Charity expert vows to ‘stand up for the sector’ after committee appointment

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Charity law and governance expert Catherine Rustomji has been elected to sit on the Charity Law Association executive committee.

As head of charities at full service law firm Shakespeare Martineau, Catherine’s position on the executive committee will see her play a leading role in improving knowledge and awareness of charity law issues, as well as working closely with the Charity Commission to pursue both technical and practical issues facing the sector.

The role of the Charity Law Association is to support charities of all sizes navigate the legal landscape of the third sector, providing a forum for members to exchange ideas and information as well as responding to consultations from government and regulators.

Working alongside other leaders in the sector including advisors, academics and charity professionals, Catherine will share best practice with the association’s 900+ members.

Catherine, who has more than 20 years’ experience in the charity sector, said: “I’m thrilled to have been elected to sit on the executive committee – I am looking forward to getting back into the thick of developments in charity law and discussions with peers about the latest issues affecting charities, and working as a team to stand up for the sector and make a real difference.

“This additional role will position me at the coal face of charity law, keeping me at the forefront of developments so that I can better support my clients too.”

For more than two decades, Catherine has been exclusively advising charities, social enterprises and not for profit organisations – specialising in charity law and governance, not for profit legal structures, trustee training and board development.

Over the years, she has supported national, regional and local charities, not for profit organisations, community groups, schools, colleges, churches, welfare and professional associations – operating across the health, education, arts, public and private sectors.

Nearly 1,000 members of the Charity Law Association were asked to vote for the executive committee, with appointments announced at the organisation’s recent AGM. Positions are voluntary and held for three years, subject to re-election by members.

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Catherine Rustomji is a partner and head of charities at Shakespeare Martineau. She has been advising charities, social enterprises and not for profit organisations exclusively for over 20 years.

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Legacy loop: spring edition 2022

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Taking a look at the recent case of Higgins v Morgan and others [2021] EWHC 2846 (Ch) involving a 1975 Act claim brought by an adult step-son where the court considered the claimant to have both a “moral claim” and grounds for recovering their CFA success fee.

Background to the case

A claim was brought against the estate of Stewart Higgins by his stepson, Barrie Higgins. Stewart died intestate and under the intestacy rules his estate passed to his cousins as beneficiaries and Barrie was not to benefit. Barrie alleged that Stewart had promised that Barrie would be included in his will and subsequently the distributions under the intestacy rules were against Stewart’s wishes.

Barrie was encountering financial difficulties and depended upon his wife’s profession in wedding photography, which had been impacted by the Covid-19 pandemic. Barrie subsequently brought a claim as a person treated as a child of the deceased under section 1(1)(d) of the 1975 Act. This was defended by the beneficiaries.

What was the outcome?

It was concluded that showing a need for maintenance plus a relevant relationship is generally not enough to be successful in such a claim, and that in instances where an adult child claims inheritance who is well capable of living independently, ‘something more’ was required. This included being able to demonstrate a form of moral claim.

Having regard to s.3 factors taken into consideration by the court when considering whether an award is to be made, the court awarded Barrie £40,800 for his claim, which was subsequently increased to £55,000 to take into account his success fee (as his solicitors were acting under a conditional fee agreement or “CFA”). The judge considered that the promises made to Barrie by the deceased constituted ‘some form of moral claim’ owed to Barrie. The judge also considered their close relationship in comparison to the existing beneficiaries.

What does the outcome of this case mean for charities?

This case demonstrates that something more than being a child of the deceased is required in claims where the child is now an adult. As well as having the relevant relationship to the deceased, an adult child must have a moral claim against the estate. 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.

The court’s attitude to recovery of CFA success fees

From a costs recovery perspective, the judgment in Hirachand v Hirachand [2021] EWCA Civ 1498 (the Re H appeal), handed down very shortly after Higgins v Morgan, provided further clarity on the Court’s willingness to consider a claimant’s CFA success fee when making an award. This significant court of Appeal judgment confirmed that awards under the 1975 Act can include a lump sum to discharge all or part of a claimant’s success fee. This decision may prove to encourage more claimants (and their solicitors) to consider pursuing a 1975 Act claim by way of a CFA.

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Jemima acts for both individuals and charities in resolving a range of contentious trusts and probate disputes and contested Court of Protection matters.

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Music Royalties – ensuring the drums keep beating

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12 Days of Christmas - Day 12: Drummers drumming

The right to receive royalties from music, as for many other types of intellectual property rights, can be inherited as part of a person’s estate.

When a musician dies, the beneficiaries of their estate either named in their will or, if they do not have one, the beneficiaries determined by the rules of intestacy, will be able to receive the royalties throughout the period of copyright. This right currently lasts 70 years from the creator’s date of death.

As copyright has such a long term it is possible that rights to receive royalties can pass down through several generations. Where the intellectual property is of significant value, this can be directed to structures such as trusts during a creator’s lifetime or on their death to ensure that it is carefully managed by appropriate trustees for the benefit of a person’s whole family. Alternatively, a person with valuable intellectual property might consider appointing a literary executor with particular expertise in the relevant area, separately to the other executors of their estate.

People tend to focus on tangible and financial possessions when making their wills and can accidentally overlook valuable intellectual property such as copyrights, trademarks, designs, Artist’s Resale Rights or patents. This intangible property is often forgotten or not clearly and fully dealt with as part of someone’s estate planning.

If you have any intellectual property of significant value, it is important to get advice on the proper drafting of your will to ensure that all facets of the piece of original work or creation will be passed in line with your wishes on your death.

For example, although an item such as a painting may hold some value, it can be the case that the greater value is the intellectual property surrounding the painting. As such, intellectual property rights should be clearly defined and included in any gift of personal items where it is the owner’s intention that they pass with the physical item itself.

There can be several different intellectual property rights associated with a particular creation which can make dealing with these assets complicated. For example, copyright in a sound recording (lasting 50 years from when the sound recording was made if unpublished or 70 years from being made public within that period) exists separately from the works and performances included in that sound recording.

Having a properly drafted will that deals with your intellectual property can not only give peace of mind to the creator but also help prevent disputes after a person’s death as to the scope of any gifts in which intellectual property exists.

Another issue that can arise in respect of intellectual property is that people often do not keep good records of their creations, especially in an era where creations are often stored or created in the digital space. Therefore it is a good idea to keep a record of all works you have created and lists of any relevant experts or contacts who your executors will need to deal with after your death in respect of the works you have created.

Focusing attention on who will inherit your royalties can ensure your family continue the beat to the sound of your drum after you have died.

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As a specialist private client solicitor Virginia begins by making sure she understands the dynamic of her clients’ lives and then advises on all aspects of wills, trusts, probate law and inheritance tax planning.

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Have you considered your pet in your will?

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Most people know the importance of ensuring that they have a will in place, to provide for their loved ones after their death. However, many people have not considered their “non-human” loved ones and who will care for those furry family members after their human carer has died. 

