Guides & Advice

Our latest edition of Life Times magazine

Our Autumn Edition of Life Times is Out Now

We bring you the autumn edition of Life Times magazine - a round-up of insightful and informative content.

From looking at how to access the First Homes scheme, to resolving relationship disputes out of court, and Inheritance – A gift or a curse? The autumn issue is packed full of useful tips and information.

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Government Announces Adult Social Care Reforms

New Legislation

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Social Care Reforms

The Government announced last week that, from October 2023, there will be changes made to the Social Care system. These changes will affect how much you will need to pay towards your care in the future. These changes are currently proceeding through Parliament.

The current average cost in England of a stay in a residential home is £600 per week, with nursing care costing on average £800 per week.

What is the current system?

Currently, if the value of your capital assets is above £23,250 then your care fees will need to be fully self-funded, and you will not receive any financial support from the Local Authority, subject to certain limited disregarded items in certain circumstances.

If the value of your capital assets are between, £14,250 and £23,250, then you will get some financial help from the Local Authority.

If your assets are less than £14,250, then you must continue paying from your income, subject to a ‘protected’ lower amount, but you will not need to contribute from your capital. The Local Authority will pay the remainder.

Your Local Authority will do a ‘means test’ to work out how much you will need to contribute from your capital towards the cost of your care.

What are the new changes?

MPs voted this week by a sizeable majority to approve the following changes to the Social Care system.

  • If the value of your capital assets is above £100,000 then you will need to fully self-fund your care.
  • If the value of your capital assets is between £20,000 and £100,000, then you will need to contribute to a percentage of the fees, based on your income and savings, but you can request financial support from the Local Authority on a means-tested basis.
  • If the value of your capital assets is below £20,000 then you will not have to use your capital to pay for your care, although you will still need to contribute from your income, subject to a ‘protected’ lower amount.

The Government also announced that people will not be made to pay more than £86,000 (a lifetime cumulative amount) in care costs. Whilst, on the face of it, this change may be welcomed by many who worry about spending their life savings on care fees, and needing to sell their homes to fund their care costs, this cap does not include the costs of accommodation and food – only personal care. However, care costs paid whilst at home will count towards this total lifetime amount.

This change will only benefit those starting care from October 2023. If you are already paying for your care, then you will not benefit from the new changes.

Can I protect my savings for my family?

There is no definitive answer to this question. It is important to consider your aims and objectives, and your personal and family circumstances. We can advise and support you about the payment of care fees and the relevant disregards. Learn more about this and the matters mentioned above, or to review any existing steps or structures you may have taken or tried to put in place in this area, by getting in touch with our private client team.

These changes will not affect the Deprivation of Capital Rules or the Continuing Healthcare Funding entitlement to Nursing Care (not residential costs or food) for those who are assessed as needing nursing care which is a NHS responsibility.

 

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Lauren helps individuals put plans in place for the future by means of Wills, Powers of Attorney, and other estate Planning.

With our adaptable and creative approach, we ensure your family’s interests are always protected in troubled times. We know that no two families are the same and we take the time to understand the intricacies and sensitivities of the situations that you face.

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Insight

Legacy loop: summer edition 2021

Welcome to the summer edition of our Legacy Loop coverage

Clitheroe v Bond (2021) EWHC 1102 (Ch)

This recent decision is significant in reiterating that the correct test when determining mental capacity to make a will is still that set out in Banks v Goodfellow (1870) and not the Mental Capacity Act 2005.  

The 19th century case of Banks v Goodfellow provides the well-established common law test for determining mental capacity to make a will and is almost always referred to by legal advisors in cases where a lack of capacity is asserted.

Background to the case

In summary, the Banks v Goodfellow test sets out that a testator must:

  • Understand the nature of making a will and its effects.
  • Understand the extent of the property of which they are disposing.
  • Be able to comprehend and appreciate the claims to which they ought to give effect.
  • Have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of their property by will.

The level of understanding required varies with the complexity of the will itself, the assets and any claims on the testator.

In the case of Clitheroe v Bond however, the court had the opportunity to re-consider arguments that the Mental Capacity Act 2005 should replace the Banks v Goodfellow test for determining capacity, as well as examining the current test for delusions (limb 4 of the Banks v Goodfellow test).

The case concerned a dispute between a brother and sister over the validity of two wills made by their late mother. The court was asked to decide whether the mother died intestate (effectively without a will) – meaning daughter, Susan Bond, and son, John Clitheroe, would receive an equal share of the £400,000 estate – or whether her wills were valid, meaning almost all of the residuary estate would go to the son.

In the original trial, it was held that both wills were invalid due to the mother not having sufficient mental capacity to make the wills. It was found that, at the times the wills were made, their mother was suffering with complex grief reaction, 'insane delusions' and persisting depression following the death of her eldest child from cancer.

What was the outcome?

However on appeal, it was argued that the judge had applied the test in Banks v Goodfellow incorrectly when determining the mother’s capacity. It was concluded that the correct test for determining capacity continues to be the Banks v Goodfellow test. It was also concluded that to establish delusional thoughts, the relevant false belief must be “irrational and fixed in nature”. The parties have been given a further three months to reconsider their positions in light of these decisions.

This case has provided contentious probate lawyers with welcome clarity on the ongoing effectiveness and use of the Banks v Goodfellow test.

A full copy of the judgment can be found here.

Miles & Shearer v Shearer (2021) EWHC 1000 (Ch)

A recent unsuccessful claim brought by two adult children under the Inheritance (Provision for Family and Dependants) Act 1975
Background to the case

This recent high-profile claim was brought by two adult daughters (Juliet and Lauretta) of a deceased father’s estate. Neither the daughters nor their children benefitted under their father’s will and Juliet and Lauretta therefore brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 for financial provision from the estate. The claim was defended by the deceased’s second wife, Pamela, who was the principal beneficiary of the estate.

What was the outcome?

The court dismissed the claim. It was held that the pair were able to meet their maintenance needs from other resources and their father had no obligation or responsibility towards them. They had also been well provided for during the parent's lifetime and the court therefore made no award for further provision from the estate.

What does this mean for charities?

Adult child claims are generally considered difficult to succeed in, particularly where the individuals bring the claim are financially stable. This case provides a further reminder the court is unlikely to make an award to an adult child in those circumstances, even where the estate is of considerable value. If charity beneficiaries are faced with a claim brought against the estate by an adult child claimant, it is important to seek legal advice early to establish the true merits of that claim and the strength of the position to take in defending the claim.

A full copy of the judgment can be found here.

