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Advising Expats On The Importance Of Making A Will

BY: Paul / 0 COMMENTS / CATEGORIES: News, Will Writing

Advising Expats On The Importance Of Making A Will

To quote Scarlett O’Hara in Gone with the Wind – “death, taxes, and childbirth, there’s never a convenient time for any of them”.

When it comes to the Grim Reaper, if he comes for your client whilst they are living in a foreign country, he is not bothered about whether they have organised their affairs or not. And few situations are messier than dealing with the fall-out from someone who is domiciled abroad and dies intestate.

An estimated 5.5  million British people live overseas. According to the data, over 1.5 million reside down under (Australia and New Zealand), 761,000 in Spain, 1.2 million in North America, 240,000 living in Dubai, and 212,000 in South Africa.

For succession purposes, where a matter involves more than one legal system it is necessary to apply the conflict of laws (also referred to as private international law (PIL)) rules that determine which law of succession applies. Where the PIL rules of one jurisdiction conflict with the PIL rules of another jurisdiction, it is necessary to determine which jurisdiction can decide the matter.

Fortunately, since 17 August 2015, the rules surrounding dying intestate within the European Union have been simplified. If someone dies in an EU Member State without a Will, the rules of intestacy will be the rules of the country in which they were habitually resident as at the date of their death.

The concept of domicile

The country in which a person is domiciled refers to the nation with which they have the closest ties. A person’s domicile of origin is typically their father’s domicile as at their date of birth.   One can choose to be domiciled in a different country from that where they were born; however, a person can only be domiciled in one country at a time. To establish whether a person has changed their domicile, consideration must be given to whether they have left their domicile of origin and settled in their country of choice and whether that move is permanent.

Conceptually, this may not be difficult. But take the increasingly common case of a mixed-nationality couple, who, once their children have grown up, decide to divide their time between two jurisdictions, e.g. Australia and France; this may continue for many years until one dies without a Will. In such circumstances, establishing which domicile applies is far from straightforward .

The law of intestacy in different jurisdictions

Once domicile or habitual residence is established, the intestacy laws of that country will apply. What many British migrants fail to realise is that other countries’ laws often differ substantially from that of England and Wales.

Australia

Each state in Australia has its own intestacy laws. For example, if the deceased dies in Perth, Western Australia, allocation of the estate is governed by the Administration Act 1903 (WA). Division will depend on the value of the estate and the type and number of potential beneficiaries. Unlike English intestacy law, cohabitees do have inheritance rights under the Administration Act, if they can establish they have been in a de-facto relationship with the deceased for two years or more.

Generally, anyone over the age of 18 who is entitled to a share of the estate can apply for Letters of Administration to the Probate Office of the Supreme Court for the right to manage the estate.

United States of America

Like Australia, each State has its own laws of intestacy. However, the laws are fairly uniform for small estates. In most cases, if the estate is valued at less than $100,000, rather than file Court proceedings, family members can file a Declaration of Small Estate through a bank. In California, this can even be done through the Department of Motor Vehicles (DVA). The person filing the Declaration must swear an oath that no other person has any greater claim to the deceased’s property.

State law varies for estates over $100,000 and where there are spouses or partners, and/or children involved. For example, in New York State , in the case of an intestacy where there is a spouse but no children, the spouse receives the entire estate.  If there is a spouse and children,
the spouse inherits the first $50,000 plus half of the balance. The children* inherit everything else.

Unmarried partners have no right to inherit under New York intestacy law. This has led to a growth in ‘deathbed’ marriages. State law provides the right for family members to have such a marriage annulled if they can prove the nuptials were made specifically to achieve fraudulent financial gain.

Dubai

If an expat dies without a Will in Dubai, the default is that Sharia law will decide who inherits their estate. Sharia law is not codified, and there is no system of precedent in the UAE Courts.

Under Sharia law, if a husband dies intestate, the wife will qualify for only one-eighth of her deceased spouse’s estate. In addition, all assets (including bank accounts and shares) will be frozen until liabilities have been discharged.

Conclusion

For those advising clients who have property in the UK and are likely to acquire assets in the country they move to, it is imperative they are advised on the importance of having a valid Will in place, not only in the UK but in the jurisdiction they are moving to.

Dying intestate in the UK causes complications enough. For the survivors of expats who die without a Will, the resulting administrative and financial problems can be a nightmare – and one that is completely avoidable.

  • by TWP Main Admin
  • Aug 13, 2019

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Tax Efficient Will Planning

BY: Paul / 0 COMMENTS / CATEGORIES: Inheritance Tax

With the introduction of the Finance Act 2006 the possibility of using lifetime planning for saving inheritance tax was severely restricted using lifetime settlements. By contrast, the use of trusts in Wills still have many of the old tax saving options available to him or her, most of which continue to use settlements. The will draughtsman can make use of these settlements to minimise a family’s tax liability in several ways. Saving tax is normally a concern for families with children, the parents wishing to pass assets on to children or grandchildren as efficiently as possible.

Following the introduction of the residence nil rate band (RNRB) presented fresh problems as the use of many popular forms of settlement could lead to the loss of the RNRB If the will and advice given is not carefully considered.

The following suggestions assume that:

  1. the clients are married or in a civil partnership;
  2. that one or both has children;
  3. both clients have assets in excess of the nil rate band but are not unduly overburdened with wealth, and will have most of their joint assets tied up in the family home;
  4. both clients are concerned that the surviving spouse or civil partner should have enough to live on but are anxious to pass on as much as possible to the children.

Advisers should be cautious common particularly when dealing with the family home. It is important to warn the clients that the tax rules may change and the very few tax saving schemes can be guaranteed.

The use of insurance policies can be used to make funds available to children for paying inheritance tax or to give them a lump sum not liable to IHT. This can be achieved by means of a joint lives policy. The premiums paid will be exempt if the payments fall within the normal expenditure from income exemption s21 IHTA 1984. The policy will mature on the death of the last surviving spouse and provided the benefit of the policy has been assigned to the children, the proceeds will pass directly to them.

