Complex Probate and Wills

We all like to think of ourselves as indispensable. And when it comes to business owners, most of you truly are – 95% of businesses have at least one such individual. Sarah Roberts, a specialist in wills and estate planning for businesses at solicitors, Charles Lucas & Marshall asks – what would happen to your business if you were unable to run it?

It might not be something you like to think about, but how would your business survive if you were unable to run it? In the UK:

• businesses lost around £500 million during the volcanic ash cloud disruption, partly due to the absence of people stranded abroad;
• over 25,000 people were killed or seriously injured in road accidents last year; and
• 111,000 people each year suffer their first stroke.

Your employees and business partners are fantastic, but many decisions (including ordinary, everyday ones) are still made by you. Did you know that even joint accounts are frozen by the bank (until legal authority is produced) if you become mentally unable to make decisions for yourself?

Perhaps you have ‘keyman’ insurance? While ‘keyman’ policies compensate for some loss suffered, what you get depends on the level of cover and even then policy exclusions can be extensive.

Wouldn’t it be better to prevent loss in the first place? Well you can: you could make a Lasting Power of Attorney (LPA).

Sarah Roberts

Your LPA is a document that gives legal authority to someone you trust (your attorney(s)) to make decisions and sign papers on your behalf. It can only be used once it has been registered with the Office of the Public Guardian. The special thing about an LPA is that – unlike most other options – it continues to be effective even if you become mentally unable to make decisions for yourself.

There are two types of LPA for different types of decision – financial and welfare. This means you can appoint a business partner or professional advisor to make decisions about your business and finances, without worrying that they will make decisions about your personal life (and vice versa).

Your LPA can be tailored to your individual business and financial situation. You can include restrictions on what your attorney(s) can do and whether or not they have to all agree. You can also include guidance to help them know how you would make a decision and the factors you want them to consider.

If you don’t make an LPA and you become mentally unable to make decisions for yourself, then an application to the Court of Protection would be required. This is very time-consuming and expensive. What would happen to your business in the meantime?

Next week, count how many times you put pen to paper to sign something for your business – you might find you are more indispensable than even you realised.

For further information contact Sarah Roberts on 01635 521212 or sarah.roberts@clmlaw.co.uk

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

Sarah Roberts, a wills and estate lawyer with Charles Lucas & Marshall looks at the growing issue of digital assets in the event of death.

Q. What will happen to my digital photographs, MP3s, MP4s and e-books, when I die?

Digital Assets

Many people in today’s society have financially valuable digital music, video and e-book collections; yet very few have considered what will happen to their collection when they die and what information would be needed to access and transfer those digital assets.

Generally, these “digital assets” are the same as any other property you own and will pass to your heirs. However, some online service providers include “non-transferability” clauses in their terms and conditions which can make it more difficult to access data they hold.

If you haven’t made a Will, then the law (the “intestacy rules”) decides who will receive any transferable digital assets – and it may not be the person you want. If you have made a Will, did you give sufficient thought to your digital assets and include specific provisions to deal with them?

Q. What do I need to do to make sure that my digital assets are inherited by the right people?

Your “executors” or “administrators” are responsible for collecting together all of your assets and distributing them to the correct people under your Will or the intestacy rules. Will they know you have digital assets, where to look for them and how to access them? If not, your valuable files and memories could be lost forever.

You should consider:

• Creating a list of your online accounts, electronic devices, data storage devices and their associated passwords
• Store a copy of your digital asset and password list at your solicitors or at your bank
• Speak to your family and friends to make sure they know what you want to happen and who has access to your usernames and passwords
• Review your Will (or make a Will), to say who should receive your digital assets
• Create backups of the most important assets and store them at your solicitors or at your bank
• Don’t forget to regularly update your password list and backups as well as regularly reviewing your Will

Q. Are there any risks I should be aware of?

The most important thing is not to compromise your security. If you create a list of usernames and passwords, make sure it is not openly accessible.

A digital list should be password protected and you should limit the people you give the password to. Ideally, keep your list on a device separate from your computer (e.g. a CD, USB memory stick, etc) and in a secure location away from your home.

An alternative solution is to store your account and file information in an “online vault”. Various companies offer this service and some can even shut down accounts for you and delete data you don’t want passed on. Be especially careful about security though, because this sort of data storage could be a magnet for hackers/identity theft and encryption is no guarantee that your data is safe.

For further information contact Sarah Roberts on sarah.roberts@clmlaw.co.uk or 01488 682506.

Solicitors, Charles Lucas & Marshall have appointed another specialist to their wills and estate planning team.

Sarah Roberts

Sarah Roberts has joined the firm’s Newbury office where she will work on existing accounts and develop her own client portfolio. Sarah has previously worked for national firms, Ward Hadaway, Lester Aldridge and The Inheritance Planning Company.

“Charles Lucas & Marshall is renowned for its expertise in wills and estate planning and has one of the biggest teams in this region,” explained Sarah.  “This will give me the opportunity to diversify and move forward with my career.”

Demand for legal services around inheritance tax planning, probate and issues relating to the elderly has increased rapidly in the last five years.

Sarah Roberts can be contacted on 01635 521212 or sarah.roberts@clmlaw.co.uk

Simon Mee has been made an associate at Thames Valley law firm, Charles Lucas & Marshall.

A member of its wills and estate planning team, Simon joined the firm three years ago and is a specialist in inheritance tax planning, powers of attorney and the fast-growing area of contentious probate, resolving disputes over wills and inheritance claims.

He is a member of the Society of Trust and Estate Practitioners.

Simon Mee can be contacted on 01635 521212  or simon.mee@clmlaw.co.uk

Mounting costs of care home fees could mean elderly people have nothing to leave in their wills, a Swindon solicitor has warned.

