XYZ

What is  Business Lasting Power of Attorney?

A Business Lasting Power of Attorney (LPA) is a form of Lasting Power of Attorney and an effective way of protecting your business from the operational impact of sudden and unforeseen absence.

It is a legally binding document, dealing with business assets only, which assigns one or more trusted people to help you make decisions or to make decisions on your behalf if you are unable to do so.

Business LPA’s can be as detailed as you like and can appoint multiple Attorneys to handle different areas of the business.  They provide a platform for you to explain to your Attorney(s) exactly how you would like your business to be run and what they should do with it in certain sets of circumstances.  This may include the way in which they continue to keep it going whilst you are unable to, or the steps you would like them to take to close the business by way of sale, transfer or otherwise.

Your Business LPA should also give permission to your Attorney(s) to employ the services of other professionals, generally or specifically, to assist them.  

What is a Business Will?

Wills have always been an important part of succession planning for business owners and investors.  Without a Will to direct how your professional interests should be managed, your business could face immediate operational issues and your estate may be dealt with in a way which depreciates its value.  

Effective succession and inheritance tax planning ensures that when the time comes, assets are passed on to the right people in a way that maximises the available tax reliefs. 

We call Wills which contain important directions regarding business and professional interests, Business Wills.  

Not sure if you need a Private Business Preservation Package?

Whatever your age, the sad reality is that anyone can become incapacitated or worse through illness or accident.

Ask yourself what you want to happen to your business interests if you are suddenly unable to manage them yourself? Do you really want to leave that to chance?

We specialise in helping business owners, directors and investors protect their professional interests from personal life events so they can achieve their ambitions and leave a legacy to those they intended. Please read our blogs:

If you would like to instruct a solicitor to assist with probate, you can contact Sangeeta Rabadia directly by email or phoning +44 (0)20 7993 2936.

 

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

What is Probate?

Probate is the term loosely used for dealing with the assets and affairs of a person who has died (often referred to as the deceased or Testator), which can also be called Estate Administration.

You would usually need to show that you have the legal authority to handle probate and would apply to Court for a Grant of Representation, which would take the form of a Grant of Probate or Letters of Administration depending on whether the deceased left a Will.

Who can Apply for Probate?

This depends on whether the deceased had made a valid Will or not. If there is a Will there would usually be nominations for who the deceased wanted to carry out the task of administering their estate. Those nominated (known as Executors) have the choice to:

  • take up the role themselves
  • give someone else, usually a professional, permission to deal with the estate and only step in if needed
  • renounce the role altogether.

If there is no Will, the person(s) most entitled to the deceased’s estate will be eligible to take out a Grant of Probate and deal with the deceased’s affairs.

What is the Process?

Probate can take a long time and must be completed in a certain order, but there are interim grants that you can apply for in special circumstances. For example, if someone died in the middle of a property transaction, you can apply for an interim grant that allows you to complete the property transaction. There are also special grants for situations of dispute and where very little is known about the deceased’s estate.

Where the value of the deceased’s estate is small, some institutions may allow you to deal with specific assets without a Grant of Representation.

It is common for the process to be handled by a solicitor overseen by the Executor(s) or Beneficiaries.

1. Valuations and Notifications

To deal with the estate of someone who has passed away, you must first establish what their assets were, together with the value of these assets.

Depending on the situation this can be quite a difficult task. For example, if you were not involved in the deceased’s finances, it may not be easy to find out what they owned or whether they had pensions and investments. If you do find yourself in this situation, a solicitor can assist with special search facilities.

It is very important to obtain the right valuations as this will impact the tax position of the estate. Special assets, such as businesses, artwork, antiques, foreign assets, heritage buildings, and commercial properties, may require specialist involvement to ensure the accuracy of the valuations.

In practice, this is usually the time you would inform institutions that the deceased has passed away.

2. Inheritance Tax

Inheritance Tax is a tax that is payable by the estate of a deceased person before their assets can be distributed. The amount paid will depend on an array of circumstances including the value and type of assets within the estate.

There may be opportunities to reduce the amount that is paid by applying for exemptions and reliefs. For example, if there is a gift to a spouse or a charity within a Will, there is usually no inheritance tax to pay on those gifts. Agricultural assets, business assets and heritage assets may also qualify for tax relief.

If the deceased had foreign connections, it will be important for you to confirm their domicile as this can also impact the amount of tax that is paid. Domicile is the country that is a person’s lawful residence and usually reflects the country they treat as their permanent home. However, it may not be the country they spend most time in so if there is any doubt you should take legal advice.

Inheritance Tax will also depend on the deceased’s financial position during their lifetime. More specifically, if gifts have been made, consideration of when these were made and to whom will be important in calculating the tax liability.

Inheritance tax can be complex, so it is advisable to seek specialist legal advice to ensure that the correct amount is paid.

Any tax due should be paid within 6 months of the deceased’s death to ensure that penalties and interest do not accrue. You should note that tax is payable by the deceased’s estate rather than the executors or administrators personally. This is not always a simple process so there are circumstances in which the payment can be delayed or staggered, but either way, the HMRC will need to give their approval before you can apply for Probate. In some circumstances, it may also be possible to take out an Inheritance Tax loan to enable you to move forward with probate.

3. Apply for Probate

It is only after Inheritance Tax has been dealt with that you can apply to the Court for the Grant of Representation (Grant of Probate or Letters of Administration), which you will need to finalise the deceased’s affairs.

There have been many changes in the way in which probate applications are sent to the Court recently, which has had an impact on the timeframes for when an application is approved. It is always worth speaking to a professional to ensure that the correct processes are being adopted.

Once your application for a grant is approved, you will receive a Court sealed version. Many institutions will require an original document, so it is advisable to ask the Court to send you multiple copies so that you can carry out many tasks at the same time.

4. Finalise Legal Affairs

The Grant will give you the authority to manage and deal with all the assets and affairs of the deceased. This could be closing bank accounts, paying their debts, transferring assets into beneficiaries’ names, taking over the management of business ventures or even managing Trusts created in the Will or in law – for example if there are beneficiaries who are minors.