When dealing with elderly clients who are accompanied by adult children, it is important to establish what the clients (as opposed to their children) want, and is desirable, if possible to see the clients in the absence of those who may benefit from the settlement or Will. With more complex family arrangements, allegations of undue influence in relation to lifetime gifts are increasing, and solicitors and other professionals have been criticised in court for failure to give independent legal advice to clients in relation to the proposed gifts.

The simplest option is for the first spouse to die to leave everything to the survivor, relying on the survivor to leave the combined assets to the children. The whole of the first estate will be spouse exempt and the survivor’s estate will benefit from the transferable nil rate band.

The disadvantages of such an arrangement are that the survivor may remarry, spend or lose the combined assets or go into a nursing home leading to the loss of the estate in fees. More people than ever before are choosing, therefore, to make use of trusts for asset protection purposes (APT’s). The use of a flexible life interest trust for some or all the assets can be a particularly useful tool, but the clients need to consider carefully what they wish to do in the future.

It is particularly important to advise the clients that by using an APT during their lifetime, they are giving up ownership to the trustees (albeit they may be one trustee themselves) and will incur further costs should they wish to mortgage or seek to release funds through equity release schemes.

Although the use of nil rate band discretionary trusts became less popular with the introduction of the transferable nil rate band, There is still much to be said for leaving a nil rate band discretionary trust with spouse and issue as beneficiaries, and creating the residue on trust (FLIT) for the surviving spouse for life giving the trustees wide powers to appoint capital to the life tenant or to the issue.

Such an arrangement has the following advantages:

  1. the first spouse to die makes use of his or her nil rate band (this is useful both where future growth in the value of assets may outstrip the value of the NRB transferred to the survivor and where the survivors estate may exceed the taper threshold leading to a loss of the RNRB) ;
  2. the trustees can give the surviving spouse all the income of the estate if that is appropriate;
  3. the trustees can appoint all the capital to the estate of the surviving spouse, if appropriate;
  4. the trustees have the flexibility to appoint income and capital to other beneficiaries, if appropriate
  5. the trust capital can be preserved for the issue.

Leaving some or all the estate a surviving spouse or civil partner on a fixable life interest trust

an alternative to leaving property to a spouse or civil partner absolutely is that it can be left to the spouse or civil partner on a flexible life interest trust or flit. The will should give the trustees power to terminate all or part of the life interest.

The advantages of using a FLIT are that:

  1. the residue passes to the spouse or civil partner initially and, therefore, is exempt from IHT using the spouse exemption;
  2. the NRB of the first to die will be transferred to the survivor;
  3. the surviving spouse has the benefit of receiving all the income, but the capital is protected for the issue; and
  4. the trustees have the power to appoint capital to the spouse and/or issue, depending on the individual circumstances.

If the trustees use their powers to terminate all or part of the spouse’s interest in possession (IIP) life interest, to create a discretionary trust, the spouse is treated as making a gift for the purposes of the reservation of benefit rules IHTA 1984 s102ZA. The spouse should not, therefore be included in the class of beneficiaries.

Problems with using the residence nil rate band RNRB

it is not necessary to make a specific gift of a residence to lineal descendants to obtain the RNRB.

It can be left as part of the residue of the estate.

However, even the simplest gifs can cause problems. A straightforward substitutional gift to children of a predeceased child may lead to the loss of the RNRB if the substitutional gift is contained in a trust contingent on reaching a stated age.

The impact of the residence nil rate band (RNRB)

With the introduction of the finance (No 2) in 2015 it inserted several new sections into the IHTA 1984. The effect of the new legislation is to provide an additional nil rate band available for deaths on or after the 6th of April 2017 when a residence is inherited by a deceased’s children or remoter issue or spouses or civil partners of such children or issue. There is also downsizing legislation which was included in the Finance Act 2016 which has made further amendments. Where a person dies without using all or part of his RNRB because he or she died before its introduction the unused portion can be transferred to a surviving spouse or civil partner.

Property left to certain types of settlement are treated as ‘inherited’ under IHTA 1984 Section 8J(4). The settled property must be held in trusts creating one of the following:

  • an immediate post death interest (IPDI) under section 49a; or
  • A disabled person’s interest under section 89; or
  • a bereaved minors or bereaved young person trusts section 71A or 71D.

Very few settlements qualify. The discretionary settlement is not included even if all the beneficiaries are lineal descendants. A typical grandparents settlement,” to such of my grandchildren as reach 21” will not qualify because the trust created is a relevant property trust and so not one of the permitted trusts. However, an appointment from a discretionary trust or advancement of capital to a beneficiary with a contingent interest made within 2 years of death to the lineal descendants will be read back into the will under IHTA 1984 s144 and so trustees could retrospectively secure the RNRB be for the estate.

Testators wishing to leave residential property to adult children with a substitutional gift to children of a deceased child will, therefore, need to consider the form of the substitution gift carefully if they want to secure the RNRB in relation to that gift. The possible options are a bare trust where the grandchildren will become absolutely entitled at 18 or an immediate post death interest.

The latter may be attractive as the trustees can be given overriding powers to appoint capital as they see fit. It is necessary to vary the Trustee Act 1925, s31 to provide that any accumulated income e.g. where the residence has been sold after death and the proceeds invested is held on a bare trust for the beneficiary. If this is not done, section 31(2)ii provides that any accumulated income is held on accretion to capital where a minor beneficiary dies before reaching 18. This has a divesting effect and the settlement will not create an immediate post death interest.

S.W.W Director general

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How and why to support your favourite charities in your will and the tax benefits for you

BY: Paul / 0 COMMENTS / CATEGORIES: Inheritance Tax

Discover the vital importance of gifts in wills to charities, the types of gifts you can leave and the tax advantages of doing so.

This post explains why and how to leave money to charities in your will and how to get yours sorted with zero fuss, today.

 


Why give to charity in your will?

