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Making a Living Will…

A Living Will, also known as an advance decision, is designed to be used during your lifetime and sets out your wishes in respect of your care and medical treatment.

By making a Living Will, you can put in writing details of what is important to you and how you would like to be treated in the event that you are unable to make or communicate your wishes at a future date.

What you can include in a Living Will

As well as medical considerations, you can record your preferences in respect of where you would like to be cared for, personal preferences for your day to day life, such as diet and religious beliefs, and who is to be consulted about your care. You should ideally also discuss this with your family and those included in your Living Will.

You cannot include any instructions about what should happen to your estate after you die; this needs to go in a separate Last Will and Testament.

What to consider in respect of medical treatment

It is possible to refuse certain treatments, such as life support and antibiotics for life-threatening infections, but you cannot refuse basic care or food and water. Similarly, you can’t nominate someone to make decisions on your behalf.

If you have a specific condition, you should discuss the possible terms of any Living Will with your medical practitioners.

A Living Will can be made at any time, to help loved ones make difficult decisions in the future, and it is not necessary to wait until you are facing illness or incapacity.

Is a Living Will legally enforceable?

If your Living Will is within the bounds of what is legal and is valid and unambiguous, it will be legally binding on medical professionals.

Health and welfare lasting power of attorney

A health and welfare lasting power of attorney (LPA) is a document appointing someone to act on your behalf in respect of similar matters. If an LPA is signed after a Living Will is made, it may invalidate the Living Will if it gives the attorney the power to make the same decisions covered in the Living Will.

It is possible to write a health and welfare LPA that doesn’t invalidate a Living Will, however this would need to be carefully drafted.

A Living Will made after a health and welfare LPA would take precedence to the LPA in respect of life-saving treatments.

By putting a Living Will in place while you are able to make important decisions for yourself can be helpful and of comfort to your loved ones in the future.

If you would like to talk to one of our lawyers about a Living Will or an LPA, call us on 01243 216900 or email us at info@legalmatters.co.uk.

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Leaving a jointly owned property in your Will…

If you own your home jointly with someone else, you should think about how you want to leave it when you write your Will.

There are two different ways in which you can jointly own a property. Only one type of ownership allows you to leave your share of your home to someone in your Will.

Owning your home as a joint tenant

If you and your spouse or partner own your property as joint tenants, then on the death of either of you, the property automatically passes to the survivor. Even if you leave all of your estate to someone else in your Will, a property owned by you as a joint tenant will become solely owned by the other joint tenant.

Owning your home as a tenant in common

If you hold your property with someone else as tenants in common, then your share of that property passes in accordance with your Will. If you don’t have a Will, then it will be subject to the rules of intestacy, which specify which of your relatives will inherit your estate.

This means that if a tenant in common dies, the surviving owner may be forced to leave the home if the person who inherits the other share wishes to sell.

Writing your Will as a property owner

It is always preferable to write a Will, whether or not you own a property, to ensure that your estate passes to those whom you would wish to benefit from it. If you do own a property jointly with someone else, think about what you want to happen after your death.

If you would like to leave your share to someone else, but you currently hold the home as joint tenants, it is possible to sever the tenancy so that ownership becomes as tenants in common. When you own a property in this way, it is also possible to hold unequal shares, for example one-quarter owned by one person and three-quarters by another. This needs to be put in writing at the time the tenancy is created. You can also put details of how you will agree any sale of the property into this document.

Creating a life interest trust

If you want your spouse or partner to live in the home after your death, but don’t want to give them your share of the property outright, your Will can give them a life interest in the home. This would give them the right to live in the property for as long as they want, but ultimately the house would pass to your choice of beneficiary.

This prevents the ‘sideways disinheritance’ trap, where a second spouse could choose to leave the property to their children, excluding the children of the first marriage.

If you would like to talk to one of our property experts or Will writers, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

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Inheritance tax

Is Inheritance Tax payable on property gifted during lifetime?

It is a mistake to think that Inheritance Tax (IHT) can be avoided by giving away assets during your lifetime.

While it may often be the case that it is beneficial to pass on gifts during your life, you need to be aware that there could still be an IHT liability.

