When your spouse or civil partner is diagnosed with dementia, it can be incredibly overwhelming, and you would be forgiven for omitting to think about the impact this may have on your own affairs. We wanted to take an opportunity to outline some of the aspects that someone may want to consider in protecting their own assets in these circumstances.
Wills
You may need to review your Will. It is very common to appoint your spouse or civil partner as your sole executor and this may no longer be appropriate depending on their mental capacity and whether they would be able to cope with acting as an executor whilst living with dementia.
You may also want to consider whether you should leave your estate to your spouse or civil partner if they are living with dementia. You will need to think about your respective assets and whether they will need access to assets held in your name in order to continue living in the lifestyle you are accustomed to or to pay for their care.
Trusts
In these circumstances a type of will trust can be useful to allow your trustees to decide as to how much or if your spouse or civil partner should benefit from your estate. The trustees could appoint funds to them if required but it allows for flexibility to avoid your estate being used to pay for their care.
Trusts are however complex and will not suit everyone. They can also impact the IHT (inheritance tax) position so careful consideration needs to be taken before entering into any of these arrangements as assets passing between spouses and civil partners are exempt for IHT purposes, whereas the tax treatment of trusts depend upon their terms. If you are considering whether a trust is appropriate for you, please do seek advice from one of our Wills, Probate and Estate Planning team who can help guide you through this.
Tenants in common
If you want to include some form of trust as mentioned above, you will need to review how you own any joint property. You may own the property as “joint tenants” which means your respective share of the property will pass to your surviving co-owner, regardless as to the terms of your Will. If you own the property as “tenants in common”, your respective shares of the property will pass according to your Will. This means that your share of the property can pass into the trust as set out above and allow your trustees to manage this in line with the terms of the trust, rather than it falling into your spouse/civil partner’s estate and being used to fund their continuing care.
If you are unsure which type of joint ownership you have, you can obtain a copy of your title direct from the Land Registry and our Wills, Probate and Estate Planning team would be happy to help you identify what type of joint ownership you have.
Lasting Powers of Attorney (LPA)
You may have appointed your spouse or civil partner as your attorney and you may wish to consider whether they could still take on this role. If you have a replacement attorney appointed, you should review this to ensure that this is an appropriate replacement or whether you wish to cancel your LPAs and create new LPAs in light of this change in your circumstances.
If you have not chosen to appoint a replacement attorney, you will need to create a new LPA to ensure that a trusted individual is appointed to act on your behalf if you ever lose mental capacity. It is important to remember that you cannot make a LPA if you have lost mental capacity so it is something that must be prepared whilst you are in good health. We sincerely hope that these documents can be left as an insurance but it will ensure that should you lose mental capacity, your chosen trusted individuals can step into your shoes and make decisions in your best interests.
If you would like to discuss your own affairs and what arrangements we can assist you with, please do contact Hannah Wallbridge or visit our Wills, Probate and Estate Planning to find out more.