Rittson-Thomas v Oxfordshire County Council, 2019 EWCA Civ 200

An interesting case where the court considered a donor’s intentions regarding a gift made for a specific purpose and how a change in circumstances reversed the gift back to the estate

This case concerned the redevelopment of a primary school in Nettlebed, Oxfordshire. The land upon which Nettlebed primary school originally stood had been gifted to the local authority for its use as a school by the estate of Robert Flemming in the early 20th century.

Anna Morris recently considered the outcome of this case in further detail in an article for Today’s Wills and Probate, a link to Anna’s article can be found here and a copy of the judgment in full can be found here.

We’re here to help

Many members of our team are trustees of charities themselves and have first-hand experience of the challenges facing charities today. We also know that legacy donations form an increasingly large part of a charity’s income. If you have a dispute around a legacy donation then we can help – contact Andrew Wilkinson or Debra Burton for support.

As well as having broad expertise in charity law, our dedicated charity team can support charities with issues such as employment law, funding and corporate advice, intellectual property considerations and real estate advice.

Our charities team is ranked as Top Tier firm in the Legal 500 2021 edition.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND. 

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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Guides & Advice

The Dangers of Joint Property

“How is your joint property held” is a question we ask every client undertaking estate planning or making a will.

The answer can potentially have very significant consequences, particularly where the family home is the main asset.

For some, the ability to hold property as either joint tenants or tenants in common may be very familiar concepts. For others, the decision of how to hold the family home has often been made many years ago or was not something ever actively considered.

Other clients have undertaken estate planning many years ago, which resulted in their property being held as tenants as common. However, when the couple have moved, the new property has inadvertently been purchased as joint tenants, potentially undermining any estate planning they have put in place.

Where property is held as joint tenants, on the death of one owner, the property passes automatically to the other, regardless of the provisions of that person’s will.

But in contrast, where property is held as tenants on common, when one person dies, the share belonging to them passes in accordance with the terms of their will.

Many family homes are held as joint tenants, as this is often seen as the “default” for married couples and although this may work well for many people, it is not always the best option.

Considerations for the future

Consider a second marriage, where the first to die wishes to protect their share of the property for the children of previous relationships. If the home is held as joint tenants, the surviving spouse has complete control after the first death – they could give the property away or they could leave it in their Will to their own children or to a new spouse if they remarry. If they die without a Will, the laws of intestacy will decide who will inherit this on their death and this will not include step-children.

The possible unintended consequences of holding a property as joint tenants are clearly demonstrated by a recent case where a married couple were both found dead at their home. It was unclear who had died first and each had a daughter from a previous relationship.

The couple held their home (and their bank account) as joint tenants, meaning that whoever died second would inherit the other’s share.

Where it cannot be determined who has died first, the law considers this to have been the older person, in this case the husband. As a result of this, the wife was deemed hold all the assets at her death and her daughter inherited everything. The husband’s daughter inherited nothing. Had the property been held as tenants in common instead, each daughter would have received half.

How it affects estate planning

Holding property as tenants in common can also sometimes be useful even where the ultimate intended beneficiaries are the same for each joint owner.

Many people choose to include Nil Rate Band Trusts in their Wills on the first death, not least because this allows up to £325,000 to be held outside the Estate of the survivor, providing protection of this sum from care fees. If the main asset is the family home, it is often necessary to ensure that the share belonging to the first to die passes under their Will in order to have enough value to make full use of this Trust. This will not happen where property is held as joint tenants.

These are the key features of joint tenants vs tenants in common but whether they are pros or cons can be subjective and frequently depends on individual circumstances. It’s important to obtain legal advice before committing to one option over another so that you know that you’re making the right choice for you and your family.

Contact us

For further information contact Kathleen Ryan or another member of the private client team in your local office.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance for any queries on family and private matters. We also have a team of experts on hand for a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Top ten things to consider before preparing a trust

Families have used trusts for centuries to protect their wealth and maintain its value for the benefit of future generations. Whilst many people have heard of trusts, most struggle to understand exactly what they are and the benefits they can bring.
What is a trust?

A trust is the formal transfer of assets (such as a property, shares or simply cash) to a small group of people, usually two or three, known as “trustees”, with instructions that they hold the assets for the benefit of others.  

If the trust is to be made in your lifetime, to take immediate effect, then it is usually evidenced by a trust deed and often referred to as a ‘settlement. If it is to be created on or shortly after your death, then the trust rules must be set out in your will itself and would be known as a ‘will trust. 

Whether created by lifetime settlement or by a will, the trust document states who is responsible for looking after the gifted assets (the trustees), who is to benefit (the beneficiaries), and any rules or conditions to which the trustees and beneficiaries must adhere. The separation of the legal ownership and beneficial ownership, which were once inseparable, is the unique characteristic of the trust concept. The trustees are the legal owners but the beneficial owners are the beneficiaries.  

Here we outline the top ten things to consider before preparing a trust: 

1. Identify the assets you want to give away

This could be cash, property, or even shares in a business. It is important to appreciate the different tax implications of transferring these different types of asset into a trust, as this may influence what assets, and the value of the assets, you wish to put into the trust.  

2.Consider the reasons for wanting to give your assets away

One reason might be because you would otherwise face an inheritance tax bill if you still own the assets when you die. Read out more about how personal tax planning, including creating trusts, can assist with minimising tax liabilities.  

Another reason may be that you simply wish to ensure that others, such as your children, can benefit from the assets now because you do not need to anymore. It could also be part of a wider estate planning exercise involving the procurement or sale of a business. Once you’ve thought about why you want to give the assets away, it will help form your decision on whether a trust is the best option for you. 

3. Decide who will act as trustees and safeguard the assets

This could be you, or a spouse/civil partner, or it could also be other family members or close friends. It is worth noting that professionals can also act as trustees. 

4. Decide who will be named as the beneficiaries of the trust

This could be named individuals or a class of beneficiaries, such as your “children” or your “siblings”. Trusts are a useful way of safeguarding assets for vulnerable beneficiaries as they can protect them, as well as the funds, into the longer term. 

5. Review your options and decide what type of trust is most suitable for the beneficiaries

There are several different types of trust to choose from and each of them affords the trustees and beneficiaries different responsibilities or rights respectively. Each one is treated differently for tax purposes so it is important to select the right one.  

There are three main types of trust to be aware of. 

Discretionary trust

This type of trust affords your chosen trustees with a very wide range of authority to manage the trust assets – including how the beneficiaries receive any benefit from the trust. The key element of a discretionary trust is that no one beneficiary has an absolute right to receive either, income generated by the trust assets (e.g. dividends, interest, rental income) or to receive any capital. 

These types of trust are very widely used because they enable the trust assets to be distributed in what the trustees deem to be the most tax efficient or practical way, depending on the circumstances at the time they make the decision.  