Although it may seem distasteful to some, legally speaking, pets are considered to be part of your personal “chattels”, like your clothes, car or your furniture, and will therefore form part of your estate when you have died. You should consider making provision for what will happen to your pets in your will. 

It is important to consider not only who you would like to care for your pets, but also the costs of caring for them and whether it may be appropriate to leave funds to those who will take on their care. However, it is essential to choose someone that you trust to ensure that not only will your pets be properly cared for, but also that any funds left to that person are used for the purpose for which they were intended. It is not possible to leave funds directly to a pet. 

For those who do not have family or friends who would be able to take on the care of their pets, there are charities who will care of them, usually as long as arrangements are put into place beforehand.  

It is therefore a matter that should be considered carefully and researched thoroughly, to ensure that your furry, feathery or even scaly family members will be properly cared for and that those French Hens will continue to live happily after your death. 

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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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It can be difficult to envisage a time when you’re not there to provide for your family. However, we are here to guide and support you with preparing a will so your wealth is protected for your loved ones into the future.

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What is inheritance tax?

Quite simply, it is a tax on a person’s assets when they die. It can also be applied to the recipient of a gift that costs over a certain amount and the giver has then died within seven years. The gift does not have to be monetary; it could also be property or possessions.

What’s the limit?

Per tax year, a person is able to give away a cumulative total of £3,000 to whoever they choose. They can also give as many small gifts under £250 to different people as they like.

What’s the seven-year-rule?

The seven-year-rule becomes relevant when a person gives away over £3,000 in one tax year. It states that the giver must survive for seven years after the gift for it to be exempt from inheritance tax. If not, the value of the gift is counted back into their estate when calculating the inheritance tax due. Such gifts will use up the tax-free allowance (nil rate band) available on their death and, if the value exceeds this, the recipient is liable to pay inheritance tax. However, the tax payable does start to taper if it has been more than three years since the date of the gift.

Are there any gifts that are exempt?

Donations to charity and some gifts for marriages or civil partnerships are not liable for inheritance tax, depending on how closely related a person is to the happy couple. All gifts between married couples or those in civil partners are also exempt.

Is there a way to avoid inheritance tax for certain?

Unfortunately, unless a person is psychic, there is no sure-fire way to avoid inheritance tax on gifts over £3,000.

Nevertheless, there is the option of using ‘excess income’. If a person can prove their income meets all their living costs, and that their standard of living can be maintained after the gift, then it may be possible to claim an exemption for inheritance tax. However, to qualify, there must be a regular pattern to this gifting.

All this being said, as long as the giver communicates effectively with the recipient about the potential risks of an expensive gift, generosity does not need to be feared. If in doubt, seek advice from an expert.

Contact Suzanne Leggott on 0116 257 6130 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.

Why business owners should have an up-to-date will

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Making sure you have an up-to-date will

Having an up-to-date will in place is the only way that you can guarantee that your wishes are carried out on your death.  Dying without a will means your estate will pass in accordance with the intestacy rules. And iyou are a business owner and this happens it could have massive implications for your business and your family.   

What having a will in place means for your family

There are several scenarios to consider: 

  • What happens if your business assets are inherited by your spouse, civil partner, or other family members who are not “in the business” and know nothing about it or, worse perhaps, do not have the knowledge or skills to run it. Your business which you have spent years building could be damaged following your death and it may no longer be able to continue providing for your family into the future. 
  • Consider whether your business partners could work with your spouse, civil partner or other family members. Would they be prepared to bring them up to speed with the business or would they have the means to buy them out? 
  • If your business is run as a partnership, the death of a partner who has no will in place could lead to the business being dissolved automatically if there is no partnership agreement drawn up either. Regardless of the surviving partners’ wishes, they would need to sell off the business and its underlying assets. 

Having an appropriately drafted will in place could mean that the most suitable people can continue to run the business and family can still benefit from the value of the business. 

If your family have no desire to inherit the business, your will can stipulate that your business partners inherit the same and the cash value is inherited by family instead. 

It is important that, where possible, Business Property Relief (BPR) is available to your personal representatives in order to exempt the business assets from Inheritance Tax (IHT) and crystallise this relief as soon as possible ideally having had the position agreed by HMRC following your death. 

To do this, it may be necessary to pass your business assets into a trust structure. A trust, unlike a surviving spouse or civil partner, is a non-exempt beneficiary for IHT purposes and as such, BPR would be claimed by your Personal Representatives to ensure that no IHT is payable still. 

Other options for your will

Your surviving spouse, civil partner or family can benefit from the business assets while they remain in the trust but the value of the business assets is outside of their own estates. Alternatively, your family could purchase the business assets from the trust using assets they have inherited from your estate swapping BPR assets in the trust for cash (which then falls out of their estate). Once they have owned the business assets for two years they will then again potentially qualify for BPR on their own deaths.  

Be aware, however, that even if you have a will that deals with business assets, there should still be a shareholders agreement or partnership agreement in place and all business partners should be aware of what happens when one of them dies. 

Consider putting in place a cross option agreement if you leave your business assets to anyone other than your business partners as this will enable the surviving business partners to purchase the business assets from your family under the terms of a shareholders agreement or partnership agreement. 

There is a lot to consider and many options available and it is essential that you get the right advice to ensure the survival of your business, and the best outcome for your employees and your family.

 

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The current pandemic has brought an increase in the number of people making wills, many of them homemade. However, many of these Wills can be badly drafted and fail to deal with all the assets that a person has, particularly their digital assets. 

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Based in the firm’s Milton Keynes office, Matt advises his clients on tax efficient estate planning options which could include the preparation of Wills, trusts, deeds of gift and deeds of variation.

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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.

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Witnessing a Will Online: The Problems with Remote Signing

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Making Wills Online

Debra Burton comments on the increase in Will disputes being brought following the pandemic and shift into remote witnessing of Wills during the COVID-19 pandemic.

Since the pandemic, Will validity challenges on the basis that Wills have not been properly witnessed are increasing.

The rules on how to make a Will, and the formal requirements regarding how they should be validly witnessed, are generally complicated. Lockdown in the pandemic then made the problem worse as it could prove very difficult to find one witness, never mind two.

There are a number of myths around the signing of Wills, particularly online Wills, including that Wills can be signed electronically or only one witness is now needed.

Neither of these are correct – a person making a Will (known as the testator (male) or testatrix (female)) must sign the Will with a “wet ink” signature and two witnesses are required to witness the signing of the Will.

Beneficiaries are now focussing more on how the Will was witnessed and testing the evidence of the witnesses, where previously they may not have done so.

Challenging a Will based on lack of proper witnessing can be easier (and therefore cheaper) claim to bring after the testator/testatrix has died, as opposed to a claim based on lack of testamentary capacity, for example.

There is no need for expert evidence or judicial discretion if the witness evidence is clear. Either the Will was witnessed properly and is valid or it is not.

If you have concerns about a Will that looks like it has potentially not been correctly executed, please get in contact with our team who would be happy to advise and assist you further.

