COVID-19 | Protecting your personal affairs during a crisis
COVID-19 | Protecting your personal affairs during a crisis
As we spend more time at home with loved ones, it’s understandable that we consider the best ways of protecting our estate. There may be concerns about vulnerability or age, so getting personal affairs in order is important and timely.
In this webinar we look at:
- what you need to consider when making a will and how to overcome some of the current challenges in executing wills
- how appointing a temporary power of attorney can help with getting legal documents signed whilst in lockdown
- how you can best protect your wealth in a period of uncertainty through inheritance tax planning, and how some of the best tax-saving opportunities can be found and achieved in a falling market
Please do let us know of future topics that you are interested in, or for more information about our webinars please contact us.
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Hi, I'm Matt Parr associate in the Private Client team here at Shakespeare Martineau. Welcome to today's webinar and protecting your personal affairs during a crisis. You will see on your screen that there you are able to ask you a so, please do ask questions along the way and answer as many as I can and we'll also share a summary of questions with everyone after the webinar. So to start preparing a will at any point in life.
Once you've reached adulthood is a good idea particularly when you begin to acquire assets Mary or otherwise enter into relationship or if you have children, it is also a advisable to consider reviewing your will If your circumstances change it's often true to say that will you prepare 10 years ago is unlikely to meet your needs today events such as the coronavirus pandemic also make many stop and think about Provisions they have in place to ensure that their Affairs can be managed. Once they have died and that there is state will be distributed to the right people with that in mind now is a good time to consider reviewing the content of your existing will and seek advice about how the change in the investment Market could be a good time to make estate planning decisions, which could benefit you both.
Clean and provide tax benefits as well firstly we will look at types of change things.
You need to consider when making will and how you might overcome some of the challenges and executing bulls that the coronavirus has presented such challenges have led to a consultation on a temporary change to laws that have existed for almost 200 years and stood the test of time here in England and Wales while even Scotland and other nations in the Commonwealth of developed and adapted and become more flexible one of the first Things to consider when making a will is the contents of your old one if indeed you have one taking a look back at how you approach certain aspects of the exercise previously can often help you hone your thoughts and focus the mind on exactly why you need to make changes in the first place first and foremost. It's often helpful to reconsider the contents of a will so you can begin putting your thoughts on paper. So if you have an old will to get out and review it invariably you need to decide on who you would wish to appoint as your Executives and trustees it executives are responsible for administering.
Our state they will take the lead with ensuring your Affairs are dealt with properly when you have died. Your debts are paid your tax Affairs are settled safeguarding and ensuring your assets and ultimately ensuring your estate passes to the right hands those of your chosen beneficiaries. Your executive should be people you trust and ideally longer younger than you though. This isn't at all a requirement. My advice is that you choose the right people for the role not simply those that you feel or to a point because they are your family Executives and trustees often the same.
People your trustees will be responsible for safeguarding assets for the benefit of any minor beneficiaries such as children who may not have reached adulthood when you die, which brings me on to the next Point next you need to consider appointing Guardians and many children you have if they are under the age of 18 Guardians will take over a parental responsibility. Should your children be left orphaned on your death?
One can see when considering pairing a will you ought to consider whether you wish to leave specific items of personal belongings or indeed specific sums of money to individuals or Charities. You may have family heirlooms. You would wish to leave to your side of the family or a charity of supported while you're alive that you wish to benefit in some way on your death. Your legacies of money and items are paid over first from you residuary state leaving a balance called the residuary estate. Your residuary estate is the pot left at the end once all expenses liabilities.
Is legacies have first been deducted for the vast majority of people that represent the bulk of their estate.
When preparing a will you need to consider he would wish to receive your residual State the options available as to how this is divided are plentiful but mistakes are easily made and seeking advice to ensure you considered all those options will often pay dividends in the long run many do not consider their estate to be complex or that there are circumstances do not warrant a professional. I advising them however in my experience these justifications often proved wrong lastly you may have funeral wishes that you wish to include in your way.
Now legally binding but if you have a preference you ought to make your Executives aware of this to avoid any doubt when the time comes to arrange the funeral itself.
In today's world when coronavirus is having such a denture until impact on our lives and social distancing and indeed legislation prevents you from leaving the house for all bird of handful of reasons. It could prove difficult to put your mind to Preparing a new will and even if you do there are obvious barriers in place that may prevent you being able to sign the world correctly in accordance with the rules to be a legally valid. Will your signature itself needs to be witnessed by two independent Witnesses.
