship order from the sheriff court. Spouses and children have no default power as “next of kin” to make decisions on your behalf if you lose or have diminished capacity. We hare involved with the “Start the Conversation” campaign which seeks to encourage more people to grant powers of attorney and help individuals and families take control of managing affairs in a straightforward and efficient way if capacity is lost. Following recent TV coverage about the use of powers of attorney, we issued an update on why these documents are a vital element in putting personals affairs in order… ready for illness or unexpected circumstances.

STILL RELEVANT AND RIGHT?

Have an up-to-date will. Are the beneficiaries still correct? Are the executors appropriate for the decision making roles they will have? Are the executors in anyway conflicted (e.g. where there are business interests involved)? Have family and financial circumstances changed for you? Who will look after young children if both parents pass away? Have the tax rules changed since you made your will (e.g. legacies to anyone other than a spouse/civil partner or charity on the first death and bequests of houses should be carefully considered)? Similarly, are nominations and expressions of wish for death benefits current allowing your loved ones to benefit from these in the best and most tax efficient way?

Title to your house. Alongside having an up-to-date will, your title deeds should be up-to-date and consistent with your will. A title to a house which is held e.g. by “husband and wife and the survivor” might benefit from a change to simply “husband and wife”. This can have asset protection benefits in wills.

PARTICULAR INDIVIDUALS, FAMILIES AND ASSETS

Do you cohabit with a partner but are unmarried/not in a civil partnership? The default rules in this area are really quite unhelpful and can readily cause significant financial and emotional stress for all involved if a cohabitant passes away without a will. It is very important that cohabitants put in place wills rather than rely on the default succession rules.

Do you wish to favour one child over another in your will? Do you wish to “skip” a generation and have your grandchildren inherit? Is a spouse/civil partner’s entitlement under a will to be restricted in some way? Scots succession law provides certain “protections from disinheritance” or “forced heirship” rules. These are called “legal rights” and apply to spouses/civil partners and children. These are automatic and fixed entitlements which arise on death. Where the intention is to e.g. exclude a child from inheriting, legal rights must be carefully considered. We have blogged on developments in this area on a number of occasions. If you want to find out more without reading the blogs, just get in touch directly. The aim being to avoid ‘contentious probate’ or will disputes.

Business, shareholder and partner protection. If one of your fellow shareholders or partners dies or suffers from a severe illness, your business might well be faced with serious questions about retaining control among the other shareholders or partners. At the same time the beneficiaries of your deceased business partner will expect a fair value for their interest in the business. Many businesses will have insurance policies in place to produce the necessary cash. However, equally important is making sure that this cash is available in the “right” way, at the “right” time for the “right” people and the business. It is this latter issue that may need particular attention. From time to time we find that the cash is not available for the “right” people and often crucially (inadvertently) the business does not benefit at all. We looked in more detail at this important topic in this blog.

Inspired by January holiday adverts, we turn finally to sunnier climes. For those with foreign assets within the EU, EU-wide (broadly) changes to succession law came into force in August 2015 which open up the possibility that Scots law (and thus your Scottish will) can be selected to apply to govern succession to a foreign asset rather than the law of the country in which the asset is situated. This will be particularly relevant for those with land and buildings in an EU country. For assets held outwith the EU (and perhaps after Brexit), the need for wills in different countries needs to be considered and to make sure these dovetail properly.