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A B C D E F G H I J K L M N O P R S T V W Y

Private Client

In Defence of LPAs
Thursday 14th September 2017

Former Senior Judge Denzil Lush caused a stir recently with comments he made to the BBC about powers of attorney. He stated that people should be far more aware of the risks and vowed never to sign one himself.

A Lasting Powers of Attorney (LPA) is a legal document, which allows you to appoint a trusted friend or relative to help make decisions on your behalf when you mentally or physically unable. There are two types of LPA, covering financial decisions and health and care decisions.

Mr Lush was the senior judge in the Court of Protection, which looks after the interests of people who do not have the capacity to look after themselves. He adjudicated in 6,000 power of attorney cases and warned that LPAs can have a detrimental effect on family relationships.

While Mr Lush is correct in that powers of attorney are open to abuse, and of course safeguarding vulnerable people must be a priority, by his nature as a judge he is exposed to only the worst situations that arise.

The BBC reported that last year, almost 650,000 applications were made to register LPAs and there are 2.5m currently registered. In the vast majority of cases, LPAs work exactly as they should. As legal professionals working in this area, we see the benefits of LPAs in action every day.

Making an LPA ensures that the person who you choose, rather than a stranger, is able to make decisions for you and makes things easier for your relatives and friends in the future.

If you do not have an LPA in place and lose mental capacity in the future your loved ones will not have legal authority to manage your affairs and would need to make a costly and time consuming application to the Court of Protection to be appointed to make decisions on your behalf.

We always recommend seeking expert legal advice when making an LPA, especially where there are assets such as businesses or overseas properties.

For further information on powers of attorney, please take a look at the Private Client section of our website. If you would like to discuss making an LPA, I would be delighted to speak with you.


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Mutual Wills: The impact of contractual agreement on testamentary freedom
Monday 21st August 2017

In the recent case of Legg v Burton, the High Court has deemed thirteen separate wills to be invalid, as mutual wills were made beforehand which on first death bound the survivor’s estate.

Mutual wills are wills that are made by two or more individuals who contractually agree not to revoke them or to circumvent their provisions, through for example, making lifetime gifts. If the first to die did not change his or her will, on the first death the survivor’s will becomes irrevocable. If the survivor decided to change his or her will, the changes would have legal effect, but would create a constructive trust over the property that is left to the survivor.

Mr and Mrs Clark made mirror wills in 2000. Between the date of death of her husband and her own death, Mrs Clark made thirteen separate wills with varying provisions. Mrs Clark’s daughters challenged these wills made after the first death, which were less favourable to them, on the basis that their mother’s 2000 will was mutual. Mrs Clark’s grandsons and a partner, who were the appointed executors in her last will and testament, argued that her 2000 will was not mutual. Their argument was founded on wording in the 2000 wills which provided that the trustees should ‘pay [the] residuary estate to [the Deceased] absolutely and beneficially and without any sort of trust obligation.’

His Honour Judge Paul Matthews held that this clause did not disagree with the wills being mutual, as the constructive trust arises outside of the mutual wills themselves. In deeming the wills to be mutual, the court relied upon credible witness evidence from the claimants which cited a clear understanding between Mr and Mrs Clark that their wills would be ‘set in stone’ and could not be amended. There was even recollection of a particular discussion, when after Mr Clark had said that he would not change his will, Mrs Clark shouted back to him ‘No I bloody won’t change it either…’. 

The judgement highlighted that the constructive trust arises on second death. It is imposed to the extent that the survivor’s will, through amendment, runs inconsistent with the contractual agreement as evidenced in the mutual wills.

For more information on the topic please contact Joshua Eaton or another member of our Private Client team


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Essential wealth protection: Cohabitation agreements
Wednesday 16th August 2017

Cohabiting couples are the fastest growing family type in the UK – more than doubling from 1.5 million in 1996 to 3.3 million in 2016. There are several possible reasons for this and wealth protection is almost certainly amongst them.  However, is simply steering clear of the wedding aisle enough to protect your assets?