This part of the process it very important; as a personal representative you will need to collect in all the assets of the estates and then distribute them to the right people in the correct manner. If errors are made, you could find yourself personally liable for the losses so it is important to keep an accurate record for yourself and the beneficiaries.

How Can a Solicitor help?

Undertaking this responsibility may be the last thing you want to do if you are grieving and coming to terms with the loss of a loved one, especially if there is a dispute between beneficiaries. We can assist you from the beginning to the end of the process, or with specific parts, lightening the burden of the paperwork and acting pro-actively to resolve issues so there are no unnecessary delays.

We have years of experience in assisting clients with complex and sensitive matters, so you can be assured we will always act with professionalism and discretion.

If you would like to instruct a solicitor to assist with probate, you can contact Sangeeta Rabadia directly by email or phoning +44 (0)20 7993 2936.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ


In a time when both our business models and personal relationships are being tested to their limits, it is important to understand how the breakdown of a relationship can affect your business.

This webinar is essential viewing for all entrepreneurs who are:

  • Married or considering marriage in the future
  • With a business partner who is married or might get married in the future
  • In business with their romantic partner
  • Employing their romantic partner
  • With business loans secured against a jointly owned residence

Because…

Your spouse could “own” 50% of your business, even if they have never been involved with it.

What does this mean?

If you separate you might need to “buy them out” or give them shares in the business.  There are also tax implications.

In this webinar we will consider:

  • Real-life separation case studies from business owners who started their businesses before and during marriage, including horror stories that you will want to avoid.
  • Cost-effective legal steps to help you protect your business whilst ensuring you can provide fairly for your spouse, including pre-nups, post-nups, cohabitation agreements and trusts.
  • Practical tips for anyone considering divorce who does not have protections in place.
  • Legal strategies to negotiate a fair outcome for everyone.

Why can we talk to you about this?  As law firm specialising in Family and Private Wealth firm, we help entrepreneurs, directors and investors to protect their professional interests from personal life events, so they can achieve their lifetime ambitions and leave the legacy they intend.  We also deal with the legal fall-out for those who do not take these steps.

Other Allard Bailey webinars for Fresh Business Thinking:

  1. How to use the law to align your personal and professional goals so that you can maximise growth in all areas: View here.
  2. How to protect your business from events in your personal life that can have a significant impact, such as your unexpected incapacity, death or personal debt: View here.
//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

Setting Up a Lasting Power of Attorney

The person granting an LPA is called the Donor.  If you are the Donor, you can set up one or both of the following LPA’s:

  1. Health and Welfare Lasting Power of Attorney: gives a person the power to make decisions about your day to day welfare such as washing, dressing and eating, housing and medical care.

  2. Property and Financial Affairs Lasting Power of Attorney: grants a person the power to make decisions about your assets such as managing your bank account, paying bills, collecting state benefits and pensions on your behalf and selling your home if necessary.

These documents are very important as they will safeguard your assets from predatory third parties if you find yourself in a vulnerable situation. It is a complex area of law and we would always recommend that legal advice is taken before executing LPA’s.

We also assist Business Owners and Investors to prepare detailed Business Lasting Powers of Attorney.  A Business LPA deals with business assets only and should appoint an Attorney with the requisite qualifications and abilities to manage your business.  

Who can be an Attorney?

An Attorney can be any adult person that you trust.  Some people will nominate a professional attorney, but this is not always necessary.  It can be appropriate for family members to act as your attorney, in which case we can provide useful guidance to explain their duties and what they can and cannot do with these powers.  If there is no suitable person, we can provide an attorney service.

What does it mean to be an Attorney?

Acting as an Attorney (the person tasked with managing the assets and/or welfare of the Donor) is a great responsibility. It allows a person to manage your finances, your health and welfare if you are unable to do so.

What happens if there is not a Lasting Power of Attorney?

In this situation, your relatives may need to apply to the Court for a Deputyship Order, which will give them the power to make decisions on your behalf.  This can be costly and time consuming.  As well as providing extra stress to your family at what will already be a difficult time, you might find that the person looking after your affairs is not the person you would choose yourself.

Challenging a Lasting Power of Attorney

What if I have concerns about my chosen Attorney?

If you are a Donor and have concerns about one of your attorneys, you can revoke their appointment and appoint someone else.

What if I have concerns about somebody else’s Attorney?

By the time the Attorney takes up their role, it is unlikely the Donor will be able to keep tabs on what they are doing.  Unfortunately, vulnerable people are often be taken advantage of.  The legislation and guidance are very clear that whatever an Attorney does, it must be in the ‘best interests’ of the Donor.

If you believe that an Attorney is not acting in the best interests of the Donor, we can assist you with:

  • Court applications in seeking guidance

  • Court applications to object to an Attorney’s action(s)

  • Removal of Attorneys acting beyond the scope of their power.

To arrange an initial discussion about establishing or challenging a Lasting Power of Attorney, please call 020 7667 2936 or complete the contact form.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

It has been said that the only certainties in life are death and taxes, so it is smart to prepare for both.

With effective estate planning you can protect your wealth, ensuring that you and your family are provided for now and in the future.

Whether your assets are held in the UK, overseas or split between continents, we can help to devise the most effective means of retaining and passing on wealth to the next generation, or meeting your philanthropic aims. We can also help to protect your wealth from unexpected events like incapacity and claims from third parties.

Disputes regarding wealth are often complicated and highly stressful, especially if you are grieving.  Whether you are making or defending a claim against an estate or trust, we will always act with sensitivity and discretion, keeping your private matters out of Court wherever possible. 

We can support you at every decision-making stage of your life, assisting you personally as well as where you act as a trustee or executor.

We can advise you on:

  • Probate and administration of estates (Probate and Estates Legal Terminology)
  • Inheritance and capital gains tax planning such as gifting, lifetime settlements and advice on ownership of a second home in UK or overseas
  • Creation and administration of Trusts
  • Disputes regarding Wills, trusts and probate including incapacity, undue influence and Inheritance (Provision for Family and Dependents) Act 1975 claims.