They need to be present with you when you sign the will and they too must subsequently signed the will in your presence and In the presence of each other many clients have expressed concern as to how they will meet the strict criteria when they are unable to meet friends or colleagues.
Those are valid concerns which has triggered the ministry of Justice to enter into discussions with the government about changing in the almost 200 year old legislation to make signing a will and easier process given the current lockdown situation. Unfortunately, however, these discussions are not happening at a particularly fast pace. And in the meantime, we must make do with complying with the rules.
So that's what you ought to consider when thinking about making a will but what about moving existing legal transactions along or ensuring your Affairs more generally are maintained during periods of self-isolation Well, there is something you can prepare that will often enable someone to look after these particular matters for you. You could prepare an ordinary power of attorney or indeed an often more appropriately a lasting power of attorney the first being added more temporary solution to the issue and the second being a more long-term solution which could prove useful in a number of distant different scenarios. I'll Focus primarily on the ordinary Powers of Attorney for the purpose of this webinar. So how can a delegated power of attorney help you?
While he may not be able to leave the house delegating your legal authority to undertake certain tasks may prove extremely useful. The type of authority can delegate may include the authority to sign contracts or other Deeds on your behalf. You become the donor and your trusted third party your attorney.
It is possible to implement different types of ordinary power of attorney, whether that be a wide-ranging and general power which would enable your attorney to manage your property and financial affairs entirely on your behalf or more specific and restricted Powers, which may only Will your attorney to carry out one particular task or transaction for you? The first more General type is useful in circumstances when you're out of the country or perhaps in self-isolation for extended periods during the coronavirus outbreak the second more specific type is most common and more suitable if in all other regards you can continue to manage your own Affairs, but simply require the ability to delegate your authority to complete a specific task or transaction.
Which other type of ordinary power of attorney you decide is right for you and your circumstances you can specify a time limit at the end of which the authority of the attorney ceases.
I thought it would be helpful to summarize the sorts of tasks. You could delegate to an attorney and these include but are not limited to executing Deeds on your behalf or to enable the attorney to sign a transfer Deed on the sale or completion of a property on your behalf attending completion meeting. So for example, your attorney may very well be to attend to completion meeting on your behalf and consequently sign the transaction documents on your behalf as well.
They can all be also be useful on the sale of shares. For example, you may have a completed on the sale of shares to a third party, but prior to the buyer being listed on the share registrar. You may execute an ordinary power of attorney in favor of the buyer in order that they can carry out any transactions, they wish with their new shares while they remain in your name on the register and proxies for example, as a consequence of self is 18. You cannot attend a shareholders meeting and as such you enable your attorney to vote about meeting on your behalf.
Provided the only Power of Attorney deed is drafted appropriately you can choose to revoke the power you have delegated at any point which can be useful. So a Fail-Safe if your attorney act in a way contrary to your best interest or No Powers of Attorney can repaired swiftly and they are often required at short notice. It is important. However, particularly if granting a specific power that the drafting the deed itself is wide enough to ensure the attorney can do what is required to complete the transaction but not too wide so it's to allow the attorney to make decisions.
Side the scope of the authority you wanted to delegate in the first place. So do have a careful think about the extent of any power You may wish to Grant.
The last point to cover off in this webinar is how best you can protect your wealth in a period of uncertainty such as this through inheritance tax planning and how some of the best tax saving of opportunities can be found and achieved in a falling Market. It is true to say that many may have looked at their pensions Investments over the last couple of months and being considerate concerned to see their value having dropped.
Now would be a very good time to contact your fund manager and have a discussion about how over the coming months you could make strategic decisions to crystallize losses or indeed smaller gains on some particular Investments which may assist later in the tax year. If you're planning on making a disposable. Sorry it disposal of an asset which will create a chargeable gain offsetting the correct amount of losses against anticipated games may very well reduce any Capital tax liability down the line.
Some clients have considered making Gifts of shares to family in the past. But the transfer itself, even if no sale takes place May trigger a capital gains tax liability based on the deemed value of the shares on the date of the transfer consequently.
This may put you off transferring shares which have risen significantly in value, since you've owned them taking advantage of the dip in the market You may wish to reconsider transferring these shares now and see any capital gains tax liability reduced as a consequence the recipient of the as we're quiet them in the quiet them at the reduced value and this will be their base cost for capital gains tax when they dispose of the same in the future, but ideally the recipient May well be a lower rate taxpayer and the charter capital gains tax would be lower as a consequence and they may have full capital gains tax allowance is available to them to offset against the gain which you may not taking advantage of what many perceive will be a temporary drop in the value of Investments may also involve transferring the shares into a trust for the benefit of those other family members such as adult children the value of assets being transferred into most types of Lifetime trust is limited to three hundred and twenty five thousand pound every seven years. If you do not wish to trigger an immediate charge for inheritance tax, we see as being led worth less overall. You may very well be a to transfer a larger number of investments into the trust and see them.
