Wednesday, May 20th, 2009
A new Bill to update the law relating to trusts has been introduced in the House of Lords.
The Perpetuities and Accumulations Bill will modernise the rules which restrict how long an owner can control the future ownership of property (perpetuities) and how long trustees can add income to capital (accumulations). The rules are designed to prevent people locking wealth away indefinitely.
A spokesman for the Ministry of Justice said: “The Bill will restrict the rule against perpetuities to trusts and simplify its operation by introducing a single 125-year period. It will remove restrictions on accumulations except for charities, which will be subject to a 21-year limit.
“Other than a limited right to opt in to a 100-year period, the changes will not affect pre-existing trusts or wills.”
The Bill will implement recommendations put forward by the Law Commission in a report published in 1998.
Sir Terence Etherton, chairman of the Law Commission, welcomed the Bill and said reform of this ancient area of law is long overdue. He added: “The effects of the Bill will be felt particularly in commercial transactions, which will be freed from the unnecessary complexity added by these rules.”
Please contact David Edwards if you would like more information about trusts.
Saturday, May 2nd, 2009
Solicitors often advise clients to make a will so they can settle their affairs and prevent problems arising for their families in the future.
The stress that can emerge from failing to make a will were illustrated in an extraordinary case involving an agricultural labourer who worked without pay for 30 years on the understanding that he would eventually inherit his cousin’s farm.
David Thorner spent most of his adult life helping out on a farm in Somerset owned by his cousin Peter Thorner. He agreed not to take any wages on the understanding that he would inherit the land, worth £2m, when his cousin died. He lived on little more than pocket money from his parents in the meantime.
Peter made a will leaving the estate to David. Later he made an alteration to the will relating to a completely different matter but then never returned it to his solicitor. When he died the will could not be found.
In the absence of a will, other members of Peter’s family claimed the estate. The case ended up in the High Court which recognised David’s remarkable commitment and accepted that his cousin Peter had wanted him to inherit.
David was awarded the farm with the remainder of the estate, valued at over £1m, going to other members of the family.
However, Peter’s sisters challenged the ruling and won their case in the Court of Appeal. Lord Justice Lloyd said David Thorner had a strong moral claim to the farm but it would be a dangerous precedent for him to inherit it. “This is another case, where, what appear to have been a man’s testamentary intentions have failed because, for whatever reason, he did not take the proper steps to put them into effect.
“It may be thought that David had a strong moral claim to inherit Peter’s farm, after the unstinting help he gave to Peter, both on the farm and in personal support to him in his life, over almost 30 years.”
However, Lord Justice Lloyd then added that there was no evidence that anything had been said “which in terms amounted to a statement, still less a promise, that David would inherit the farm.
Mr Thorner refused to accept the Court of Appeal’s decision and took the case to the House of Lords, which has now ruled in his favour. It means he will be able to inherit after all.
The case illustrates the problems that can arise if someone fails to make a will or fails to keep it up to date. It might be said that justice was done in the end as Mr Thorner will inherit after all, but he has had to fight a long legal battle to win his case. All that stress could have been avoided if his cousin had simply updated his will.
Anyone who has not made a will or updated it to reflect changes in their circumstances should consider doing so as soon as possible.
Please Maria Turner or Sue Bedwell if you would more information.
Friday, May 1st, 2009
Many of our clients want to save Inheritance Tax but feel unable to make gifts in case they need their capital later in life – perhaps to pay for long term care.
By the time they feel able to release money it is often too late to be sure of surviving by seven years. For others they could make gifts, but are stopped for personal reasons - perhaps a child’s rocky marriage or business problems.
As a result the Inland Revenue continues to bring in untold millions of completely avoidable tax.
The good news is that there are long established and perfectly legal arrangements that allow someone to put capital out of their estate but to get it back later should the need arise.
For more information on how to save inheritance tax contact Maria Turner or David Edwards
Monday, April 20th, 2009
The process of registering Lasting Powers of Attorney (LPA) is being made cheaper and simpler.
