Private Client

We encourage everyone, no matter their age, to consider how their loved ones would cope if the worst should happen. By planning ahead with the guidance of a properly qualified and regulated solicitor, you ensure that more of the wealth accumulated during your life goes to those you choose, in the way that you want.

Minimise tax, administer your estate, help executors, apply for probate, it is vital you select a specialist private lawyer with the expertise and experience to manage your affairs efficiently and smoothly, with a personal and sensitive touch.

We are amongst the best private lawyers in Somerset for wills, probate and trusts, with offices in Bridgwater, Minehead, Wellington, Martock, Yeovil and Exeter.

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The importance of a will

How We Help You

A Will doesn’t just make your life easier, it makes your loved ones lives easier after you die. You owe it to your family to make a Will. It makes the process of dealing with your affairs at a stressful time easier and can ensure more of the wealth accumulated during your life goes to those you want, in the way that you want, and they know they have respected your wishes.

It also helps you minimise taxes payable, so as much wealth as possible can be retained by your beneficiaries.

Expert advice on how best to arrange your affairs, or plan your estate, can make the whole process easier and more ordered.

This can include:

  • Administration of estates
  • Helping executors by taking the strain at this difficult time
  • Applying for probate

One very important aspect always to consider with deciding on your estate is to use a properly qualified and regulated solicitor.

Whilst there are many options for making a simple will, it can prove to be a false economy not to use an experienced solicitor, especially if you are looking at more complex arrangements.

There comes a point for many people in their lives, or those of their relatives, when they need assistance and support in making important decisions to ensure their best interests, and those around them.

When this point comes you must have complete confidence and faith in the integrity, as well as knowledge, of the person you put your trust in to provide the Powers of Attorney. It is not a decision that should be taken lightly, and neither is the choice of individual you choose to act on your behalf.

These can be a vital tool in assisting elderly or infirm individuals, or their relatives, maintain their quality of life and personal dignity if managed properly. We can offer an effective service, respecting the sensitivities of those involved, but ensuring the correct legal protection is provided.

We can also advise on how to make the best use of capital for the needs of the elderly.

We are accustomed to looking after the affairs of clients whether at home or in residential care, are happy to make home visits, and work closely with the caring professionals to ensure a high quality of care and service.

The Court of Protection makes decisions for people who are unable to do so for themselves. It can also appoint someone too act for a person who is unable to make their own decisions. This may cover issues involving the person’s property, financial affairs, health, and personal welfare.

We specialise in assisting people who deal with the Court of Protection and work for those under the jurisdiction of the Court of Protection. We look after the welfare and safeguard the affairs of those suffering from mental or physical incapacity.

Because of the sensitive nature of the work, we offer a personalised and responsive service, our Court of Protection experts provide legal advice and practical help to families and professionals working with and caring for our clients.

We are accustomed to looking after the affairs of clients whether at home or in residential care, are happy to make home visits, and work closely with the caring professionals to ensure a high quality of care and service.

Careful planning can ensure that more of your wealth is passed to your beneficiaries.

Having spent a lifetime accumulating wealth, it is reassuring to know that it can be passed to your chosen beneficiaries.

Ensuring that as much as possible is passed on requires careful and thorough planning to ensure all your duties are met most cost-efficiently.

It is not just the cost however, the more organised you have your inheritance plans the more swiftly and smoothly the process will be for the beneficiaries.

Our inheritance tax planning service provides a simple and straightforward process for managing your affairs professionally, practically, and efficiently, giving you the peace of mind that your assets will be managed in accordance with your wishes.

If you feel a Will is not as it should be then you have the right to contest it.

In these circumstances, expert support and advice is critical to achieving the desired change in outcome. Our experience in contesting Wills means we can offer insight and effective strategies for challenging the existing Will to improve your chances of overturning the original settlement.
Using our specialist services can make the process faster and less costly potentially, helping you reach a satisfactory settlement more quickly. To make the process as easy as possible for you to manage, you will deal with the same lawyer from beginning to end and will not be passed from department to department. It’s vital to have confidence in your solicitor in terms of doing everything they can on your behalf, as well as faith in their guidance through the technical aspects of the law, to be sure of achieving the best outcome.

As specialist private lawyers we have the expertise and experience to manage your affairs more efficiently and smoothly, and the personal touch to deliver the service in way that suits you best.

Coping with the death of a loved one is a difficult and stressful time.

There are many legal formalities following a death and we are dedicated to easing the stress placed upon friends and family of the deceased and work with them to provide the support they need.