For an initial discussion about your situation, please call us on +44 (0)20 7993 2936 or select Get Started Online below.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

When you run a business there is always an interaction between your professional and personal life, so it is important to understand how the decisions you make in your private life can impact your business.

This is the second in a three-part webinar series in which we look at how to legally align your professional and personal interests so that:

  • the value of your wealth is maximised
  • your business is protected from significant life events
  • you can achieve your ultimate life goals.

In this webinar we will focus on how to shield your business from unexpected life events that can have a significant and sometimes catastrophic impact.

You will learn about the Four Ds and how they can affect your business. In all scenarios we will discuss cost-effective legal tools to protect your business, when and how to use them.

  • Death:
    • What can happen to your business if you die without a will?
    • How to ensure your business can continue to operate without you
    • The difference between a Business Will and a regular Will
  • Disappearance:
    • Can anyone fill management functions if sudden incapacity from an accident or illness causes you or a business partner to temporarily disappear from the business?
    • How to minimise the operational impact of temporary incapacity using a Business Lasting Power of Attorney
    • How to keep the business running, or allow it to be sold, if you experience long-term incapacity
  • Divorce:
    • Is your spouse entitled to 50% of your business?
    • How to ring fence pre-existing assets including your business
    • Ways to shield your business from the financial and emotional impact of relationship breakdown
  • Debt:
    • When your personal finances will affect your business
    • How company structures and Trusts can shield your business from personal creditors

In the final webinar of this series, we will look further at how your family and personal relationships can affect your business and how effective planning can minimise this.

A replay of the first webinar which explained how you can use the law to align your personal and professional interests and maximise growth in all areas can be viewed here.

Why can we talk to you about this? We specialise in helping entrepreneurs, directors and investors to protect their professional interests from personal life events, so they can achieve their lifetime ambitions and leave the legacy they intend. We also deal with the legal fall-out for those who do not take these steps.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ


When you run a business there is always an overlap between your professional and personal life. To ensure you can realise your goals, it is important to understand how the decisions you make in your private life can impact your business interests and vice versa.

We specialise in helping entrepreneurs, directors and investors to protect their professional interests from personal life events, so they can achieve their lifetime ambitions and leave the legacy they intend. We also deal with the legal fall-out for those who do not take these steps.

This is the first in a three-part webinar series in which we look at how to legally align your professional and personal interests so that:

  • the value of your wealth is maximised
  • your business is protected from significant life events
  • you can achieve your ultimate life goals.

In the first webinar we will focus on how to grow efficiently and you will learn:

  • Whether the company structure you have in place will help or hinder your personal goals including enjoying life now or in retirement, creating a family business, leaving a personal legacy and charitable aims.
  • How to grow your business in a way that allows you to meet both your professional and personal ambitions.
  • How to structure your personal wealth to achieve your short, medium and long-term goals.
  • How to protect your long-term interests and those of your family, including vulnerable persons, using different legal tools.

In part 2, we will discuss the legal tools you can use to shield your business from the impact of personal life events such as unexpected incapacity, death, marriage and divorce.

In part 3, we will consider how your personal relationships can affect your business and how effective planning can minimise this.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

The reality is that anyone can become incapacitated at any time through illness or accident, so it makes sense to prepare for that possibility.  Depending on the length of time you are out of action, the consequences for your life may be minimal, but the consequences for your business could be more significant.  For example:

  • If you are the only signatory for payroll, what will happen if you are unable to sign for the foreseeable future?
  • How will the business operate if a Co-Director is unable to co-sign contracts or guarantees?

What is a Business LPA? 
A Business Lasting Power of Attorney (LPA) is an effective way of protecting your business from the operational impact of sudden and unforeseen absence.

As with  all LPAs, it is a legally binding document, which assigns one or more trusted people to help you make decisions or to make decisions on your behalf.  These trusted people are called Attorneys.  For more details on Lasting Power of Attorneys please see Lasting Powers of Attorney.

A Business LPA deals with business assets only and should appoint an Attorney with the requisite qualifications and abilities to manage your business for you for a sustained period if necessary. For example, if you are a dentist running a dental practice, then appointing your spouse who has expertise in say, retail, is not going to be suitable.  Rather, partners of your dental practice or other such professionals would be better suited to managing your practice.  It is important to note that some industries impose regulatory restrictions on who can manage a business within that profession.

Business LPA’s can be as detailed as you like and can appoint multiple Attorneys to handle different areas of the business.  They provide a platform for you to explain to your Attorney(s) exactly how you would like your business to be run and what they should do with it in certain sets of circumstances.  This may include the way in which they continue to keep it going whilst you are unable to, or the steps you would like them to take to close the business by way of sale, transfer or otherwise.

Your Business LPA should also give permission to your Attorney(s) to employ the services of other professionals, generally or specifically, to assist them.  As, for example, if you have a financial advisor who usually helps you with certain investments, they will require your express permission to liaise with your Attorney or they would be unable to continue managing your investments without a court order.

Are There Other options?
Another way in which this can be addressed is by putting in place a Property and Financial Affairs Lasting Power of Attorney in which you appoint an Attorney who would be responsible for looking after your interests in your business.

However, a Business LPA ensures an appropriate separation between your business and personal affairs so that you have the right person looking after each aspect of your life.  Putting in place a detailed business LPA will ensure that your business interests continue to operate smoothly in the event that you are unable to manage them yourself.  You might consider making it a prerequisite for all company stakeholders.

In addition to a Business LPA we also recommend that business owners consider succession planning and prepare a detailed Business Will to preserve their business and personal interests should the worst happen, you can read more about succession planning and Business Wills here.

LEGAL ADVICE

For more information on preparing a detailed and effective Business Lasting Power of Attorney to protect your company contact Sangeeta Rabadia.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

Key Considerations for Business Owners
The most common business types are sole traders, partnerships and incorporated companies.  Depending on the businesses structure, documents such as shareholder agreements, partnership agreements and articles of association usually set out the basis for how it is owned and managed.  It is also possible for these documents to dictate what happens to each owners’ share in the business should they die.