The announcement by the Office of the Public Guardian, which administers the registration process, follows a public consultation on the implementation of the Mental Capacity Act 2005.
LPAs were one of the main provisions introduced by the Act in 2007.
The changes, which came into effect on 1st April, mean that the cost of registration is reduced from £150 to £120 and the forms and accompanying documentation will use plainer language.
LPAs have proved very popular since they replaced the old Enduring Powers of Attorney (EPA) because they offer more choice to people who want to prepare for a time when they may lose some of their mental capacity.
The property and finance LPA allows you to appoint someone to look after your financial affairs if you become incapable of doing so yourself. The personal welfare LPA lets you grant an attorney authority over such matters as health care and the kind of treatment you receive.
In the first 12 months after being introduced, the number of people registering LPAs was three times higher than the figure for EPAs in previous years.
The Public Guardian, Martin John, said: “We have listened to people’s concerns about the length and complexity of the forms and we have responded. For example, we have reduced the risk of errors through improved design and have included guidance to make completion simpler.
“Reducing the LPA registration fee demonstrates our commitment to provide a cost-effective service and to encourage take up of such an important safeguard.
‘We aim to deliver a service that is easy to understand and use, and improving the forms is a key step in that direction.”
The Office of the Public Guardian needs to register LPAs before they can be used. Registration is followed by a 42-day statutory waiting period to allow people to raise objections to the registration. This waiting period is one of the safeguards built into the process to ensure that the LPA has been drawn up properly and is not fraudulent.
People who have registered LPAs say it provides peace of mind to know that arrangements are in place to protect their interests should they lose the capacity to do so themselves as they get older.
Please contact Sue Bedwell if you would like more information about Lasting Powers of Attorney.
Tuesday, March 31st, 2009
The current financial crisis together with the housing slump means many people may find that their wills are out of date and need to be redrawn.
That’s the warning from the Law Society which says that provisions made in more prosperous times may no longer be appropriate.
One of the potential problems is that people who want to provide for someone by leaving them certain assets may find those assets have shrunk in value and are no longer sufficient to achieve the desired result.
The President of the Law Society, Paul Marsh, said: “Those wanting to leave friends and family in a secure position after they pass away might find that what they have left in their will has considerably less value than when their solicitor wrote it.
“With homes losing value people may need to look again at their wills, especially if they have included tax planning provisions which are no longer appropriate.
“The same goes for shares and other assets. The value of the assets in a person’s will might have fallen significantly since it was drafted and so the will may need to be rewritten.”
It’s also possible that the changing relative values of cash, property and shares mean that some beneficiaries may receive a greater proportion of your estate than you anticipated and some may receive less. It may be necessary to change the will to redress the balance.
Mr Marsh said: “It is essential that anyone with a will who has not looked to update it recently goes to their solicitor to review it and, if needs be, change it to reflect their current financial situation.
“A solicitor is best placed to advise on any necessary amendments, as well as provide guidance on tax planning. Reducing the tax burden on the assets you wish to leave in your will has an even more relevant benefit for your family and friends in the current economic climate.
“If you do not have a will, now would be a good time to write one or risk leaving friends, families or other intended recipients of your assets with nothing.”
Please contact Maria Turner if you would like more information about wills and probate matters.
Monday, March 30th, 2009
We are delighted to announce our new financial planning service. For many years we have been asked to provide financial advice and have been unable to do so. The partners have set up a new financial planning business, DKM Wealth Limited which is a firm of chartered financial planners. The firm, regulated by the Financial Services Authority, specialises in investments, Inheritance Tax and business financial planning.
Please contact David Edwards to arrange a free initial meeting at one of our offices to discuss your circumstances or contact John Kelly FCA at DKM Wealth Ltd
Tuesday, March 24th, 2009
A 12-year-old boy who sustained brain injuries when a car being driven by his mother was involved in an accident is to receive a lump sum of £2.3m plus regular payments for the rest of his life.