We can advise on all aspects of Estate Administration both where there is a Will and what happens if someone has passed away without a Will. If someone dies without a Will their estate will be dealt with according to the rules of Intestacy, with their assets being distributed amongst their relatives according to a set legal formula.

Useful Guides

What to do when someone dies

This guide explains what needs to be done when someone passes away and how to go about it. Sorting out the affairs of someone who has passed away can be complex and time consuming at what is already a difficult time.

The most important thing is to deal with grieving and the funeral – in most cases legal formalities can wait. That said, it is important to establish whether there is a Will in which the Deceased expressed any particular wishes with regard to their funeral arrangements. A Will may also specify what is and isn’t to be considered part of the funeral expense.

Legal requirements following death vary depending on the size of the estate, how assets were owned and whether there is a Will. If an estate is worth less than £5,000 (and in some cases up to £15,000) and only comprises cash accounts and/or National Savings, it may be possible to deal with the estate without any formal Grant (see below).

If all the Deceased’s assets were owned jointly with someone, of whatever amount, they normally pass to the survivor automatically and can be transferred on production of the death certificate. If the assets pass other than to the Deceased’s spouse though and their value exceeds the nil rate band for Inheritance Tax, then an Inheritance Tax return still needs to be completed and tax may be payable by those who have received the assets. The funeral costs, debts etc also still need to be paid.

It is the duty of the Deceased’s personal representatives (PRs) to deal with the administration of the estate. If the Deceased didn’t have a Will the PRs, called Administrators, are normally those beneficiaries who will receive the estate according to the Intestacy Rules, provided they are over 18. The estate will be shared out in accordance with those rules, but until a Grant (in this case Letters of Administration) is obtained no-one has authority to deal with the estate so it is important to establish quickly who should act.

If there is a Will the PRs are called Executors. They are appointed from the moment of death and have authority from then, but to deal with most issues they will need a Grant of Probate to formally confirm their position and the validity of the Will.

If the Deceased had a Will but the Executors have died or are unable to act the Will is still valid as to distribution of the estate but substitute PRs, normally the main beneficiaries, are appointed (again called Administrators) who apply for a Grant of Letters of Administration with Will Annexed.

In all cases it is necessary to prepare a full inventory of the estate with exact values or balances for assets and liabilities as at the date of death, complete an Inheritance Tax Return and calculate and pay any tax arising. This has to be done before the Grant can be obtained and we can advise where funding for any tax payable can be obtained. If you apply for the Grant yourself, you will need to attend an interview at your local Probate Registry. If we submit it for you, it can be done by post. Once the Grant is received it is the duty of the personal representatives to get in all the assets of the Deceased, pay off all their liabilities (including taxes) and then distribute the balance as required. Specific items can be handed over immediately, and if cash gifts are not paid within one year of death then interest has to be paid on them.

If you would like an estate to be distributed differently, either for personal reasons or for tax saving/planning reasons, then for up to two years after the date of death we can vary the estate for you, even if the administration of the estate is already complete. As long as it doesn’t make more tax payable, you do not even need the agreement or involvement of the personal representatives.

Contesting an estate can be complex and expensive and is beyond the scope of this leaflet but we can advise on contesting a Will or making a claim against an estate or how to respond to a claim as the personal representative.

We take a flexible approach to costs and are happy to work to suit you depending upon how much of the administration you want us to deal with. We can agree costs on a fixed, percentage or hourly rate basis, or a combination of them, to deal with some or all of the estate, depending on what you prefer.

We can help with these issues and advise about incidental matters arising along the way.

If your relationship has ended then you should review your Will, especially if you have children, or if you do not intend to divorce your estranged spouse at this point in time.

If you die intestate (ie without a Will) then a former partner who you were not married to and no longer live with is not normally entitled to anything from your estate. If you are married but separated your spouse would still be entitled under the Intestacy Rules, albeit the amount varies depending on whether or not you have children. Once you are divorced your former spouse normally has no entitlement on intestacy albeit they may be able to claim against your estate if you were making maintenance payments to them for their own benefit.

If you die with a Will then a former partner, whether you are married to them or not, still remains entitled under it until you change it. Once you are divorced from a spouse then your Will is interpreted as though your spouse had died before you and has no entitlement unless you make a new Will post divorce which benefits them. As above, they may be able to claim against your estate if you were making maintenance payments to them for their own benefit. Their appointment as Executor lapses although this can leave you without an Executor.

