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Funeral Costs Rise

BY: Paul / 0 COMMENTS / CATEGORIES: News

Funeral Costs Increased By 3.4% Last Year

The average cost of a funeral has increased by 3.4% to £4,417 since last year. 

The increase is forcing a lot more grieving families into financial difficulties according to the latest Cost of Dying Report by SunLife. 

12.5% of all families faced the unenviable prospect of finding the money to pay for the funeral costs of their loved ones. 

The report claims that the final celebrations of a loved ones life is contributing to debt with over a fifth of families borrowing money from friends and family members to cover funeral costs. 

Additionally, a quarter of respondents admitted to paying for the funeral on their credit cards or through loans. 

It seems as though regions vary greatly with Londoners facing an average funeral bill of £5,963, a staggering 35% more than the national average. 

Whilst the average funeral increased by 3.4% in the last year, residents of the Midlands and Wales faced the largest annual funeral cost rises of 9.6% and 9.4% respectively. 

Last year, Royal London published a National Funeral Cost Index. It found that the total amount of funeral debt in the UK has risen to £147m, up 12% from last year. 

It estimated around 74,000 bereaved families who have struggled to cover the cost of a funeral in the past year. 27% of those who struggled said they went into debt from credit cards, loans or overdrafts. 

20% said they borrowed money from family and friends, with 12% saying they chose a cheaper funeral. The index also found that people on lower incomes are spending much more of their income on a funeral, meaning they’re left worse off than those on higher incomes. 

What are the alternatives? 

It is only natural to want to give your loved one the ultimate send off. For many, the consensus has been a service, usually in a crematorium followed by burial or cremation. 

Overall, 23% of all funerals involved a burial service with 77% ending in cremation. 

However, with costs rising and more families spiralling into debt, should we start to stray from the traditional and often expensive funeral pathways? 

The report found that the average cost of a basic cremation, including a service was £3,858 once a coffin, service space and funeral car are factored in. 

However, direct cremations, whereby the deceased is cremated without a service, fell in price by 5% to £1,626. Loved ones would then have the option to hold a memorial service once the ashes are returned. 

Almost half (44%) of all respondents were unaware of this option with 42% happy for this option to be embraced for their own funeral if it meant their loved ones were able to avoid financial stress.  

A fifth would also consider this option for their loved ones as it meant they were able to organise original and bespoke memorial services.   

Ian Atkinson, Marketing Director at SunLife, commented:  

“Some people do not like the thought of not having a service in a crematorium, thinking perhaps it is not a ‘proper’ send-off, but this view is changing more and more. We may well start to see more and more people having direct cremations in the future as people realise how much cheaper they are and how they’re able to have the complete flexibility to have a personal service of their own wherever they wish.  

“The cost of direct cremations is also falling, and the main reasons could be the rise in competition and families looking for a good low-cost funeral option. Funeral directors are responding to changes in consumer demand, with more customers shopping around and looking for a good lower-cost option.” 

How damaging is the cost of a traditional funeral to already grieving families?

  • by Martin Parrin
  • Jan 10, 2020

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A Lasting Power of Attorney – Commonly Asked Questions

BY: Paul / 0 COMMENTS / CATEGORIES: News

With 12.5 million people in the UK over the age of 65 and just under 1 million Lasting Powers of Attorney registered with the Court of Protection, it’s hard to believe that despite the number of people being affected by dementia or some other illness which affects their capacity, measures aren’t being put in place to protect loved ones.

A Lasting Power of Attorney is a legal document which allows a person (called the donor) to appoint someone they know and trust to make decisions on their behalf should they become unable to do so in the future. This person is called an attorney. Attorneys must always act in the best interest of the donor.

There are 2 types of LPA: –

  • Health and Welfare
  • Property and Financial Affairs

Let’s look at what each LPA can do and what decisions it covers:

Health and Welfare

  • Day to day decisions such as exercise, dietary requirements
  • Medical care
  • Life sustaining treatment
  • Relocation into a care home or sheltered accommodation

A Health and Welfare LPA can only be used once it has been registered with the Office of Public Guardian (OPG) and when the donor loses mental capacity.

Property and Financial Affairs

  • Managing bank accounts
  • Paying bills
  • Collecting income and benefits
  • Making decisions with regards to the home
  • Selling the home
  • Managing investments

A Property and Financial Affairs LPA can be used as soon as it is registered with the OPG. The donor can restrict the rights the attorneys have under the “instructions” section of the LPA form.

Appointing Attorneys

Normally 1-4 attorneys can be appointed but it is important for the donor to ensure the attorneys are someone they know and trust to act in their best interests. Attorneys can act either: –

  • Jointly (attorneys must agree unanimously on every decision);
  • Jointly and severally (attorneys can make decisions on their own or together); or
  • Jointly for some and jointly and severally for other decisions (attorneys must agree unanimously on some decisions but can make others on their own).