The tax rules on lifetime gifts

Gifts of cash or valuable items made in the seven years before death may need to be counted when the estate executor calculates IHT liability.

Up to £3,000 can be given tax-free each tax year, or £6,000 if no gift was made the previous year.

Each parent can give their child £5,000 tax-free towards a wedding, and a grandparent can give £2,500 and other relatives £1,000 towards a wedding.

When a gift is given in the seven years before death, it will need to be included in estate calculations for IHT. It is the job of the executor or administrator to find out what gifts have been made and account to HM Revenue & Customs for any IHT that may be due.

Where gifts exceed the amount allowed to be given free of tax, then they will be deducted from the nil-rate band, ie. the amount an individual can leave tax-free on their death. The figure currently stands at £325,000.

There is a sliding scale for calculating the amount of IHT payable on gifts. Where the sum was given less than three years prior to death, then IHT is payable at 40 percent. In the three to four years before death it is 32 percent and the sliding scale continues for each year at rates of 24 percent (four to five years), 16 percent (five to six years) and 8 percent (six to seven years).

Tax-free gifts

Small gifts of £250 or below can be given free of tax, as can gifts made from income you receive and maintenance payments made to relatives or ex-spouses.

Tax-free giving to spouse or civil partner

As your whole estate can be passed free of IHT to your spouse or civil partner, it follows that lifetime gifts to them are also free of tax. However, if you put money into a trust, this may create a tax liability. It is a complex area of law and it is advisable to speak to an expert tax and trusts lawyer.

An experienced adviser will also be able to help you make the most of IHT allowance and suggest ways of structuring your assets to minimise the amount of tax payable. When done properly, this can make a substantial difference to your liability.

It is also possible to appoint a professional executor who would be responsible for calculating IHT liability and preparing estate accounts.

If you would like to speak to one of our expert tax and trusts professionals, ring us on on 01243 216900 or email us at info@legalmatters.co.uk.

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Can you leave someone a legacy in your Will and also name them as your Executor?

When you’re writing your Will, you will need to choose the right person to be your executor. We look at what being an executor entails and whether that person can also be a beneficiary.

It is important when writing your Will that the executor you name is someone you trust to deal with your affairs after you’ve gone. Estate administration can be a long and sometimes complicated matter and you need to be sure that the person you have chosen is willing to act and capable of doing so.

It is perfectly acceptable for your executor to be a beneficiary as well, in fact this is often the case.

The role of executor

Your executor will be responsible for all administrative matters, starting with funeral arrangements and registering the death with the appropriate authorities. You can choose more than one executor should you wish.

They need to notify all asset holders and other organisations and then collect in and value the assets.

Other ancillary jobs such as putting vacant property insurance in place and making arrangements to check on any property regularly also fall to the executor.

Once the estate has been valued, tax needs to be calculated and paid. This includes Inheritance Tax, Income Tax and in some instances Capital Gains Tax.

Once the estate is in funds, outstanding debts need to be paid and estate accounts prepared.

The final job is to distribute the estate to the beneficiaries. This may involve transfer of assets and gifts of personal possessions as well as cash payments.

The role of beneficiary

A beneficiary will be notified that they have been left something in the Will, but won’t necessarily be regularly updated on the probate process unless there are delays. As well as receiving their named gift, they are also entitled to see the estate accounts.

If no valid Will exists

Where the deceased didn’t leave a Will, their estate passes under the Rules of Intestacy, which state that assets pass to close family members in a strict order. The spouse is at the top of the list, with children next. The person heading the list is entitled to act as executor if they choose. If they do not wish to take on the role, then the next person has the option of doing it.

By ensuring that you have a valid Will in place, you have the chance to appoint your choice of executor as well as ensuring that your assets are left to those you wish to benefit.

If you would like to talk to one of our expert Will writers, ring us on on 01243 216900 or email us at info@legalmatters.co.uk.

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Estate administration deadlines…

After someone dies, their assets need to be collected in and distributed to their beneficiaries. We look at the deadlines for completing this work.

The person who deals with the administration of an estate is known as the executor or, where there was no Will, the administrator. It is their job to value the estate, apply for probate if needed, work out any tax liability, discharge debts, liquidate assets, prepare estate accounts and arrange for distribution of the money and personal items in accordance with the Will or the rules of intestacy.