As none of the chosen beneficiaries have an absolute right to either income or capital, none of the trust assets are deemed to be theirs and they will therefore not generally impact their entitlement to receive benefits, or form part of their own estate for inheritance tax purposes. 

Although you cannot seek to hinder your trustees’ discretion as to how the trust assets are used, you can seek to guide them and influence their decision through the use of a ‘letter of wishesThis confidentially informs your trustees how you envisage them using the trust assets. They can, if having considered all the relevant circumstances, exercise their discretion to follow your wishes. Because of the amount of discretion your trustees can exercise, it is vital you select the appropriate people to act in this role. 

Interest in possession trust

This type of trust generally affords one or more individual with the right to receive an income from the trust assets, or occupy and property that the trust may own. That chosen beneficiary is usually referred to as a life tenant because they are normally given that right to receive the income for the rest of their life. Generally, your trustees do not have the discretion to deprive that chosen beneficiary, or beneficiaries of that right, and any income generated by the trust must be paid over to them. 

Given that the beneficiary does have a right to receive income from the trust, this will have an impact on their own tax position when they receive the income, when they die, and if they dispose of the asset. Ordinarily, if a beneficiary of these types of trust dies, the value of the underlying trust assets are combined with their own assets when calculating any inheritance tax liability. 

Your trustees must balance the entitlement of the life tenant to receive a reasonable income, and therefore maximise the same, while also maintaining and safeguarding the value of the underlying capital assets for the ultimate beneficiaries who will receive the capital when the life tenant dies, or otherwise forgoes their entitlement. 

Bare trusts

These are the most basic type of trust structures. Effectively, the trustees hold a defined amount or share of both the capital and income for the benefit, or one or more individuals who are absolutely entitled to both. For all tax purposes, the underlying trust assets are treated as though they are held in the beneficiary’s own hand (with certain exceptions for minor beneficiaries).  

The beneficiary can insist that the trust assets are transferred into their name, provided they have reached 18 years of age. 

Bare trusts are particularly useful as a means of accurately recording the true beneficial ownership of an asset, while the legal title is still vested in another. For example, should a minor inherit a property, their name cannot appear on the legal title because minors cannot hold property in their name. Consequently, a parent or guardian may instead own the legal title in their name, but they will hold the beneficial entitlement as bare trustee for the minor beneficiary. When that minor becomes 18, they can, at that point, have the legal title to the property transferred into their name so that the legal and beneficial ownership become aligned. 

The tax rules around these different types of trust are complex and must be carefully considered before a decision is made. 

6. Understand the practical implications of setting up a trust

Once assets are transferred into a trust, it is generally the case that you cannot benefit from those assets again. This is often to ensure that the establishment of the trust is advantageous to you from a tax perspective. Therefore it is important to ensure you do not need access to these assets once you have given them away.  

The trustees also need to be prepared to file tax returns for the trust, prepare trust accounts, hold trustee meetings and otherwise ensure ongoing administration and safeguarding of the assets is managed. 

7. Think about your long-term plan for the trust

Trusts can be in place for up to 125 years if they are non-charitable. While it is often the case that more modern trusts do not last this long in reality, you should think about who you would want to benefit from the assets if they remain in the trust for a longer period of time; for example, your grandchildren, wider family members or a charity. 

8. Assess whether you expect your trustees to seek legal and tax advice to assist them in administering the trust

If your trustees are likely to need legal advice and support when administrating the trust then you will need to consider ensuring that there is sufficient liquid assets in the trust to meet the costs of obtaining the advice - your trustees are not obliged to use their personal funds to discharge these costs.  

It is also worth noting that if you are a trustee yourself, and you pay these fees on the trustee’s behalf, you will in effect be adding to the trust fund each time you contribute to the fees. 

9. Consider if you’d like to benefit charitable causes

A charitable trust can be an extremely effective way of ring-fencing assets for the exclusive benefit of charitable causes close to your heart. There are many tax advantages too if a trust is set up for these purposes. Read more about how a charitable trust can be included as part of your estate planning. 

10. Use a trust to safeguard compensation pay-outs

A trust can be used to safeguard personal injury or medical negligence compensation, but it is important you seek this advice before, or as soon as possible after, you have been awarded the funds. A personal injury compensation trust can be an extremely effective way of ring-fencing your compensation, so it doesn’t impact on your entitlement to certain benefits. 

Safeguarding your estate for future generations

We appreciate that personal circumstances evolve, and tax regulations change over time, so we know it’s important to consider a number of factors before deciding if establishing a trust is the right decision for you. Our private client team are on hand to support you throughout the lifetime of that trust to ensure your estate is protected for future generations. 

If you’d like to discuss what the most practical and tax efficient trust vehicle may be for you then speak to a member of your local private client team. 

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Guides & Advice

Five things to consider before giving away your home

There are many reasons why you may consider transferring your property from your name into that of a relative, such as a child or grandchild. As your home is one of the most important assets you own, it is vital that you understand the implications, as well as the benefits, in order to make an informed decision that is right for you. 

Here we highlight the top five things to consider if you are thinking about giving away your home. 

1. What are the reasons for wanting to give away your home?

If you are considering giving away your home to avoid care costs then you need to be aware of the implications - you cannot intentionally reduce your assets to avoid paying care home fees. 

If in the future you require residential care, the local authority will assess the extent of that need (i.e. for nursing or residential care) and would consider if you are eligible for financial assistance with care fees. Where your income and capital is below a certain level then you may be entitled to a contribution from the local authority to help pay for the fees.   

However, if you have reduced your capital by giving away your home, or other assets, to your children or other relatives, the local authority may disregard this transfer as a deliberate “deprivation” to avoid paying care fees. They will make an assessment on whether you were fit and healthy at the time of giving away your home and therefore could not foresee needing care and support. There is no set time limit between making the gift and needing to move into care.  

2. Are you planning to continue living in your home after you give it away?

If so, you should consider the various tax consequences for yourself and for the recipient of the asset, as transferring your home to someone else could give rise to various tax consequences for inheritance tax as well as capital gains tax. 

Inheritance Tax 

Inheritance tax may be payable on your death on assets including savings, investments and property over £325,000 (the “Nil Rate Band”). Tax is payable on the amount over this figure at 40%. 

If you give away your home during your lifetime it will still be included as part of your estate, if it was given away within seven years of your death. Read more about what other lifetime gifts are exempt from inheritance tax.

Additionally, if you transfer your home to another (such as your children), and continue to live in the property until the date of your death, HMRC may treat this as a ‘reservation of benefit’, even if the seven year period has elapsed.  This could be avoided if you pay a market rent to the new owner of the property, although this may then have income tax consequences for that individual. 