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Debra is a specialist contentious trust and probate solicitor who advises on all areas of contentious trust and probate matters, representing private individuals, trusts and charities.

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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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Garraway’s digital legacy challenges are a lesson to us all

Many have recently empathised with TV’s Kate Garraway as she publicly recounted the struggles of her husband Derek Draper in his battle against COVID-19. As if his health challenges weren’t enough, she has spoken out about the additional difficulty of getting access to joint funds whilst he was in the hospital.

With most of our valued information, records and assets online, keeping them in the hands of those we trust has never been more important. With the average person holding 70-80 passwords, this raises an important question for us all - how do we manage our digital legacy, especially in the event of ill health?

Safeguarding our digital legacy

In the midst of a global pandemic, it’s important to be prepared should you suddenly be struck down with ill health. Safeguarding our digital legacy can be done in four simple steps:

 

  • taking inventory of your digital assets and devices;
  • securing your passwords;
  • making decisions about your digital assets.
  • providing instructions for handling your digital assets

Our digital assets become the legacy we own, and protecting them is a vital task. Should the worst happen, it’s important that loved ones have access to be able to complete transactions or stop payments on your behalf. More crucially, it can help mitigate some of the stress that a loved one may feel if struggling emotionally with your ill health. Protecting your digital legacy can mean also protecting your loved ones from significant administrative challenges.

Take stock of your digital assets

We all have a huge amount of digital assets that are expanding on a yearly basis. This could be our Netflix or Amazon accounts, bank accounts, social media profiles, and cryptocurrency accounts such as Bitcoin. Our entire lives are going virtual - so it’s becoming increasingly important that we safeguard our digital legacy.

This starts with taking stock of our digital inventory - making a note of exactly what we have online.

So how can we do that? It starts with conducting a review of our digital assets. We should examine not only the sentimental value but also the potential monetary value that our digital assets now hold. For example, Crypto and PayPal accounts are likely to hold real monetary value and similarly, intellectual property held electronically within books, videos and poetry could provide beneficiaries with significant financial gains.

On the other hand, family photos held within a Dropbox account or social media pages are much more likely to hold sentimental significance.

Since the pandemic, more of our banking assets have shifted further online. ATMs are reducing in number, and many physical branches have closed. Reduced access to physical banks means that they need to protect our digital assets is even more pertinent in a world where we conduct a lot of our transactions virtually. In the case of Kate Garraway, having joint accounts meant that one party could not access funds without authorisation of the partner. Had a schedule been kept of what passwords were held and for what, it could have protected her from what was inevitably a very stressful situation.

What happens if a loved one passes away without safeguarding digital assets? At present there are a number of legal ‘grey areas’ surrounding digital asset legacy planning and only recently has this become more common to include in a will. There is a real need for clearer guidance and an update in the law surrounding digital assets will be required in the near future. However, until that time, those writing and distributing a will should take caution.

Provide instructions for handling your digital assets

However, no matter whether it is sentimental or financial gains that digital assets could provide, ensuring that clear instruction is provided can help to ensure that they are catered for accordingly. It is wise to securely store a digital assets log that provides the access details of all accounts, or use a third-party password genie like Lastpass, along with a clear indication of what action is to be taken with each asset. However, individuals should exercise caution in doing so to ensure that they are not breaching the terms and conditions of the service provider.

If in the event of a bereavement, executors have a duty to maximise and administer an individual’s estate, but accessing online accounts without formal written permission in the will could mean that they are in breach of the Computer Misuse Act 1990.

Being an executor isn’t just about realising the assets of a will, executors often have a moral duty to fulfil the wishes of the deceased to the best of their ability and knowledge. If an executor doesn’t have the correct skillset to manage digital assets, it can cause huge amounts of stress and in turn, if proper instruction isn’t given to the executor, digital assets can be lost completely. Therefore, it is important to nominate a ‘tech savvy’ executor to manage the distribution of the digital asset element of a will  - failing to fulfil the task competently could open executors up to personal liability claims from beneficiaries. It is also not uncommon to have more than one executor, who could be chosen for specific tasks based on their proficiency.

Unfortunately, before more formal guidance is available, we are likely to see an increase in problems caused by unclear or incomplete instructions regarding the legacy of digital assets.

Garraway’s struggles are a lesson to us all, and her challenges can help us all to realise that taking a safeguarding approach to digital assets is a necessary activity for every individual, young or old. Following the four steps means that we can take active measures to protect our digital legacy, for now, and the future. This process isn’t a one-time event - it’s now an ongoing endeavour that we all must undertake.

We're here to help

We can advise and support you with creating your lasting powers of attorney. Learn more about the process by getting in touch with our private client team, and we’ll arrange a free call back at a time to suit you.

Our private client team is ranked as a Top Tier Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your way out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

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

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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Insight

Legacy loop: spring edition 2021

Welcome to the spring edition of our Legacy Loop

Recent case update | Charities
Knipe v The British Racing Drivers’ Motor Sport Charity and Ors (2020) EWHC 3295 (Ch)
Background to the case

The recent case of Knipe involves two charities that were named in the testator’s will (‘the British Drivers Club Benevolent Fund’ and ‘the Cancer Research fund’) - neither of which actually existed at the time of his death.

Ordinarily, when trying to work out who should benefit from a will, the will file and evidence from the solicitors who prepared the will can provide useful guidance.  Unfortunately, in Knipe, the executor was unable to get any clarification on what the testator had intended from the firm who had made the will as the will file had been destroyed.

An application was then made to the court for determination as to the correct construction of the will in relation to these two charitable gifts.

The court considered the testator’s professional background and his previous longstanding involvement with and membership with the British Racing Drivers’ Motor Sports Charity, it was concluded that the testator must have intended them to benefit, as they are the only named registered charity with a similar name and which has a benevolent fund administered by the British Racing Drivers’ Club (a non-charitable unincorporated association).

What was the outcome?

The court was unable to establish a link between the testator and any particular cancer research charity, and it was considered that the testator did not have any strong connections to a particular cancer charity. It was therefore interpreted that the testator generally intended to benefit any general cancer research charity and the court authorised the executor to pay the legacy to a cancer research charity of his choice.

What does the outcome of this case mean for charities?

Whilst it is possible for the court to interpret and determine a testator’s intentions following death, it is both quicker and significantly less costly to ensure that all beneficiaries are accurately identified and named at the time of making the will.

Particularly in the case of charity beneficiaries, inclusion of the charity’s full registered name, address and company/charity number in the will itself means that the right beneficiaries can be easily identified when it comes to administering an estate, especially if the charity then merges or its assets passed to another charity.

The full version of the judgment, in this case, can be found here.

The future of will-making and legacy donations and the implications for charity fundraisers and managers

Legacy Foresight’s recent Charitable Wills in the 21st Century project looked at will-making and charitable legacies, both now and into the future, considering the implications for both legacy fundraisers and managers.