Every year, people in the UK leave £2.9 billion to charities in their wills. These gifts can make a lasting impression on your favourite charities, allowing them to continue to operate and improve their services. In the last 12 months Farewill has raised £40 million in legacy donations.

“It’s incredible how generous the British public are” says Dominique Abranson, Legacy and in Memory Manager for WaterAid, “gifts from wills are absolutely vital in helping us reach everyone everywhere with clean water, decent toilets and good hygiene and transforming lives of the communities we work with overseas”

The charity might be a cause you’ve supported all your life making periodic donations. You might have encountered your chosen charity during medical treatment or end-of-life care for a loved one. Or you may be looking to minimise the amount of tax you pay when you die.

What types of legacy gifts can you give to your chosen charity?

There are three types of charitable legacies that you can choose from.

Pecuniary

A pecuniary legacy gift is the simplest and most common way of leaving a gift to charity in your will. You simply state your intention to leave a specified sum to your chosen charity. The executor of your estate is then tasked with making sure this sum reaches your intended charity.

Specific

A specific legacy gift relates to a particular item that you wish to leave to a charity of your choice. It may be a property, a road vehicle that the charity could benefit from or even shares.

Residuary

A residuary legacy gift is when you leave the whole of your estate or a percentage of your estate, The percentage you choose remains the same regardless of the value of your estate when you die.

While a cash (pecuniary) gift is a simple way to leave a gift to your chosen charity, it’s worth noting that the sum you include in your will today may not have the intended impact when the time comes. £1,000 today is a considerable sum but, in 30 years, it may not stretch as far.

What are the tax advantages of leaving gifts to charity?

Leaving a gift to charity in your will can reduce the tax your loved ones pay on what you leave them.

Inheritance tax is charged at 40% and applies to the proportion of your estate valued above £325,000 (£650,000 for married couples).

You can reduce the inheritance tax rate on the remainder of your estate (above £325,000) from 40% to 36%, if you leave at least 10% of your ‘net estate’ to a charity.

Here’s a worked example, without a charitable gift:

  • Your net estate is worth £425,000
  • You leave everything to your partner (unmarried). £100,000 is liable for inheritance tax (£425,000 – £325,000 tax allowance)
  • £100,000 is charged inheritance tax at 40%, equalling £40,000 due in tax.
  • So, £60,000 is left after inheritance tax has been subtracted
  • Your partner gets £385,000 after tax (£325,000 + £60,000)

Here’s a worked example, with a 10% charitable gift:

  • Your net estate is worth £425,000
  • You leave 10% of your estate (tax free) to charity £42,500 (net estate is now worth £382,500)
  • You leave the remainder to your partner (unmarried), £57,500 is liable for inheritance tax (£382,500 – £325,000 tax allowance)
  • £57,500 is charged inheritance tax at 36% (lower charity rate), equalling £20,700 due in tax
  • So £36,800 is left after inheritance tax has been subtracted
  • Your partner gets £361,800 after tax (£325,000 + £36,800), and the charity gets £42,500.

In the above example your partner gets £23,200 less, but the charity has gained nearly double that – £42,500 for good causes.

How to find details of a charity you wish to support?

Wherever you are based in the UK, these online registers will help you find contact details of the charity you wish to support:

England and Wales

Charities Commission’s register of charities

Scotland

Scottish Charity Regulator’s charity register

Northern Ireland

The Charity Commission for Northern Ireland

Next steps to give to charity in your will

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Forfeiture Rule Modified In Assisted Suicide Case

BY: Paul / 0 COMMENTS / CATEGORIES: News

Are we ‘living’ longer or merely being kept alive well beyond our individual natural expiry date?

As modern medicine continues to improve, death and old age is rapidly becoming viewed as almost an act of personal negligence.  The medical profession and those struck down with illness are encouraged to ‘keep fighting’, sometimes long after disease has already won the battle and all that is left is a living corpse, denied the dignity and peace of death.

In a sensitive and poignant article by Katy Butler, the agony of prolonging death is laid bare:

“My father Jeffrey—a retired Wesleyan University professor who’d tossed me laughing into the air when I was a baby and taught me to read when I was four—had suffered a devastating stroke at the age of 79. A year later, to correct a slow heartbeat, he’d been casually outfitted with a pacemaker that kept his heart going until his life became a curse to him rather than a blessing. He’d told my mother, “I’m living too long.”

By the time the hellish summer of 2006 arrived, he was 84 and I’d come to believe that his pacemaker should never have been installed at all. The man I loved more than any other was going blind and falling into dementia. He did not understand the purpose of a dinner napkin and when I visited, I had to coach him to take off his slippers before he tried to put on his shoes. In June, he spent an entire weekend brushing and re-brushing his teeth. In August, he suffered a brain haemorrhage, fell in the driveway, and spent nearly a week in Yale-New Haven hospital, where he suffered a terrible form of cognitive decompensation, often afflicting the elderly, known as “hospital delirium.” When he came home, he asked my brother Michael why the living room was filling up with leaves.”

There is another side to modern life and advancements in access to information; should we be struck down with a degenerative disease, dementia, or a slow-acting but terminal cancer, we are under little illusion of the pain and indignity that lies before us.  For this reason, and because we can be kept ‘existing’ for many years, in a state few would describe as living.  And this has brought the debate of ‘assisted suicide’ to the fore, with each new case which hits the headlines challenging our concepts of morals, death, and the right to control our own lives to the end.

Helping someone die and the rule of forfeiture

The recent case of Ninian v Findlay [2019] EWHC 297 (Ch) provides a small, but significant advancement in the law surrounding assisting a loved one to die.

Section 1 of the Forfeiture Act 1982 states:

The “forfeiture rule”.

(1) In this Act, the “forfeiture rule” means the rule of public policy which in certain circumstances precludes a person who has unlawfully killed another from acquiring a benefit in consequence of the killing.

(2) References in this Act to a person who has unlawfully killed another include a reference to a person who has unlawfully aided, abetted, counselled or procured the death of that other and references in this Act to unlawful killing shall be interpreted accordingly.

