How Pensions Have Changed

It’s just over two years since the pension reforms were introduced to give people more choice in accessing their pensions. One of the benefits it’s brought is that it is encouraging people to think more about their pensions when they’re younger.

According to research by Aegon, 15% of people have realised they need to plan more for their retirement. The number of people talking to an advisor has almost doubled in the last 12 months.

What is particularly good to hear is that since the reforms, 14% of working age people are saving more in their pension pot. As a result, there has been a big jump up since April 2015 in the average amount that people have saved, from £29,000 to £50,000.

Just as it’s important for people to seek advice on how to grow their pensions, the new freedoms mean that people should equally take advice to manage when and how much they take out at retirement.

There may be a temptation to withdraw a large sum and leave yourself with too little to enjoy in a long retirement. Before splashing out on a long, exotic holiday, it pays to take a moment to think about some of the costs you may need to prepare for now.

When planning for your future, you may need to consider funeral and possible future care costs, as well as any outstanding debts. If you have built up a large pot and plan to invest it, you will need solid financial advice to ensure you get the best return.

Figures from HMRC show that many people are taking advantage of the freedom to withdraw money from their pension pot after the age of 55. During the last year, an average of 164,000 people withdrew money each quarter. The average withdrawal per individual was nearly £9,900.

The beauty of the pension reforms is that people have more choice to decide what to do with their pension pot. There are 6 options once you get to age 55:

1. Leave the pot until a later date
2. Buy an annuity
3. Invest the pot to produce an income
4. Withdraw cash in chunks
5. Withdraw the whole pot in one go
6. A mix of the above

Many people are still following the traditional route of buying an annuity, but as the figures go to show, many are also enjoying their new-found freedom. But the choices you make at retirement may have a big implication on the inheritance tax your dependents will need to pay.

It is worth discussing this with both your financial advisor and your Will writer. It’s a complex area and in some situations, it may be advisable to set up a Trust.

For advice on planning your Will please contact legalmatters today on 01243 216900 or email us at info@legalmatters.co.uk.

Where There’s A Home, There’s A House – Using Your House In Retirement

A house is far more than simply a home. It’s also an enormously valuable asset, which can help you meet the costs of retirement.

In truth, most of us aren’t saving enough to cover our retirement needs. A recent study by Prudential found that more than half of those planning to retire this year will work beyond state pension age, with many pointing to a lack of money as the motivating factor. Around 1 in 12 said they simply could not afford to retire before they reach the age of 70.

However, the value tied up in our properties represents a potential answer for some with insufficient savings. According to Key Retirement, the property owned by the over-65s is worth a massive £1.054 trillion. So how can people tap into that money?

One answer is to downsize to a smaller property. These will usually be substantially cheaper, meaning that you can move into a property which is less difficult to manage and bank thousands of pounds to supplement your pension.

If you don’t want to leave your property, perhaps because of sentimental reasons or because it is close to family, then looking to remortgage may be an option. However, some lenders are less than eager to lend to people in their later years, so it may not be possible. Your chances of successfully remortgaging will depend on your individual circumstances.

An increasingly popular option is equity release, where you essentially unlock some of the equity you have built up in your property. Interest in equity release is at record levels and in the first half of 2017, retired homeowners cashed in £1.25 billion of housing wealth, according to Key Retirement. While these products are more expensive than remortgaging, they provide a useful alternative and should allow you to leave some form of inheritance for your loved ones after you pass away.

Interested to see how your property can supplement your retirement or be left to your loved ones after you’re gone? Speak to us today on 01243 216900 or email us at info@legalmatters.co.uk.

Spoiling Legacies For Celebrity Children

Father of 4, Gordon Ramsay, has joined a growing list of celebrities who have decided not to leave their inheritance to their children. The celebrity chef, perhaps as well known for his colourful language as his culinary genius, believes in instilling a strong work ethic in them instead.

He has homes in London, Cornwall and LA and an impressive income – he is in 26th place on the Forbes rich list, with an income for the last year of £46 million. Despite this, he shares the view with many that to leave his offspring a fortune would be to spoil them.