However there is a window between when you first decide your marriage has broken down and before when a decree absolute will be granted when your soon to be former spouse could still be an Executor and beneficiary of your Will if you do not otherwise change it. We would recommend changing your Will sooner rather than later. At the same time it is also important to consider severing the ownership of any property which you own jointly; otherwise this could pass to your former spouse automatically.

If you have children under 18 then having an up-to-date Will is even more important as if you are intestate or have a Will without an Executor then any surviving parent of your children is entitled to become the personal representative of your estate. Accordingly, an ex-spouse or partner could have control of your children’s inheritance.

If you have children from more than one relationship then your Personal Representatives could be two former spouses or partners who do not get on and which could spell disaster for the successful and cost-effective administration of your estate and protection of your children’s inheritance.

A carer of children (even where that carer is a parent) can request financial help from a Trust Fund to assist with looking after children, if that carer is also a Personal Representative of your estate they have a financial interest in deciding how much to pay themselves from the children’s inheritance, and there may be little that can be done to stop them abusing this opportunity.

Your Will should also appoint Guardians to have responsibility for any children under the age of 18 although the appointment is normally only effective after the death of all those with Parental Responsibility for the children.

Your next of kin are normally responsible for making your funeral arrangements but if this is your children you may wish to use your Will to nominate someone else to have this responsibility until the children are old enough. You can set out your wishes as to burial/cremation and funeral formalities. It can also say if you wish your body to be used for transplant surgery or for medical research. However, as the Will may not be read for some time after your death, it also important to let your family/friends know your wishes.

When making a Will, you should also consider making a Lasting Power of Attorney to appoint one or more people to look after your financial affairs if you became unable to do so because of mental or physical impairment. This is even more important if you no longer have a spouse or partner who may have been able to do this previously. Further information is available in our Lasting Powers of Attorney guide.

Further information about Wills generally and Inheritance Tax Planning can be found in other guides.

It is therefore vital to make a Will appointing Executors of your choice who can then become Trustees of your children’s inheritance until they get to the age you have specified in your Will at which they should inherit, and to set out who should look after your children and who should have responsibility for your funeral. Taking care of this can help avoid unwanted outcomes and family arguments.

Without a Will you die intestate and your wealth (or “estate”) passes according to statutory provisions. This can mean a spouse/civil partner may not be entitled to everything and a cohabitee receives nothing. Those who will deal with your estate are also appointed by the statutory provisions. If your estate is to pass to children under eighteen this will normally be the surviving parent, even if that parent is not or never has been married to you, which could mean an ex partner controlling your children’s trust fund! These problems can be avoided by making a Will dealing specifically with these issues.

When making your Will there are various things to consider, including:

1 EXECUTORS
Are responsible for administering your estate by establishing the extent of your wealth, discharging debts, paying funeral expenses, taxes etc. They also pay out any legacies and distribute the rest of your estate according to your Will. Executors must be over 18, but can be a beneficiary of your Will. If you intend to leave all or most of your estate to one beneficiary you may wish to appoint him/her as sole executor. Otherwise it is normal to appoint at least two executors. We can be appointed as your Executors and this may be helpful if your affairs are complicated or the Will may be contested.

2 TRUSTEES
If your Will creates a trust (even if only to hold money for a child until they are 18) Trustees are responsible for dealing with it. It is usual to appoint the same people as Executors and Trustees, but they can be different.

3 GUARDIANS
Have responsibility for children under 18, but the appointment normally only takes effect if both parents have died.

4 FUNERAL ARRANGEMENTS
A Will can include funeral wishes and also indicate consent to organ transplant or use for medical research. However, as the Will may not be read for some time after your death, it is important to let family/friends know of any particular wishes and it is especially important to say so if you wish an unmarried partner to have responsibility for arranging the funeral. We can also put you in contact with undertakers with whom you can pre-arrange your funeral

5 LEGACIES
Are mainly of two types:

  • 5.1 cash gifts to individuals or other beneficiaries such as charities. Unless a Will says otherwise, these legacies are normally free of Inheritance Tax. You can also direct that a particular cash legacy has priority (in case your estate is insufficient to pay all legacies in full), or for index linking so the value of the legacy keeps up with inflation.
  • 5.2 Specific gifts such as jewellery, furniture or land. These are also normally free of Inheritance Tax unless a Will says otherwise and usually have priority over cash legacies.