With the rise in cohabitation has come the rise in cohabitation disputes.  There is simply no legal protection or law specifically for dealing with the property of cohabitating couples who do not marry and ultimately separate.  Although attempts have been made, the Cohabitation Rights Bill 2016/17 has been abandoned and so the position remains that the best the courts can do is attempt to find an fair and equitable solution in the law and legal principles that apply to co-ownership and beneficial interests in property (known as TOLATA).  Often such legal applications are complex and the costs of pursuing claims can often far outweigh what a cohabitee is hoping to achieve.  For example, in the case of Seagrove v Sullivan in 2014 the parties made headlines when they were chastised by the courts spending £1.5 million on legal fees in a dispute over £500,000 worth of equity in the property they shared. 

Whilst it may seem unromantic, it is essential for cohabitees to consider their positions and clearly set out what is agreed in respect of their finances to avoid any later dispute if they are to separate.  We would always recommend that cohabitees protect their positions at the outset by entering in to a cohabitation agreement prior to moving in with their partner.  This is particularly the case if there are unequal contributions to the purchase price of a property, or one cohabitee is moving into a property solely owned by the other, or one cohabitee intends to fund the majority of renovations or material improvements to the property.

A cohabitation agreement is the document that defines the terms on how you live together financially; it can be as detailed as you wish and can range from:

  • specifying your shares in the property
  • what your respective financial responsibilities are (i.e. who pays what bills and when)
  • childcare arrangements and who will pay private school fees etc. 
  • how fittings/debts/joint bank accounts would be divided in the event of separation; and
  • if you will make/receive any financial provision for/from your partner if the relationship ends.

For further guidance on wealth protection, please follow the link below to register for our free “Expect the Unexpected” seminar in September below. 

https://www.eventbrite.co.uk/e/succession-planning-expect-the-unexpected-tickets-36107429293


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Law firm cleared of negligence in relation to advice regarding trust payments
Wednesday 16th August 2017

The London law firm, Farrer & Co LLP, have been cleared by the High Court of negligence in relation to advice regarding trust payments.

Multi-millionaire Mr Cundill was a discretionary beneficiary of a settlement. Prior to his death in 2011, Mr Cundill requested the trustees of the settlement to make provision to the value of $10m to his close friend Ms Joseph (the Claimant). The trustees rejected that request, but later agreed to pay the Claimant the sum of £5m through periodical payments from the trust fund.

In 2009 Mr Cundill dismissed his housekeeper and produced a document revoking his Lasting Power of Attorney, both understood to have been at the request of the Claimant. Mr Cundhill had previously informed the trustees and Farrer that he did not want to alter his care arrangements. There were also concerns that Mr Cundill was having too much money spent on the Claimant. With the support of advice from Farrer, the trustees decided to cease all future payments to the Claimant.

The Claimant brought a claim against Farrer, arguing that the firm should not have allowed the payments to cease. Materially, the Claimant argued that she was a party to Farrer’s contractual retainer with Mr Cundill. As the firm was instructed by Mr Cundill to ensure that the payments were made to her, she claimed that the firm owed her a tortious duty of care which was breached by Farrer’s negligence in allowing the payments to cease. 

The High Court rejected the negligence claim. Finding in Farrer’s favour, His Honour Judge Purle QC held that there was no duty on Farrer to ensure that the payments continued to be made. The judgement supported Farrer in recognising its attempts to act in the best interests of Mr Cundill.


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Dementia - Planning for the Future?
Friday 28th July 2017

Recent research from University College London has anticipated that by 2040 more than 1.2 million people will be living with dementia. Taking an ageing population into account, this number represents a significant increase on the number of people with dementia today. Anyone with a family member, elderly or otherwise, who has received a dementia diagnosis will appreciate how distressing dementia can be. However, it is important to put planning measures in place, before or on a diagnosis, to deal with the practical issues that are likely going forward. 

What measures can be put in place?

Wills enable people to decide who should inherit their assets on death. LPAs allow people to appoint trusted individuals (attorneys) to look after their affairs in the event that they lose mental capacity. There are two types of LPA, one for Property and Finance, and one for Health and Welfare. Attorneys appointed under LPAs are appointed to manage the affairs of the individual. For example, attorneys appointed under a Property and Finance LPA will be able to take steps to ensure that bills are paid and that funds are available for that individual’s care.

