With the ever-growing power of the internet and the constant desire to make financial savings, the amount of DIY legal forms on offer has never been greater, so what are the risks? Is the potential short-term financial benefit worth the consequences of not seeking professional advice?

Whist a DIY LPA might appear to be a more cost-effective method, if there are any mistakes on the form or a signature is illegible, it will be rejected and must be resubmitted at an additional fee. If mistakes go unnoticed, the LPA could be rejected at the time of use. Banks, utility providers, Doctors and other professionals have stringent checks, and if a mistake was made in the drafting of the LPA – they will not accept it. This could cause significant delays and stress at the time when the LPA is designed to relieve just that.

The role of a professional is to draft the document correctly, manage communication with the Office of The Public Guardian, and provide counsel and support to the donor. Professionals can also ensure the attorneys know their duties and the limits of their powers, e.g., making gifts or investing. There is a real danger with DIY LPA’s that a donor could be persuaded to sign something without fully realising the repercussions.

A valid LPA must include a certificate from an independent third party confirming that the donor understands the purpose of the LPA and the powers
conferred by it. They also confirm no undue influence or fraud is being used to manipulate the donor into creating the LPA, acting as a safeguard. If you use a Professional, they will provide this certificate for you.

Families in Britain know we need a social care system that does not strip vulnerable people of hard-won assets. The onset of frailty should not result in impoverishment. The government once again delays the care-cap policy.

Back in 2019, Boris Johnson pledged to “fix the crisis in social care once and for all”. That year’s Conservative manifesto promised the Government would forge cross-party consensus and stated that “nobody needing care should be forced to sell their home to pay for it”. He pledged to set a cap of £86,000 as the maximum anyone should pay for care.

The PM and the Chancellor have now agreed at least a two-year delay to the cap’s introduction. Sir Andrew Dilnot, the architect of the original social care cap policy, commented on the delay “it seems like a breach of promise for some of the most vulnerable people in our society. By not going through with these reforms, we’re leaving people and their families absolutely on their own until they’re down to their last £23,250.”

The sad but simple fact is that legions of people have died while depending on a substandard care system that has devoured their assets. Ministers must ensure that our most vulnerable citizens have the world-class care they need and deserve.

“Freezing the inheritance tax threshold for yet another two years – until April 2028 – is another kick in the teeth for those wanting to pass down their wealth to loved ones. We believe that this extended freeze combined with rampant inflation and the increase in house prices will bring more money into the taxman’s sights.” Alex Davies, CEO and Founder Wealth Club

Contrary to what many think, inheritance tax doesn’t just affect the super-rich. It will be the thousands of hardworking families to bear the brunt, as they get caught in the cross hairs of high property prices and frozen IHT allowances.

Recent figures show that HMRC raked in another £3.5 billion in inheritance tax receipts in the six months to September 2022. This is £400 million more than in the same period last year and continues the upward trend. The good news is that with some careful planning there are lots of perfectly legitimate ways you can eliminate or keep IHT bills to the minimum, so more of your wealth is passed on to your loved ones rather than being syphoned off by the taxman.

Who Pays IHT?

• Inheritance tax (IHT) of 40% is usually chargeable if one’s assets exceed a certain threshold, after deducting any liabilities, exemptions, and reliefs.
• The threshold (nil rate band) has been £325,000 per single person since 6 April 2009 – and will now stay frozen at this level up to April 2028.
• There is an additional transferable main residence nil rate band of £175,000 available when passing the family home down to children or other direct descendants.
• Any unused threshold may be transferred to a surviving spouse or civil partner. So, a couple could currently potentially pass on up to £1 million before IHT might apply.

Key IHT Stats

1. One in every 25 estates pay inheritance tax, but the freeze on inheritance tax thresholds, paired with inflation and decades of house price increases is bringing more and more into the taxman’s sights.
2. Wealth Club calculations suggest the average inheritance tax bill could increase to just over £266,000 in the current tax year. This is a 27% increase from the £209,000 average paid just three years ago.
3. While you can pass on money IHT free to your spouse or civil partner, the estate could still be subject to IHT on their death though they may be able to make use of your pass-on allowance.
4. The main threshold is the nil-rate band, enabling up to £325,000 of an estate to be passed on without having to pay any IHT. This has been unchanged since April 2009.
5. There is also a Residence Nil Rate band worth £175,000 which allows most people to pass on a family home more tax efficiently to direct descendants, although this tapers for estates over £2 million and is not available at all for estates worth over £2.35 million.

*Assumes inflation at 4% from 2023/24 to 2027/8.