6 RESIDUARY ESTATE
This is what remains after your Executors have paid:

  • 6.1 debts and funeral expenses
  • 6.2 any Inheritance Tax or other taxes
  • 6.3 legacies and bequests
  • 6.4 legal and other costs of administering your estate

It is important to include a residuary gift in your Will and usual to include a substitute beneficiary in case your first choice dies before you. For instance, you may give your entire estate to your spouse/civil partner, but if he/she dies before you then to your children and/or grandchildren.

7 TRUSTS
Rather than making an outright gift, a trust can be used to hold cash or assets to prevent the beneficiary(ies) having direct access, but with provisions as to who is to benefit from the assets and how, including allowing occupation of a property. They are 151018 also very useful in protecting assets against care fees or in second relationships to ensure assets pass back to your own children in the long term.

At the same time as dealing with your Will we can also advise on:

Inheritance Tax Planning
Inheritance Tax is payable at 40% on the value of your estate at death, together with gifts made in the preceding seven years, in excess of the Nil Rate Band (currently £325,000). The value of your estate may include life policies, pension benefits and assets given away that you still enjoy the benefit of. Since October 2007 any unused Nil Rate Band of the first spouse/civil partner to die can be used by the survivor’s estate. If your net worth exceeds this you may wish to try to reduce the tax impact by disposing of assets now, or other means. 

Lasting Powers Of Attorney
When making a Will, you should also consider a Lasting Power of Attorney by which you appoint someone to deal with your affairs if you became unable to do so because of mental or physical impairment. Please ask for our Lasting Powers of Attorney leaflet for further information.

There are different types of Power of Attorney. An Ordinary Power of Attorney normally only lasts for a limited period and cannot be used if you become incapable of managing your affairs. Lasting Powers of Attorney (LPAs) (which replaced Enduring Powers of Attorney) last until revoked and are used to appoint someone to act on your behalf in case you are no longer able to deal with matters yourself in the future. There are two types – Property & Affairs LPAs and Personal Welfare LPAs.

A Property & Affairs LPA appoints one or more people to make decisions for you in relation to your property and financial affairs. The power can be as wide or restrictive as you like and can include anything from paying bills to selling your house. You can direct that your Attorney(s) can manage your property and finances whilst you have capacity as well as when you lack capacity.

A Personal Welfare LPA gives your Attorney(s) power to make decisions about your personal welfare, including healthcare matters. This can include medical treatment or whether residential care may be more appropriate for you.

You can also give your Attorney(s) authority to make decisions about day-to-day aspects of your personal welfare but it is up to you which decisions you allow your Attorney(s) to take. If you want your Attorney(s) to make decisions about the withholding of ‘life-sustaining treatment’ this must be expressly given.

Attorney(s) you appoint to make personal welfare decisions on your behalf can only use their powers when the LPA is registered AND you lack the capacity to make these decisions yourself.

1. Who can be an Attorney?
Any adult can be an Attorney as long as they are not mentally incapable or bankrupt. We suggest that at least two people are normally appointed and additionally you can indicate who should be notified on any registration of the LPA.

2. What can my Attorneys do?
The power you can give your Attorneys can be wide and varied. Depending on whether you choose to make a Property & Affairs or Personal Welfare LPA, you can incorporate provisions ranging from allowing your Attorneys to access and manage your bank accounts to deciding your daily routine. These powers can be restricted or widened depending upon your circumstances and your own particular wishes.

3. When does the appointment commence?
Appointment of your Attorneys does not commence until the LPA is registered with the Office of the Public Guardian (OPG). You can register the LPA yourself while you are able to make decisions for yourself or it can be registered by your Attorneys. When your LPA is submitted for registration, the person submitting the form must notify anyone you have said that you wish to be informed of the registration. If any of these people have concerns about the LPA, for example they feel you were put under the pressure to make it, they can object to the LPA being registered. This is an additional safeguard against potential misuse. The completed registration application is then submitted with the appropriate fee. The OPG checks the LPA and sets a registration date (currently around 6 weeks from the date the OPG gives notice to anyone who did not join in the application to register). If there any objections, it may take longer to register your LPA whilst these are dealt with.

4. Is there any independent control of my Attorney?
An LPA has to be registered before it can be used and an initial safeguard as mentioned above is that you can specify who should be 170120 informed on your Attorney(s) applying to register. They are able to object to the registration, and the OPG will carefully check the LPA and the application anyway to ensure they are satisfied the LPA has been completed properly. Once the LPA is registered the Attorney has a duty to provide accounts and details of how they are managing your affairs. If the Attorneys act improperly it is possible for their appointment to be terminated.