Simon Mee

Simon Mee, a wills and estate planning specialist with law firm, Charles Lucas & Marshall, says increasing numbers of elderly people could see their assets wiped out as they struggle to fund the costs of living in a care home.

“It seems unfair that people who have saved and lived carefully for years will have nothing to leave for their families in their will,” she said. “This does not have to be the case though.

“Many people are ending up in this situation because they have not received legal advice about their estates and are therefore unaware of the consequences of not making a will.”

Simon Mee’s warning follows a report that more than 20,000 pensioners had to sell their homes last year to pay for residential care home fees – an increase of 17 percent over the past five years.

Last year’s Age Concern/Help the Aged estimates put average care home fees at £470 per week.

“Most couples I meet have two concerns,” adds Simon Mee. “They want to provide for their spouse and preserve some of their estate for their children. This can be achieved through the preparation of a Will – which means they can carry on living and enjoying their lives.”

“Residents’ assets will inevitably deplete. Our advice to people who are worried is to speak to their solicitor as they can inform you of the options you have.”

The figures are based on research by health care analysts Laing & Buisson and the House of Commons Library.

Simon Mee can be contacted on 01635 521212  or simon.mee@clmlaw.co.uk
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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

Care of an elderly relative is something most of us will have to face up to in our lives – yet we are still reluctant to prepare for it.

Simon Mee, a solicitor with Wantage law firm, Charles Lucas & Marshall, says families often learn the truth too late when they are confronted with expensive care home fees for a member of their family.

“They discover they have no legal access to their mother or father’s money or property and haven’t got the financial resources themselves to pay these very expensive fees,” she says. “This can create an enormously stressful situation for a family, at what is already an emotional time.”

The most effective action a family can take to look after a relative’s financial affairs is through a Lasting Power of Attorney. This involves a relative giving their consent to one or more people to make financial decisions on their behalf.

“Often this is something families are loathe to confront and discuss, says Simon Mee. “But the consequences of not planning for possible mental incapacity can be serious and can create an unnecessary administrative burden for a family.”

One Oxford woman who wished she had taken out power of attorney is Janice Simms, whose elderly mother, Beryl, suffered a stroke last year and has been unable to live independently ever since. Beryl is now happy, living in a care home in Woodstock, but for her daughter, Janice, the last year has been a succession of bureaucratic and expensive hurdles as she has attempted to sort out her mother’s affairs.

“We were paying weekly care home bills of £800 while at the same time trying to sort out power of attorney,” explained Janice. “For this, we needed a letter from her doctor explaining my mum was mentally capable of granting us power of attorney.

“When they assessed her they felt she was not capable of retaining information and therefore could not grant us power of attorney. This meant we had only one option – to go to the Court of Protection.

“This has taken seven months to sort out and there have been so many forms to fill in - it has been a bureaucratic nightmare. We also had to pay a £400 Court fee and an annual fee of £340 for the Court of Protection to continuously supervise they way we manage my mum’s affairs.

“Additionally, we have to take out an insurance bond of £150 each year to protect my mum’s assets in the event of me embezzling her money.  Power of attorney would have been so much simpler.”

From her experience of having to sort out her mother’s affairs, Janice has already decided that she will organize her own power of attorney for her daughter in the near future.

“I wouldn’t want my daughter to have to go through what we have had to,” says Janice. “It is completely avoidable.”

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

Michael Overend, a specialist in wills and estate planning at law firm, Charles Lucas & Marshall looks at the steps which need to be taken when a partner requires residential care.

Michael Overend

Q.    My husband has Alzheimer’s disease and will shortly be moving into residential care.  Will our house have to be sold to pay the care fees?

A. While you continue to live in the house, its value will not be taken into account in assessing how much your husband should personally pay for his care.  You will not have to sell the house.  A similar exclusion would be available if you were unmarried but living with a partner who had to go into care.

Q.    My husband receives pension income and has some savings.  Will these have to be used to pay for his care?

A. Your husband’s state pension and any other state benefits will have to be used for the cost of his care, regardless of whether or not he has any savings.    Only one half of any occupational or personal pension will have to be used, provided the other half is paid to you.

To the extent that your husband’s income is insufficient to pay the care fees in full, then the shortfall will have to be paid from your husband’s savings if these exceed the prescribed limit (currently £23,250). Once the savings fall below this figure the local authority will start to make a contribution towards the fees.

Once your husband’s savings have fallen to the lower limit (currently £14,250) then he will not have to contribute any more of his savings to the cost of care.

If you have savings in joint names then you should separate these into individual accounts of equal value before your husband goes into care.

Q.    Should I review my Will?

A. You should certainly review your Will if you are currently leaving your estate to your husband outright on your death.  If your Will stays in this format your capital will have to be used to pay your husband’s care fees following your death.

You should consider changing your Will so that you leave your estate to a trust from which your husband can benefit.   The value of your estate will not then be taken into account in assessing how much capital your husband has.  Consequently the local authority will start to contribute to his care fees earlier than would otherwise be the case.

If the local authority’s contribution is not sufficient to pay for the care home fees in full then the trust fund can be used to make “third party top ups” to meet the balance of the fees.

When you update your Will, you should also take advice on the structure of your assets.

For example, if you own your house jointly with your husband then it is likely that on your death your share of the house will pass to him outright even though your will states that your estate is to be left in trust.   You need to ensure that you own the house jointly as “tenants in common”.   This means that when the first of you dies, his or her half of the house will pass according to the Will.    For this arrangement to work satisfactorily, it is important that your husband has previously made a Will in your favour.

For further advice please contact Michael Overend on (01635) 521212 or michael.overend@clmlaw.co.uk.