In our experience, these terms are often draconian, leading to forced buy outs, depreciation of value and occasionally even dissolution of an owners share with no benefit to their heirs.  It is therefore important to ensure there are adequate business documents with appropriate options for your heirs and surviving business associates to consider on your passing.

It is also important that you deal with your business properly within your Will to ensure that it is administered effectively and passed to your intended heirs.  The contents of your Will should reflect the options contained within the business documents and provide heirs with the appropriate legal route to maximise the value of their inheritance.

Below are examples of some of the things you should consider:

  • Should you appoint executors who are solely responsible for the administration of your business? While you may prefer for family members to deal with your personal assets, it is often more appropriate for business partners or other professionals such as solicitors to deal with business assets. This can be particularly important if you would like the business to continue operating.
  • Do you need to assign trustees to manage business interests for minors? If your beneficiaries are minor children they are not going to be able to manage the business themselves or make decisions as to whether they should retain or sell their share.  You could consider setting up trusts or other structures to ensure their interest in the business is looked after by competent people until they can take over themselves.  This ensures that the business can continue to operate smoothly and that practical day to day matters can be addressed with ease.
  • Are any of your beneficiaries vulnerable? For vulnerable beneficiaries who may never be able to manage the assets themselves, it is important to ensure that a long-term structure is put in place to protect their interests.  You could consider whether to set up a trust or appoint an appropriate deputy to act on their behalf.  You might decide it is more appropriate for the business, or your share, to be sold and proceeds then held for the beneficiary.  Whatever you choose, it is important that your Will provides for the mechanism in which your wishes can be carried out.
  • Would you like your employees to receive a share of the business? It is not uncommon for small business owners who have grown their company with a loyal team to want some or all of their employees to receive some value from the business.  In this situation you might consider an employee share scheme or a more general share in the profits.
  • What are the tax implications? As with other assets, the value of your business may be subject to inheritance tax.  A qualified professional can help you consider what reliefs may be available to your beneficiaries, what you can do during your lifetime and what you can do within the terms of your Will to maximise these tax reliefs.  For example, we worked with a client who sold his marketing company for a large sum, which had obvious benefits to him in life, but negated the availability of business property relief on death.  We subsequently advised and assisted him in the investment of the sale proceeds into vehicles which would qualify for tax reliefs when he died.  We can also assist you in managing your personal taxes, such as Income tax and Capital Gains Tax, which are linked to your profit share from your business interests.

Other Business Interests
The above considerations are not just important for people who own a business.  They are also necessary if you have business interests such as rental properties, investment portfolios and other stocks and shares.

The way in which these assets are owned will have just as much impact on how they are inherited and how much inheritance tax is paid on your death.  For example, rental properties will not necessarily qualify for special inheritance tax reliefs.  An effective solicitor can help you structure your portfolio to not only maximise the use of tax reliefs during your life time, but also ensure a smooth transition to your beneficiaries so that they do not pay more inheritance tax than they need to.  At Allard Bailey Family Law, we achieve this with a combination of lifetime planning and implementation as well as succession planning through effective Wills.

A Special Note on Investment Portfolios
Investment portfolios are often held in a variety of structures, depending on what your financial advisor believes to be most effective for each investment.  If your advisor does not have an overview of your entire estate, it may mean that you minimise your liability for one tax, whilst inadvertently increasing the liability for another tax.  It is therefore advisable for your entire estate and holdings to be reviewed periodically.

You should also be aware that if your investments are held in trust they will fall out of your estate so you cannot dictate how these assets are dealt with in your Will.

LEGAL ADVICE

To ensure that your wishes can be carried out in the best way for you and your beneficiaries, it is advisable to seek professional advice when considering how to plan the succession of your business and other investments.  It is also advisable to prepare a detailed Business Lasting Power of Attorney to protect your business in the event of unforeseen absence caused by sudden incapacity.  For more information on how we can assist you please contact Sangeeta Rabadia.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

When you run your own business, there will always be an overlap between your professional and personal life.  To ensure you can achieve both your business and personal aspirations, it is important that your solicitors fully understand how the decisions you make in your private life can impact your business interests.

Our team advises entrepreneurs, company directors and investors on matters in which their business and personal lives converge.  From succession and inheritance tax planning to divorce and separation, we help business owners maximise the effectiveness of their investments and protect their interests from adverse third parties.

You can join this year’s regional finals from the comfort of your own home or office.  Join us as we raise a glass and celebrate all things entrepreneurial on Wednesday 23rd September 2020.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

Lack of Mental Capacity
When you give instructions and then execute your Will, you will need to know what you are doing and understand the full implications of your actions.

In legal terms this broadly means you, the Testator (person making the Will), will need to:

  • Understand that you are making a Will and how a Will works
  • Understand what assets and liabilities you have and what you are gifting in your Will
  • Appreciate how others will be affected by the contents of your Will and that you will be expected to make provisions for certain people
  • Not have a disorder that affects your mind causing you to dispose of your assets in a manner that you would not otherwise do so

Mental Capacity is a complex area as it is possible for you to have capacity for certain matters and not for others, for example if you have periods of lucidity making it difficult to know when it is the right time to take instructions or execute your Will. Sometimes, the issue of capacity may not be obvious and that can make the job of the Will writer very difficult.

It is these complexities that often lead to questions being raised after the Testator dies. If a serious question of capacity is raised, it will be for those beneficiaries wanting to rely on the Will to prove that you did not lack mental capacity when you executed your Will.

How can I Protect my Will from Challenges for Lack of Mental Capacity?
An important step is to use a professional Will writer.  A good practitioner will always ask appropriate questions during the initial meeting to establish whether there may be any concerns about your mental capacity.

If there are concerns, they will follow the ‘Golden Rule’ and an appropriate medical practitioner will be asked to assess you and determine whether you are able to execute a Will.  The medical practitioner will be encouraged to act as a witness when the Will is signed, but this is not always possible.

If you anticipate a dispute then it is a good idea to speak to a medical practitioner anyway and have the discussion recorded in medical logs or reports, which can be used as evidence by your intended beneficiaries if necessary. It is worth noting that records detailing your health at the time the Will is executed will always be useful evidence, even if mental capacity is not considered to be an issue at that time.