The report recognises that people’s circumstances, relationships and wishes change over time, and this often elicits a person to change a will that they may have done some years earlier later in life. This may therefore play a part in influencing where the focus should be in terms of stewardship and awareness-raising from legacy teams.

Online wills

Whilst we are seeing a significant shift in law firms moving further to remote working and provision of services, and introduction of video witnessing of wills, it is not considered likely that there will be a huge overhaul of the current legislation governing will making.  Wills are important documents that determine who benefits from your estate following your death, it is therefore essential that proper advice is sought and consideration is given to the content and execution of that document (as would be the case with giving away money and assets during lifetime).

Read our recent article on the video witnessing of wills and the possible impact of the potential introduction of dispensing powers (upholding testamentary wishes made do not comply with the formal requirements of a will).

The Legacy Foresight report suggests that rather than a “revolution” in the way wills are made, there is more likely to be an “evolution” by way of voluntary codes of conduct and more explicit standards brought in. Therefore, whilst online wills may provide a more accessible route to making a will, there is a danger that we could see a knock on effect later, perhaps due to fewer safeguards in place to ensure those wills are validly made and executed.

Our recent webinar, hosted by STEP East Midlands, considered the common problems of ‘DIY wills’, as well as taking a look at digital assets. View a recording of the webinar.

Free wills

Charity schemes and free wills services are found to be a significant source of business within the will-making sector, and search and comparison providers such as Money Saving Expert, Which and Citizens Advice (and even social media) are likely to be important in influencing the schemes potential donors are exposed to.

Whereas charitable wills among the ‘war babies’ and ‘baby boomers’ are perhaps more prevalent than among millennials, free wills schemes are appearing to appeal to young people where the cost of making a will may be a significant factor. The report highlights therefore that, as the payback of those schemes is generally far off in relation to young people, stewardship and maintaining relations with those donors is vital in retaining their support.

How will charities be affected?

The project suggests that it remains uncertain exactly what the effect on charitable giving will be following the coronavirus pandemic, and whether there will be any notable changes to the will-making industry or donors’ needs. The report suggests that a further phase is intended to be carried out in the wake of the coronavirus crisis to explore these questions in more detail.

We’re here to help

Read our full spring legacy loop email here.

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.

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

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Guides & Advice

Can you remove an executor from a will?

When an executor is dragging their feet in progressing the estate administration, but refusing to stand down, it can be extremely frustrating for beneficiaries who are to inherit from a person’s estate.

Here we outline five top tips for dealing with this issue, particularly where an executor named in the will has not yet taken a grant:

1. Act early

As soon as you are notified that you are a beneficiary, start making enquiries of the executor. These enquiries may include asking for details of the legacies left to you (or a copy of the will) and confirmation of when the executor intends to apply for probate. Engaging early with the executor can help to identify is unnecessary delays are likely to occur at an early stage.

2. Where there’s a will there’s a way

Where an executor is in possession of the deceased’s will, and simply will not divulge the information in it, provide a copy or submit it to the probate registry to apply for probate, you can issue a subpoena ordering the executor to deliver up the original will to the probate registry.

If the executor fails to comply with the subpoena, they will be in contempt of court. This can then form grounds for asking the probate registry to ‘pass over’ their entitlement to take a grant and allow another appropriate person to step in and take on the role of executor.

3. Next stop…citation

If an executor is refusing to apply for a grant to administer an estate, there is a process by which an application can be made to the probate registry for an order requiring the executor to take a grant. This is known as the citation procedure.

Once a caveat is in place, a draft citation application is made by the ‘citor’ (person seeking to force the executor to take the grant) and is lodged with the probate registry (together with payment of the £4 fee and a draft order).

This is then served on the ‘citee’ (the executor) and the citee then has eight days from the date of service to enter an ‘appearance’ (explanation of their position) at the probate registry.

If an appearance is not entered then the citee can be required to enter one within a set time, or the citor can apply for the grant themselves. Similarly, if an appearance is entered by the cite, but they still fail to apply for the grant, the citor can apply for an order to be made to them instead. This is a good tool to have in your armoury should you be trying to persuade an executor to take a grant and progress the estate administration.

4. Push to stand down

Where concerns have arisen about the executor’s ability to fulfil their duties, or their handling of the estate administration prior to taking out a grant, then you could request that they “renounce” their position.

If they have been carrying out actions as an executor (known as ‘intermeddling’) then they are not able to renounce, but they can still agree to step down. It will still require a court order to remove them but, if this is done with consent, it is relatively quick process. If they won’t agree to step down then a formal application for their removal/passing over of their entitlement to the grant can be made.

It is always preferable to try and get the executor to agree to stand down as executor in the first instance.  A letter detailing your concerns and requesting their agreement to stand down, perhaps with the threat of a court or probate registry application if they continue not to co-operate, is a good first step and can also be used an evidence in court if required later down the line.

5. Seek legal advice

Wherever you have growing concerns regarding unnecessary delays by executors, it is advisable to seek legal advice at an early stage to understand what you can do and the likely costs involved. Often, the earlier action is taken the quicker matters can move forward and the estate be administered.

We can help to administer estates professionally and empathetically

Dealing with administration of an estate when someone has died can be an extremely emotional and testing time, particularly when it involves the estate of a close family member or friend.

If you’re the beneficiary of a will and an executor is dragging their feet in progressing the estate administration then we can help - contact Andrew Wilkinson or Debra Burton for guidance and support.

Alternatively, get in touch online or visit our wills solicitors page to learn more.

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.

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

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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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.

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

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Guides & Advice

Can I still make a will during the coronavirus lockdown period?

ITV Central News recently ran a feature on the increase in the number of people writing wills over the last six months – a 550% increase overall and a huge 1200% increase in those under 35.

It’s clear that people are concerned about the risks posed to them by the coronavirus outbreak and want to get their affairs in order and have one less thing to worry about.

Why should I make a will?

Making a will is important and, now more than ever, ensuring your affairs are in order and your will is up to date is on a lot of our clients’ minds. Being stuck in lockdown shouldn’t stop you from putting them in place.

Read more about how preparing a will can ensure your assets pass into the right hands.

How can I make a will during lockdown?

Ordinarily, we would meet with our clients face–to-face, but we appreciate that this isn’t always sensible, particularly if you are vulnerable.

We are happy to meet with you virtually via video conferencing facilities such as Skype, Zoom, Microsoft Teams of FaceTime if you would prefer. From that point on, we can deal with matters by telephone, email or post - we just need to ensure we are speaking with you and not someone pretending to be you!

Once we have fully understood your needs and concerns we will prepare a draft will for your consideration and send this by secure, password protected email or by post, whichever method is best for you. Your draft will is accompanied by a detailed explanatory note of each of the clauses it contains and any additional information needed from you will be clearly highlighted.

Once you receive the draft will we are on hand to answer any questions you may have to ensure you receive the high-quality service and tailored legal advice you would ordinarily receive from us.

How do I sign my will?