Capital gains tax

There is no capital gains tax payable on any gain (if any) when you transfer the ownership of your main residence. However, if it is a second home, capital gains tax is payable on any gain from first acquisition to when it is given away, even if no money changes hands.  

Also, if the person you transfer the property to then disposes of it in the future, then they may liable to pay taxThis is because they will acquire the property at the current market value at the time of transfer, and so any gain made on disposal may be liable to capital gains tax. Therefore, it is vital to have the property valued at the time that the gift is made. 

Read more about how personal tax planning can protect your wealth and help you and your family to make the most of it.  

3. Is there a risk of the recipient divorcing or becoming bankrupt?

If you transfer your home to a person who is married, or who later marries, your home could be made part of a financial settlement if they were then to divorce. As a result, their ex-spouse may have a legal claim on the house and could dispose of it in a way in which you do not approve.

The situation is similar if the person you transfer your house to becomes bankrupt later in life. The trustee in bankruptcy could have a claim on your home in order to sell it and satisfy various creditors - resulting in the loss of your home.

4. What happens if the recipient dies before you?

Once you have transferred your home, it no longer forms part of your estate and therefore cannot be included in your will. To ensure that you don’t lose your home if the recipient of the property dies before you, you need to ensure that you are provided for in their will. Read more about the importance of making a will. 

However, if they don’t update their will in a timely manner, and die before you, then their interest in the house will pass under their will. If they don’t have a will in place then the property will pass under the intestacy rules 

In either circumstance, the ownership of your home may pass to someone you did not intend. 

5. What happens if you ‘fall out’ with the recipient?

Many families experience conflict and discord at some point, and if you decide to transfer you home to a member of your family, complications may arise if you later have a disagreement with them. 

A gift is irrevocable and absolute. So once your home has been legally transferred to your family, you will need their consent for future dealings (for example, to transfer it back) and you may have no legal right to live there if none were agreed at the point of the initial transfer. Therefore, in certain circumstances following a disagreement, your family may be able to force you to leave your own home.  

Deciding to give away your home

If you’ve considered the benefits and implications of giving away your home and have decided that it is the right decision for you, then we can help.  

Our private client team will support you and guide you through the process of giving away your home, ensuring you protect your current wealth to provide you with a secure future. 

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Conditional fee agreement (CFA) case update | Spring/Summer 2020

Conditional fee agreement (CFA) case update | Spring/Summer 2020

Here we take a look at two recent significant cases relating to the recovery of success fees for claimants acting under conditional fee agreements in 1975 Act claims.

What is a conditional fee agreement (CFA)?

Where a potential claimant may have limited funds to bring a case, but have good prospects of success, solicitors may offer to take their case on under a conditional fee agreement, commonly referred to as a CFA or a ‘no win no fee’ agreement.

When are success fees charged?

Payment of legal fees to solicitors are conditional upon their client ‘winning’ their case, and at that point, a further success fee on top of their standard fees can also be charged to the client. Success fees are often substantial and capped at 100% of the solicitor’s base fees.

Until recently, the general position was that only the claimant's base costs could be recoverable from the defendant or the deceased's estate, and not any CFA uplift charged by the claimant’s solicitors.

Example 

Under the will of A, the entire estate worth £250,000 is left to a charity.  A’s spouse, B, brings an inheritance claim against the estate of their late husband.  The charity settles the claim for £100,000 plus costs.

B’s standard costs are £30,000 but the solicitors acting for the spouse were acting on a CFA with a success fee of 50%.

The estate would therefore pay £30,000 towards B’s standard costs. However, the £15,000 success fee would come out of B’s award of £100,000 so she would receive £85,000 after payment of all the legal fees.

Bullock v Denton and Willoughby (2020) and Re H Deceased (2020) EWHC 1134 FAM

Two recent decisions by the High Court have changed this position.

In Bullock v Denton and Willoughby and Re H Deceased, the courts have awarded the successful claimants a higher sum from the estate to compensate them for the success fees charged by their legal representatives.

Bullock v Denton and Willoughby

In the recent unreported case of Bullock v Denton and Willoughby, the claimant brought a claim against the estate of the deceased as his cohabiting partner of five years. The primary defendant (the deceased’s brother) argued that the claimant was a housekeeper and not in a loving relationship with the deceased.

However, the judge found in favour of the claimant and awarded her a life interest in a sum of £140,000 to purchase a property, together with an additional £65,000 to cover her further costs such as moving fees, white goods and payment towards historic debts.

In addition, the judge also awarded the claimant a £25,000 contribution to the success fee charged by her solicitor and counsel. The judge made this award on the basis that the claimant was entitled for these costs to be taken into account when considering her financial needs as the success fee would be a future debt.

Re H Deceased

This decision was then recently applied in the family court case of Re H Deceased (2020) EWHC 1134 (Fam).

The claimant was the estranged daughter of the deceased and had not been financially maintained by her family for more than 20 years. Despite the estrangement, the judge held that the claimant’s claim for financial provision from the estate should not be precluded solely on the basis of a lack of financial maintenance from the deceased. The judge felt that the claimant was “in a position of real need” due to suffering with mental illness and awarded her appropriately to meet her current financial needs.

The judge concluded that success fees could be recovered by claimants in Inheritance Act claims.  However this case is subject to appeal.

The impact of these cases on legacy income for charities

Ultimately, the further awards given in CFA funded cases mean further significant deductions from the estate fund, and lower distributions to any other beneficiaries named in the will.

This could have a real impact on what charities receive from the estate; in our example above, some of the £15,000 success fee would be payable by the estate, in addition to the base costs, meaning the charity receives le4ss money.

The decisions in these cases are likely to encourage people who have potential claims that would have otherwise been put off paying solicitors’ fees (and certainly their success fees) to instruct solicitors and pursue their claim. This is likely to result in a general increase in will challenges and claims brought under the Inheritance Act. If this proves to be the case, charities may find themselves in a position where they are obliged to defend more Inheritance Act claims.

Hopefully the Court of Appeal will overturn the decision in Re H Deceased and make a ruling on this point that will be binding for cases going forward.

However as the appeal won’t be heard for many months, until then, these cases will be heavily relied upon by solicitors (and barristers) acting under CFAs to try to get more money from the estate.

As a charity, what can you do?

If faced with will challenges and Inheritance Act claims, it is important to continue to pursue the necessary steps to recover the legacies and assets you are entitled to from a will - particularly in the current economic climate.

It is always advisable to seek legal advice following notification of a potential claim, as early legal intervention may help to flush out any unmeritorious claims and encourage settlement of disputes out of court.

