Complex Probate and Wills

Q. I want to give money to my children and grandchildren and I have been advised that on my death my estate will be liable for inheritance tax.  Will inheritance tax be paid on the gifts made to my family whilst I am still alive?

Simon Mee

A. Simon Mee, wills and estate planning specialist with law firm, Charles Lucas & Marshall.

In its simplest terms inheritance tax is charged on the transfer of assets on death.  However, gifts made during life may also be taxed.  A person is entitled to give up to £3,000 each tax year without any inheritance tax being payable and if one year’s exemption is not used it may be rolled over for one year only to make a maximum of £6,000.  So if you have three children each may receive £1,000.  In addition, you can give a maximum of £250 to any one person each tax year as long as they receive no more than that amount from you.

Of course, you can give more than these amounts. However, if you fail to survive the gifts by seven years the value of the gift will be added to your estate for inheritance tax purposes after any annual exemption has been deducted.  If the gift is substantial, tax may be payable on it and that tax may be reduced as the gift gets older.

It is important to bear in mind that you cannot continue to benefit from a gift once it has been given.  Therefore you should ensure that you will have no further need of the money or asset you intend to give away.

Other exemptions and reliefs do exist, eg gifts made on the marriage of a child, but these will depend on your circumstances.  It is sensible to seek advice before making any gifts for inheritance tax purposes and to keep accurate records.

I do not spend all my income and am concerned that the unused income is adding to the value of my estate and will simply increase the inheritance tax due. Is there anything I can do?

An inheritance tax exemption does exist for gifts made from excess income. However the terms upon which the exemption may be claimed are strict and appropriate records must be kept.

To qualify for the exemption, gifts must be made as a part of normal expenditure, this means they must be typical or habitual payments. This can be shown by regular payments made over time, by setting out in a letter a commitment to make those regular payments, or even by paying the premiums of a life policy owned by another person.

It must also be possible to show that the gifts are in fact made from your excess income and that your remaining income allows you to maintain your usual standard of living.    This can be shown by keeping a record of your annual income and your annual expenditure.  Whilst this may appear to be an onerous task it can provide an opportunity to save a significant amount of tax.

For further information contact Simon Mee on 01488 682506 or simon.mee@clmlaw.co.uk

Simon Mee, a specialist in solicitors, Charles Lucas & Marshall’s wills and estate planning team, looks at problems which can arise when there is a legal dispute over a will.

A Will allows a person to show how they wish their assets to be distributed following their death.  In general any person over the age of 18 and of sound disposing mind may make a Will. The first question to consider will be whether the Will was correctly executed and therefore can be said to be valid.  Secondly, it will be necessary to consider whether a person was of sound disposing mind at the time the Will was made.  Did they have the mental capacity to complete the Will? Disputes over the issue of capacity to complete a Will are becoming increasingly common and are likely to continue to rise in number for various reasons including the increase in the number of elderly persons suffering from dementia and lengthening average life expectancy.

To have testamentary capacity a person must understand the nature of the act and effect of making a Will. They must understand the extent of the property given by the Will and have an appreciation of the persons they should consider in distributing their estate. They must also not be affected by any disorder or delusion which would prevent them understanding the terms of the Will.

In addition to testamentary capacity it is also necessary for the person to have known and approved of the contents of the Will. This will in many cases be linked to the question of testamentary capacity, but should also be considered separately.

It is possible to challenge a Will on the basis of undue influence. To be successful it would be necessary to prove actual coercion of the testator.  This goes further than merely influencing the decision making by suggestion or otherwise and effectively requires sufficient influence to cause a loss of free will.

Each case will depend on its own facts and the starting point will be to investigate the circumstances in which the Will was signed. A series of questions should be asked e.g. who prepared the Will and who was present at the time, whether there are any previous wills and whether a medical practitioner provided a report of the person’s capacity at the time the will was made?