Within the trust itself outside of your estate for inheritance tax purposes. You can also claim holdover relief on the transfer of the shares into the trust capital gains tax purposes on what should be a smaller gain in the first place with the crisis wreaking havoc on many Charities balance sheets now and for the foreseeable future owing to canceled fundraising events. You may very well wish to consider philanthropy as a possible tax planning strategy for yourself.
cough Gifts to register Charities during Lifetime and on death exempt from inheritance tax and consequently many clients do consider making gifts in their Wills to Charities.
However, given the extent to which Charities are struggling with reduced levels of income You may wish to consider making gifts to them now during your lifetime bringing forward their entitlement and gifting the funds now will have a positive impact on the charity at a time you could argue they may need it the most to survive and has the added benefit of you being a See the money being put to good use gifting the funds now also reduces the value of your stable inheritance tax immediately without triggering any inheritance tax liability. Now regardless of the amount that is gifted regardless of this. It is always best to keep accurate records of the gifts being made for future reference. This may also help you decide later down the line how you may want to review the Charities you benefit in your will and to what extent taking into account how you benefited them during your lifetime?
I'm In conclusion for many clients a drop in the investment Market of this nature as drastic as it is is not too much of a concern given the anticipated time Horizon for their Investments to bounce back but a careful eye should be cast over any opportunities that arise as a consequence of a dip in the market.
Well that brings us to the end of the webinar and thank you for listening to it. I hope you found it useful and relevant in the current circumstances. I will answer a couple of questions now and we'll also send a note of all qas along with the recording of This webinar.
One question we've had is how ordinary Powers of Attorney differ from lasting power of attorney. So firstly the use of ordinary Powers of Attorney does tend to be better suited to transactional or commercial context and there is an important distinction to be made between them and Lasting power of attorney lasting Powers of Attorney and able your attorney to continue acting on your behalf.
Even if you've lost capacity, whereas an attorney acting under an ordinary power that Any kind of continue acting in those circumstances and their Authority ceases with you having lost mental capacity. So if you are concerned about the ongoing management of your Affairs in the longer term in particular in the event that you lose mental capacity should certainly consider preparing lasting Powers of Attorney instead. That isn't to say however that lasting power of attorney are not suitable to help you in circumstances where the power may very well only need to be temporary.
Because if the lasting power of attorney documents are prepared correctly. They are suitable to be used in those circumstances.
Also, it is not common to restrict necessarily the attorneys Authority Under a lasting power of attorney document and most wish to grant their attorneys in effect the authority to make any decision that may very well be required to manage your Affairs and Safeguard your assets. So we've had another question here. How do you advise we sign a will if we can't see friends and colleagues? Well, unfortunately at the moment they need to comply with the existing rules around the correct.
signing of a will has led to serve some rather inventive solutions to the problem some clients have stood in their hallways or Landings in flats and have had their signature witnessed by people hanging over the banisters above or below them before the document is left on the stairs for the witnesses to collect and sign another client of mine has asked neighbors to witness him signing his signature through a porch door the front of their house and subsequently posted the will through the letterbox for their witnesses to sign where he can see them some Clients of mine have signed the wheels in the back Gardens with neighbors either side witnessing their signatures over the garden fence another colleague of mine. And in fact, another solicitor in the industry have undertaken curbside signings of the will whereby they witnessed a signature of the client from the end of the clients driveway.
The client has subsequently left the will in the middle of the driveway itself, which is enabled this listed to approach and sign the document all while maintaining maintaining a safe distance and I relating from each other So throughout the process whatever process is chosen, it is important that you you in the witnesses wear gloves specifically for the purpose of handling the will and passing it t to each other and that those gloves are removed 1 6 size is complete and all parties should use their own pens. There is discussion about being able to witness a will via video conferencing as they have recently moved to in New Zealand or removing the need to for two witnesses reducing number two, just one or indeed none in certain circumstances.
As I've mentioned previously the discussions are moving quite slowly in the meantime instructions to prepare new Wheels can be done remotely by phone email and video conferencing. So the perceived barriers to sign in the will this stage should not prevent you from beginning the process completely.
So thank you for all the great questions. I will follow up on all of these after the session and share these with you in the meantime for further advice and guidance on the coronavirus visit shma.co.uk