5. Do I need a Lasting Power of Attorney?
Unfortunately, it is not possible to clearly identify whether anybody will ever need an LPA or not. Incapacity is hard to predict and the difficulty which arises is that if a person becomes incapable it may then be too late to make an LPA, leaving only the much more expensive receivership procedure. A Lasting Power of Attorney can be seen as insurance against the more expensive alternative.

Making an LPA can be quite involved but we aim to make the process as straight forward as possible for you and the benefit of making absolutely clear how property and healthcare decisions should be made for you if you become unable to make these decisions yourself is invaluable.

Inheritance Tax (IHT) is payable at 40% on the net value of your estate at the time of your death in excess of the Nil Rate Band (NRB), which is currently £325,000. The value includes gifts made in the preceding seven years and can also include life policies, pension benefits and assets given away that you still enjoy the benefit of. An additional NRB relating to residential property only and which is left to direct descendants will also become available from April 2017, initially at £100,000. If your net worth is less than the available NRB then no tax is payable. If it is more than the NRB and tax would be payable you may wish to try to reduce the tax impact by considering some of the ideas below. Firstly though you should have some idea of what you and your spouse/civil partner (if applicable) are worth and what you can afford to be without.

There are some simple tax planning steps which you can utilise:

1. Annual Exemption – gifts of up to £3,000 each year, but separate from the Small Gifts Exemption. The two cannot be combined to make a gift to a single person of £3,250. Unused allowance can be rolled forward for one year, but should be used as early as possible each tax year to avoid passing away without having been utilised.

2. Small Gifts Exemption – any number of gifts of up to £250 in a tax year to different people.

3. Marriage Gifts – up to £5,000 to a child; £2,500 to a grandchild; or £1,000 to anyone else.

4. Regular Gifts Out of Income ie. gifts which are from income rather than capital and which can include the regular giving away of excess income over expenditure.

5. Gifts Between Spouses/Civil Partners – always exempt if both live in the UK

6. Life Policies – the benefit of a policy can be written in Trust for a selected person, but advice should be taken before doing so from your legal and/or financial advisor.

7. Child Trust Funds – up to £1,200 per year from all sources can be paid into a Child Trust Fund aside from the gifts above, without any Inheritance Tax (or Income Tax for parents) issues.

8. Pension Benefits – can be nominated to intended beneficiaries.

9. Family Maintenance – for your spouse, ex-spouse and your children under 18 or in full time education.

In addition to the above steps, we can advise you on the suitability of your circumstances for the following:

A. Trusts – come in a variety of forms:

  • (1) Discretionary Trusts – Trustees have absolute discretion in the application of trust funds and no beneficiary has an absolute right to trust money. A very flexible trust and can be used for tax planning.
  • (2) Interest in Possession Trusts – a beneficiary receives income from the trust, or the right to occupy property, for life and after his/her death the trust fund is paid to other beneficiaries. It is effective for protecting assets in second relationships or from vulnerable beneficiaries and protecting assets against means assessments for care fees.
  • (3) Accumulation and Maintenance Trusts are useful hybrid discretionary trusts but only work from grandparent to grandchild. (4) Immediate Post Death Interest Trusts are similar to Accumulation and Maintenance Trusts with certain beneficial tax planning rules.

B. Potentially Exempt Transfers are gifts which can become exempt from IHT if you survive further seven years. If you survive less than three years the gift is counted in full but if death occurs between three and seven years, the amount of tax the gift may attract reduces on a sliding scale. The beneficiary is responsible for paying any tax, so it is important to take advice before making potentially exempt transfers.

C. Transferable Nil Rate Bands – a transferable NRB arises when one party to a marriage or civil partnership has died and the amount of their estate that was chargeable to Inheritance Tax did not use up all their NRB. If the surviving spouse/civil partner dies after 9th October 2007 the unused part can be transferred to their estate. This can mean that on second death up to £650,000, is exempt from Inheritance Tax. It is very 151018 important to keep records of the first deceased’s assets, as they are relevant to work out what is available on second death.

D. Variation of Estates – if you receive an inheritance and you plan to give all or part of the amount away to someone else then for up to two years after the date of death we can vary the estate for you, even if the administration of the estate is already complete. As long as it doesn’t make more tax payable in the original estate, you do not even need the agreement or involvement of the personal representatives. In some cases it may be beneficial to vary back to a surviving spouse/civil partner who then receives the transferable NRB and can make gifts which may fall out of their own estate after seven years.