The case concerned a widow of an 80-year-old man who was diagnosed with a progressive, incurable, degenerative disease.  Three years after being diagnosed, he made the decision to end his life through accompanied suicide and contacted the Dignitas clinic in Switzerland.  At the time his wife was unaware of his decision.  When she discovered his plans, she tried to dissuade him, but he was determined.  She convinced him to tell his doctor and to look into palliative care options.  However, she also assisted with much of the administrative aspects of applying to the Dignitas Clinic and made the necessary travel arrangements as he was unable to speak.  And because she loved him, she accompanied him to the clinic.

The widow was never prosecuted for her actions as the police concluded that to take such a step would not be in the public interest.

The widow made an application under section 2 of the Forfeiture Act 1982 to have the forfeiture rule modified or excluded.  Such action could be taken by the Court if it was felt justice demanded it.

Section 2 of the Suicide Act 1961, which provides for the offence of encouraging or assisting suicide, was first considered.  The Court noted that in 2010, substantial amendments had been made to the Suicide Act with the aim to clarify the existing law.

The offence was held to comprise two elements: performing an act capable of encouraging or assisting the suicide (the actus reus) and establishing that the act was intended to encourage or assist the suicide (the mens rea).  It was not necessary that the act actually encouraged or assisted the suicide, only that it was capable of doing so.  Thus, the actus reus was objective, whereas the mens rea was subjective.

It was concluded that the widow had not wanted her husband to go to the Dignitas Clinic.  However, it was her actions that made the trip possible.  Therefore, when viewed objectively, the acts of the widow were capable of assisting suicide, and she had the necessary intent to help her husband end his life, despite her objections.  This meant the elements to constitute an offence under section 2 of the Suicide Act were satisfied.

Once it was established that the forfeiture rule applied, as it did in this case, the Court may have regard to the Claimant’s conduct and material circumstances of the case when deciding whether or not to exercise its discretion.

The Court examined the dissenting decision of Lord Justice Mummery in Dunbar v Plant [1998] Ch. 412, [1997] 7 WLUK 487, whereby the scope of discretion was discussed, and paragraphs 43-45 of a publication issued by the Director of Public Prosecutions entitled “Suicide: Policy for Prosecutors in Respect of Cases of Encouraging or Assisting Suicide“, which set out the factors tending for and against prosecution.  It was decided that although the dissenting opinion in Dunbar was not determinative, the fact the CPS declined to prosecute was a powerful factor in the Court granting relief from forfeiture.

Conclusion

It is safe to say that these types of cases will become more frequent.  Regardless of what the law states, compared to even 10 years ago, people are more educated, wealthier, and have access to the information and means to take matters into their own hands when it comes to the right to die.  Anyone who has loved knows that they would do anything to end their beloved’s suffering.  And if relief from forfeiture is not granted, is it not a final insult to the bravery of the person who has taken matters into their own hands, to refuse to honour their last wishes via their Will?  Or do we need to stand firm, and apply the law rigidly, until Parliament resolves the matter of whether a human being has the right to decide when to die?

What do you think?

  • by TWP Main Admin

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What Happens to your children

BY: Paul / 0 COMMENTS / CATEGORIES: News

A guide to appointing guardians in your will.

There is a general conception that Wills are for the elderly and those in ill-health, but life is uncertain and everyone needs a Will, to ensure your hard-earnt assets go to the people or causes which you care the most about.

Certain events prompt people to make a Will such as an increase in personal wealth, buying a property and having children.

When parents make Wills, they want to ensure that their children are provided for in the best way. Whilst the primary focus is usually on financial provisions, what about your children’s welfare, especially if both of you die?

Nobody wants to think about dying young or leaving their children behind, especially young children but what happens if you should die before your children reach the age 18? Those under the age of 18, in the eyes of the law, are classed as minors. If their parents are dead, they will need a legal guardian to help and support them.

A guardian may be appointed through a Will to have parental responsibility for your children. Parental responsibility means all the legal rights, powers, responsibility and authority of a parent (as stated in the Children Act 1989.)

Guardians have the legal rights and responsibilities of parents. In many cases the children will live with their guardians, but this is not always possible or necessary. For instance, the parents may be divorced and the children live with their mother. Father dies and by his will he appoints his parents as the guardians of his young children. The children continue to live with their mother the guardians (grandparents) are able to help make the major decisions and will have rights to have regular contact with the children

Whether you are thinking of making a new Will or revising a current Will to ensure that your children are looked after, here are a few things you may want to consider.

What happens with your children if guardians are not appointed?

If you do not appoint a guardian, an application to the Family Court may be necessary. This may be by a family member or by local Social Services.

In some circumstances, children could be placed in care until the court appoints a guardian, which could be lengthy and add to your children’s distress.

A verbal agreement between family and friends is not considered to be enough to satisfy the Courts of a guardianship.

What if I am divorced?

On divorce you will usually have retained parental responsibility for your children even if they do not live with you. As a result, you will be able to appoint a guardian. Because of the divorce, this can be a particularly sensitive issue and you will need legal advice tailored to your circumstances and the needs of your children.

When do you need to appoint a Guardian?

If you are married at the time of your child’s birth and either the mother or the father dies, the surviving parent will have parental responsibility for the children. Similarly, if you are not married and a father dies first, the mother will retain parental responsibility. However, if you are not married, the father will only have sole parental responsibility where he is named on the birth certificate of a child who has been born after 1 December 2003.

What are the benefits of appointing guardians?

  • You can be sure your children are going to be looked after by someone you have chosen and trust.
  • You will know that important decisions in your children’s life such as education, housing, medical treatment are in the hands of someone who knows of your plans or who can be trusted to make sensible plans
  • You can leave money to your guardians to cover the costs they will incur, so that you know your children would be bought up comfortably without financially burdening their guardian.
  • You can might be able to make your house available for your children and their guardian

How to choose a guardian?

Being a guardian is a big responsibility. You must discuss it with the people you choose and get their input and agreement.