It is best to put Wills and LPAs in place before dementia is even a concern. However, Wills and LPAs can be put in place following a diagnosis, if the individual still has mental capacity. When the dementia sufferer no longer has mental capacity, if they don’t have an LPA, lengthy and costly court procedures are the only way in which these matters can be dealt with, via the appointment of a Deputy.  In addition, the proposed Deputy may not necessarily be the person the individual would have chosen.

It is  important to put Wills and LPAs in place before dementia is a concern, or to act as soon as possible following a diagnosis. We endeavour to ensure that whenever a client makes a Will, we also talk to them about the importance of LPAs and how they would operate. Having an up to date Will and LPAs in place should be part of any individual’s planning for the future, and would go a long way in helping with the practical issues that would arise following a diagnosis. Wills and LPAs can be very useful in assisting your family through what can be a very difficult time.


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#TheDigitalAge
Wednesday 19th July 2017

Everyone knows there are certain archaic formalities to be complied with in order to execute a valid Will (although not everyone knows exactly what they are), but all that could soon be changed under radical changes to the law currently being proposed by the Law Commission. The consultation will run until November 2017 and will cover matters such as lowering the age at which a person can make a Will from 18 to 16, introducing a new mental capacity test to take account of improved understanding of conditions like dementia and suggesting that people will be able to use voicemail and text messages to make their Wills.

Under the proposals, the law would be relaxed to allow electronic communications to be recognised as a valid Will where the person’s intentions regarding the distribution of his/her estate were clear.  The Courts would have the power to rule on whether the person’s wishes were accurately recorded, without needing to consider whether the strict rules of Will making had been adhered to.

With online systems for creating Lasting Powers of Attorney and the Probate Service also introducing a new online application process, it is tempting to panic about shortly being replaced by a robot.  However, there will clearly always be a need for careful planning both for tax mitigation and for asset protection over the longer term.

Although an overhaul of what can be considered to be an “outdated” system may be welcome, care will need to be taken to avoid people putting in place valid Wills without appreciating the implications.  There is an instinctive concern that this may open the door to coercion of vulnerable people and claims from dissatisfied beneficiaries who produce passing comments recorded in messages as evidence of intention, but the proposals will cover various technical issues and hope to address these concerns.

It will be interesting to see the responses to the consultation but, without adequate safeguarding, the result of such radical changes may be simply much more litigation after the event….

To find out more on the subject please contact Emma Agamian or a member of our Private Client Department.


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New inheritance tax? – Government’s response to change of fee structure in Grant of Probate claims
Monday 27th February 2017

The Government has published its response to the consultation released on 18th February 2016. The paper requested responses to the proposed plans to reform the fee structure when applying for a Grant of Probate. The fee proposals also apply to Grants of Letters of Administration. 

To recap, at present there is a flat fee of £155 when the application is made through a solicitor and £215 when a personal application is made.

The new proposed fee structure is as follows:

Value of Estate
(before Inheritance Tax)

Proposed Fee

Up to £50,000 or exempt from requiring a grant

£0

Exceeds £50,000 up to £300,000

£300

Exceeds £300,000 up to £500,000

£1,000

Exceeds £500,000 up to £1m

£4,000

Exceeds £1m up to £1.6m

£8,000

Exceeds £1.6m up to £2m

£12,000

Above £2m

£20,000

 

A staggering 95% of the respondents to the consultation disagreed with the Government’s proposed increase.

Nevertheless, the Government have decided to proceed with the fee bands outlined above. It is estimated that the increase in fees will bring about £300 million in additional income for the Exchequer.

It is expected that the fee increases will come into effect from May 2017. It is not currently clear whether the new fees will apply to deaths occurring after May 2017 or to applications submitted after this date.

If you are currently acting as an executor or an intending administrator of an estate worth more than £50,000, the application should be made as soon as possible to avoid incurring the higher court fee.
 


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Could your wishes specified in your will be overruled by the Court?
Thursday 30th July 2015

The recent Court of Appeal case which saw Mrs Ilott win £164,000 from her mother’s estate despite being written out of her will, has attracted great media attention and rightly so.

Whilst some headlines report that this case is ground breaking and undermines the reasons for making a will, in our view, this is going too far.

The late Mrs Jackson fell out with her only daughter when she decided to elope and get married at the age of 17. When Mrs Jackson died in 2004, having never reconciled with her daughter, she had left her entire estate (all £489,000 of it) to three charities. She instructed her Executors to fight any claim brought by her daughter.