We recommend that you regularly review your Will with your practitioner to demonstrate that you have not changed your mind during the passage of time.  If there are significant changes to a Will, then there should be a detailed discussion as to why those changes are being made and this discussion should be noted on the practitioner’s file.

If you feel comfortable in doing so, you should also have open and frank discussions about your wishes and the contents of your Will with beneficiaries, friends and family.  If they are aware that your wishes have been consistent or understand the reasons for any changes it can reduce the likelihood of challenges.

Undue Influence
A Will is a record of your, the Testator’s, wishes of how you want your estate distributed after your death. It is for you to make those choices and no one else. If anyone else makes or influences those choices the Will cannot be valid. The most obvious example of undue influence is when someone forces you to leave assets in a specified manner for fear for repercussions, such as being told you will not be looked after properly, threats of abuse, threats of being disowned and so on.  This can be especially terrifying for the elderly and vulnerable.

The examples above are transparent but undue Influence is not always this obvious, another example would be causing you to have untrue beliefs about a proposed beneficiary.  A recent matter that we assisted on involved of a father who was made to believe that one of his sons was not taking care of him properly, which led him to exclude the son from his Will.  This kind of undue influence is known as fraudulent calumny.

How can I Protect my Will from Challenges of Undue Influence?
A good practitioner will always ask to see you on your own so that you are free to speak openly without reprisal.

They will also have discussions with you to ensure that any changes to your Will are rational and properly considered and that you fully understand the implications. If there are any concerns a practitioner will refuse to act and may even report their suspicions to the appropriate authorities.

Unfortunately, undue influence can be hard to notice so you should be open and frank with your practitioner, who will note the conversation in their records.  If it is feasible, a discussion with any family about your wishes is also encouraged.  Not only will this show there is no undue influence, it may also prevent any disputes or animosity after your Will is read.

Challenging Wills made during the Pandemic
The COVID-19 pandemic has caused many people to think about the importance of Wills.  At the start of lockdown there was a 70% surge in Will instructions. However, the need for social distancing has meant that taking instructions and executing Wills has been problematic for some.  Video or telephone calls with a practitioner may get the job done, but it does make it harder to identify issues and this could lead to problems when your Will has to be used.

If you have executed your Will during this pandemic period and have any concerns about future challenges, we recommend that you get your will reviewed once you are able to meet with a practitioner in person.

LEGAL ADVICE

At Allard Bailey Family Law we regularly assist in drafting Wills where there are complex or sensitive wishes and can help you to protect your intended beneficiaries from unwarranted challenges, as well as defending them should disputes occur.

To book a consultation or telephone appointment, please contact Sangeeta Rabadia on 020 7993 2936.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

Income Tax
Marriage Allowance allows married and civil partnered couples to transfer part of their tax allowance to their spouse, which can reduce their tax bill by up to £250 each year.  To benefit as a couple, one spouse would need to earn less than the other and have an income of £12,500 or less.  This is not available to cohabiting couples.

Capital Gains Tax
Capital Gains Tax is usually paid on the net gain arising from a disposal of assets.  Assets gifted or sold to a spouse do not attract Capital Gains Tax.  However, if the assets are sold at a later stage then the base value used for the calculation will be the value at which the disposing spouse acquired the asset.

Again, this spousal exemption does not apply to cohabiting couples.  This could mean that adding your partner’s name to a property that does not qualify for principal private residence relief will attract a Capital Gains tax charge of 18% or 28%.

Pensions
Generally, pensions make provisions for a surviving spouse to receive payments when the pension contributor dies.  There are no automatic rights for cohabiting couples.  Instead, the partner would have to be specifically nominated as a beneficiary in order to access the funds in the pension.  Whilst companies and employers are making changes to their pension schemes to take cohabitation into account, not everyone has, and it is always advisable to ensure that you understand exactly how your pension would work in relation to your partner.

Married and civil partnered couples may also receive part of their spouses Additional State Pension (also known as State Second Pension or SERPs).  This benefit is not extended to a cohabiting couple.

Inheritance Tax
Inheritance tax is the area where cohabiting couples pay significantly more than a married or civil partnership couple.

Spouses are able to transfer everything they own to their spouses on death with no inheritance tax implications.  If this happens then any unused nil rate allowance and residential nil rate allowance (subject to linear decedents inheriting) can be used on the death of the second spouse.

In contrast, if a cohabiting partner inherits any assets, they will have to pay 40% tax on any inheritance above the nil rate allowance (currently £325,000).  The residential nil rate allowance will not be available and unused allowances cannot be transferred.

If a spouse dies without leaving a Will, the intestacy rules enable the surviving spouse to inherit some, if not all, of the deceased spouse’s estate.  In contrast, there is no automatic provision for cohabiting couples under intestacy rules.  The impact can be enormous if assets are not jointly owned.

What can you do?
Couples who are simply opposed to the institution of marriage have the option to enter into a civil partnership to take advantage of the tax reliefs.  Those who prefer to continue living as a cohabiting couple are advised to ensure that their estate is managed in a tax efficient manner and they have a valid Will to protect their partner and any children.

You can learn more about the importance of Wills for safeguarding your children’s future here.

LEGAL ADVICE

If you require legal advice or assistance to on tax, trusts, wills or estate planning please contact Sangeeta Rabadia or call 020 7993 2936 to request a consultation.

*according to the latest information released by The National Office of Statistics, which reports a 25.8% increase in the decade 2008 – 2018.

 

 

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

What can I do if there is not a Lasting Power of Attorney?

If someone you know loses the ability to make decisions for themselves, and there is no Lasting Power of Attorney in place, it is advisable to make an application for Deputyship to give you the authority to look after their affairs on their behalf.

This process can be quite lengthy, sometimes taking over 6 months to complete. With the ongoing pandemic, this time-frame has been extended further.

What can I do if I need to make urgent decisions?

You may be able to make some decisions yourself, without having to revert to a court for assistance. When making such decisions, the key is that it must be in the best interest of the individual concerned. We recommend that you always seek advice to ensure you are acting within the remit of any relevant legislation and are not vulnerable to prosecution.