The time limit for administration

One year is allowed for completing the administration, with Inheritance Tax due by the end of the sixth month after the person’s death.

If the deceased had assets in many different places, for example different bank accounts, shareholdings and assurance policies, then it can take a considerable amount of time to even work out how much is in the estate.

For this reason, it is advisable to start work on the administration as soon as possible and make sure there are no avoidable delays.

If there is a property, this will need to be sold. Again, this can take a considerable amount of time, so the wheels need to be set in motion early on. This may involve valuing items, selling contents and arranging for clearance as well as the actual property sale itself.

When the work can’t be completed in a year

It is not unusual for administration to take longer than a year, for example if it takes a long time to find a buyer for the house or if there is an issue with a government department such as the Department for Work and Pensions.

Where the executor or administrator can show that they have acted in the best interests of the estate and that the delay is justifiable, then more time is usually permitted.

If the delay continues, interim accounts can be prepared and interim payments made to the beneficiaries. Beneficiaries will be entitled to interest on payments that remain outstanding after the one year period has come to an end.

Deed of variation deadline

If a beneficiary wants to change the share they receive, for example to include another family member or for Inheritance Tax reasons, they can execute a deed of variation to redirect part of their legacy to someone else. The deadline for signing a deed of variation is two years from the date of death.

If you are concerned about the time limits for completing an estate administration, you can engage a professional to deal with the work on your behalf.

If you would like to speak to an experienced probate lawyer, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

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What to put in your Will

What to put in your Will…

Writing a Will involves more than simply choosing who to give your money to. We look at what you should consider when making a Will.

Your Will is the document that tells people what you would like to happen to your estate after your death. If you have young children, it can also ensure that they are cared for and provided for.

The following are points to think about before having your Will drawn up:

Executors

Executors are the people responsible for dealing with the administration of an estate. They will need to collect in and value the assets then arrange for transfer or sale of them and distribution of money to your beneficiaries.

It can be a complicated and time-consuming job, so it is important to choose people who you believe are capable of carrying it out, as well as those you trust implicitly. It is possible to appoint a professional executor, for example a solicitor.

Guardians

If your children are under 18, you should use your Will to appoint a guardian for them in the event of your death.

If you don’t choose someone yourself, then it will be for the court to decide who should raise them.  You should speak to your choice of guardian and make sure that they are happy to take on the role.

Funeral arrangements

If you wish, you can include funeral arrangements in your Will, however bear in mind that they will not be legally binding. It can give your loved ones an idea of what you would have wanted however, so it can be of comfort to them. You should make sure that you have also told them that your wishes have been included in your Will in case they do not have sight of it straight away.

Specific legacies

You can leave gifts of money or items in your Will, known as specific legacies. These can be given to named individuals or charities.

Residuary Estate

This is the portion of your estate that remains after all expenses, debts and specific legacies have been paid. You can leave it to one person or split it between several, giving each one a named share, for example a third.

The important thing to bear in mind is that if your estate ends up being smaller than you had anticipated, then the residual amount may be far less than you wanted to give to someone. Those receiving specific legacies will still receive their money first, and those sharing the residuary estate may be left with very little.

To speak to one of our expert Will lawyers, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

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Foreign assets in a Will

How to deal with foreign assets left in a Will…

More people than ever are leaving assets in foreign countries when they die, making administration of their estate more complex. We look at some of the main considerations.

One of the first questions to be answered is which country was the permanent home or country of domicile of the deceased.

If you are domiciled in the UK, Inheritance Tax is payable on your assets wherever they are located. If you are domiciled elsewhere then you may be liable for Inheritance Tax on your UK assets as well as tax payable in other countries.

All of the assets in the estate need to be valued. At this stage, approaches can be made to foreign asset holders to ask what they need from the executor, such as a certified copy of the death certificate or Grant of Probate.

Foreign property ownership

A Will made in the UK may specifically refer to foreign property, or alternatively there may be a Will made in the country where the property is located.

If there isn’t a Will at all, then the property would pass under the rules of succession that apply in the country where the property is.