You can appoint up to four guardians in your will and these are some of the things you may want to think about:

  • Who is most able to care for child emotionally, financially and physically?
  • Who do your children already feel comfortable with?
  • Who can provide similar parenting styles and values of your own?
  • Would the person have enough time and energy to devote to your children?
  • Would your children have to move far away and uproot their life?
  • Does the person you’re considering have any other children?

Most people appoint only two guardians, such as another couple. It is usual for a couple to appoint the same guardians in relation to their children as they usually only become effective on the death of the second parent. However, young couples with children commonly appoint both sets of the children’s grandparents and leave a separate letter of guidance incorporating the above factors as to how they wish for their children to be provided for.

We always recommend naming substitute guardians especially if your original guardians are older than you (e.g. if you are appointing your own parents). This can save you having to change your Will in the event your primary guardians are unable or unwilling to act.

A guardianship clause may be changed or cancelled as often as you like during your lifetime, to fit with changes in your personal circumstances.

Naming a guardian should be regarded as an important part of any parent’s estate planning, if not the most important. By including a guardianship clause in your will, the appointment is easily identifiable and can be considered quickly. You can see that issues relating to guardianship can become very complex. These are some of the most critical decisions you will make to protect your children

 Sophie Sullivan

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Will A UK Lasting Power Of Attorney Or Deputyship Order Be Recognised Overseas?

BY: Paul / 0 COMMENTS / CATEGORIES: Power of Attorney

With an ageing population, mental capacity is a growing concern for many and Lasting Powers of Attorney (LPAs) can bring peace of mind to those who are worried about how their affairs will be dealt with if they lose mental capacity.

Equally, people owning assets overseas is on the rise, with one in six ‘baby-boomers’ owning a second home, according to a 2018 study by the Institute of Fiscal studies.

So, how do you make sure that your clients’ overseas assets are protected if they lose mental capacity? Is an English LPA or Deputyship Order sufficient?

The simple answer is: probably not!

Sara Janion, Director of Worldwide Lawyers – a UK-based company, which connects UK solicitors and legal practitioners to independent lawyers across the world – and Notary Public of England and Wales, explains:

“A UK Lasting Power of Attorney is highly unlikely to be recognised by foreign courts on its own, without further process.

“For instance, in Spain you would need to obtain a legalised and officially sworn translation of the LPA that it is acceptable under Spanish law. In addition, it’s usually also necessary to get a sworn statement from a lawyer with the appropriate expertise stating that, under English law, the LPA gives the attorneys authority to deal with the assets of the donor.

“All this makes getting a Spanish Court to recognise the English LPA a very complex process, not to mention the time and additional costs it takes.

“When it comes to Deputyship Orders, whilst it can be possible to get some foreign authorities to recognise an existing Deputyship, it’s expensive and time consuming at a time when it might be critical to have access to the foreign assets and when other funds may be limited or unavailable.

“As ‘attorneys’, who are given power under an English Lasting Power of Attorney, are not able to delegate their power, they are not able to appoint another ‘attorney’ to handle the foreign assets like properties or bank accounts. This means that, for example, in order to sell a property in Spain for someone who has lost mental capacity, the English ‘attorney’ would need to travel to Spain to deal with the transaction.

“A much easier option is to ensure that both an English LPA, covering any English affairs, and a separate Spanish Power or Attorney, which is specifically worded to authorise the appointed attorneys to deal with any Spanish assets in the event of loss of capacity, are prepared.

“How difficult or easy this process is will, of course, depend on what country the assets are located in.

“However, we always advise legal practitioners who are preparing an English LPA to consider how their client’s overseas assets will be dealt with and to encourage them to seek appropriate legal advice from a lawyer in that country in the same way they would recommend that anyone with assets overseas considers a separate will to cover those foreign effects. Ultimately, it’s about future-proofing. It’s hard enough for family members dealing with effects of a loved one losing mental capacity, without having an unnecessarily laborious and costly legal battle to be able to do what’s best for them.”

Article from Worldwide Lawyers

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Secure Website

BY: Paul / 0 COMMENTS / CATEGORIES: News

Secure Website

We operate a secure website so that our clients and visitors in general can browse the site and use our online will writing forms with full confidence. To signify this when using an SSL Certificate, so browser’s use a padlock symbol in the path window at the top of your screen.

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Why do we have funerals?

BY: Paul / 0 COMMENTS / CATEGORIES: Funeral Plans, News

 

Funeral and burial traditions have been dated as far back as 100,000 years ago with modern human remains found in Qafzeh, Israel. There are even some findings which suggest evidence of intentional burials by Neanderthals dating back 250,000 – 300,000 years ago, however many of these sites are a topic of controversy between experts.

With evidence of burial traditions dating back throughout the ages, taking care of the deceased remains part of our culture today despite changes in funeral traditions. But why do we do we have funerals?

For early societies with religious beliefs, and for believers across many of today’s faiths, a funeral ceremony will usher the dead on to the next life. During ancient times many had believed their loved ones would not be able to cross over to the next life if they did not have the rites and rituals of a properly conducted funeral.

Modern funerals can tie to the sentiment of securing entry to the next life but generally involve a much more dignified and affectionate send off for the deceased. Whether the funeral involves religious beliefs or not, it still plays a very important part in coming to terms with the loss of a loved one.

Time to stop and think

Immediately after a death there can be a lot to do and the funeral might be the first real opportunity the family have to stop, and begin to acknowledge that the deceased is really gone, with their friends and family.

A co-founder of the What’s Your Grief website, Litsa Williams, has written about how funerals can be the starting point for grieving.

“It can be a really important ritual and the first step for so many people, and as much as you may be dreading it, you may be surprised at the comfort you find in meeting people you may never have known were touched by your loved one in some way.”

A funeral can be an important opportunity for people to gather together and demonstrate their love and respect for the deceased while offering support and sympathy to the bereaved. The death of someone close is clearly a difficult time and having people around that care for the bereaved and the deceased can be a considerable comfort.

