Blogs - Health, financial and end of life matters - Three Peas in a Pod in Estate Planning basics

Published:

27 June 2025

Kate Garraway, former presenter at Good Morning Britain, and popular English broadcaster and journalist, lost her husband, Derek Draper, in January 2024. Derek died after fighting a long battle with symptoms of Coronavirus, which he contracted in March 2020. She shared, during a no-holds barred interview on her show, "One of the practical problems - which a lot of people would've experienced…like many things, the car is entirely in Derek's name; the insurance is in Derek's name, a lot of our bank accounts…. Because legally, I haven't got power of attorney. And all this other stuff that goes on when you're dealing with a situation where someone's been sick for a long time." It became increasingly difficult for her to access her husband’s bank accounts and she regretted the absence of a Lasting Power of Attorney (LPA) that would have made the burden easier on her and the children in caring for him during his ill health. An LPA is one of the three important components in Estate Planning, the two others being a ‘will’ and a ‘trust.’

Lasting Power of Attorney (LPA)

An LPA is a legal document that allows someone (you can appoint your spouse, child, relative, or a professional, such as a solicitor) to act on your behalf if you become unable to make decisions due to an illness or accident. This is especially important if you have persistent health issues and as you progress and age. An LPA can only be made while the person making it has full capacity to do so. Due to the absence of an LPA made in advance, Kate Garraway could not access the bank accounts that were set up solely in her husband’s name as his health deteriorated and he became incapacitated. The Office of the Public Guardian in 2022 reported a growing number of UK residents now obtaining and registering their LPA, but that number only represents about 10% of the UK’s population. While an increase has been reported, a lot more UK residents still need to take proactive steps with planning their estates or making proactive health and financial decisions.

The two main types of LPA are:

Property & Financial: the appointee makes property, banking, or financial decisions when you become mentally incapacitated.
Health & Welfare: the appointee makes decisions on the type of medical care or the welfare arrangements you will have, such as when or how you will receive it, if you become incapacitated.

When you are selecting an appointee, make sure to select someone that you trust. You can also select more than one person and decide the scope of authority that you wish to give to each appointee. Your LPA can be reviewed periodically and can be revoked, and must be registered with the Office of the Public Guardian.

Will

A Will is a legal document that details how your estate or assets should be distributed when you die. A Will should be updated regularly to reflect your estate/assets as they change over time and following any significant life events. The absence of a Will means your assets will be distributed via the Rules of Intestacy, which may not represent your personal wishes. 51% of UK adults don’t have a will or plan to have one. Reasons cited for not having a will include not having sufficient assets or wealth to necessitate creating one (26%), or the belief that they still have enough time left to write one later (23%). Some stated they don’t want to be pessimistic or think of death (15%) while others don’t want to deal with solicitors (8%) or pay for a Will (14%).

Although there is no legal requirement for your Will to be written by a lawyer, you should be cautioned against writing it yourself to ensure it is properly executed and therefore valid. There is more guidance on how to ensure a will is valid on the GOV.UK website here, but ensuring your Will is valid and enforceable could be complex and you will benefit from seeking legal advice prior to doing so. Furthermore, if you are 55 years old and over, ‘Free Wills Month’ allows you to make or update your basic Will for free.

Trusts

A Trust is a legal arrangement where you appoint a trustee or trustees to manage your assets while you are alive and/or upon your death. Trusts have been known to serve a valuable purpose for controlling what happens to your assets especially when you die.

The general rules of inheritance tax, which is levied on a deceased person’s estate, are summarised below (correct as at the date of publication of this blog):

Normally, there is no Inheritance Tax to pay if either the value of your estate is below the £325,000 threshold or you leave everything above the £325,000 threshold to your spouse, civil partner, or a registered charity.
Inheritance Tax is due at 40% on anything above the £325,000 threshold- but there’s a reduced rate of 36% on some assets if the person leaves more than 10% of their estate to a registered charity (or a community amateur sports club).

Placing assets into a Trust during your lifetime may avoid the long probate process for those assets on your death, which can otherwise involve a lengthy and protracted process. It does not eliminate your inheritance tax obligations but aims to ensure that your assets are properly managed and distributed to your beneficiaries in the most cost effective and tax efficient manner. Trusts can include anything of value including cash, property, fine art, shares, boats, etc.

The type of Trust you set up will depend on the value of your assets and your objectives. Three important components of a trust include: settlor, trustee, and beneficiary. You are the settlor when you set up and put assets into the Trust; the trustee(s) manage(s) the Trust, and the beneficiary benefits or receives the asset(s) from the Trust.

There are three common types of Trusts:

Bare Trust: Trustee holds assets for the beneficiary, who has the right to claim the assets and benefits of the trust when they reach the age of 18.
Life Interest Trust, also known as an ‘Interest in Possession’ Trust, passes on Trust income to the beneficiaries. There are two types of beneficiaries that can benefit in this type of Trust:
- Life Tenant: income made from the Trust, after fees are deducted, such as rents, dividends, etc. is paid to the beneficiary (also known as life tenant) for a period (usually until the death of the life tenant), however, the beneficiary here does not have access to the capital.
- Remainderman: receives the actual ownership of the asset when the life tenant passes away, or the Trust is terminated. The beneficiary is also known as the “remainderman”.

Discretionary Trust: gives full discretion to the trustee to decide how and when the assets are distributed, particularly where the beneficiary is still a child.

Conclusion

Estate planning and the use of LPAs, wills and trusts protect your health, wellbeing, and finances when life takes an unexpected turn. It also takes care of your family upon your death and ensures your hard-earned estate and assets are distributed to your beneficiaries in accordance with your wishes while maximizing your estate in the most cost-effective and tax-efficient manner.

By Clara Ogusemi, Student Blog Writer at QMLAC and LLB Law Student.

The information provided here does not replace professional guidance, for which you should consult an estate planning specialist.

This blog is for information only and does not constitute legal advice on any matter. While we always aim to ensure that information is correct at the date of posting, the legal position can change, and the blogs will not ordinarily be updated to reflect any subsequent relevant changes. Anyone seeking legal advice on the subject matter should contact a specialist legal representative.