It has been reported that Mrs Ilott (now aged 54) has five children, is on benefits, has no pension, and was living in rented social housing accommodation.

Mrs Ilott’s claim that her mother had failed to make reasonable financial provision for her, brought under the Inheritance (provision for Family and Dependants) Act 1975 was successful. The judges were influenced by the fact that Mrs llott had “real financial need” and also that Mrs Jackson had little association with the charities who she wished to benefit from her estate.

Unfortunately, family relationships sometimes break down and in such circumstances, people do feel that they should have the right to exclude a particular family member from benefitting if they so wish.

Whilst this decision does seems to undermine that very principle, it has to be said that the judges’ reasoning is very much dependent on the specific facts. In assessing a claim under the 1975 Act, the court has to decide whether the provision made in a will is “reasonable” with particular regard to the needs and resources of the parties. In this case, the claimant was in specific financial need and the charities were not.  The award was limited to a level that would enable Mrs Ilott to buy a property and to have a small cash sum that would not affect her state benefits.'

Generally speaking, adult children not in financial need will still face an uphill battle in bringing a successful claim.

For those who anticipate potential disputes in respect of their own estates, thought should also be given to the steps that could be taken to make a will as robust as possible. Setting out a detailed explanation of what is being done, and why, explaining your connection to those you intend to benefit, and perhaps even giving a degree of flexibility to your Executors to determine how part of your estate is distributed could mitigate the risks.

For further information on the case, please see http://www.brabners.com/blogs/dispute-resolution/woman-omitted-her-mother-will-wins-164k-inheritance

If you would like more information about estate planning and/or wish to create a new Will or update your existing one, please contact the private client team. 


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The issues with appointing Lay Executors
Tuesday 7th October 2014

Considering the content of your Will can sometimes be a difficult and daunting decision and choosing who to appoint as executors can often get overlooked.

An executor should be someone you can trust to carry out the wishes of your Will and ensure your loved ones are financially secure when you have passed away.  This could be a relative/friend or a professional such as a solicitor.

Lay executors do not get paid for carrying out their duties (however, the testator could have a pecuniary legacy in respect of the executor duties if they wish) and this tends to be the main reason why lay executors are appointed in favour of professionals.
 

However, there have been a number of claims in respect of fraudulent distributions by a lay executor in more recent times; 368 claims in respect of breach of fiduciary duty were lodged in 2013 alone. Other claims include theft of assets and favouring certain beneficiaries over other beneficiaries.

Often family members who are also beneficiaries are appointed as executors and this could give rise to potential dispute and friction which in turn, could lead to the executor not acting in the accordance of your wishes.

It should also be noted that lay executors can be personally liable for administering an estate incorrectly.  The beneficiaries for instance could bring a claim against the lay executor if they have delayed matters and as a result of the value of the residuary estate is reduced.  Further any money due to the HMRC which has been incorrectly calculated could result in the lay executor becoming personally liable.

Professional executors are independent, regulated and are covered by indemnity insurance.  They have a duty to carry out the wishes of the Will and are experienced in dealing with the administration process making the process quicker.

Professionals do charge for the service of acting as an executor, however, long term it is likely to be more cost effective than a claim brought against the lay executor who mishandles your estate.
 


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Young British adults encouraged to make a will
Wednesday 21st May 2014

Last week the Law Society published a press release reporting that almost two out of three adults in Britain have not made a will. It advises those who have not done so, to act now.

The Law Society last week reported that research from Dying Matters Coalition revealed that only 36% of British adults say they have written a will, while 83% have said they are uncomfortable discussing their dying wishes.

People who die without a will are said to die intestate and the law then imposes arbitrary rules on who gets what leaving those excluded to bring court action as the only way to claim what they think they are due.

Those with children or dependents need to ensure that wishes relating to the provision of care are clear. For unmarried couples and those who wish to benefit charity, friends and more distant relatives, as opposed to next of kin, making a will is the only way to ensure that assets pass the right way on death.

Attitudes ought to change. Making a will should not be seen as something you do towards the end of your life. Ideally it should be something which is started as a young adult and then seen as an ongoing process which is reviewed regularly, like going for a check-up, to ensure that your will is up to date and does what is needed.


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