We can guide you through the process

We understand that legacy donations form an increasingly large part of charities’ income, and to have your bequests challenged can delay and reduce that much-needed income.

With a particular specialism in representing charities, our team of experts can support you in dealing with those disputes and guide you through the process - contact Andrew Wilkinson or Debra Burton in our inheritance disputes team.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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Opinion

COVID-19: How the Treasury could replenish its coffers post-pandemic with changes to taxation

COVID-19: How the Treasury could replenish its coffers post-pandemic with changes to taxation

It’s fair to say that we’re living through and dealing with a crisis that is affecting every aspect of our lives at the moment. The government’s commitment to supporting businesses and individuals with the Coronavirus Job Retention Scheme, the broad package of business loans, the financial measures to support the self-employed and other injections of financial assistance is to be commended. However, what happens once the pandemic is over?

When the current lockdown is lifted, and we all try to pick up from where we left off and find our ‘new normal’, it’s very likely that this financial support, which has been so important to keeping business and individuals going through these few months and beyond, will have left the Treasury with a potentially huge budget deficit.

Much has been written about the effects this lockdown will have on economic performance and current forecasting by accountants, PwC estimates a deficit of 10-15% of GDP in 2020/21 and the hope is that this falls to 5-7% of GDP in 2021/22.  However, with this large deficit, how will the government find the funds it needs to get the economy back on track?

Tax rises are inevitable

There is no doubt at all that the government will look to raise taxation somehow, somewhere.

It is unlikely that income tax and VAT will be their first port of call as this smacks of taxing the less wealthy and those most in need at a time when people have been living under extremely stressful conditions.

Instead, the more obvious and palatable choice of capital taxation reforms would be perceived as a taxation of the wealthier in society.

It is also possible that any such reforms could be pushed through in an emergency budget with little or no notice and could leave many families without the tools to pass their estates on to the next generation efficiently.

What sorts of taxation could be affected?

The likely targets are inheritance tax and capital gains tax, potentially including the reduction or indeed, abolition of Business Property Relief and Agricultural Property Relief on assets gifted on death.

There is also the possibility that the Potentially Exempt Transfer seven-year clock will be removed or extended. Currently, this works on a sliding scale and comes into play when gifts of over £250 are made during a person’s lifetime. Should the individual die before seven years have passed since the gift was made, then a level of tax must be paid depending on how many years it has been. If this relief is removed, then the full amount of tax will always be payable.

Capital gains tax free uplift on the base value of assets at death might be another target. At present, a person who has inherited an asset only has to pay capital gains tax from its value when they receive it to when they sell it. Should the capital gains tax free uplift be removed, then the receiver would have to pay capital gains tax from when the deceased originally acquired the asset instead.

Deeds of variation post-death may also be removed or amended to neuter their tax planning element.

Any abolition or amendment of one or a combination of the above reliefs and measures could result in significantly higher taxes and a reduction in the options available, so it’s important that families think ahead and plan now. Read more about efficient personal tax planning.

How can I prepare?

There are other vehicles and options available, such as:

  • Utilising existing trusts or creating new settlements – By using the current nil rate band of £325,000, married couples and civil partners can set up tax-free family discretionary trusts of £650,000. This enables people to support the next generation without immediately having to give assets outright.
  • Gifting assets if possible - Any changes to taxes are unlikely to be retrospective, so making lifetime gifts now, should people be able to manage without the asset, could be wise.
  • Reviewing and redrawing wills to take account of these possibilities – Having a flexible will and a letter of wishes can ensure that assets are treated in the most tax efficient manner.

What is key though, is that action is taken now to enable families and individuals to have choice and make the best use of the options out there.

We’re here to help

If you’d like help and advice around personal tax or estate planning then we can support and guide you through the process. Contact us confidentially today by calling 0330 024 0333, or filling out our enquiry form, and a member of our private client law team will get in touch with you shortly.

The uncertainty of what’s to come as a result of the COVID-19 pandemic is understandably keeping many people awake at night. However, while the scope of what our future may look like is still evolving, one aspect that can be controlled is putting measures and provisions in place to plan for the future and protect the wealth of you and your family. Our guide to recovery and resilience highlights the opportunities currently out there for effective wealth planning that will make a real difference.

Our free legal helpline also offers bespoke guidance on a range of subjects, with a team of experts on hand for any queries relating to personal and family matters. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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In this edition, we take a look at recent cases where estate administrations have been delayed and we provide you with our hints and tips for progressing slow estate administrations and continuing to generate legacy income at this difficult time.

RECENT CASES

Charities can be faced with a number of hurdles when it comes to estate administration. Currently those challenges may be due to the knock on effect of Covid-19 or a result of other challenges and claims, perhaps brought by disgruntled beneficiaries or family members.  We take a look at two such recent cases.

Ali v Taj (2020)

Mr Mohammed Taj died in 2007 and a grant of probate was obtained in May 2008. The residuary beneficiaries of Mohammed’s estate, his widow and children from his first marriage, were still yet to receive an inventory and accounts from the executors relating to the estate 11 years after his death.

Requests for information were made numerous times by the residuary beneficiaries, however only limited, deficient information was provided by the executors. The executors stated that the delay was due investigations being carried out by HMRC into Mohammed’s affairs.

The residuary beneficiaries subsequently issued a summons for an inventory and account.

A first hearing took place without notice to the parties and the judge ordered the executors to provide an inventory and account within 28 days and pay the residuary beneficiaries’ costs. The executors appealed and a further hearing to consider the summons application took place, with all parties and counsel in attendance.

The court upheld the previous finding, noting that providing an account and inventory was a “cardinal” and important duty of a personal representative and beneficiaries are usually always entitled to this information.

This case highlights executor’s duties and provides a useful reference for when faced with situations where executors may be dragging their feet in providing estate inventories and accounts, delaying completion of an administration of an estate as a result.

RNLI v Sonya Young (2019)

Mr Brian Cole, a former lifeboatman, left a legacy of £268,000 from his estate worth nearly £300,000 to the RNLI in his last will. His previous will made in 2012 had left the majority of his estate to his former partner, Ms Angela Saunders, and his will before that made in 2008 left the majority of his estate to his daughter, Ms Sonya Young. His latest will left Angela and Sonya both £5,000 each.

The administration of Brian’s estate was delayed due to Angela and Sonya’s prevarication and assertion that Brian’s last will was invalid on the grounds of mental capacity. As a result, the RNLI issued a probate claim to propound the last will.

The RNLI’s claim was successful and the Judge, Master Teverson, ordered probate of the last will in an oral judgment on 19 July 2019.