 

A celebration of life

More often now the funeral is seen as an opportunity to celebrate a life well lived. There are less strictly regimented religious ceremonies with the funeral featuring more reflective elements which are unique to the personality of the person that has passed.

From a cheerful dress code to a quirky music choice, funerals can be an opportunity to remember the wonderful personality of a loved one who is missed but never forgotten.

At a time of great upset, a funeral with well-known ceremonies can offer some familiar structure for people close to the departed. The familiarity of words spoken and songs sung during these ceremonies can reduce some of the burden of having to think about what to do next and instead let us focus on our feelings.

No matter how people choose to mark their passing or the passing of a loved one, the familiarity of funeral ritual is also a factor in why we take such care over funeral planning. Whether to prepare the way for the next life, to gather friends and family to say goodbye or just to have one final opportunity to demonstrate our individuality, funerals are an important part of our passing.

E.M.P SOLUTIONS CAN PROVIDE PRE-PAID FUNERAL PLANS TO SUIT ALL YOUR NEED’S https://www.safehandsplans.co.uk/aff/90/e.m.p-solutions-will-writing

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Living through Loss

BY: Paul / 0 COMMENTS / CATEGORIES: Funeral Plans

It’s one of the hazards of an actor’s life: that people think you’re the same off screen as you are on it. Because the actor Humphrey Bogart often played “tough guys” in his films, in real life he was constantly being challenged by men who wanted to prove that they were tougher than he was. He had to learn to joke or charm his way out of these annoying situations.

At a lower level, actors who play villains in soap operas may find themselves being shouted at on the street – or worse – for things that they’ve only done on screen.  A lot of people find it hard to distinguish between fantasy and reality. And even if you know the difference, it can be difficult to feel it. A good actor can make the character he plays seem real, so that it’s hard to remember that the actor has a life of his own.

Take the British actor Jason Watkins, who was widely praised for his performance in the two-part docu-drama The Lost Honour of Christopher Jefferies. He portrayed a retired school-teacher who was wrongly accused of murder. And his acting was so good – so convincing – that he won a BAFTA. And he’s gone on to have other successful and widely-watched roles. Each time he’s convincingly become another person, so that it’s hard to remember that he has a life of his own. But he does. And with life comes loss. He and his wife Clara Francis has suffered one of the most painful things any human being can suffer: the loss of a child.

Their daughter Maude was only two-and-a-half when, at the beginning of 2011, she died suddenly and unexpectedly. She had been ill with a cough and breathing difficulties, but the doctors who examined her didn’t think it was serious – just a minor infection. She was sent home from hospital and her parents thought, yes, she’s getting better. They put her to bed in her cot. A few hours later her father went to check on her. She was dead. The infection wasn’t minor but very serious: it had triggered an over-reaction from her immune system, which had begun attacking the very organs it is designed to protect.

The condition is called “sepsis” and the two bereaved parents are now campaigning for greater awareness not just among the public, but also in the medical profession. This is one way in which they are trying to cope with the pain and loss they still feel six years after their daughter’s death. Out of the very bad thing that happened to them, they want some good to come for others. Perhaps their campaign will help another parent to spot the danger-signs of sepsis or prompt a doctor somewhere to think again about what appears to be a minor illness. And then a child who might have died will get the right treatment and live to grow up, have a family and enjoy a successful career.

Jason Watkins and his wife might never hear that their work has saved another child, but they know that they are doing something positive in response to their devastating loss. They also know that their work isn’t just helping strangers: they have a living daughter called Bessie for whom they want to be the best possible parents. The loss of Maude caused them so much pain that it would have been easy to be paralysed by it and think of nothing else, neglecting the world and their continuing responsibilities there.

They couldn’t allow that to happen: Bessie still needed them. Their campaign about sepsis has been one of the ways in which they pulled their minds away from their bereavement and back to the lives that hadn’t ended and that they wanted to keep safe. It was the right thing to do for themselves, their living daughter, and the dead daughter whose memory they are honouring and whom they will never allow to fade or pass from their minds.

Contact us for information on Pre-Paid funeral plans 01325324515 – info@empsolutions.co.uk

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COMMON MISTAKES IN LASTING POWER OF ATTORNEY APPLICATIONS

BY: Paul / 0 COMMENTS / CATEGORIES: News, Power of Attorney


A poorly drafted Lasting Power of Attorney (LPA) can lead to unnecessary stress and expense for the Donor or the draftsman, or in the worst cases leave a vulnerable person without any LPA in place at all. This month’s CPD will consider the common errors that even the professional draftsman can make when drafting instructions for LPAs of any type.

WHAT’S THE ISSUE?

LPAs are complex legal documents and care must be taken when drafting them to ensure they are completed correctly. The Office of the Public Guardian (OPG) will reject any forms that are completed incorrectly or that don’t meet their standards. According to the OPG around 15% of LPA forms submitted to them have errors.
Getting it wrong can be expensive if the mistake isn’t recognised until registration. The registration fee for LPAs is £82 per document. If they are rejected, they must be corrected and re-registered and this costs £41 per document if sent back within 3 months. If the corrected forms are sent back outside of this time limit you will need to pay the full fee again.
If the registration doesn’t take place until after the Donor has lost capacity, then they may be left with no LPA in place at all if a mistake is found. At this point it will be too late to correct the form and resubmit it. This is why it is so important that the forms are completed correctly, and appropriate advice taken if you are unsure about any aspect of the form or how you can put the Donor’s wishes into practice.

PROBLEMATIC INSTRUCTIONS
The most common errors with instructions that cause issues for LPAs are:
• Lack of clarity
• Making contradictory statements
• Attempting to ask an Attorney to act beyond their powers
• Legally invalid instructions
• Incorrectly handling how replacement Attorneys will start acting
Often a Donor will have very specific wishes in mind for how their Attorneys should act and what kinds of decisions that can make and how they should make them. Unfortunately, what the Donor wants isn’t always legally possible so it’s essential to explain the limitations of Attorneys powers and manage a client’s expectations when it comes to drafting instructions.