Capacity

Before an LPA is made, it is imperative that the donor is over 18 and has mental capacity. This means they must understand:

  • What an LPA is
  • Who they want to make it?
  • Who they are appointing as attorney?
  • How they have decided the attorneys; and
  • That they understand what powers the attorney will have.

If the donor cannot decide for himself in relation to the matter due to an impairment of or disturbance in the functioning of his mind or brain, such as late set dementia, it is likely they will not have the required capacity.

Essentially, the donor should be assessed on whether they have the ability to make a particular decision at a particular time. If unsure, a GP or independent mental capacity advocate can assess the donor’s capacity.

Registration

Once the forms have been submitted to the OPG, they can take up to 16 weeks to be registered.

FAQ

Can I do an LPA if my father has lost capacity?

No. An LPA can only be made by someone who has mental capacity. If a person loses mental capacity and has no LPA in place, an application would need to be made to the Court of Protection who will appoint a deputy to act in the donor’s best interests (this is known as Deputyship Order). Anyone over the age of 18 can apply to the Court of Protection to be your Deputy to make financial decisions on the donor’s behalf. This can be a lengthy (normally 6-month timeframe) and very expensive process with the added risk that the application may be refused by the OPG or that no provision will be made for Health and Welfare.

Do I have to register my LPA straight away?

To be effective, an LPA must be registered with the Office of the Public Guardian. There is a registration fee of £82 per document and is means tested so if the donor is on a low income or benefits, they may be eligible for remission of those fees.

It is better to have the LPA registered as soon as possible. The principle reason for this is that if the LPA is registered later on or where the donor starts to lose capacity, if the form is returned by the OPG for any reason (given the long turnaround time), the donor may no longer have capacity and therefore cannot sign the form. This will mean the LPA cannot be put in place for the donor anymore and an application for deputyship will need to be made. On top of that, imagine a loved one needs to go into a care home as their health has deteriorated but you are unable to access their funds to pay for care home fees until the OPG approve. Is the added stress worth it?

Once my LPA has been registered, I can’t change it.

Wrong. An LPA that has been registered can be revoked at any time, providing the donor still has mental capacity. This does mean a new LPA will need to be made and a further £82 registration fee paid.

Can I get an LPA for my business?

Yes. you can use the Property and Financial LPA to ensure attorneys can continue to make decisions about the continuity of your business, paying staff, entering into contracts etc. This means if you are a business owner you could have two Property & Financial Affairs LPAs, one dealing with your personal finances and the other appointing attorneys to deal with your business interests.

Capacity can be lost at any time and could be due to either an accident, a stroke or a deteriorating condition so please don’t wait until it’s too late.

You have read the above on why an LPA may not be necessary which this article explores further.

“I don’t need an LPA because my next of kin can make important decisions on my behalf”

Not true. No-one can act on your behalf or make decisions on your behalf if they have not been legally authorised to do so.

“My Will has appointed executors, so they’ll be able to make decisions on my behalf.”

Not true. A Will is entirely separate to an LPA. Executors appointed in a Will only have the power or authority to distribute your estate as requested and in line with your Will, on death. They have no authority to make decisions on your behalf during your lifetime.

“I don’t need an LPA until I become elderly and of ill health”

Not true. An LPA can be made by anyone over the age or 18 who has full mental capacity. Someone may lose capacity or no longer be able to make decisions due to an accident, being in a coma or other mental illness.

The sooner you put an LPA in place the better, as you know provisions will have been put in place in the event the unthinkable happens. If you wait and, in that time, lose capacity, it will be too late to get an LPA and your loved ones will need to apply for a Deputyship Order from the Court of Protection. This will not only take a long time but also a costly process.

“Once my health and welfare LPA is registered, it means someone else can make decisions for me and I don’t want that while I have capacity”

Not true. A health and welfare LPA only comes into effect when the donor loses capacity even if the LPA has been registered.

“Getting an LPA is expensive”

The cost of registering an LPA is £82 per document. In comparison, if you fail to make an LPA and lose capacity, your family will be left with no other option but to apply for a Deputyship Order, this will cost significantly more.

“Me and my partner have joint bank accounts, so we don’t need LPA’s”

Not true. This is always the most alarming to couples when they are told that even if they have a joint bank account, this does not mean the partner will be able to automatically access funds to pay for bills, mortgage or general expenses. If the spouse was to lose capacity, the bank have the ability to remove access and freeze the account until they receive a copy of the registered LPA which is extremely stressful for the spouse.