Unfortunately Sonya had turned down a pre-trial settlement offer from the RNLI of approximately £30,000 and she had spent around £54,000 of Brian’s estate funds by the time of the judgment. A charging order was subsequently placed on her house and she faces having to sell her home to pay the RNLI the shortfall in their legacy.

Following the landmark Supreme Court decision in Ilott v Mitson (2017), it is encouraging to see courts continuing to uphold charity legacies equivalent to the majority of the estate. This case also highlights the importance of pushing forward estate administrations whilst protecting estate assets.



TOP TIPS ON HOW TO PROGRESS ESTATE ADMINISTRATIONS

Cases such as Taj v Ali and RNLI v Young give us food for thought when considering what charities should do when faced with a delay to an estate administration.

Here are our top tips for what to do when faced with this:

1. Don’t be afraid

If a person wants to prevent an estate being administered by challenging a will, they can lodge a caveat at the probate registry to prevent a grant of probate being obtained. Sometimes, the person who lodges the caveat (the ‘caveator’) takes little further action and this leads to a delay in an estate being administered and prolong legacies being paid to beneficiaries.

If payment of a legacy to you is delayed due to a caveat being lodged, do not be afraid to challenge it. You can consider ‘warning off the caveat’ by objecting to the caveat being in place and stating your interest in the estate to the Probate Registry. The caveator then has 14 days from the date of the warning to respond and state their position (known as “entering an appearance”). If the Probate Registry is not satisfied with the ‘appearance’, it may be refused or you could apply to have it struck out, resulting in a grant of probate then being taken.

This can be a good way to challenge a potential claim at an early stage. Should the matter go to court in the future, the caveator may be at a risk of having a costs order made against them due to keeping a caveat in place without bringing a will challenge purely in order to delay probate.

2. Protect estate funds

Where a probate dispute arises, it is a good idea to take steps to protect the funds in the estate at an early stage to avoid the risk of funds being spent, as in RNLI v Young.

There are a number of ways this can be done;

3. Interim distributions

Where administration of an estate is delayed, and perhaps has been for some time, you could attempt to agree an interim distribution of a legacy owed to you with the executors and other beneficiaries.

Interim payments can be a good way to secure payment of your legacy and bring in legacy income more quickly.

Interim distributions are often a viable option where the value of the estate is such that it can accommodate an interim payment whilst retaining enough of a fund to cover future liabilities.

Ask questions of the executors to check that they are not holding on to funds without good reason. Queries could be made as to what the future liabilities are likely to be, when these liabilities are likely to occur and whether they can be funded in different ways, such as by regular income from other assets in the estate. This may be viewed more objectively by a professional executor as they do not to have the same emotional connection to the estate as lay executors.

It is important however that, where there is ongoing litigation between beneficiaries, all beneficiaries are treated equally and the interim distribution does not leave one party with an unfair fighting fund. 

4. Early settlement

Early resolution of a dispute is always beneficial to all parties. It is both cost effective and saves time for both parties as the estate can be distributed more quickly.

Where there is some merit in a potential claim, various methods of alternative dispute resolution can be considered, including mediation, round table discussions and without prejudice negotiations. This can be implemented at all stages of litigation as well as the pre-litigation stage.

Despite the current lockdown and social distancing measures in place, mediations and court hearings are continuing to be held remotely by electronic means. As such, offers to mediate should continue to be made and accepted to try and achieve early settlements in disputes.

5. Seek legal advice 

To avoid the unnecessary delay of estate administrations, it is best to seek legal advice at the point that you are made aware of a potential dispute.
Obtaining legal advice as early as possible can help to resolve disputes in a timely manner and save costs further down the line.

Contact us

Shakespeare Martineau has launched a free legal helpline offering bespoke guidance on a range of subjects from employment and general business matters, through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too.

Available from 10am-12pm Monday to Friday, call 0800 689 4064.

General advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

All the latest views and insights on COVID-19 (coronavirus)

If you need to sign paperwork now and in the future, you may not be able to get to the meeting but by planning ahead, arrangements can be made which should not delay your transactions or prevent it from happening entirely.  You can do this by appointing a temporary power of attorney.

How can a delegated power of attorney help me?

It is possible to delegate your legal authority to carry out tasks on your behalf to someone else using a deed – an Ordinary Power of Attorney. The type of authority you 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 a wide ranging and general Ordinary Power of Attorney enabling someone to manage your property and financial affairs entirely on your behalf, or to carrying out one particular task or transaction for you. The first more general type is useful in circumstances when you are out of the country or perhaps in self-isolation for extended periods. 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.

Whichever type of Ordinary Power of Attorney you decide upon is right for you, you can specify a time limit, at the end of which the authority of the attorney ceases. This cessation could occur even if the transaction they were completing on your behalf is still not complete in which case new authority would be needed by way of a newly executed document.

What can a power of attorney complete on my behalf?

Some examples of when it may be appropriate to execute an Ordinary Power of Attorney to enable someone to act on your behalf include:-

Provided the Ordinary Power of Attorney deed is drafted appropriately, you can choose to revoke the power you have delegated at any point which can be a useful failsafe if your attorney acts in any way contrary to your best interests.

Ordinary Powers of Attorney can be prepared swiftly and they are often required at short notice. It is important, however, particularly if granting a specific power, that the drafting of the deed itself is wide enough to ensure the attorney can do what is required to complete the transaction but not too wide so as to allow the attorney to make decisions outside the scope of the authority you wanted to delegate in the first place.

How do Ordinary Powers of Attorney differ from Lasting Powers of Attorney?

The use of Ordinary Powers of Attorney does tend to be better suited to transactional or commercial contexts and there is an important distinction to be made between them and perhaps the more common Enduring and Lasting Powers of Attorney. The latter two types of power enable your attorney to continue acting on your behalf even if you lost your mental capacity. An attorney acting under an Ordinary Power of Attorney cannot continue acting in those circumstances – their authority ceases with you having lost mental capacity.

If you are concerned about the ongoing management of your affairs in the longer term, in particular in the event you lose mental capacity, you should consider preparing Lasting Powers of Attorney.

If you would like to discuss any of the issues raised here about appointing an ordinary Power of Attorney or any aspect of managing your affairs, please do contact Matt Parr or another member of the private client team in your local office.

For advice or guidance on any other legal issue, a member of our team can help – please click here to discuss.

For more general advice in relation to coronavirus visit our dedicated resource hub.

All the latest views and insights on COVID-19 (coronavirus)

There are however types of relationship agreements that are available to everyone that can help provide clarity and certainty to both parties and their families and they should be considered proactively when family circumstances change.

Moving in together into a new home or moving into a property already owned by one party, parents wishing to invest in a property for a cohabiting child or a divorcee planning to cohabit with a new partner are all scenarios that can cause anxiety and stress to all parties involved and their families.

