A Power of Attorney alert has been issued ahead of a significant HMRC rule change scheduled for 2027. A Lasting Power of Attorney is a £92 document that outlines how you wish your affairs to be managed if you become unable to do so due to illness or incapacity.
However, looming inheritance tax (IHT) changes from April 2027 have prompted warnings from pensions experts. Starting next year, pensions are expected to be included in estates for IHT purposes, which could make poor planning significantly more expensive for families in the years ahead.
Expert Warnings on Common Mistakes
Rebecca Robertson, an Independent Financial Adviser, planner, and director of Evolution Financial Planning, highlighted common errors: "The two most common mistakes I see are married couples assuming all assets go to each other and non-married couples not considering what will happen without a will, which can be a major issue for women without any personal assets."
She added: "The majority of people like to hope for the best and, only when they have to deal with a family's estate when someone has passed away, do they realise the complexity of it all. One milestone when people do recognise they need a will is when they have children, but this is generally at a time when finances are straightforward. Often over time the will becomes old and out of date. Again only years later when they are dealing with another family member or they come across an issue, will they act. If they haven't, they have missed an opportunity. This is going to be even more important post-April 2027, when pensions become part of the estate."
Importance of Updating Wills
Steven Greenall, director of Greenall Estate Planning, emphasized the need for proper planning: "Everyone knows they need a will and a Lasting Power of Attorney, but they keep putting them off until it's too late. Trying to cut corners and preparing a will without seeking advice or transferring property while the testator is still alive, without considering the seven-year rule or gifts with reservation of benefits, can really cause a lot of unintended consequences. Not updating wills after life events such as divorce or remarriage often sees inheritance going to people it's no longer intended for."
With the 2027 rule change approaching, experts urge individuals to review their estate plans and ensure their Lasting Power of Attorney and wills are up to date to avoid costly mistakes.