There are some decisions for which you will need to make an application to the Court of Protection.  The application you make will depend on what you are asking the court to make a decision about.

Finances – If the decision relates to someone’s finances, you will always need to make a Deputyship application. The application would need to state that there are urgent matters that need to be considered. Urgent matters may include accessing a bank account to pay bills or authority to complete a property transaction which has stalled.

Health and Welfare – If the decision relates to someone’s health and welfare, it may be necessary to make an emergency application to the court. Such applications usually relate to medical treatment (including whether to switch off a life support machine or not), removing someone from their home or the deprivation of their liberty (having to confine them in an institution). For such applications, forms still need to be completed but it is recommended that you speak to the court prior to lodging any application. In practice, this application will be much quicker than a normal Deputyship application.

An urgent application to the Court of Protection is not necessary if you are simply trying to assist someone who is vulnerable and has their movement restricted because of the pandemic. If you find yourself wanting to help someone in this position then a General Power of Attorney may be a more suitable option for you. Please click here for more information.

Do I still need to apply for Deputyship if I only need a decision on one matter?

If the decision relates to finances, then the answer is likely to be yes. If someone cannot manage their affairs now, then it may be that they will not be able to do so going forward or at least for some time. As such it would be advisable to obtain a Deputyship. This can be revoked if and when the individual can make their own decisions again.

If the decision relates to health and welfare, then a general Deputyship order may not be appropriate. The Court of Protection will only grant such a Deputyship in very limited circumstances.

Are the courts still open?

Courts continue to operate a best as they can. Urgent applications continue to be heard and are given priority. Such hearings take place by telephone or video conference and it is likely that this will continue for some time.

It may be the case that a hearing is not even necessary and the court can make a decision based on the evidence that has been submitted. In our experience the courts are acting as swiftly as they can to ensure that applications are dealt with efficiently.

The pandemic has caused standard Court of Protection applications to be processed more slowly. This may mean that you need to submit an urgent application in the meantime so as to allow you quicker access to an individual’s affairs.

Urgent applications have to be drafted and submitted in a short frame of time and are often complex. As such we would always recommend that you seek professional advice prior to making any such application.

LEGAL ADVICE

If you require legal advice or assistance to make an application to the Court of Protection, request a Deputyship or execute a Lasting Power of Attorney please contact Sangeeta Rabadia to arrange a Consultation.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

The safety and wellbeing of their children is of paramount importance to most parents, whatever their age.  However, few parents will realise that having an appropriate and valid Will is an essential tool in securing an underage child’s future.

Without a Will, your child may be set on a path that you would not want or have even envisaged.

By making a Will, you can be sure that your child or children are protected as best as possible.  This blog sets out some of the key facts all parents should consider.

Guardianship: Who Will Look After Your Child?
When both parents pass-away whilst a child is still underage, there is no one with parental responsibility who can take over the role of a parent.

Parental responsibility is a term used to describe the legal rights and responsibilities of a parent, which include housing, protecting and maintaining their child.  All mothers and most fathers gain parental responsibility when a child is born.  In some situations, such as adoption, parental responsibility will later be transferred to other responsible adults.

If there is no-one with parental responsibility to take care of a child, it will fall on the authorities to choose an appropriate caretaker. You may be surprised to hear that family members are not necessarily the people who end up caring for a child and, although they will try, it is not always possible for the authorities to house siblings together.

By making a valid Will, you can name those that you most trust to take care of your child as legal Guardians in the event of your untimely death. Furthermore, you can specify your wishes in terms of their upbringing to ensure they are cared for in the way you intended. c

Nominating guardians can be particularly important in complicated family situations where parents are separated and it may not be appropriate for the other parent to assume care of a child.

It is of course important to discuss your wishes with your preferred Guardians to ensure that they are both willing and able to fulfill this important role.

Your Child’s Inheritance
If you do not have a valid Will in place, the distribution of your assets will be governed by intestacy laws, which may be contrary to your intentions.  A valid Will ensures that your assets are distributed in accordance with your wishes.

If you are married or in a civil partnership, the majority of your estate would usually be inherited by your legal partner (this is the case if there are children from the relationship).

If you do not have a legally recognised spouse, your estate would usually be divided equally between your children.  However, English law does not allow for assets to be directly inherited by children until they reach the age of 18.  A ‘trust’ is therefore imposed when assets are left to minors in your Will.  You appoint executors or trustees who are responsible for looking after those assets until each child reaches a nominated age. In the absence of a Will, the law decides who becomes responsible, and again, it may not be the person whom you would personally entrust with such a responsibility.

If you are in the process of separation, you should be aware that your former spouse remains one of your heirs until your relationship has legally ended and could inherit your estate instead of your children.  Click here for further information on the importance of updating your will as soon as you decide to separate.

Even after you are divorced, if your ex-partner has parental responsibility, they could be appointed to look after your assets on behalf of the children. Some people will be comfortable with this, others will not.

Wills are not only for those with significant assets, they are a key tool in ensuring your children and their inheritance are protected.  It is advisable to use a solicitor to draft or at least check your Will to ensure that it will have the effect that you want.  Mistakes can mean that your wishes are not followed.

Legal Advice

For further information on preparing or contesting a Will please contact Sangeeta Rabadia or call 020 7993 2936 to schedule a virtual appointment.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

Who Should Prepare a Lasting Power of Attorney?

It is sensible for everyone over the age of 18 to have a Lasting Power of Attorney (LPA). LPA’s act as an insurance policy.  They are something you hope you never have to use but are there just in case. There are two types of LPA: ‘Property and Financial Affairs’ and ‘Health and Welfare’.  Both allow you to nominate people, referred to as attorneys, to look after you and your interests if you become incapacitated.

Why?

If you do not have an LPA in place, your loved ones would have to apply to the court for a deputyship order to make decisions on your behalf.  This is a time consuming and costly process, which may not allow the Deputy the same level of access to your affairs as you would wish.  You might also find yourself with an unwanted person looking after your interests.

During a temporary or more permanent incapacity, the LPA’s will ensure that bills are paid, the fridge is stocked and the children do not go without.