Ordinarily, a will must still be signed in the physical presence of two independent witnesses, despite the issues regarding self-isolating. However, the government has very recently announced a relaxation of these rules which will also work retrospectively. The changes mean that a will can be witnessed via video conference facilities.

The new legislation will apply to wills that have been made since 31 January 2020 and will apply for wills made up to 31 January 2022. Read more about the guidance for making wills by video call on the gov.uk website.

Despite this, it is incredibly important that the will is signed correctly. We will provide you with detailed instructions on how to do this and offer suggestions as to how this can be done whilst complying with the current government rules and restrictions.

For your added reassurance, we can oversee the will signing process either by video-conferencing or in person, if necessary.

Can I ask one of my family members to witness signing a will instead? 

Individuals should not be tempted to ask their family or anyone who stands to benefit under the will (or anyone married to someone who stands to benefit) to be a witness. Doing this may inadvertently invalidate any gift to that person you’ve included in your will. Depending on the extent of their entitlement, this may undermine the entire purpose of preparing the will in the first place.

Can someone else manage my affairs if I’m self-isolating? 

If you already have a lasting power of attorney in place then your attorney(s) may be able to manage your affairs if you need some help, depending on how they are drafted and whether they are registered.

If you don’t have one in place already then we can help keep things moving by preparing a temporary power of attorney, which is different to a lasting power of attorney in that it is very specific and you can limit it to the particular task that you’d like somebody to do for you. These can also be put in place quite quickly.

Read more about how you can ensure your affairs remain in order and your assets are protected with powers of attorney.

We encourage our clients to consider preparing these at the same time they turn their mind to preparing a will.

Contact us

No matter where you are on your journey, we can help to support and guide you through the process. If you’d like to discuss putting a will in place, or would like advice or guidance around the process, please contact Matt Parr on 07979 412 698, or fill out our enquiry form, and a member of our private client team will get in touch with you shortly.

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

Intrested in our will writing services?

Our will expert lawyers are ready to help you prepare your will find out more about our prices and services by clicking the button below or calling us on: 0330 024 0333

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Guides & Advice

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

Guidance for attorneys acting under a lasting power of attorney

What is a lasting power of attorney?

A lasting power of attorney is a legal document that lets an individual (known as the ‘donor’) appoint one or more people (known as ‘attorneys’) to help them make decisions, or for them to make decisions on their behalf. 

If you have agreed to act as an attorney for an individual, it is important that you understand the role and what your duties will be. 

Types of lasting power of attorney

The types of decisions you can make will depend on whether you’re an attorney for: 

  • property and financial affairs; 
  • health and welfare; or 
  • both. 

You may have been appointed either alone, jointly (where all attorneys need to sign/make a decision each time together), or jointly and severally (where all or any one attorney can sign/make a decision) with another, or others). 

When can a lasting power of attorney be used?
Property and financial affairs lasting power of attorney

Once the lasting power of attorney has been registered with the Office of the Public Guardian, and provided that it is unrestricted, you will be able to act for the donor for the rest of his or her life, as long as the power is not revoked  

You will be able to act for the donor because he or she asks you to, or because he or she has lost the mental capacity to deal with his or her property and financial affairs, in whole or in part. 

Health and welfare lasting power of attorney

You will only able to act for the donor if the lasting power of attorney has been registered with the Office of the Public Guardian and only if the donor does not have sufficient mental capacity to make the relevant health or welfare decision himself/herself 

In both cases, under the Mental Capacity Act 2005, whether or not the donor has, or has not got, sufficient mental capacity to make the relevant decision at the relevant time is issue and decision-specific. 

If the lasting power of attorney has not been registered with the Office of the Public Guardian, you will have no legal powers.  The donor can register the lasting power of attorney while he or she is mentally capable, or you can apply to register the lasting power of attorney. 

There is no power for you to make any decision for the donor under the lasting power of attorney during the registration process.  However, if the donor has capacity and needs some urgent assistance with his or her finances, a general power of attorney can be set up to cover this interim period. Read more about how temporary powers of attorney can keep things moving. 

Things you can and can’t do with power of attorney
What you can do as an attorney
Property and financial affairs lasting power of attorney 

When acting under a property and financial lasting power of attorney you will be able to do most things the donor could have done in relation to his or her finances and property, provided there are no restrictions in the document. Some examples of what this might include are: 

  • Buying or selling property 
  • Opening, closing or operating any bank, building society, or other, account 
  • Giving access to the donor’s financial information 
  • Claiming, receiving and using (on the Donor’s behalf) all state benefits, pensions, allowances and rebates (unless someone called an ‘appointee has already been appointed to do this and their appointment has previously been notified to the Department for Work and Pensions, and everyone is happy for this to continue) 
  • Receiving any income, inheritance or other entitlement on behalf of the donor 
  • Dealing with the donor’s tax affairs 
  • Paying the donor’s mortgage, rent and household expenses and other bills 
  • Insuring, maintaining and repairing the donor’s property 
  • Investing the donor’s savings and, as necessary appointing, or liaising with an investment manager in regard to the donor’s investments 
  • Making limited gifts on the donor’s behalf 
  • Paying for private medical care and residential care or nursing home fees 
  • Applying for any entitlement to funding for NHS care, social care or adaptations. 
  • Using the donor’s money to buy a vehicle or any equipment or other help they need 
  • Repaying interest and capital on any loan taken out by the donor

However, in all cases, these decisions can only be made if acting in the best interests of the donor. 

Health and welfare lasting power of attorney 

When acting under a health and welfare lasting power of attorney, unless the document restricts you, you will be able to make decisions about the donor’s personal welfare, health and care, which could include: 

  • Where the donor should live, and who they should live with; 
  • The donor’s day-to-day care, including diet and dress; 
  • Whom the donor may have contact with; 
  • Consenting to, or refusing, medical examination and/or treatment on the donor’s behalf; 
  • Arrangements required to be made for the donor to be given medical, dental and/or optical treatment; 
  • Assessments for, and provision of, community care services; 
  • Whether the donor should take part in social activities, leisure activities, education or training; 
  • The donor’s personal correspondence and papers; 
  • Rights of access to personal information about the donor; and/or 
  • Complaints about the donor’s care or treatment. 
What you can’t do as an attorney

Whether you’re an attorney acting under a Property and financial affairs lasting power of attorney or a health and welfare lasting power of attorney, you cannot: 

  • change the donor’s will; or 
  • gift their assets away. 
Your legal responsibilities and duties as an attorney

In your role as an attorney, you have important duties and responsibilities. These are set out in the Mental Capacity Act 2005 and are explained in the Mental Capacity Act Code of Practice 

However, the following provisions are particularly important: 

1. You must follow the principles set out in section one of the Act:

Principle 1 - It should be assumed that everyone has capacity to make his or her own decisions, unless it is proved otherwise. 

Principle 2 - A person should be provided with all the help and support possible to make and communicate their own decision, before anyone concludes that they lack capacity to make their own decision. 