From THE BRITISH BANKING ASSOCIATION

What happens if the other joint account holder becomes mentally incapable? In England and Wales, if one party to the joint account loses capacity to operate their account, banks and building societies will use their discretion to determine whether or not to temporarily restrict the operation of the account to essential transactions only (for example, living expenses and medical/ residential care bills for both parties) until a deputy has been appointed or a power of attorney registered. In Scotland, you can continue to run the account as long as the original account mandate was either-to-sign and there is not a court order preventing the account from being used.

If the other joint account holder appointed you as attorney, under a ‘lasting power of attorney’ (in England and Wales) or a ‘continuing power of attorney’ (in Scotland), you can register the power of attorney and run the joint account.

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Why Establishing Testamentary Capacity Is Not a Tick-Box Exercise

BY: Paul / 0 COMMENTS / CATEGORIES: News

One of the many challenges for legal practitioners specialising in Will drafting is establishing the testamentary capacity of the Testator.  While in some cases, the presence or absence of sufficient mental capacity may be clear, in others, there may be some uncertainty, necessitating a more comprehensive process to reach a consensus.  In the case of James v James [2018] EWHC 43 (Ch); [2018] C.O.P.L.R. 147; [2018] 1 WLUK 252 (Ch D (Bristol)) the High Court was asked to make a ruling on a challenge to a Will based on lack of testamentary capacity, and also outline the factors law practitioners should consider when making a capacity assessment at the time of Will drafting.

James v James (2018)

James v James involved the Will of a man who died in August 2012 at the age of 81.  The Testator had been a successful businessman with a farming and haulage operation in Dorset.  He had been reluctant to make commitments to his family regarding his inheritance until later in his life after his cognitive wellbeing had been in decline for some time.

The Claimant, S, was one of the Testators three children.  In 2007, some of the plots of land owned by the Testator were transferred to one of his daughters, and after the family farming partnership was dissolved, the claimant received a farm, £200,000, the haulage business, vehicles, and a license to use one of the plots, ‘Pennymore’ from which to operate the haulage business.  S, however, had been led to believe he would inherit ‘Pennymore’, leading him to challenge the Will on the grounds of his father’s lack of testamentary capacity.

It was stated that the Testator had not been “as formidable as he had once been” from approximately 2004 and had been diagnosed with “moderate dementia with frontal lobe impairment” in 2011.  The Will had been signed in September 2010, hence close to the time at which the Claimant had been assessed as unable to make decisions “about his health care, where he lives or his finances”.  The High Court held that the common law test for assessing retrospective capacity should be the one set out in Banks v Goodfellow (1870) (Banks), rather than the statutory test set out in the Mental Capacity Act 2005.  Applying Banks, the Testator, should have understood:

  • the nature of entering into the will and its effect;
  • the extent of the property of which he was disposing; and
  • claims to which he ought to give effect

In addition, Banks requires the Testator have “no disorder of the mind that perverts his sense of right or prevents the exercise of his natural faculties in disposing of his property by Will”.

The Court held the Testator did have the capacity to enter into the Will.

This case is significant as it underpins the continued importance of Banks as the sole test for judging Will-making capacity in retrospect, and despite being a case from 1870, has not been superseded by the more recent Mental Capacity Act 2005, which contains a new legal provision for the assessment of mental capacity.

Assessing testamentary capacity at the time of Will writing

The importance of verifying the mental capacity of a Testator should never be underestimated.  Ultimately, by undertaking this process in a clear and concise manner, contentious probate can be avoided, saving cost, time, and familial discord on behalf of clients and their beneficiaries in the future.

As we established above, the Banks test requires the Testator to understand the Will itself, the extent of their assets and the claims upon them.  In addition, a law practitioner can further assess testamentary capacity in several ways:

If the Testator is elderly or infirm at the time of Will writing, the following steps should be considered:

  • Obtain contemporaneous medical opinion confirming testamentary capacity
  • Asking a medical practitioner to witness the Will
  • In the absence of medical opinion, explain to the Testator that this may heighten the possibility of their Will being challenged successfully on the grounds of lack of testamentary capacity. Ensure they confirm they wish to proceed and make clear notes of the guidance provided and the decisions made by the Testator and attach these records to the file.

If a medical opinion is needed, it is important to request the assistance of a health practitioner with the skills to assess capacity, to avoid the risk of their competence to make this assessment being questioned in a later claim.  The client’s GP may therefore not be the best person to make the assessment.  It is also essential that the time between the medical opinion being received and the Will being signed be minimised, to avoid any suggestion that mental capacity declined in the intervening period.  When instructing the medical expert, subject to your client’s consent, it is also recommended to provide a summary of their proposed testamentary wishes.

If there is uncertainty regarding the mental capacity of your client (i.e. you have doubts but cannot be sure), it may not be in the best interests of the client to draft the Will.  Should your client still wish to proceed in light of the risks that the Will may be later deemed invalid, you should record all of the grounds for doubting capacity, that this has been explained to your client, and the reasons they still wish to proceed.