The boy’s mother was killed in the accident in which her car collided with a vehicle being driven by someone with no insurance. The uninsured driver was considered to be most at fault for the accident but the mother was also partly responsible through her negligence.
The boy’s family made a claim against his mother’s estate on the grounds that her negligence had contributed to the accident. Her insurance firm accepted liability.
The boy was only three years old at the time of the accident and because of his injuries he will never be able to lead a normal life or look after himself. His life expectancy has been reduced by up to 18 years.
Following an out of court settlement, he is to receive a lump sum of £2.3m plus annual payments of £40,000 until he is 14. These payments will increase in stages until he is 25 when he will then start receiving £126,500 a year.
Please contact Steven Kinch if you would like more information about making a personal injury claim.
Sunday, February 22nd, 2009
Readers of our Private Client newsletter can enjoy 20% of our normal charge for a standard Will if you contact us before the end of February and sign the Will before the end of March.
For the Brighton and Hove area contact Maria Turner
For the East Grinstead area contact Laura Mason
And for the Worthing area contact Sue Bedwell
Sunday, February 22nd, 2009
The amount of money a husband or wife can automatically inherit if their partner dies without making a will has been substantially increased.
However, it could still leave the surviving spouse at risk of losing the family home or other valuable assets. The Government has urged everyone to make a will to protect their families and ensure that their money is passed on according to their wishes.
It is a common misconception that if a person dies without making a will, all their estate automatically passes on to their surviving spouse. In reality, however, the estate is divided between surviving relatives in a manner laid down by the law.
Until now, if the deceased person had children then the surviving spouse received £125,000 from the estate. If there were no children then that figure increased to £200,000.
The rest of the estate was shared out between the children or other relatives if there were no children. These thresholds - known as the statutory legacy for people dying intestate, that is, without having made a will - have been in force since 1993.
On 1st February this year, these figures were increased to £250,000 for the surviving spouse, when a deceased person leaves children and £450,000 when there are no children.
It offers some extra protection to the spouses of people who die intestate but it must be remembered that the increase is well below house inflation over the same period and also below the figures recommended by the Department for Constitutional Affairs in 2005. It suggested £350,000 and £650,000 respectively.
The level of the threshold is very important because most people’s main asset is their house. If the value of the house is above the threshold, the surviving spouse may have to sell up so the deceased’s children can receive their share of the inheritance. There have been several occasions where this has happened and it can cause great hardship.
As many people’s family circumstances become more complicated due to second marriages, it is possible that this may become more of a problem in future.
Announcing the increases, the Justice Minister Bridget Prentice, said: “Married couples and civil partners should not assume that when their spouse or civil partner dies, they will automatically be entitled to everything. It is up to individuals to make sure that their wishes are respected by making a will.
“My message to people is, don’t leave it to chance. Make sure your loved ones are properly provided for by leaving a will.”
This remains good advice. It’s your money; you worked hard for it all your life. Make sure it is handled exactly according to your wishes.
Please contact Maria Turner if you would like more information about wills and probate or any aspect of inheritance planning.
Wednesday, January 28th, 2009
A 54-year-old man who injured his finger and grazed his face when he tripped on some cracked pavement has been awarded £2,837 compensation.
The injuries occurred when the man tripped on a section of pavement where the tarmac had become broken leaving a deviation of more than 1.5 inches. The injured man claimed the Highways Authority was negligent and had failed in its statutory duty under the Highways Act 1980 to maintain the area properly.
The authority disputed liability saying it had inspected the area as required and complied with the Act.
The man’s facial grazing healed up but he sustained a permanent minor deformity to the little finger on his right hand. He had not been able to work for a few days after the accident and then had to ask for lifts to work as he could not drive until his finger healed sufficiently.
The judge held that the authority was liable because the defects to the pavement were long-standing and so should have been rectified by the authority. By failing to carry out repairs it had failed to protect the man from a foreseeable risk of injury.
Anyone who sustains injury as a result of someone else’s negligence is entitled to claim compensation.
Please contact Steven Kinch if you would like more information.
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