E. Agricultural and Business Property Relief – these reliefs are beyond the scope of this leaflet but can be extremely valuable. Please ask for further advice.

F. Active Service Exemption – the estates of service personnel killed on active service or where death is attributable to an injury sustained on active service may be exempt from IHT.

G. Gifts to Charities – gifts to charities are normally tax free and if you gift at least 10% of your estate to charities it can reduce the tax rate on the rest of your estate by 10%.

In addition to the above there are also investment products available which can assist in the mitigation of IHT. Whilst we are not qualified to advise on these ourselves, we can put you in contact with one of our panel of Financial Advisors who will be pleased to advise you in connection with matters such as life assurance, and appropriate investment products.

The death of a businessperson can have serious consequences for their business. If you run a business it is vital to consider succession planning, especially in the immediate post-death period, to avoid a successful business grinding to a halt and becoming a millstone round the neck of your executors and a drain on the rest of your estate. A carefully considered and drafted Will taking into account the implications of Inheritance, Capital Gains and other taxes and potential liabilities can help ensure you keep your business running, whether to sell for the maximum return for your Estate or to pass on to future generations.

SOLE TRADERS
Sole Traders are the most vulnerable, and if your business solely comprises you and your individual expertise (as with services such as plumbers or consultants) it may be inevitable that your business dies with you. However, if there is someone who can be appointed as your Executor and can take over the running of the business in the short term pending its disposal, some value may be salvaged, especially where there is an established reputation which passes with your business name. If you have employees they may be able to assist your Executors continue to run the business in the short term whilst decisions are made how to proceed. This can be in a number of ways:

  1. pass the business on to a beneficiary named in your Will
  2. pass the business on to a residuary beneficiary as part of their entitlement (even if your Will did not specifically provide for this)
  3. sell the business as a going concern
  4. wind the business up

As successors to the business even in the short term your Executors will need to attend to practical matters such as banking, insurance, VAT and tax registrations, notification to supervisory bodies etc. As Executors have no automatic authority to run a Deceased’s business, it is vital your Will gives them power to continue the business (long term if appropriate – your nominated beneficiary may be too young to inherit at the time of your death) and also personal indemnity from your Estate with regard to business liabilities they may incur.

It is also extremely important to consider employees. Employment effectively terminates on the death of a sole trader employer but if the business continues they will have the protection of the TUPE Regulations. If the business does not continue employees will have redundancy claims which will need to be paid and which can be significant for long serving employees. Outstanding litigation and tribunal claims also continue beyond death, so it is important to take these potential liabilities into account in planning your business.

If you are about to take a new lease, how long will it be for? If this is well past your retirement age will it be an asset to help dispose of the business, or in the unfortunate event of your death will it be an expensive liability? Ensure you have rights under the Landlord and Tenant Act and you can keep renewing the lease as required, without saddling the business with an unnecessary burden.

PARTNERSHIPS
Unless a partnership deed provides otherwise, on death of a partner the partnership is dissolved and wound up with the net assets (or liabilities) shared between the partners and the deceased partner’s estate in accordance with the Partnership Act.

A partnership deed is vital to ensure continuance of the business for the remaining partners and provide the framework for valuing the deceased’s share and how to make payment out of that amount or whether the share can be sold to another partner, sold outside the partnership, or transferred to a nominated beneficiary.

Unexpected dissolution can have tax consequences that cannot be planned for. It is important that your Will is prepared taking any partnership deed provisions into account. Death of more than one partner at the same time should also be considered – a fatal accident involving both partners of a two partner business travelling together can have the same effect on a business as for a Sole Trader as referred to above.

PRIVATE LIMITED COMPANIES
On death of a shareholder their shares belong to their estate but what can be done with them depends on the Articles of the company or any shareholder agreement. These may determine how the shares can be disposed of and set out any preferential purchase rights for remaining shareholders and what voting rights the shares have. If you have a majority shareholding your Executors could be left controlling the company. Your Will needs to operate in conjunction with the Articles or shareholder agreement. If you do not have a shareholder agreement (which can also deal with many other issues between shareholders) we can help put one together for you. 

INHERITANCE TAX
This is a complex issue and whilst many business assets qualify for exemption from Inheritance Tax others do not, or only qualify for a restricted amount of relief. There are also different rules for different types of businesses. We can advise you fully when preparing your Will for you and also advise the best way to take advantage of these reliefs for both lifetime and death planning, in conjunction with your accountant and other business advisors.