Another common problem area is when a couple have not married but lived together for many years and one of the partners dies without making a will.  If a person dies without a Will they are said to be “intestate” and their assets will pass under the “intestacy rules”.  These distribute the estate amongst the deceased’s relatives in a specific order. The surviving partner may be eligible to make a claim under the Inheritance (Provision for Family and Dependants) Act 1975.  Partners who have lived in the same household for two years as a husband wife or civil partner of the deceased may be entitled to make a claim for reasonable financial provision.

Reasonable financial provision is defined as “such provision as would be reasonable in all the circumstances for his maintenance”.  The Court will look at a variety of factors to assess this including the financial resources and needs of the parties and any obligations and responsibilities the deceased may have had.  There is a time limit for making the claim.

For further information contact Simon Mee on 01635 521212 or simon.mee@clmlaw.co.uk

Simon Mee, a wills and estate planning specialist with solicitors, Charles Lucas & Marshall explains why people may want to consider a ‘living will.’

Simon Mee

When a person is unwell they will usually talk with their doctors to agree a course of treatment.  However, if, for example, a person is unconscious following an accident or is unable to communicate their wishes during the later stages of an illness, doctors will need to make the decisions themselves.  They must act in the patient’s ‘best interests’ and will assess those best interests by referring to a variety of factors.

However, a person may have made an advance decision to refuse medical treatment which the medical team must follow whether or not they believe it is in the best interest of their patient.  

The term Living Will has no legal meaning, but is often used to refer to these advance decisions or sometimes, advance statements. These are not binding decisions to refuse treatment but provide an indication of the patient’s wishes which healthcare staff should take into account when assessing a person’s best interests.

How do I make an advance decision?

An advance decision to refuse treatment is binding and must be followed, provided it is valid and applicable.  An advance decision can be made invalid by withdrawing the decision, appointing one or more attorneys under a Personal Welfare Lasting Power of Attorney or by acting in a way clearly inconsistent with the decision.

An advance decision must also be applicable, that is, it must state precisely what treatment is to be refused ie a statement giving a general desire not to be treated is not sufficient.  Therefore, an advance decision is usually most appropriate where a person has been diagnosed with a particular illness and the course of that illness can be defined, or if a person has strong feelings or beliefs about a particular treatment, such as blood transfusions.

While an advance decision need not be in writing and may be verbal, a written record should be kept, either in a person’s healthcare record or by preparation of a specific document. However, an advance decision which refuses life sustaining treatment must be in writing and signed and witnessed.

Only if a healthcare professional is satisfied an advance decision exists, is valid and is applicable must they follow it and not carry out the relevant treatment.

Are there any alternatives?

Advance decisions are especially useful where a particular situation is likely to occur in the course of an illness or strong feelings are held about a particular treatment.

Following the Mental Capacity Act 2005 it is possible to appoint a person, called an attorney, to make health and welfare decisions if you are incapable of making them yourself. This could include the ability to refuse or give consent to life sustaining treatment. This Personal Welfare Lasting Power of Attorney provides an opportunity to appoint a person to make a wide range of decisions about care and treatment and can provide greater flexibility than an advance directive.

For further information contact Simon Mee on 01488 682506 or simon.mee@clmlaw.co.uk

Child Trust Funds

Parents and grandparents of children with disabilities should take steps to ensure that assets they want to leave to their disabled child do not deny them means-tested benefits when they become adults.

Simon Mee, a wills and estate planning specialist with law firm, Charles Lucas & Marshall says the simplest way of achieving this is by setting up a trust fund.

“This enables money or assets that parents, grandparents or other family members want to leave to the child to be ring-fenced,” he says. “The benefits and care structure they have set in place over many years will not then be jeopardised when the child becomes an adult.”

Sadly, many families discover too late that money or assets which have been set aside through a will to improve the welfare of a disabled family member can, in fact, create additional problems for that beneficiary. This may be because it affects the disabled person’s right to state support or the beneficiary may not be able to manage the money themselves.