CONTRADICTORY STATEMENTS

Instructions are legally binding on the Attorneys and they must be followed. It’s therefore incredibly important that any instructions are clearly written and legally valid. If the instructions aren’t valid then the OPG may refuse to register the LPA or may need to apply to the Court of Protection (COP) to have the offending instruction severed.
Instructions can be invalid because they are too vague and cause uncertainty in what the Attorney is actually allowed to do. When drafting instructions make sure that there is no room for misinterpretation and that what is expected of the Attorney is sufficiently clear.
Instructions that contradict other sections in the LPA will cause the LPA to fail at registration. The most common invalid instructions are those that are incompatible with the way the Attorneys are appointed in section 3 of the form. Where the Donor has appointed multiple Attorneys to act, they must decide on how they will make decisions. There are three available options here:

1. Jointly and severally
If Attorneys are appointed to act jointly and severally, they may act either together or independently. This allows more flexibility as any one of the Attorneys may act alone. Especially useful where a decision needs to be made urgently.
Problems arise where a Donor then includes instructions that impose further restrictions that contradict this appointment. Common examples include stating that the Attorneys must act together in certain circumstances, or that one Attorney has a deciding vote. These types of instruction are contrary to what the Donor has selected in section 3 of the form and would have to be severed.
For a recent case example of this see JF (Case No 12925291). In this case the Donor had appointed three Attorneys and, in the instructions, had stated “My two daughters (if surviving) must always agree on any decision jointly before any actions regarding my estate can be implemented. OM may act as an attorney independently of my daughters.” The OPG would not register the LPA as the instruction contradicted the nature of the Attorney’s appointment, so they applied to the COP to seek a severance of the instruction.
The COP recognised that severing the instruction would lead to an LPA that didn’t match the Donor’s wishes, and also recognised that the Donor could achieve what she wanted only by executing two separate LPAs. The Donor consented to the severance, so it was directed that the instruction was severed, and the LPA registered without it.
In the same run of severance applications to the COP (they tend to be reviewed in bulk) the COP also heard the case of SH (Case No 1291136T). In this one they directed for an instruction to be severed as the instruction “While my attorneys are authorised to act jointly and severally I specifically direct that all decisions must be made by at least two of my attorneys and that no attorney has the power to make decisions individually.” was incompatible with the joint and several appointment they had made.

2. Jointly
If Attorneys are appointed to act jointly then they must act unanimously. If one Attorney becomes unable to act the remaining joint Attorneys also become unable to act. As such, any instruction stating that the Attorneys must act by majority.
Up until recently it was also impossible to re-appoint surviving joint Attorneys as replacement attorneys, with the effect that if one joint Attorney stopped acting the survivors continued. It was assumed that if the donor appointed A, B and C as joint Attorneys that they wanted them to act all together or not at all, so naming them all as replacements so they could be ‘reappointed’ if one died contradicted this. Donors have previously been told to avoid such appointments as they would fail. This position has changed with the case of Miles v The Public Guardian and Others [2015] EWHC 2960 (Ch).
In Miles the donor had appointed her attorneys A and B to act jointly in certain transactions, and jointly and severally in regard to everything else. She only wanted her replacement attorney C to act if both A and B could no longer act. The wording used was as follows:
“My attorneys may act jointly and severally save with regard to:
1. any sale of my property at [and it set out her address] (or any property which may subsequently replace it); and
2. any transaction in excess of £10,000
when all surviving attorneys who are capable of acting (whether originally appointed or who have been appointed by and are acting in substitution) shall act jointly in so far as there may be more than one of them able to do so but in the event that there is only one of them capable of acting I expressly re- appoint that attorney to act alone.”
It was held that this provision was valid as there was nothing in the MCA 2005 that expressly prohibited it. In his judgement Lord Justice Nugee did admit to finding part of the drafting confusing, specifically the wording in the second set of brackets. This highlights the need to be especially clear when drafting such complex instructions. To that end the following wording was suggested in Miles as a means of appointing joint attorneys with provision for the survivor of them to act alone:
“I wish my attorneys A and B to act as follows:
(1) So long as both attorneys are able and willing to act, I wish them to make the following decisions jointly: sale of the house; transactions over £10,000 [or the like] but all other decisions to be made jointly and severally;
(2) In the event that one of my original attorneys A and B is unable or unwilling to act, I then appoint the remaining of my original attorneys A or B, as the case may be, as replacement attorney to act solely;
(3) In the event of both my original attorneys being unable or unwilling to act, I appoint C as a replacement attorney to act solely [with whatever variations the case requires].”
Note that the OPG have not yet updated their official guidance (LP12) since this case, so the OPG may still query such an instruction at registration.
3. Jointly for some decisions, jointly and severally for all other decisions.

This option is the hybrid power, so it’s benefits and drawbacks mirror those of joint and several/joint appointments.
Instructions must apply equally to all Attorneys named on the form. It isn’t possible to appoint A, B, and C and state that A and B can only make decisions about the Donor’s personal finances and C can only make decisions about the Donor’s business. At least not within a single form. To achieve something like this the Donor would need to make and register two separate LPAs.