OTHER ISSUES
In making a Will the choice of your Executors is vital as they must be people capable of running a business, although you can appoint separate Executors to deal with your business assets. We would normally recommend professional executors who, although will charge for their services, also have accountability for their actions.

Executors have authority to act from the moment of death. If you die intestate, no-one is appointed until a Grant of Representation is issued which can take 3 – 6 months. This could have a profound effect on your business.

It is also important to consider how your business interest will be bought out or liabilities discharged. We can put you in contact with advisors who can arrange Key Man Insurance, Life Assurance and Death in Service Insurance.

As well as death, you should also consider what would happen in the event of a catastrophic injury – who would run your business then? A Lasting Power of Attorney allows you to appoint someone to deal with your business in the event that you become incapacitated.

There are around 450,000 people resident in Care and Nursing Homes in the UK of whom only around 15,000 have their care costs fully funded by the NHS. Around 40 per cent of the 450,000 care home residents in the UK are required to pay towards their own fees because they have built up savings and property over their lives and although many are entitled to have their care fees paid the amount Local Authorities pay rarely covers the full cost of care leaving many residents needing to contribute from their own resources to make up the difference.

A single room in a residential home now costs an average of £35,000 a year, and homes that provide nursing care charge more than £45,000. In some areas, fees frequently exceed £50,000. The South West has the second most expensive care fees in the country.

Anyone living in England with assets of more than £23,250 has to pay the costs of their care. Once capital falls below £14,250 they shouldn’t have to contribute from capital, although may still be required to contribute from income. It is assumed that £1 of income arises for each £250 of savings over the minimum threshold.

These are the reasons why so many people are worried about the future and in particular their family home which is often their largest asset and that it could be sold to pay for their care. As a result, many people are considering giving away their homes to their children or family to try and prevent the Local Authority from using it to fund any future care costs.

However, this is not a step to be taken lightly and there are many reasons for not doing so:

1. There is no guarantee that transferring your home will be successful. If it is determined that you have deliberately deprived 060519 your self of a capital asset, your means can be assessed as though you were still the owner of it. The onus is on the Local Authority to prove that you have given away your home with the intention to deliberately deprive them of that home for the purpose of paying for your care fees. Over the last few years, both the Government and the Courts have made extensive rulings regarding the extent to which the Local Authority can assume that in transferring the family home, the transfer was undertaken to deliberately deprive the Local Authority. The guidelines are as follows:

  • 1.1 If you are fit and healthy when you make the gift, it is unreasonable for the Local Authority to assume that there has been a deliberate deprivation.
  • 1.2 It must be reasonable for the Local Authority to assume that you knew you were going into care in the near future. It is not enough for them to show that you thought that you may go into care in the future. This is very important. In most cases, a transfer is made without there being a real possibility of the person concerned going into care, only a chance.
  • 1.3 We can advise you on the most successful way for you to transfer the asset with a minimum of risk for the Local Authority deeming it a deliberate deprivation.
  • 1.4 We can also advise you of the best way to carry out the transfer, whether by straightforward gift, discretionary trust or life interest trust. 1.5. Under the current legislation, if you meet the following criteria it is likely that you will be able to successfully transfer your home:
  • 1.5.1 you are a fit and healthy person with no health problems which would cause you to be placed in care in the near future; or 060519
  • 1.5.2 you are in ill health, but a relative is caring for you on a daily basis thus delaying your entry into care. You would like to transfer the property to this person to reward them for the services that they have provided you in the last few years; or
  • 1.5.3 a friend or relative is paying your mortgage and carries out most of the maintenance around the house. You would like to reward that person by making a transfer to them for all their hard work.
  • 1.6 No-one can give you an absolute guarantee that a transfer will be successful. We can only advise you on the current legislation. As legislation and your circumstances change arrangements made may need to be reviewed. We cannot guarantee that all the measures we recommend will succeed and you will need to take into account the cost of putting those measures into place against the alternative.
  • 2. If your children were to be divorced or declared bankrupt then the house would be counted as an asset of theirs and could have to be sold, regardless of your consent.
  • 3. If one or more of your children die before you, your house would pass as part of their estate and could end up being partly or wholly owned by a son or daughter-in-law, your grandchildren, or even a charity, none of whom may be particularly sympathetic to your wish to stay there.
  • 4. You could also fall out with your children or they could otherwise sell it without informing you.
  • 5. Once the gift is made the house is no longer yours – you can’t get it back. Will your children spend money to maintain it the way you always have?