He and his wife Tana have agreed they will give their children the 25% deposit they will need for a flat – but that’s it.

The common theme among the people taking this stance is that they want their children to grow up hard-working and fulfilled. They believe that handing on large sums of money changes people for the worse.

There are many who feel that their money is better spent on charitable works. In 2010, Bill and Melinda Gates and Warren Buffet set up the Giving Pledge. They encouraged 40 of America’s wealthiest people to join them in committing to give more than half of their wealth away, either while they are living or through their Will.

In an interview on ITV’s This Morning, Bill Gates summed up his attitude towards inheritance: “It’s not a favour to kids for them to have huge sums of wealth. It distorts anything they might do creating their own path.”

Simon Cowell has also said he plans to leave his money to charity. Whether he has changed his mind since the birth of his son, Eric, remains to be seen.

Sting on the other hand has said he intends to spend his wealth while he’s still alive. He, along with Nigella Lawson and Lenny Henry have echoed similar concerns as Bill Gates about over-privileging their children.

Back in 1992, three female inheritors set up the Inheritance Project. They wanted to talk about how inheriting wealth can be a negative thing and the effects it had on them. They interviewed 200 people in a similar position to them. They found that it was common for people who had inherited large sums of money to be trapped by their lack of needing to work and that many of them found it difficult to sustain relationships and had problems with addictions.

Obviously, all these examples involve very large sums of money and the people in question are not leaving their children penniless. But regardless of the size of your estate, it is worth putting some thought into what you leave to who and ensuring that it’s drawn up correctly.

For help on any aspect of preparing your Will, please call legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

From here to maternity; why sorting out your Will needn’t be a Royal pain…

This week, a statement from the palace made the happy announcement that William and Kate are expecting once again. This news makes legalmatters feel all gooey inside. Legalmatters does love a baby, particularly a royal one with a rosy cheek and a knee sock, and extends the warmest of congratulations to the Cambridges on their impending bundle.

It has been baby news all around this week at LM towers with many clients sharing their news of family additions. New babies, together with holidays, are often one of those trigger events that get people thinking about their legal affairs. It’s a funny old thing having babies. Along with an indescribable love and exhaustion that you never thought possible, becoming a parent (and legally responsible for another tiny human) slaps you in the face with a fear of mortality like no other experience. No longer will you approach life’s risks with the same reckless abandon as your childless life before; bungee jumping and sky diving may take a backseat for a few years. Let’s face it, even that initial drive home from the hospital can be one of the most tense and apprehensive of your life. Don’t they realise you’ve got a baby in the back for goodness sake? You’ve even fashioned a gaudy yellow sign to warn other drivers of your precious cargo – yet they’re still driving like Bowser from Mario Kart as you indicate half a mile before your turning and drive at 15mph in a 40mph zone.

One client in particular has been in touch to put their instructions ‘on hold’ whilst they await their first baby in the next few weeks. They cheerily informed us that they would be back in touch in 6 weeks or so to finish off their Will and as we hung the phone up we wanted to ruffle their hair with an ‘aawww’ and a head tilt.

It may well be that 4 weeks post birth they will be straight back on the phone with confirmation of who is to inherit the family clock and who their executors are. But, it may be that there are other things taking up their time when they are at home with a one-month old. Such as brushing their teeth, wearing something that isn’t covered in milk and – the holy grail – actually managing to drink a cup of tea whilst it’s still hot.

Life with a new baby is hard. Physically, emotionally, financially. It can take time – a lot of time – being caught up in the wonderful, confusing, exhausting and worrying whirlwind of looking after a new baby before you step outside, blinking into the sun, and make steps to reintroduce a semblance of routine and anything which resembled your life before.

Of course you should get your Will sorted, now more than ever. But we are realists and know that life has a habit of getting in the way. Sorting out your Will in the months post birth is on the list with getting the car serviced, shaving or sorting out the weird drip in the downstairs cloakroom tap. You know you must do them, but seriously, all hours in the day are spent keeping a small person alive. Making it out of the house to get to Rhyme Time can be an effort of Herculean proportions, let alone the time and expense of going to see a Solicitor to sort out your Will and LPAs. Legalmatters knows that your time is precious and time spent going to see a Solicitor at their office – around naptimes- could be time spent watching Netflix and eating Hobnobs. Sleep when the baby sleeps? Yeah, right. I guess you then cook when the baby cooks and clean when the baby cleans too?