Principle 3 - A person should not be treated as lacking capacity just because they make an unwise decision. 

Principle 4 - Actions or decisions carried out on behalf of someone who lacks capacity must be in that person’s best interests. 

Principle 5 - Actions or decisions carried out on behalf of someone who lacks capacity should limit their own rights and freedom of action as little as possible. 

2. You must always act in the donor’s best interests

There is guidance in chapter five of the Code of Practice to help you. However, in general terms you need to consider the donor’s past and present wishes and feelings, beliefs and values and, where practical and appropriate, consult with: 

(a) anyone caring for the donor; 

(b) close relatives and anyone else with an interest in their welfare; and/or  

(c) other attorneys appointed by the donor. 

Always check whether the donor has sufficient mental capacity to make a particular decision themselves.  Remember, you can act under the property and financial lasting power of attorney if the donor does have mental capacity, if they have asked you to act in such circumstances, and there are no restrictions in the document. However, you can only act under a health and welfare lasting power of attorney if the donor does not have sufficient mental capacity to make that particular health and welfare decision. 

3. Only make those decisions the lasting power of attorney gives you authority to make

For example, if you are only acting under a property and financial affairs lasting power of attorney, you cannot make decisions about the donor’s personal care, such as medical treatment.  If the lasting power of attorney is restricted in any way, your authority is limited.  If you need further powers in the future, you will be able to apply to the court. 

Likewise, if you are only appointed as a health and welfare attorney, you have no power to make decisions about the donor’s financial investments. 

4. Other duties under a lasting power of attorney
  • Apply certain standards of care and skills (duty of care) when making decisions; 
  • Carry out the donor’s instructions; 
  • Do not take advantage of your position and do not benefit yourself, but benefit only the donor       (fiduciary duty); 
  • Do not delegate decisions, unless authorised to do so; 
  • Act in good faith; 
  • Respect confidentiality; 
  • Comply with the directions of the Court of Protection; 
  • Do not give up the role without telling the donor and the Court; 
  • Keep accounts if you are a financial attorney; 
  • Keep the donor’s money and property separate from your own if you are a financial attorney 
  • In relation to end-of-life decisions, where authorised under a health and welfare attorney, do not be motivated by the desire to bring about the donor’s death (you may wish to save the donor suffering and to comply with his or her wishes); and/or 
  • Notify the Office of the Public Guardian, if the donor dies, or recovers.
How do I decide if the donor has sufficient mental capacity? 

The Mental Capacity Act sets out a two-stage test of capacity: 

  1. Does the person have an impairment of, or a disturbance in, the functioning of, their mind or brain?  Examples may include conditions associated with some form of dementia, or the long–term effects of brain damage.  
  2. Does the impairment or disturbance mean that the person is unable to make a specific decision?  This stage can only be reached if you have taken all practical steps to support the donor in making the relevant decision and this has failed.

A person is considered to be unable to make a decision if they cannot, on the balance of probabilities: 

  • understand information about the decision to be made (the Act calls this ‘relevant information’); 
  • retain that information in their mind; 
  • weigh that information as part of the decision-making process; and 
  • communicate their decision, by talking, using sign language or by any other means. 

The Mental Capacity Code of Practice offers useful and practical examples in chapter four of the code of practice 

Essentially you need to give the donor as much opportunity to make his or her own decisions as possible before you decide to act, and ensure you have followed the suggested steps for establishing ‘that the donor lacks capacity to make a particular decision’. 

Can an attorney make gifts?

You have very limited powers to make gifts from the donor’s property when acting as financial attorney. You can only make gifts to people who are related to, or connected with, the donor (including attorneys) on specific occasions such as: 

  • births or birthdays; 
  • weddings owedding anniversaries; 
  • civil partnership ceremonies or anniversaries; or 
  • any other occasions when family, friends or associates usually give presents. 

You can continue gifts to charities if the donor was already making regular payments, or even made payments from time to time.  You must remember that gifts must be reasonable in relation to the donor’s own assets and to act in the donor’s best interests.  

Recent cases on this topic have provided further guidance on making gifts. Therefore, we advise that you seek professional advice before making any gift to ensure you are complying with the law in this area. 

Can I make a will or codicil on behalf of the donor when acting under a property and financial lasting power of attorney?

Unless you apply to the Court of Protection for an order in this regard (and that application is successful), then you’re unable to make a will or codicil on behalf of the donor.  

Getting help with understanding the role of an attorney

Putting in place a power of attorney can give a donor peace of mind that their affairs remain in good order, their assets are protected and their wishes are carried out. 

Whether you’ve agreed to act as an attorney for someone else, or you’re considering putting powers of attorney in place, our team of private client lawyers will guide you through the process and ensure you understand the level of authority an attorney will have. 

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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The hidden dangers of online will-writing services

The hidden dangers of online will-writing services

As people have spent more time at home with their loved ones during the COVID-19 pandemic, it has understandably prompted many to turn their thoughts to the best way of protecting their estate to pass onto your friends and family and get their legal affairs in order.

Back in the first lockdown in March 2020, the Law Society reported a 30% increase on the usual requests to create wills, with online services also seeing more interest. While online will-writers may appear to be a speedy and inexpensive alternative to using a solicitor (some online services offer wills for less than twenty pounds and all completed in less than 15 minutes), are some of these offers too good to be true?

Here we highlight the four dangers to be aware of when considering an online will-writing service.

1. Lack of regulation

Firms of solicitors are bound by rigorous regulations and standards, which guarantee a certain level of protection for their clients when drafting their wills. They are also required to keep up to date with changes to the relevant laws to ensure their advice is accurate and their wills are legally valid. However, not all online will-writers are regulated and therefore they do not have to adhere to the same regulations and standards.

Unlike solicitors, some online will-writers may not have adequate insurance in place, so if the will doesn’t do what it is supposed to, and it’s not discovered until after the death of the testator, the disappointed beneficiary will have no redress.

2. Online wills are not bespoke

Online wills can be made in a matter of minutes and are often computer generated. The process can consist of simply filling out a form and making payment. Online will-writers may not take the time to gather information from their clients that is required to make a proper will that suits that individual’s circumstances, nor do they tend to provide advice on trusts, personal tax planning or assets held overseas. Sometimes the software automatically appoints the will writing company as the executor - even though that may not be the testator’s wishes.

As a result, online wills may not be fit for purpose. The lack of bespoke advice could mean that parts (or even the entirety) of the will may not be effective. It could also mean that the estate could face unwanted tax implications or possibly legal claims against the estate – all of which could end up costing many thousands of pounds.

3. Beware of hidden costs

Whilst the headline rate may be that the will costs ‘less than £20’, online will-writers can sometimes include extortionate hidden fees and charges in their terms and conditions. This can result in severe financial penalties for an estate later down the line.  There could even be fees for storing the will and then retrieving it.