A living together agreement or cohabitation agreement in these situations could therefore be a very worthwhile consideration.  A living together agreement is a written agreement between parties detailing the respective wealth and assets of both parties and when signed and witnessed, provides security should a couple separate, so this type of agreement can act as a safety net for the whole family – an attractive option.

Pre-nuptial agreements are not just the preserve of the rich and famous. These can often be invaluable in circumstances where one or both of the soon to be married or those entering into a civil partnership have acquired wealth prior to the relationship or would like to protect wealth to pass on to children from a previous relationship. While it is often the couple that initiate these, a parent or close relative can be instrumental in suggesting these if there is family wealth or business assets at stake too.  Crucially in order to be legally binding, ‘pre-nups’ must be freely entered into with full and frank disclosure of wealth and property and with independent advice.

And finally – the increasingly popular post-nup agreement.  Should a marriage or partnership end through divorce or dissolution, the post-nup agreement details how a couple’s assets will be distributed.   The advantages of a post-nup are numerous: they can be drawn up at any stage in the marriage or partnership, they can provide clarity on matters not outlined at the start of the marriage or partnership or that have changed since, and they can often offer an objective solution to what could be a particularly emotional time.

Each of these types of agreements has their own value and will suit different situations and scenarios, but what is clear is, that a couple considering cohabitation, marriage or a civil partnership could do well to investigate entering into an agreement to take the anxiety and stress out of potential situations further down the line.

For further information on any of the agreements discussed above please contact Katherine Marshall on 0116 257 6139  or Kuldeep Chauhan on 0116 257 6150 or a member of the family team.

Having a will also makes an already difficult time much easier for friends and family, simplifying the inheritance process and reducing the likelihood of arguments breaking out.

So, what should people be considering during their estate planning process?

Choosing an executor

An executor is someone who carries out the instructions left in a deceased’s will and does not have to be a family member, however, that is usually the case. Spouses often appoint each other, and grown-up children are a common choice. It all depends on who the person believes would be most trustworthy and capable.

Although executors don’t need to know the contents of the will, it is sensible to let them know of their role beforehand, just in case they have any strong objections.

Should a person wish to appoint two executors, they need to be sure that they will be able to work together without issue to ensure the estate is administered efficiently.

Appointing a solicitor as an executor

It is not necessary for a solicitor to be appointed as an executor, but it can be a wise move if it is likely that the administration process will be a complex one. This may be due to estate value, asset makeup or certain assets, such as business or agricultural holdings, needing a more expert eye.

When a person prepares their will, their advisor should carefully explain the advantages and disadvantages of appointing a solicitor as an executor. There will be a charge for carrying out this role, so the appointment needs to be justified by the complexity of the estate.

However, if a person feels that there is no one else they can trust to carry out the role, solicitors are a good second option.

Telling family members

Once a will has been written, family members do not have to be told. This being said, it is usually a good idea to do so, especially if it includes details about funeral plans.

It can also act as a form of reassurance, letting family know that future plans have been considered.

Once a person has passed away

On death, the appointed executors will take responsibility for the administration of the person’s estate. This includes:

A Grant of Probate may be needed for executors to deal with certain assets, such as property, shareholdings or bank accounts containing larger sums of money.

Estate planning may be an uncomfortable thought for many, but it is vital to ensuring a person’s wishes are met on their death. Contact Matt Parr on 01908 304 420 to find out more about how our private client team can help you.

For advice or guidance on any other commercial or legal issues, a member of our team can walk you through everything. Click here to discuss.

The case highlighted the importance of preparing a will which caters for a number of different scenarios, including the death of an entire family. Without Richard’s careful forethought, his estate of over £41 million would not have been left to Oxfam – a charity obviously close to his heart.

Richard incorporated a provision in his will, often called a “common tragedy clause”, which stipulated what should happen to his estate in the event that he, his fiancée and his children were to have died in a common accident. Such a clause avoids the bunching up of estate funds from one family member to the next and ensures that the estate itself has somewhere to go.

Intestacy

If Richard hadn’t prepared a will, the rules of intestacy determine that his estate would have been diverted in accordance with the Inheritance and Trustees Powers Act 2014. His blood relatives, such as parents or siblings could have stood to inherit his estate instead, something Richard appeared to not want.

Richard’s case highlights an important point regarding the intestacy rules and how they operate only to benefit spouses/civil partners or blood relatives. If, for example, Richard’s fiancée and two sons had not been on board the plane and had survived him, it would have been his two sons that would have stood to inherit the entire estate. His fiancée, for whom he would probably wished to have made some provision for, would not have stood to inherit any of his estate at all.

Choosing executors

Provision is made in a will as to who will be responsible for administering the estate and distributing it in accordance with the person’s wishes.

People should pick those that they trust to carry the responsibility. Married couples tend to appoint each other as their executors, perhaps with adult children as replacements. However, it is worth considering who is to be appointed in the event that none of those people live to take on the role.

In some circumstances, it is a good idea to appoint professionals. Solicitors, accountants, and tax advisors are all commonly appointed as a “backstop”. The likelihood is that the firm they work with, or a successor to it, will be in existence at the time of the person’s death and as such there should always be someone to step in and take the role on.

Professional executors are often a good option when it is anticipated that the estate administration may be particularly complex.

Business assets

Currently, an interest in a trading business and shares in unquoted trading companies can often qualify for Business Property Relief (‘BPR’). This reduces the value by either 100% or 50% when calculating any inheritance tax due on them. BPR, therefore, is an extremely valuable relief and should be utilised when it can be to ensure business succession to either future generations or others such as business partners.

Careful drafting of a will for those that own business assets of this nature ensures that, when possible, BPR can be utilised and the assets held in suitable vehicles, such as trusts. The trustees can help manage the business after death, safeguarding the business itself and ensuring its smooth transition to the deceased’s children or others that have been named.

The death of Richard and his family is a sad reminder of the benefits of planning ahead. As a consequence of the advice he sought and received, Richard was able to ensure that a charity benefitted from his significant wealth when it wouldn’t have done otherwise.

Find out more about our wills & succession team.

Estate planning: What needs to be considered after transitioning

Blog | Estate Planning

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In an already unsettled time, disputes over estate planning are even more unwanted.

Matt Parr, one of our private client associates, explains the importance of carefully considering the implications of a gender change when it comes to wills and inheritance:

Correct identification

There’s a fear of stigmatisation amongst the trans community, which may hold people back from broaching the topic of altering a will with their family.

However, no matter how difficult the conversation may be, it is essential that wills are updated to reflect new gender identities. If it is not done, conflicts may arise later on, causing unnecessary stress.