Legalmatters can take all of your instructions over the phone (or email. Might as well spend those 3am feed times productively rather than Facebook stalking ‘Gemma from Accounts’ holiday photos from Faliraki in 2007). Sorting out your Will and LPA with legalmatters can be quick, easy and super cost effective (as maternity leave pay is not the time to be paying extortionate fees for your legal documents).

So, whilst Catherine spends the next few months with her feet up contemplating suitably regal names (top tip: Arthur, Henry, Richard = good; Kong, Joffrey, Wenceslas = avoid), why not spend the time putting legal documents in place before the big day?

Choosing guardians for your children is nowhere near as fun as choosing nursery colours – but it is far more important. For help preparing your Will, please call legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

Only 5% Are Prepared For The Future

 

Whenever we spot a new wrinkle or grey hair, we often pause for a moment and consider how the years are rolling by. Most of us at some point will also worry about how our health might deteriorate in our later years.

In a recent study by a national law firm, 75% of respondents said they worried about getting older and 70% were specifically concerned about developing dementia. Surprisingly, despite these worries, only 5% had made plans to deal with such an eventuality.

When someone develops an illness such as dementia, or is involved in an accident that takes away their capacity to make decisions for themselves, someone else needs to make decisions for them. But nobody has the automatic right to do so. Neither your partner nor your children nor your closest friends and relatives can, unless you have specifically given them permission in advance in the form of a Lasting Power of Attorney (LPA).

An LPA can only be made while you have the mental capacity to do so. If you lose capacity to make your own decisions and there is no LPA in place, your loved ones will need to apply to the Court of Protection to appoint a deputy to make your decisions for you. They can apply to be appointed as your deputy, but it will be the court that makes this decision rather than you.

It costs £82 to register an LPA with the Office of the Public Guardian.

On the other hand, the costs for setting up a deputy via the Court of Protection are more expensive. The application fee is £400 for each type of deputyship: health/welfare and property/financial affairs. An appeal, if required, is another £400 and if the court decides a hearing is required, that’s a further £500. In addition, there is an assessment fee of £100 for new deputies and an annual supervision fee.

No-one likes to consider what may befall them in the future. It’s a much easier job to plan for though if done in advance. The financial and emotional cost for your family to deal with it after the event can be significant. Perhaps most importantly of all, LPAs allow the individual concerned to document their wishes around what happens to them at a later date and decide who will make those decisions on their behalf.

For help preparing an LPA, please call legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

Peace Of Mind Before Your Holiday

Planning your Will may be the last thing on your mind as you’re packing your shorts and sun cream, but accidents and injuries happen when we least expect them. Of course, the chances of dying or sustaining a severe injury on holiday are slim, but if you have a Will in place it’s one less thing to worry about as you head off for your break.

The risks vary depending on where you’re travelling to. According to the latest information from the Foreign and Commonwealth Office (FCO) there were just over 3,600 reported deaths of British nationals abroad in the year 2014/2015. Spain, Thailand and France recorded the highest number of fatalities. The FCO also recorded over 3,300 reported hospitalisations. In both cases, the numbers reflect occasions where the foreign office gave assistance, so the totals for both sets are likely to be higher.

If you’re travelling abroad, it’s far less likely that you will be struck down by an infectious disease. The greatest risk for most travellers according to the World Health Organisation is road traffic accidents. Even more so if you’re travelling to a lower income country, where typically road laws are a little more relaxed. Add to that, that as a driver you may be driving a vehicle you are unused to, the steering wheel may be in a different place – you may be adapting to driving on the right-hand side of the road and navigating signs in a different language.

The other high risks are associated with violence and water activities. According to the Swimming Teachers’ Association, a Briton is 5.5 times more likely to drown abroad than in the UK. In the decade up to 2010, 784 Britons drowned abroad, the majority of whom were adults.