The big cost however can come from the appointment of the will writing company as the executor and dealing with the estate administration. Often they will charge a high percentage based on the gross value of the estate. Whilst solicitors can also charge in this manner, most solicitors will renounce if asked to do so by the beneficiaries. The will writing company may refuse to do this and therefore the only way to get them removed would be a court application, which could be very costly.

Costs may also be incurred to correct a will that is not fit for purpose. What’s more, it may end up being the beneficiaries who are burdened by the financial repercussions of making a will online if the testator has passed away when these mistakes come to light.

4. Lack of verification

Online will-writers cannot be sure that the testator is who they portray themselves to be online. Unlike firms of solicitors, most online will-writers do not confirm the identity of their clients (In theory, it could be anyone sat behind the computer filling out the details for the alleged testator).

This also means that will-writing companies cannot confirm that the testator has the necessary mental capacity required to make a will. This could lead to future claims against an estate that the will is not valid due to fraud, duress, or a lack of the necessary mental capacity – all of which could end up costing the estate many thousands of pounds.

If it seems too good to be true, it probably is

Online wills embrace today’s technology and offer a speedy and quick service.  They are here to stay, and some online companies have a great business model and try to reduce the risks. However, other online will-writing companies do not.

Therefore it is important that if you are considering making a will online, you give thought as to whether it is right for your circumstances and you are fully aware of all of the implications before doing so.

Although making a will online may save a few pounds initially, a lack of regulation, bespoke advice and verification, together with extortionate hidden fees could have disastrous consequences for an estate – particularly the beneficiaries who are left to pick up the pieces.

When estates can be worth many hundreds of thousands of pounds, it is certainly worth paying that bit extra initially and use a professional for peace of mind that everything has been done correctly and the risks are minimised.

We've put together a set of FAQs to help you understand more about the benefits of having a will, the process and how much our bespoke Will writing services cost.

We can guide you through the process

Creating a will is just part of the succession planning process, but maintaining it is also important. We will strive to build an ongoing relationship with you to ensure that the plans you put in place today continue to be effective and applicable to yours and your beneficiaries’ changing circumstances, changes to legislation, and in legal best practice.

No matter where you are on your journey, we can support you and guide you through the process. If you’d like to discuss putting a will in place or would like advice or guidance around the process, please contact Anne Tromans or fill out our  and a member of our private client team will get in touch with you shortly.

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

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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.

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How can I protect my assets?

Wills clearly have an important role in estate planning on death, but often the best inheritance tax planning opportunities are those effected during one’s lifetime.

Whilst stock markets are tumbling, property prices falling and businesses of all sizes are facing uncertain futures, it’s reasonable for people to sit tight and be hesitant to part with their wealth. However, ironically, some of the best tax saving opportunities can be found and achieved in a falling market.

So how can I reduce my tax liabilities?

Capital gains tax (CGT) often prohibits the direct gifting of assets to individuals.  However, if the value of an asset decreases in a falling market, then so does the impact of capital gains tax on the gift – this is because the tax is based on the gain that’s been made on that asset, and not on the value received. This is often overlooked by individuals, who only recognise the potential implications for inheritance tax and not those for capital gains tax.

Gifting assets into a certain trust can potentially mitigate an immediate charge to CGT on the person making the gift, deferring it into the hands of the trustees of the trust, often giving them time to plan/minimise the future crystallisation of such a gain.

A decrease in the value of assets could also mean that more assets can be placed into a trust before any inheritance tax is triggered – so a double tax-saving opportunity.

We understand it’s a difficult time

We know that looking after the wealth you have accumulated during your life really matters, so we want to help you and your family to make the most of it. Whilst it’s currently a time of uncertainty for many, there are plenty of opportunities out there for effective wealth planning that will make a real difference,

Contact a member of your local private client team to help guide you through the process.

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

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What’s next after coming out?

Blog | Family

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Whilst these topics may be tricky to discuss, early communication with family and friends can help to minimise the risk of family conflict and make sure loved ones are protected for the future.

Preparation is key

It is sensible to consider your current financial and legal arrangements, including your existing will and powers of attorney before telling your friends and family, especially if you are unsure of how they will react.

A legal adviser can offer advice ahead of time and assist in the formulation of a contingency plan, allowing you to quickly safeguard your interests, should any family relationships come under strain as a result of the news.

Give it time

It is important to remember that family and friends may need some time to process your news – their initial reaction might be out of emotion and they may not always feel that way. In terms of moving forward, discussions from both a financial and a personal perspective will need to be had, but the timings and outcome for every couple will be unique. Whilst separation and divorce may be best for some, the idea of staying together and living as companions may better suit others.

Thinking about divorce

Currently, UK law dictates that adultery can only occur between members of the opposite sex. With this in mind, should either partner decide to leave the marriage, providing they’ve not been separated for two years or more, a divorce application would have to be issued on the grounds of unreasonable behaviour. Under these circumstances, the person making the application must show that the other party has behaved in such a way that the Applicant cannot reasonably be expected to live with him or her, causing the marriage to irretrievably break down.

In this situation, seeking support from an accredited family lawyer is advisable and often results in a far better outcome for all involved.

In the absence of any children, the separation process and division of assets can be relatively simple. However, where children are involved, the process can be more complicated, often requiring arrangements for maintenance payments and provisions for the children’s futures to be made.

Moving forward

Should a new relationship be formed, it is often important to ensure that children from the first marriage are provided for. Financial agreements, such as a Living Together Agreements/ Cohabitation Agreements, can protect assets owned prior to living with a new partner, ensuring complete transparency around who owns what. For those intending to remarry, a prenuptial agreement is also advisable in order to help to ringfence the assets brought into the marriage and clarify those that are to be kept separate.  Re-marriage will automatically revoke any previous Will you may have prepared – it is important to ensure that a new Will is prepared as soon as possible before or after the re-marriage, particularly if you have children from the previous marriage that you wish to benefit.

As with the breakdown of any relationship, open communication, allowing time for family to accept the news and specialist legal support can help to safeguard the future for loved ones and pave the way for a new chapter.

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Stephanie deals with all aspects of relationship breakdown to include divorce, children matters and resolving the financial issues upon separation.

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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.

An attorney is an individual person who has been chosen by another to manage that person’s financial affairs in the event that they lose mental capacity to make decisions themselves. An attorney is appointed using either a Lasting Power of Attorney (LPA) (or an older Enduring Power of Attorney). Someone who is appointed by the Court of Protection to act on another person’s behalf should they lose mental capacity and have not appointed an attorney themselves, is called a deputy.

An attorney (or deputy) acts on someone’s behalf while that person is still alive but lacks mental capacity to manage their own affairs, whereas an executor is appointed in someone’s will and acts on their behalf after they have died. An attorney’s power to act on someone’s behalf ends on that mentally incapable person’s death.

What can an attorney do?

The Lasting Power of Attorney document will set out what decisions an attorney can make. Many choose not to place restrictions on what an attorney can do, instead, trusting them to make whatever decision may be necessary to safeguard their best interests. A deputy’s powers are governed by the court order appointing him or her in the first place.