“All benefits are mean tested with a sliding scale of entitlement,” says Simon Mee. “What is intended as a generous and responsible gesture can end up having a negative impact on the disabled person’s quality of living.

“These problems can be avoided by setting up a trust fund to manage the assets on behalf of the beneficiary. The Trust can appoint trustees to manage the fund and the person setting up the Trust can also write a letter of wishes, setting out their intentions and wishes as to how the trust fund should be managed.”

One mother who has set up a trust fund for her daughter is Elly Hase of Newbury. A mother of two, Elly’s oldest child, Ciara, six, was born with a rare chromosome disorder which means her levels of understanding are lower than other children her age. Doctors do not know how Ciara’s condition will progress.

“As I was getting divorced I thought it also seemed sensible to make a new will,” said Elly. “I wanted to make provision for my four year old son but also realised I needed to protect Ciara. The last thing I want is for the care structure we are developing for her to be taken away.

“It does mean, via my letter of wishes, I have leant heavily on my trustees to make decisions for Ciara. Equally though, my parents, who want to leave money for Ciara in their own wills, can now use the trust fund to do that and that gives them peace of mind .”

For further information please contact Simon Mee on 01635 521212 or simon.mee@clmlaw.co.uk

In April 2009, great-grandmother Betty Figg was snatched by social workers against the wishes of her daughter, her former carer.

Social workers arrived with police and a battering ram to remove the 86-year-old woman suffering from dementia from her daughter’s house.

The media quickly spread pictures and video footage of Betty being taken from the house in her wheelchair with a towel thrown over her head.

It seems social services did not agree with Betty’s daughter that it was in Betty’s best interests to be cared by her daughter in a specially converted room, in her daughter’s home.

Could this happen to you and your family?

There is a way that it can be avoided; by giving a health and welfare lasting power of attorney to a family member, social services are prevented from making care decisions.

Without this document, social services can make decisions on behalf a vulnerable person, if they think they lack mental capacity and believe it is in their best interests.

They do not have to follow what the family want and cannot be liable for their decisions.

Simon Mee, of Charles Lucas & Marshall Solicitors, of Newbury, and a member Solicitors for the Elderly, is encouraging all older people to plan ahead and make a health and welfare lasting power of attorney.

‘It is an important document and sensible to get advice about the choices you have.

What happened to Mrs Figg may never happen to you, but if it does, you and your family will be glad you made the power.’

Please contact Simon Mee on 01635 521212 or simon.mee@clmlaw.co.uk

Legal disputes over wills are on the rise as more families are prepared to go to court to wage war and claim their inheritance.

Simon Mee, a specialist in wills and estate planning at solicitors, Charles Lucas & Marshall says the firm has seen a sharp increase in people seeking the best way of contesting a will.

“There are many reasons for this,” says Simon Mee. “Disputes can arise because couples live together but don’t get married. Quite often, the deceased has been married more than once, which may leave their will open to dispute by step children or children from previous marriages.”

“We are also living longer and people tend to have more sizeable estates these days. In other words, there is more for people to go at.”

The number of cases among warring families which had to be settled in the High Court last year rose to 228, compared to a mere 83 in 2006. However the number of wills which were legally disputed was far higher as wherever possible solicitors seek to settle the dispute before it reaches court.

“As we live longer, more people are challenging wills on the grounds of mental incapacity,” said Simon Mee. “More people are also leaving their money to charities even when they have children – particularly if they haven’t spoken to their children for years or their children have not provided support during their old age.”

One of the biggest causes of contention is when the deceased has left their estate to a second wife and has not made any direct provision in his will for children from the first marriage.

“This can get very complicated,” added Simon Mee. “But people are having fewer qualms about taking the matter to court if they feel they have been unfairly treated.”

Please contact Simon Mee on 01635 521212 or simon.mee@clmlaw.co.uk