Once you have a Will in place, make sure it’s stored in a way that’s easy for your executor to find. The company that writes your Will may be able to do this for you.

Holidays are a time to relax and spend time with the people you love. Setting up things such as Wills and travel insurance means you can sit back and enjoy yourself in the knowledge that if something does go wrong, your family will be taken care of.

For help on any aspect of preparing and writing a Will, please call legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

 

The Forsyth Saga

Last Friday, news broke of the sad death of Sir Bruce Forsyth. The former Strictly Come Dancing host and all round National Treasure passed away at the age of 89, following a lengthy battle with illness. 

Reports in various national papers have since detailed the star’s alleged estate planning which, according to ‘a friend’, was done in an effort to “avoid it being gobbled up by the taxman”. By all accounts, Sir Bruce has left all of his £17million estate (didn’t he do well?) to his wife outright where it has then been widely reported that his widow Wilnelia will then “be able to transfer up to £650,000 to each relative tax free to avoid inheritance tax”.

Whilst is it true that legacies to spouses are free from inheritance tax by virtue of the spousal exemption, legalmatters shakes its head at the level of misinformation reported. Quite frankly it doesn’t even know where to start with dissecting what a flawed and short-sighted piece of alleged tax planning this represents, but here goes.

So what is the actual position (if indeed these were his wishes) and why might it be regarded as a potentially reckless and ineffective idea?

First of all, the tabloid press have been quoting the figure of £650,000 supposedly available for Wilnelia to generously distribute ‘to each relative’ once Sir Bruce’s legacy has been transferred. Each relative!?! If this was the case, then the majority of estate planners would be out of a job and considered, surplus to requirements.

It would appear that the press have confused the level of transferrable nil rate band available to the surviving spouse on death with what an individual is able to give away tax free during their lifetime. Whilst Wilnelia would indeed be able to benefit from her late husband’s inherited nil rate band of £325,000 to combine with her own on her death, her late husband’s nil rate band is not something that she would be free to make use of during her lifetime. The articles also totally disregard the newly established ‘residential nil rate band’ that this tax year alone would have increased the late entertainer’s tax free allowance by an additional £100,000 (but latterly would allow a combined nil rate band of £1,000,000 if left to lineal descendants).

Any legacy left to a spouse is free of tax by virtue of the spousal exemption. Wilnelia is, of course, free to make gifts to whoever she likes during her lifetime. As long as she were to live another 7 years following such gifts (of any monetary value) these would also be inheritance tax ‘free’. Quite honestly, she could gift the full £17 million equally amongst his 6 children (or whoever she so wishes) as soon as she had received the monies from probate, should she be so inclined, but therein lies the issue.

If indeed this is the arrangement, there is NOTHING obliging Wilnelia to carry out the ‘wishes’ of her late husband. Outright gifts by their very nature, leave the recipient free to do whatever they like with the legacy. Despite ‘wishes’ or ‘instructions’ from the deceased, there is nothing legally binding to see that these are fulfilled. The deceased is simply requesting the recipient to make distributions and is hoping that this will be carried out. Whilst this level of trust is admirable, the private client practitioner knows more than most that trusting your relatives to ‘do the right thing’ on your death is a dangerous assumption.

Let us assume that, despite having no legal obligations to do so, the recipient of the legacy has every honourable intention of making these posthumous gifts. They themselves would need to survive another 7 years which is always a risky proposition. What instead, if they were to lose mental capacity and unable to make such transfers? Michael Schumacher’s tragic accident and resultant circumstances have shown that age, wealth and level of fitness have nothing to do with a lack of mental capacity and inability to manage your own affairs. How can we be sure that Wilnelia shall live a long and untroubled life, free of illness and incapacity? Her ability to make gifts from her late husband’s fortune and to therefore share the wealth and to reduce her own liabilities to inheritance tax is dependent on her being mentally fit and well; certainly, any attorneys that she may have appointed won’t be able to undertake such tax planning ventures without court authority (another common misconception).

So what might Sir Bruce have done to make provision for his children and grandchildren (and indeed he could well have done, because we are commenting on the reporting, not on actual events)?

