Looking to the future when you’re starting out

The first step into your career is an exciting time. As with any other big life event, it’s a good time to consider your getting things in order for the future.

Your personal circumstances will affect your considerations – as will your family and relationship status and any living arrangements you might have. However, there are some key legal documents which will be of benefit to you regardless of your situation.

Why make a will?

Getting a will in place is arguably one of the most important things you can do for your future. Whilst not the most exciting of topics, it is crucial to ensuring that your estate passes onto those you wish to receive it when you are no longer here. This is your opportunity to set that in motion – including insuring your instructions are carried out properly and who you want to benefit from your estate.

An estimated 50-60% of adults in the UK do not have a will. Without one, your estate passes under the default intestacy rules, which could lead to your assets not being passed on as you would want.

Based on legislation from 1925 and only modestly updated in 2014, the intestacy rules have not been readily updated to reflect the modern family structure. They provide a list of relatives who can benefit from your estate in an order of priority. This starts with any spouse and children, ahead of passing down a line of more distant relatives if required.

However these rules do not include stepchildren, foster children or cohabiting partners. They prioritise the spouse, who receives the first £322,000 of the estate, all personal effects and half of any remaining estate if the deceased has surviving lineal descendants.

Any children of the deceased receive the remaining 50% equally between them. Although spouses may be the priority for many, it can create difficulties for individuals who have married for a second time, who have children from a previous relationship. There is little balance between those interested parties in terms of value.

There are many benefits to making a will beyond the distribution of wealth. They also mean you can specify guardians for any children you may have and structure inheritance into trusts for vulnerable beneficiaries. A will can also give you the opportunity to balance interests between partners and children from other relationships.

These documents also afford you the opportunity to detail any funeral preferences, as well as gifts to charity.

So, making a will isn’t just something to consider as you approach retirement. It is an important consideration for any individual to ensure that their affairs are as straightforward as possible for their loved ones after they have gone.

Lasting Powers of Attorney (LPAs)

In contrast to wills, LPAs allow you to ensure the running of your estate while you are alive, but in circumstances where you become less capable of making decisions for yourself.

These last for life and allow you to select people you trust to make decisions for you if you lose the mental capacity to do so, whether temporarily or otherwise. There are two types, allowing you to customise your wishes between those you trust to make medical and welfare decisions and those you trust to manage your financial affairs.

Although often a hard topic to consider, LPAs are just as important as wills – as they dictate who can access your accounts, pays your bills and ensure you have everything you need if you were to become unwell.

As with wills, these are not documents to be considered towards the end of your career as you never know when you may require them. Consider them a bit like an insurance policy. An accident or unexpected illness could impact your mental capacity at any time and so this is not just restricted to older people post-retirement.