INSTRUCTIONS THAT GO BEYOND AN ATTORNEY’S POWERS

The powers that Attorneys have under both Health & Welfare and Property & Financial Affairs LPAs are quite wide and cover nearly all aspects of dealing with an incapacitated person’s daily affairs. They are subject to some statutory restrictions, however. By way of example, Attorney’s cannot change the donor’s Will, consent to a marriage or divorce, or vote on their behalf.
Attorneys must also act solely in the best interests of the Donor and are excluded from making decisions that are in the best interests of anyone else, even if connected to the Donor. An instruction directing Attorneys to make provision for someone else would therefore be invalid unless the Donor had a legal obligation to maintain that person. In the case of Re Strange (an order of the Senior Court Judge made on 21 May 2012) the court was asked to consider whether guidance in an LPA asking the attorneys to maintain the donor’s husband was valid or whether it needed to be severed as contravening the attorneys limited powers to make gifts. The wording of the guidance was as follows: “I wish my attorneys to provide for the financial needs of my husband in the same manner that I might have been expected to do if I had capacity to do so”. It was held that the guidance in the LPA was valid as any spouse would have a statutory duty to maintain the other spouse. That said, legal advice ought to be sought before including such an instruction.
Instructions directing the Attorneys to maintain anyone who is not a spouse or civil partner, or dependent child of the Donor would be invalid and would have to be severed. In their practice note “Giving gifts: a guide to the legal background for deputies and attorneys” the OPG themselves suggest that a Donor may normally rely on being able to direct their Attorneys to maintain a person only if they have provided for those needs in the past, or it is reasonable to conclude that the person would have provided for those needs.
Even where the maintenance provision is allowed you must be incredibly careful in how this is drafted. In the case of Re Bloom (an order of the Senior Judge made on 16 March 2012). Here the instruction referred to making provision for the Donor’s wife for her ‘maintenance and benefit’. The words ‘and benefit’ were severed by the COP as this was too wide and went beyond just maintenance.
A further example of common instructions that go beyond an Attorney’s power relates to gifting. Attorney’s only have limited powers to make gifts of the Donor’s property. Under section 12 of the MCA 2005 an attorney may dispose of the Donor’s property by making gifts in the following circumstances:
(2) the Donee may make gifts –
(a) on customary occasions to persons (including the attorney) who are related to or connected with the donor; or
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(b) to any charity to which the donor made or might have been expected to make gifts.
The value of the gift must not be unreasonable in all of the circumstances, and many factors will be taken into account to determine what is reasonable, amongst them the size of the donor’s estate.
Section 12(3) defines ‘customary occasions’ as:
(a) the occasion or anniversary of a birth, a marriage or the formation of a civil partnership; or
(b) any other occasion when presents are customarily given within families, or among friends and associates.
Under section 23(4) the Court of Protection may also authorise the making of gifts that are not covered by section 12(2), such as larger gifts or gifts made for inheritance tax planning purposes
Any instruction in an LPA that attempts to extend an Attorney’s power to make gifts will be invalid and will have to be severed before the LPA can be registered. The following types of instruction would be invalid:
• directions to set up trust funds for the donor’s grandchildren
• gifts at non-customary occasions
• regular maintenance payments to people the donor is not legally obliged to maintain
• loans
• lump sum payments to the donor’s adult children upon a certain event such as marriage or purchase of a house.

LEGALLY INVALID INSTRUCTIONS

Instructions that ask the Attorneys to do anything illegal are obviously invalid, so any instructions attempting to induce the Attorney into committing a crime are impossible.
This crops up in LPA forms more often that you would think. Each year the OPG deals with around 120 cases where an instruction has been included in an LPA that is asking the Attorney to assist the donor’s suicide in some way. Under section 2 of the Suicide Act 1961 it is illegal to assist a person’s suicide. This includes helping them to attend a euthanasia clinic in a country where this is perfectly legal. Therefore, any instruction in an LPA directing the Attorney’s to assist the Donor in ending their life is invalid and would have to be severed by the COP before the LPA could be registered.
Instructions made in the wrong type of form are also legally invalid. An instruction in a Health & Welfare LPA regarding dealing with the Donor’s finances or vice versa would be legally invalid as the Attorney has no authority over this.
PROBLEMS WITH REPLACEMENT ATTORNEYS
Replacement Attorneys may only step in if an original Attorney dies, loses mental capacity, disclaims their appointment, divorces/dissolves their marriage/civil partnership to the Donor, or in the case of Property

& Financial Affairs LPAs becomes bankrupt. These ‘trigger events’ are covered in section 13 of the MCA 2005.
You must avoid including any instructions in an LPA that direct for a replacement Attorney to step in and start acting upon any event other than those trigger events listed above as this would be invalid.
The following types of instruction would be invalid and would need to be severed:
• A direction for a replacement would step in temporarily to cover an original Attorney who has gone on holiday
• A direction for a replacement to step in when requested by the original Attorneys
• Where original Attorneys were appointed jointly and severally, a direction for the replacement to step in and totally replace both original Attorney’s when only one had become unable to act.
It is something that is commonly requested, but it is impossible to state that a replacement Attorney will replace a replacement Attorney. If a Donor wishes to name Attorneys, followed by replacements, and then also name a third level of replacements they would need to make and register two separate LPA forms. One form should appoint the original Attorneys and their replacements, and the second form should name the third level of replacements as the main Attorneys but also include an instruction to state that it will only come into force if the original LPA fails.

HOW INVALID INSTRUCTIONS ARE DEALT WITH

If a provision in an LPA is invalid the OPG can apply to the COP to have the instruction severed so the LPA can be registered. The COP deal with around 100 severance applications a month, taking up a lot of court and OPG time as well as causing long delays to registration and stress to Donors. Under Schedule 1, Paragraph 11 of the Mental Capacity Act 2005 the OPG has a duty to apply for severance where an LPA contains an invalid provision and they cannot register a defective LPA until the COP makes a ruling on the case and directs them to register.
Before going to these lengths, the OPG will contact the Donor if they still have capacity and present them a choice. They may choose to go ahead with the severance application, or they can draft a new LPA that removes the invalid instruction and giving them a chance to change the instruction to achieve their aims in a way that the OPG don’t find issue with. This would involve paying a new registration fee though.
If the Donor lacks capacity at the time the registration is made then this option of redrafting the LPA is lost, and the OPG may only apply to have the offending instruction severed. They will contact the Attorney’s for their consent to the severance, as they would the Donor if they had capacity. The unfortunate consequence of this is that this may lead to an LPA being registered that no longer meets the aims of the Donor.

CONCLUSION
When it comes to drafting instructions for LPA’s we can’t stress enough how important it is that the instructions are clear, concise, and legally valid. If you are ever unsure of how likely an instruction is to be accepted then we recommend first turning to the OPGs own guidance on LPAs (Form LP12)

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