Lifetime gifting would have been the best starting point. If carried out wisely and cautiously, after careful advice and taking all needs of the parties into due consideration, then lifetime gifting is an excellent way of reducing your tax bill.

And what about the use of trusts? Despite trusts having their own particular tax regimes, they are immensely useful structures to protect and preserve assets against unknown circumstances. Tax shouldn’t necessarily always be the driver, particularly where significant wealth is concerned.

Finally, any charitable giving would have the double benefit of not only being exempt from IHT for the legacy itself, but it could also have reduced his IHT rate to 36% if he had left 10% or more of his total estate to charity. A Brucie bonus if you will.

For the papers to glibly report that Sir Bruce has ‘in one fell swoop’ cannily avoided inheritance tax and at the same time ensured that his wealth lands where he would wish is, in our humble opinion, grossly underestimating the risks and potential issues at hand and is in any event based on apparent mis-reporting of the facts.

Make sure that your wishes are adequately enshrined in the correct, binding, legal documents as the road to court is paved with good intentions. Nice to sue you, to sue you, nice. Speak to a member of the team at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk to find out more.

Factoring Overseas Assets Into Your Will

Writing a Will is the best way to decide exactly what will happen to your assets after you die. It’s important though to remember that you can determine what happens not just with your assets in the UK, but international assets too.

It’s no longer particularly unusual for people to own assets in more than one country. For example, around 200,000 Brits own property in France alone. Accounting for these international assets properly when writing a Will is incredibly important, but the process can be rather complicated.

There are cross-border inheritance and tax issues to consider. Britain is unusual in that you can decide exactly who inherits your property, but in certain European nations there are more restrictive ‘forced heirship’ rules which dictate precisely who can inherit. Until a couple of years ago, these rules applied to Brits who own property in these nations, though these restrictions have since been loosened.

It may be that you need to have separate Wills in each country in which you own assets, as well as a main Will in the country in which you live, in order to control what happens after you die.

In most countries, probate is required before any foreign assets can be sold or transferred. This process can be complicated, yet it is still preferable to dying without a Will in place, in which case your loved ones will have to deal with foreign intestacy. This can be enormously expensive, stressful and time consuming.

The world is getting smaller all the time, so increasing numbers of us own assets in other nations – whether that’s property or investments. That makes it even more important that you write comprehensive Wills in each nation, setting out precisely what you want to happen with your assets.

No-one wants to think about what happens after they die, but failing to leave a Will could leave your loved ones with enormous stress, particularly if they are having to deal with foreign assets as well as domestic ones.

Talking to a professional Will writer is strongly advised so you ensure all your assets are going to the right places. You are welcome to call us at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk and we’d be happy to talk you through things.

How easy is it to challenge a will? A cheesy tale of woe

The national press carried a somewhat bizarre tale of a woman in her 20s who married a retired school lollipop man, aged 76, who claimed that she’d found his most recent will (which left the vast bulk of his £600,000 estate to her rather than his daughter by a previous marriage) in an empty Doritos packet in the attic of the family home in Harrow Road, Wembley!

The Daily Mail story tells how Marsha Henderson married ex-London bus conductor Newton Davies in 2004.  He died in 2013 aged 85 and in a will dated July 2011 left Ms Henderson £25,000 with the rest to his daughter and friend.  The so-called ‘Doritos Will’ apparently discovered by Ms Henderson reversed the contents of the earlier Will.

So, there were three different parties involved and therefore three different sides of the story.

If you can put up with the crisp puns then stay with us for a little longer …

So quite how does this corny triangle (I did warn you) relate to us all and what messages should be taken from it?

It may strike you that putting an important document such as Will into a Doritos bag in an attic is a bit eccentric, not to say suspicious, but there are eccentric people in the world.  That of itself would not be grounds for challenging the will.  The deceased’s daughter was able to convince the judge that her father had signed his last true will in July 2011 and therefore the more recent ‘Doritos Will’ was a forgery.