If an attorney or deputy wish to make decisions outside of their remit – they must first obtain a court order authorising their course of action.

Whatever powers an attorney or deputy may have, they must both act in accordance with the Mental Capacity Act 2005 (MCA) and the accompanying Code of Practice.

Making gifts

A common question that private client practitioners are asked is whether an attorney or deputy can make gifts on the donor’s behalf out of the donor’s own funds. The gift might be a small cash gift in recognition of a grandchild’s birthday or a larger gift intended to, for example, mitigate an anticipated inheritance tax liability.

The first thing for an attorney to consider is what is in the best interests of the incapable person.

Previous cases indicate that the court is very likely to authorise the gift if a number of factors are satisfied, such as, the amount of the gift is it within the inheritance tax annual exemption of £3,000 or it falls within the inheritance tax small gifts exemption (currently £250) and the estate is likely to suffer inheritance tax in the first place (because it exceeds the current £325,000 nil rate band), the life expectancy of the incapable person is less than five years and the gifts are affordable. Above all, however, the court will consider whether it is in the incapable person’s best interests to make the gift and evidence that the incapable person would have opposed the gift will be a very relevant factor in their decision making.

An attorney must make an application to court for an order approving the making of any other gift. The Attorney must present the court with a lot of information about the incapable person’s affairs in order that the court can make a decision accordingly.

But I want to make smaller gifts

The MCA allows attorneys to make gifts to persons related or connected to the incapable person on occasions when gifts are “customarily” made and under an older EPA documents gifts can be made on “seasonal occasions” i.e. birthdays and Christmas – The court’s authorisation isn’t needed in those circumstances provided that the LPA/EPA document doesn’t expressly forbid it.

Not wishing to deter charitable gifting, the MCA does allow gifts to a charity that the incapable person has previously made gifts to – again unless expressly forbidden.

It is also important to consider the provisions that the incapable person may have made in their existing will. The LPA or court order may include provisions for you to take possession of the incapable person’s original Will, otherwise, you should request a copy of it. You should consider whether any proposed lifetime gifts would interfere with any gifts made in their will – if so, this may be evidence of the fact that the incapable person would object to the gift being made if they could.

Above all, any gift made must not be unreasonable particularly when taking into account the size of the incapable person’s estate and making the gift must be in the incapable person’s best interests. Whether an attorney should make a gift in any particular scenario will be determined on a case by case basis.

Any attorney or deputy thinking about making a gift, large or small, should consult a professional and take all steps necessary to ensure they have considered all the relevant factors before making a decision. An attorney or deputy’s duty is to safeguard the incapable person’s best interests first and foremost.

For further information or advice on this or any other private client matter, contact Matt Parr on 01908 304 420 or matt.parr@shma.co.uk. A member of our team can walk you through everything. Click here to discuss.

We have, over the last nine months, been anticipating a huge increase in probate application fees charged by HM Courts & Tribunal Service to obtain Grants of Representation across England and Wales. The increase could have seen charges rise in certain circumstances from £155 (when an application is made by a solicitor) to £6,000.

The huge rise in fees has been a major contributing factor in the extensive delays that the public and professionals have experienced in obtaining Grants of Representation from their local, or even regional, probate registries. The delays have caused financial loss through the collapse of house sales and hindering access to loved ones’ accounts following their death.

The proposed rise in fees causing all this fuss recently was a re-hash of a previous proposal which caused a large backlash against the government when fees of up to £20,000 were proposed.

Many involved in the estate administration process, including solicitors and accountants, criticised the huge increases as a stealth tax designed to target those going through very difficult times in their lives.

Brexit, and the lack of parliamentary time to scrutinise the amendments to the fees as a consequence of this, caused the increase to be postponed earlier this year. This in turn caused a great deal of uncertainty but a big sigh of relief as members of the public and practitioners alike who felt less pressure to rush through applications before the rise took hold.

Now that the plans have been scrapped, hopefully, probate registries across the country will be able to take stock and begin working through huge back logs of applications currently sitting on their desks.

Please contact our private client team if you have any queries relating to the probate application process.

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.

John and Marjorie Ann Scarle were found dead from hypothermia in their bungalow in 2016, leaving a £300,000 estate behind them. Forensic evidence suggested that Mrs Scarle died first, resulting in Mr Scarle inheriting the assets, which would then be received by his daughter. However, the other sister disputed that forensic evidence, instead saying that the position was unclear, so relied on a 95-year-old legal presumption that the elder of the two died first leading to her inheriting the estate instead.

Andrew Wilkinson, our partner and will disputes specialist, shares his thoughts:

“Modern medical science and forensics makes it much easier to establish the order of death. Therefore, the presumption is rarely used. However, the High Court ruling demonstrates that such laws still have influence, making it even more important for people to make sure their affairs are arranged in such a way so as to ensure that they end up with their intended beneficiaries”

“One of the first things that should be decided is whether property is owned as joint tenants or tenants in common. The former means that a property is passed automatically to the survivor, the latter ensures that the deceased’s share passes under their will.

“Modern family structure are leading to an increase in the number of complex inheritance disputes, such as the Scarle case. However, some of those disputes can be avoided. It is important for everyone, even those with relatively simple estates to take professional advice on what happens to their assets when they die, to avoid any unexpected outcomes.”

Our private client associate, Matt Parr, fills us in…

Latest figures published by NFU Mutual indicate that the average IHT bill has reached almost £200,000 for the most recent tax year – an increase of approximately £60,000 over a period of five years. The total haul for HM Revenue & Customs reached £5.4bn in 18/19 up from £3.8bn in the 14/15 tax year.

IHT liabilities can arise during someone’s lifetime, and not just on their death, particularly if they make certain gifts into certain types of trusts. HM Revenue & Customs have identified a total of 5,000 individuals who have paid IHT while they are still alive as a consequence of making such gifts, as well as other chargeable transactions and disposals.

Despite the introduction of the Residence Nil Rate Band, the IHT receipts for HM Revenue & Customs has increased.

It is widely recognised that the Residence Nil Rate Band legislation itself is complex, prejudicial and unpopular. The intention was to increase the Nil Rate Band to £500,000 (up from £325,000), but this only applies to a select group of people in specific circumstances. It is certainly not the universal relief that the Government would have had you believe.

The Office of Tax Simplification – the fact this exists highlights how complex the UK’s tax regime is – has very recently published its recommendations as to how the IHT regime can be amended and much to the majority of advisors dismay the Residence Nil Rate Band has not been targeted for scrappage or even amendment.

While inheritance tax revenues increase there is little chance of the UK Government looking to scrap it. There has been talk of the system being changed to come more into line with those imposed in a lot of other European countries, such as Ireland’s Capital Acquisition Tax, which offers different tax rates depending on the relationship between the deceased and the beneficiary, however, this looks unlikely.

Estate planning: What needs to be considered after transitioning

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