LPAs are also important for business owners who are the only person in their company with the authority to make financial decisions.  For further information read our blog: Business Owners Should Protect their Operations in case they are Incapacitated by Coronavirus

You should be aware that an LPA must be registered and this can take up to 2 months from submission of the application.  It may not come into effect before you need it in this pandemic, but we would recommend that you get the process going as discussions are taking place to reduce the timeframe and it will be helpful to have an expression of your wishes should anything happen.

Is there a quicker alternative?

If you are concerned about what will happen if you fall ill before an LPA takes effect, you can execute a General Power of Attorney (GPA) for the interim.  This can be drafted by a solicitor and is valid from the moment it is executed.  A GPA is usually valid for up to 12 months and can be as specific or as general as you want it to be.

Although we do not recommend that you leave it until the last minute, we can prepare urgent GPA’s if you start to show symptoms of illness.

Who Should Prepare a Will?

The simple answer is anyone who cares what will happen to those left behind.  You might not have vast wealth to leave to anyone, but if you have young children you can set out your wishes for them, as well as leaving specific sentimental gifts to family members and friends.

Without a Will, or an up-to-date Will, you could leave behind uncertainty, pass inheritance to unwanted persons and control in the hands of people you would never have chosen.

Those going through a separation or divorce are particularly vulnerable to this.  You need to be aware that your ex-partner continues to be your legal spouse and heir until your relationship has legally ended.  Unless you prepare a Will that states otherwise, your ex will continue to enjoy the rights of inheritance for a spouse.  For further information please read our blog: Why You Should Update Your Will As Soon As You Decide to Separate

Seeing a Solicitor without breaching the Stay At Home rules

We are continuing to support our clients with their Private Wealth, Wills  and Estate Planning matters whilst respecting current Government guidance on social distancing.  You can meet with us via video call or we can take your instructions on the telephone or in email.

For further information about preparing or contesting a Will or Power of Attorney, please contact Sangeeta Rabadia.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

The solution is a General Power of Attorney (GPA), which can be drafted by a solicitor and is valid from the moment it is executed.  A GPA is usually valid for 12 months and can be as specific or general as you want it to be, authorising a named person to undertake defined business functions on your behalf and, if necessary, covering your personal finances too.

We recommend that all small and medium sized business owners who do not have a contingency in place execute a General Power of Attorney, whilst simultaneously registering a Lasting Power of Attorney.

Although we would not advise you to wait until the last minute, it is possible to put an urgent General Power of Attorney in place if you start to show symptoms of illness.

For further information please contact our resident Private Wealth Specialist Sangeeta Rabadia.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

What happens to my estate if I do not update my Will before my divorce is finalised?

If you have a Will naming your spouse as a beneficiary, it will remain valid until your divorce is finalised with a Decree Absolute.  This may only take a few months, but it can also take years.  Should anything happen to you in the interim, your estate will be administered according to your Will.

It is common for spouses to be an executor as well as the main beneficiary of each other’s Wills.  If you do not want them to be in charge of your estate should anything happen to you, you should update your Will as soon as possible.

Does my divorce or dissolution invalidate my existing Will?

No, it does not.  If you do not update your Will after your relationship has legally ended, any gifts to your ex-spouse will fail, but there may be other unwanted consequences.  The assets in your Will originally intended to pass to your ex-spouse may be governed by intestacy rules, which could conflict with how you would have wished them to be distributed.

If your ex-spouse was the named executor of your estate, this may mean that you are left without an executor and left to the law to decide who will be responsible for your assets.

What happens if I do not have a Will?

In UK, if you do not have a Will your spouse or civil partner is one of your (or possibly your sole) legal heirs and would remain so until your relationship has legally ended.  Even if you have separated with a court order, they will remain an heir until your relationship has legally ended

What does this mean for my Beneficiaries?

In all these situations, your ex-partner could benefit from your estate and it would fall to your intended beneficiaries to challenge this at a time when they should be allowed to grieve.

We would therefore strongly recommend that you review your Will as soon as it is clear your relationship is ending.  You can update it as often as you want or need to reflect your wishes.

For an initial discussion about your situation, please call 020 7993 2936.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