The only way to be secure in your own home is to continue to own it, remembering that whilst an increasing number of people (and particularly women, who tend to live longer) are ending their lives living in care, the majority of people still live in their own home to the end of their lives.

Also remember that if you need care, you will want the most comfortable surroundings possible – if you can pay, you can choose. Will your children contribute towards that in return for having given them your house. Care costs should not simply be seen as a burden – you wouldn’t choose the cheapest holiday – why choose the cheapest care.

You do not owe your children an inheritance, and you should ensure that you are able to provide for your old age in which ever way that may need to be. However, what we can do is help you look at your care costs and ensure that you are receiving all the help you should be receiving from all sources and that any care funding assessment has been carried out accordingly. We will also make sure you are claiming all relevant benefits.

Accordingly, the following should be taken into account before gifting your property:

  • 1. There is no duty to disclose your assets to the Local Authority, when requested to do so and the Local Authority has no powers to enforce disclosure BUT the onus is on you to show why you should not pay for your care.
  • 2. In a capital assessment the value of the asset is the market value less 10% to cover the expenses of realisation. Any mortgage or other secured debt is fully deducted.
  • 3. The value of your home, or your share in it if jointly owned, cannot be taken into account where it is occupied by your spouse, a relative over 60, or an incapacitated dependent or child. To prevent some or all of the property being taken into account after any joint owner passes away you should make Wills incorporating life interest trusts where the deceased’s interest in the house is held in a simple trust so it does not belong to the survivor, but whilst they have the right to occupy the house, if they have to go into a home the half belonging to the first deceased spouse cannot be taken into account as capital and will ultimately pass to your intended heirs.
  • 4. Sold assets are valued at the price obtained with no discount.
  • 5. Joint accounts should be severed to ensure that only the person in care’s half share is taken into account.

The following cannot be taken into account in assessing capital:

  1. A home occupied by a dependent eg. a spouse, a child under sixteen or being maintained or an elderly person over sixty.
  2. Personal possessions.
  3. Future interests such as reversionary trust interests.
  4. The capital value of an annuity or occupational pension.
  5. The surrender value of life assurance policies (including investment bonds).
  6. The value of funds held in trust for compensation for personal injury, and also compensation managed by the Court of Protection.
  7. The assets of any business (provided the person in care still has an active interest prior to entering care).

Income which can be taken into account is as follows:

  1. 1State and Occupational Pensions
  2. Social Security Benefits (except as noted below)
  3. Annuity income
  4. Income from capital
  5. Regular trust income
  6. Rental income

Income which must be disregarded is as follows:

  1. Food, clothing and personal items
  2. Mobility component of Disability Living Allowance
  3. Christmas bonuses
  4. Council Tax benefits
  5. Charitable payment to top up fees
  6. Discretionary payments from a trust

In addition to this, we can advise you on the following key matters:

  1. Securing a care assessment
  2. Eligibility for NHS and/or Social Services funding and obtaining payment.
  3. Rights before you are discharged from hospital to ensure that your continuing care needs are arranged to both you and your family’s satisfaction, and are funded by the proper authority.
  4. Services available to you in your home to help you stay at home longer rather than go into care. Advice can be provided regarding the assessment process both on assessment of needs and capital. We will also advise you on your rights during this assessment process. NHS funding can be available for care provided at home as well as in a care home.
  5. The fairness of terms in a residential care contract. This can be very important in ensuring that you are not overcharged for any care that you are paying for.
  6. The means test for capital and income. If you own assessable capital in excess of the current limits (subject to annual review) you will not be eligible to receive Local Authority assistance for your care.
  7. Availability of Attendance Allowance, Pension Credit and funding from other sources. (NB: Benefits application forms should be requested by phone, not downloaded online, as the claim is then backdated to the date of the request!)

If you do wish to proceed with a gift we can advise you on the best way to do so, whilst at the same time preserving your right to live in the property. We can also refer you to an Independent Financial Advisor who is a member of the Society of Later Life Advisers (SOLLA) to ensure you are obtaining the best return from your capital and who can advise on other products which can assist with the payment of care fees.

For more information or to make an appointment contact Hilary Quantick, for our Bridgwater and Minehead offices. Alex Parris for our Wellington office, or Stephen Forsey for our Exeter, Martock and Yeovil offices.

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