In summary

Given the rise in Will disputes, it is even more essential that law practitioners specialising in Will drafting make no assumptions regarding the cognitive capacity of clients.  Proving testamentary capacity is more than a tick-box exercise; rather it is one that requires that Solicitors and Will writers take the time to get to know their clients and to notice the subtle signs that their capacity may be diminished.  By being open and transparent about the importance of this aspect of ensuring Will validity, you can ask questions and seek further information to help you make a determination.  And don’t assume only those in their later years may lack testamentary capacity.  A client who has suffered a head injury, perhaps as a result of a road traffic accident, or fall, may appear young, physically well, and alert, but maybe suffering impaired cognition (e.g. memory or logical reasoning).  By broadening our view of what impaired mental capacity looks like, we can ensure the validity of the Wills we draft is not questioned at a later date.

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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
Page 5 of 7
(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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Residential Nil Rate Band

BY: Paul / 0 COMMENTS / CATEGORIES: Will Writing

The residence nil rate band – do I qualify and should I change my Will?

A key promise in the Conservative Party’s manifesto prior to the last election was an increase in a married couples’ “nil rate band” (the amount they can ultimately pass to their children or others free of inheritance tax ) from £650,000 to £1 million. The Party had picked up on a growing disquiet that the nil rate band hadn’t kept up with house price increases which were pushing more and more families into the inheritance tax net. The standard nil rate band has been capped at £325,000 per person until 2021.

On the back of that promise, for deaths on or after 6 April 2017, the new, additional “Residence Nil Rate Band” (RNRB) will be available where the estate contains a family home (“a qualifying residence”) left to children or other “direct descendants” .

A maximum RNRB amount of £100,000 per person is available for deaths this year, increasing to £175,000 in 2020. If you double these figures for a married couple, the magic £1 million figure is reached by 2020.

A “qualifying residence” is any home that an individual lived in before they died (so buy-to-let properties, for example, are not included). If you own more than one residential property when you die, your personal representatives will need to nominate which property the relief should apply to.

At the end of the day, the property needs to end up in the hands of “direct descendants”. They are defined quite broadly in the legislation and include children (including adopted, foster and step-children), grandchildren, together with the spouses and civil partners of children and grandchildren. It does NOT include nieces and nephews, siblings or other relatives.

There are three main ways a property can be “inherited” by direct descendants. These are:

  1. Under the terms of a Will;
  2. Under the intestacy rules; and
  3. By survivorship.

The main perceived difficulty arises when the property is left to a trust, for example a discretionary will trust. In these circumstances, the property will NOT be treated as having being inherited, even if the class of beneficiaries is made up entirely of direct descendants. It should however be possible to appoint the property out of the discretionary trust to direct descendants within two years of death, so that the RNRB can be captured. Where the direct descendant has an absolute entitlement to the property (for example, under a bare trust), the property will be treated as inherited.

For estates with a net value of £2m or more, the RNRB will taper away £1 for every £2 over £2m. Therefore currently, the RNRB will not be available for an individual estate over £2.2m. There may be cases where lifetime gifting is appropriate to ensure the estate is within the limits.

Where the family home has been sold (perhaps to move into a smaller, rented property or a retirement flat or nursing home) “downsizing relief” means that the RNRB can still be claimed. The calculations involved in downsizing relief are complicated, but the essence of the relief is that you can still clam the benefit of the RNRB where you disposed of a qualifying residence on or after 8 July 2015.

Where does this leave us now in terms of estate planning; should we all be changing our Wills to ensure that the RNRB is captured? The short answer is “no”. I have already mentioned that in the case of a discretionary trust, it should be possible to appoint the property out within two years to take advantage of the RNRB. A deed of variation within two years of death, if appropriate, will achieve the same result. In any event, if you have left the property under your Will to individuals who are NOT direct descendants, I doubt those wishes will have changed by reason of the introduction of the RNRB.

Specific provision can be made for the RNRB in the Will, if this gives the testator some peace of mind. One option would be to leave assets equivalent in value to the maximum available residence nil rate band on discretionary trusts, with an accompanying letter of wishes to trustees requesting that they exercise their powers to ensure that any qualifying residential interest is inherited by direct descendants to take advantage of the residence nil rate band.

While a change in inheritance tax reliefs might be a trigger to pull our Will out of the drawer, my guess is that most Wills should prove compliant with requirements for the relief unless, of course, there was never any intention of leaving the estate to children or other “direct descendants” anyway. Only, perhaps, where (rarely) the whole estate is left to a mixture of direct descendants and others, might some redrafting be necessary to ensure that the RNRB will apply to the qualifying part.

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