The Gender Recognition Act 2004

On 4 April 2005, the Gender Recognition Act came into force. Under this, a person’s new affirmed gender cannot be legally recognised until they have a Gender Recognition Certificate (GRC). These are not retrospective, meaning wills drafted before 4 April 2005 will be interpreted as the beneficiary’s assigned birth gender instead of their new gender.

Obtaining a Gender Recognition Certificate is not a short process. It requires people to live as their chosen gender for two years, after which they must carry out a series of in-depth tests and be put in front of a Gender Recognition Panel. It’s best to start the estate planning process during this time to avoid extending a stressful period further.

Re-drafting your own will

For the family of those who are considering transitioning or are in the process of doing so, it may be wise to re-draft an existing will to include gender-neutral terms for beneficiaries. This allows children to benefit whether they choose to change their gender or not, removing the chance of any issues that the will-writer may have experienced themselves.

Seeking expert estate planning advice should not be avoided due to fear of judgement. Transgender people must find an adviser who puts them at ease, making the will-writing process as stress-free as possible and ensuring their assets and loved ones are protected.

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Matt works with individuals and their families to help them negotiate the many pitfalls they can encounter when planning for their future by providing pragmatic, bespoke advice.

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As part of our ongoing commitment to increasing access to legal services for all, we have developed a focus in answer to requests from the LGBT community for advice to be provided in an approachable, empathetic and non-judgemental way by lawyers that truly understand the issues they may face particularly concerning their personal matters.

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Without a pre-nup, many people think their case is dead in the water, but that’s simply not the case. When considering the division of assets, it may actually be possible to ring fence certain elements that were accrued prior to the marriage taking place. This is certainly the case for pension pots.

When considering pensions, it is important to be clear about the type of pension scheme that is involved –  different schemes have differing benefits, values and of course, pension freedom rules must be accounted for.

However, the length of the marriage, remains an important factor too, even where there is “no mingling” of assets, for instance joint bank accounts and the like.

The longer the marriage and, in particular, the more the parties relied on the capital and pensions for their future retirement, the less likely the chance of the Court excluding the pension from consideration.  Generally, although there is no law to support this, if a Pension has been accrued entirely pre-marriage, then it is unlikely to be shared, save in relation to need.   ‘Needs’ are critical in most cases, although there can be a degree of crystal ball gazing when looking at future pension needs.

Where the pension is accrued in part pre-marriage and in part post marriage, the approach to be taken may depend on the other factors in the case, such as the proportion of assets represented by the pension accrual for the length of the relationship, the view the court takes about each party’s future earning capacity and whether pension provision can be increased over time.

There are many orders that can be made in the context of financial remedy proceedings, but what is clear, is that all the circumstances of the case, will have a bearing on the outcome.

A huge number of financial transactions are taking place across the world and Bitcoins and other “e-currencies” are playing a large part in boosting this number further. However, passing these virtual pennies on after death is certainly not as straightforward as dealing with a high street bank account. This is worth bearing in mind when thinking about putting financial affairs in order.

Virtual wallets
One of Bitcoin’s biggest advantages is the security in which it is stored in its virtual “wallet”. This can be on a USB storage device or even in a cloud type service. The wallets are highly encrypted, and access is gained by use of a complex password, making it virtually impossible to access without the owner’s permission.

It is highly unlikely that family will even be aware that a person holds the e-currency unless they are told, meaning virtual funds would still exist after death, but would be inaccessible and therefore lost forever.

Ensuring executors have access
To ensure executors can gain access to the wallet without compromising security and privacy while a person is still alive can be difficult. Important information shouldn’t be recorded in a will, as this becomes a public document upon application for the Grant of Probate from the Probate Registry and as such security would be severely compromised.

It is important that this information isn’t simply recorded in a “strictly private and confidential” document stored with a will in the house, as this makes accessing such sensitive information all too easy in the event of a burglary.

Creating a separate document
It is advised that executors are made aware in the will of a separate document which they should refer to. That document should be stored securely and only be accessible by a password holder chosen by the deceased. The document can contain information as to the whereabouts of the wallet in the cloud or indeed the USB storage device.

Distributing the document
Probably the most secure method would be to make reference again in the will to the existence of the wallet and divide it into several pieces to be distributed to individual family members, friends or trusted parties such as solicitors or accountants. The pieces can be brought together on death to unlock the wallet and transfer the funds. This all sounds very clandestine and convoluted – but a person’s virtual wealth is at risk if they do not take such precautions.

Other online deposits
It isn’t simply e-currencies that can cause headaches for executors, any type of online deposit for ordinary currency such as accounts with The National Lottery, betting websites and PayPal are all accessible by password and can be overlooked. As with an e-currency wallet, provisions should be made for executors to be able to gain access to these funds and cancel accounts without compromising security while the owner is alive.

If you are unsure about how to put steps in place to assist your executors in managing your affairs once you have died, please get in touch with a member of our private client team.

Katherine Marshall, one of our partners in the family team, and Suzanne Leggott, a private client partner, discuss the issues that need to be considered in these cases:

Finding the missing person

The most vital issue is tracking down the person who has gone missing. Contact needs to be made with them, whether that be through social media campaigns, a police investigation, or even a private investigator.

If the person is retired, it is worth looking into whether they are collecting their state pension. Accessing the letter forwarding service offered by the Department for Work and Pensions can help shed light on any previous addresses the person may have had, although individuals can’t access this service; it can only be accessed through certain channels such as by solicitors or charities.

Understanding why the person may have disappeared

If a person goes missing during divorce proceedings, they may have done so to escape what can be a traumatic experience. People’s coping mechanisms vary, and sometimes they are not in the right place to face the issues head on.

It may be the case that the person has a history of mental health concerns, and if so, they may need specialist support throughout proceedings. Safeguarding procedures should be put in place by solicitors if this is the case, so the process can be managed in an appropriate manner, causing as little distress as possible.

Can funds be distributed without the missing person’s permission?

In the event of an estate administration and an absent beneficiary, issues can arise surrounding how the proceeds from the sale of the property are to be distributed. Without contacting the missing person, instructions around distribution cannot be given and can hold up proceedings for all parties.

If this occurs during a divorce, a former spouse may attempt to give away the money, perhaps to charity. This can be worrying for the family of the missing person, as there is still the possibility that they will return and need the money. However, it is unlikely that a former spouse could achieve this, as the process is complex and long-winded.

Seeking appropriate legal advice is of great importance in such a rare situation and to resolve the situation in the best way possible, contacting the missing person is paramount. This gives the individual the option of settling the situation themselves, or appointing someone else to do so.

Find out more information about our family team, or see more about our private client team.