That contention was assisted by the fact that the new will was a simple, but rather poor quality, fake.   Its most striking defect being that the clause at the end referred to it as being “HER” last will.  As the judge pithily remarked “the deceased was a man and not a woman”.

So, was Ms Henderson cornered (I apologise!) and could this happen to anyone?

Not all challenges to a will may be as clear-cut and obvious as this one.  Any court would have to be satisfied that the will does not express or carry out the deceased’s true intention.  There has to be evidence backing this up. Although this case may have been an exception because of the amateur and obvious attempt at deception, challenges to Wills on the grounds of forgery are not uncommon – but they are notoriously expensive and difficult to prove.  For example, handwriting experts are often called upon to dispute a signature.

So how do you take the heat out of a wave of potential problems?

Having a professionally prepared will is obviously the best answer.  Crisp packets in lofts are never the best place to house such an important document as a Will!  Here at legalmatters we are very happy to discuss with clients their circumstances, needs and options in relation to Wills and estate planning.

We make the whole process nice and easy, dealing with everything over the phone or by email if that’s what suits you best.

It doesn’t need to cost a packet to make a Will!  Our costs are also fiercely competitive.

Let us guide you through the process of making a Will and ensure that your Will is a sweet (as opposed to a hot) potato!

For more like this, Follow Us on Facebook, or if you have an immediate query, call us on 01243 216900 or email us at info@legalmatters.co.uk.

Winter is coming; be prepared. The legal lessons we can learn from Game of Thrones…

As Game of Thrones season 7 is fully underway, the shenanigans of the inhabitants of Westeros are attracting viewers in record breaking numbers. Whether or not this fictional romp of dragons, zombies and war is your cup of tea, once you remove the fantasy element, you are left with the very bread and butter of a private client practitioner’s workload; family relationships, wealth and death. A tenuous link? Perhaps, but undoubtedly these universal themes are very much at the heart of both worlds.

Admittedly, the level of death is a little more frequent and varied than the average probate practitioner’s workload. Her Majesty’s Courts and Tribunal Services have a difficult enough job processing paperwork without having entire family dynasties wiped out in one fell swoop (one can only imagine the Oath drafting…)

But on a serious note, the programme highlights that death will not always present itself in the chronological order of a family tree. Even despite the wealth of information in the public domain, we are still faced with clients who do not have a Will as they believe their wealth will automatically be inherited by their children on their death. The Intestacy Rules will only go so far in handing down your estate to your lineal descendants but, of course, there is so much more to a Will then simply enshrining this course of events.

Warring offspring? Dubious marriage choices? Unruly illegitimate children? All in a day’s work in the Seven Kingdoms yet in the real world, these issues are just as much cause for concern for our clients today. If you are worried about protecting the family wealth (however big or small) correct estate planning can prepare for such eventualities and ring fence funds for your intended recipients without the worry of funds falling into the wrong hands.

Indeed, so many of the show’s main conflict points could have been easily avoided and managed had the characters’ legal affairs been put in order.

Had the ‘Mad King’ been furnished with a fully registered Lasting Power of Attorney, then his appointed attorneys could have stepped it at the first sight of faltering capacity and a much cheerier (and less bloody) outcome could have been achieved by all.

A Lannister always pays their debts, and loans and gifts are indeed an excellent form of estate planning if done in the right way. A flexible family trust is a great way of allowing for loans and repayments to be made to and from the family pot of money. Running out of blood descendants? A trust also allows for the person setting it up (the ‘settlor’) to add friends or charities into the mix.

There is certainly a stark solution for making provision for ‘blended families’ (with children born from different relationships) in a straightforward manner, without having to lose your head.

Whatever your family situation, legalmatters will find the right solution for you to ensure that your death does not leave any nasty surprises for those left behind.

An appropriate, professionally prepared and properly executed Will can provide security for your family, during an already emotional time. There is a time and a place for drama and conflict, and your death shouldn’t be one of them. Make a Will, make your wishes clear, because goodness only knows transferring the ownership of a dragon is an administrative nightmare at the best of times!

For more like this, Follow Us on Facebook, or if you have an immediate query, call us on 01243 216900 or email us at info@legalmatters.co.uk.