GLOSSARY OF TERMS

TERM USED MEANING
Administrator(s) The person(s) required to deal with the deceased’s estate when there is no valid Will for the deceased or where no executors have been nominated in the will.
Administration Period The period between the date of death and the date of the final estate accounts
Administration of the Estate The collecting in, managing, dealing with and distribution of the deceased’s assets and paying all liabilities on their behalf. It is the general wrapping up all of their affairs.
Appropriation The transfer of an asset instead of its sale proceeds on account of a legacy or share of residue.
Assets Things that belong to the deceased, such as a property, investments, shares, bank accounts, chattels etc. Although not all assets have a monetary value.
Beneficiary A person entitled to receive something from the deceased’s person’s estate
Bequest A gift left in a Will.
Chargeable gift A gift on which Inheritance Tax may be payable.
Codicil A legal document by which a person amends his will.
Contingent gift A gift conditional on the happening of a particular event, e.g. a beneficiary reaching 21 years.
Creditors People or businesses who are owed money by the deceased.
Debtors People of businesses who owe the deceased money.
Deed of Variation A legal document which allows relevant beneficiaries to make changes to a will or intestacy rules after the death of the deceased.
Disbursement A payment made to a third party.
Estate When someone dies their affairs fall into their ‘estate’ until such time that matters have been dealt with and a distribution of assets can be made.
Estate Accounts A calculation of the spending incurred during the Administration of the Estate process. Usually approved by the Personal Representative
Executor(s) The person(s) nominated in the deceased’s Will to deal with the estate administration.
Goods/chattels Personal items of the deceased. Excludes land and buildings and can exclude business assets.
Grant of Probate A certificate the Court provides in order to allow somebody the authority to manage somebody else’s assets and liabilities when they have passed.  It is called this if there is a valid will.
Grant of Representation A court order authorising a person to deal with the assets of the deceased.  If a will is proved by executors, it is more precisely called a grant of probate; otherwise, a grant of letters of administration (with or without a will annexed).
Guardian(s) A person(s) appointed to look after a child under the age of 18.
Inheritance Tax A tax payable upon the calculation of the net value of the deceased’s estate as at death. It will be calculated based on current legislation and relief available.
Intestate/ Intestacy When someone dies leaving no valid Will, legislation then dictates the manner of distribution of the deceased’s assets.
Legacy /bequest/devise A gift of chattels/money/other assets by will.
Letters of administration A certificate the Court provides in order to allow somebody the authority to manage somebody else’s assets and liabilities when they have passed.  It is called this if there is no valid will – see intestacy.
Liabilities Costs and/or debts that the deceased was responsible for paying prior to their death. The Personal Representative will clear these during the Administration of the Estate
Life Interest The right to enjoy for life (or until a specified time period has elapsed or an event has occurred). This can be either money or property which will eventually revert to the original estate in some way on death. Instructions are usually included in the original deceased’s Will as to what should happen to the gift when the life interest ends.
Liquidating Assets Selling the deceased’s assets to generate cash to pay tax, creditors and beneficiaries
Next of Kin Deceased’s closed living relatives.
Pecuniary legacies A lump sum cash gift usually directed in a Will.
Personal Representatives The person obligated or appointed to manage and deal with the deceased’s estate is known as a Personal Representative for that estate.
Power reserved Where a named executor declines to act as such, but reserves the right to do so at a later date.
Predeceased Someone who dies before the deceased.
Renouncing probate Where a named executor signs a legal document which cancels his appointment from the start.
Residuary beneficiary The person that is entitled to the remainder (left over) of the deceased’s estate once all other gifts have been paid to the other beneficiaries.
Residuary estate What remains of the estate after payment of all debts, legacies and all taxes and expenses.
Residuary legacy The amount or portion of the estate which is left over after all liabilities have been paid and other gift distributions have been made. The Residuary Beneficiary will receive this.
Section 27 Trustee Act 1925 Notice This Notice is usually advertised in the London Gazette and the Local Paper where the deceased was usually resident.  Its purpose is to ensure that all persons who have a claim against the estate are given the opportunity to make a claim before distributions are made.  It is also necessary to advertise the notices to protect the Personal Representatives from personal liability.
Specific legacy A gift of what is usually an item/ chattel belonging to the deceased that is given to a nominated Beneficiary.
Statement of Truth Personal representatives confirm their entitlement to take out a Grant of Representation and that they will undertake the Administration of the Estate
Testate Reference to when someone has dies leaving a valid Will.
Testator Another termed used for the deceased.
Trust When one person is charged with assets and is obliged to look after them, manage them and deal with them on behalf of another.  An estate can be referred to as a type of Trust.  The Trust can also be derived from the terms of the Will or an intestacy.
Trustees The person or persons responsible for looking after Trust assets.
Will Legal document detailing how the deceased wants their estate dealt with and distributed.
//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

For appointment enquiries call +44 (0)20 7993 2936 or email info@allardbailey.com

If you are not ready to speak to a solicitor, you can use our free family law portal to find out where you stand legally and the steps you could take to move forward when you wish to do so.

//get_template_part( 'template-parts/post/content', get_post_format() );

XYZ

In the days leading up to a wedding there are fewer statements less romantic that asking your betrothed to take some independent legal advice about a prenup.

No one wants to think about separating before they are married, but the reality is relationships do break down and pre-nuptial agreements (or prenups) are increasingly becoming a feature of modern marriages and civil partnerships.

It can be tempting to concentrate on the dress and the party, but marriage is a contract and a contract that confers significant rights on your intended.    If a marriage or civil partnership does breakdown, then those without a prenup run the risk of years of protracted litigation over the marital estate.  If you have significant assets before you marry, or perhaps you want to ensure existing children are looked after no matter what, then a prenup might be worth considering.

A prenup allows couples to have a degree of self-regulation over their affairs and set out from the outset what will happen if they separate.   It isn’t about trying to make sure your new spouse doesn’t get anything.  On the contrary, it must be fair from the outset to be valid, and it allows parties to decide on what is fair for themselves.

Historically prenups have not been recognised in the UK, but in 2010 the landscape changed.  Although prenups are not legally binding the case of Radmacher v Granatino set the precedent that prenups should be upheld if they are not unfair.

In 2014 the Law Commission recommended that prenups should be legally binding.  That hasn’t happened yet, but the smart money is on that being a matter of time.  So where does that leave us today.

As long as certain condition are met, then the current view is that prenups should be upheld.  If no prenup is in place, then the starting point is a 50/50 split of assets.   With that in mind, taking some legal advice before you get married might save a lot of heartache in the future.

So what are the conditions that need to be met and what is fair anyway?

What you should consider:

  1. Both parties need to speak to a solicitor. Your prenup should be drawn up by a solicitor and both parties should have had an opportunity to take independent legal advice.  Most solicitors are now willing to offer a fixed fee to draft a prenup so costs don’t unnecessarily escalate.
  2. The prenup should be signed at least 21 days before the wedding. The scene lifted from the movies with the bride signing in the back of the car is likely to result in an invalid prenup.
  3. There needs to be full and frank disclosure of assets – to understand that what you are signing is fair you need to understand the true financial picture. If you don’t feel comfortable disclosing the true financial picture to your intended, then the prenup you propose might not be valid.
  4. Both solicitors acting for the parties should confirm that the agreement was entered freely and without duress.
  5. The agreement should be fair and realistic. A prenup is not a way of ringfencing all your assets and leaving your spouse with nothing if you divorce. If you take the step to get married the courts will expect that there will be some sharing of assets.  A prenup is about setting out what the parties agree is fair and that will vary from case to case.
  6. There should be consideration given to reviewing the agreement, particularly if children are born. What might be viewed as fair could change over time.

The prenup conversation might be a tricky one, but it is a lot easier agreeing what is fair while you are still enjoying the best of times, rather than when you are in the worst of times.

And the very best result after drafting a prenup? When they never have to be used.

//get_template_part( 'template-parts/post/content', get_post_format() );