Why financial and legal matters matter before ‘I do’
Weddings are undeniably exciting occasions. They signify the union of two lives, the celebration of love surrounded by family and friends, and the symbolic beginning of a shared future. Nevertheless, alongside the romance and joy, weddings are also well-known for two other aspects: significant expenses and meticulous planning. From finding the perfect venue and selecting elegant attire to choosing the ideal cake, every detail demands attention.
However, while the focus often centres on creating a magical day, couples seldom consider the practicalities they will encounter after the celebrations conclude. Few, for instance, contemplate seeking professional financial advice or legal assistance to secure their future. Yet these steps are as pivotal as saying “I do”. After all, a marriage represents not only emotional unity but also a legal and financial partnership.
Role of life and income protection
Life insurance is familiar territory for many. It ensures financial security for a spouse or family in the unfortunate event of death, often linked to liabilities such as a mortgage. By covering such debts, life insurance offers invaluable peace of mind. However, while life insurance protects against untimely death, there is also the likelihood that a working-age adult may experience a period of illness or injury that prevents them from working.
Income protection insurance addresses this gap. It provides a reliable source of income during extended absences from work due to health issues, safeguarding a couple’s ability to pay bills, maintain savings, and cover other essential expenses, including insurance premiums. Some policies even offer flexibility, allowing adjustments to the level of cover as income increases or circumstances change. By securing income protection early, couples can concentrate on building their future without the stress of financial uncertainty in the face of unexpected challenges.
Beyond the big day:Wills and estate planning
Another essential yet often overlooked step is drafting a Will. Under British law, existing Wills are revoked upon marriage unless specifically written in anticipation of the union. For many, this makes marriage the ideal milestone to either create or update a Will. While it may seem unnecessary for those with modest assets or simple wishes, a Will streamlines the estate administration process and ensures your intentions are fulfilled. Blended families, where individuals have children from previous relationships, require additional estate planning to balance the interests of a surviving spouse with those of children from earlier partnerships.
Pensions and life insurance policies should also be reviewed to ensure that the correct beneficiary nominations are in place, as these are not governed by a Will. This step can prevent complications and ensure that a spouse or other dependants remain financially secure after a partner’s death.
Crucial role of Lasting Power of Attorney
While Wills oversee the distribution of assets after death, a Lasting Power of Attorney (LPA) safeguards you during your lifetime. An LPA empowers a trusted individual, often a spouse, to manage your financial affairs or make health and welfare decisions on your behalf if you lose the mental capacity to do so yourself. There are two types of LPA. The ‘Property and Financial Affairs’ LPA deals with matters such as accessing bank accounts to settle bills or managing investments. The ‘Health and Welfare’ LPA permits decisions regarding medical treatment, care arrangements, and even life-sustaining interventions.
Some may assume that marriage grants automatic rights to act on a partner’s behalf, but this is not the case under the law. Without an LPA, a spouse may need to apply for a court order to obtain such authority, which can be time-consuming and costly. Whether the loss of capacity is temporary or permanent, having an LPA in place ensures that essential decisions can be made seamlessly.
This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments can go down as well as up, and you may get back less than you invested. past performance is not a guide to future performance.