Other assets held abroad

Other countries may require to see the UK Grant of Probate which would sometimes be resealed in that country. Alternatively, it may be a requirement that probate is also obtained in the country where the asset is held.

Why you need expert advice for foreign assets

Administering an estate which includes foreign assets can be lengthy and complicated. The best way to ensure things go as smoothly as possible is for anyone with foreign holdings to seek legal advice in drawing up the relevant Wills to cover all of their assets.

Some countries may have laws which clash with those of the UK, for example in France and Spain, where property may pass to specific heirs regardless of the terms of any Will.

Finding out the situation well in advance and undertaking estate planning in the light of the different laws can make a huge difference to the executor or administrator of a Will.

When it comes to dealing with the administration of an estate containing foreign assets, it is advisable to take advice from lawyers in the country where the assets are held to ensure that their laws and tax requirements are not breached.

If you would like to speak to one of our expert Will and tax lawyers, call us on 01243 216900 or email us at info@legalmatters.co.uk.

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Mental Capacity

Testamentary capacity – an essential requirement in making a legally valid Will…

When making a Will it is essential to have the legal and mental ability to understand the document and its effect. Without this, a Will is invalid and cannot be used. In the absence of any other Will, the estate would then pass under the Rules of Intestacy.

A survey of family solicitors carried out by insurer Direct Line found that lack of testamentary capacity was a common cause of a successful challenge to a Will’s validity.

We look at the legal requirements to satisfy this requirement.

The criteria for testamentary capacity

The person making the Will must firstly understand the nature of making a Will and its effects.

Secondly, they need to understand the extent of the property of which they are disposing.

Thirdly, they need to be able to understand and appreciate the moral claims that people may have on their estate, for example those who they support or those who have been promised something and who may have acted on that promise to their detriment.

Finally, they need to have no disorder of the mind that prevents them understanding what is right or stops them exercising their natural faculties.

When testamentary capacity is challenged

If testamentary capacity is challenged in court, then evidence would be needed from witnesses who could attest to the deceased’s mental capabilities as well as their ability to understand the Will and the claims others might have on their estate.

Expert witnesses could be called, such as doctors, who may have known the deceased at the time the Will was written.

The court will also look at anything the deceased may have said with regard to distribution of their estate.

Avoiding a legal challenge for lack of capacity

Court action can be lengthy and expensive for all involved. It is worth taking the time and trouble to put a valid Will in place before there are any doubts as to testamentary capacity.

If a Will is drafted professionally, then the Will writer will take the time to discuss matters thoroughly with you and make their own assessment of your capacity. They can make filenotes, to be kept at their offices in case they are ever needed, confirming their belief that you were capable of making a valid Will.

If the case ever came to court, they would be able to give evidence as an experienced Will writer that in their assessment you had testamentary capacity.

Should they believe that a case is borderline, they may also ask for a medical professional to become involved to provide additional evidence.

If you would like to talk to one of our expert Wills lawyers, call us on 01243 216900 or email us at info@legalmatters.co.uk.

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Dealing with business assets during Probate

Dealing with business assets during Probate…

When the owner of a business dies, probate can be lengthy and complicated as their business assets have to be valued and transferred.

Whether business assets are sold or transferred depends on the way in which the business was owned and operated as well as the wishes of the deceased.

The estate’s executor or administrator will need to obtain a Grant of Probate or Letters of Administration enabling them to deal with the business.

Sole trading and probate

If the deceased was a sole trader, then their finances and assets are simply treated as part of the estate.

Business partnerships and probate

Where the deceased was in a partnership, there would normally be a partnership agreement giving details of each partner’s contributions and liabilities. It should also set out what is to happen in the event of the death of a partner.

The deceased’s estate will be liable for any debts or a share of partnership profits. Separating the estate from the partnership may well be complex and an executor or administrator should take independent legal advice on behalf of the estate.

Companies and probate

Where the deceased owned shares in a company, the company’s Articles of Association will govern how shares can be sold and/or transferred, for example if first refusal must be given to company directors.

The executor or administrator will need to contact the company secretary and arrange for valuation of the deceased’s shareholding.

Complications

It may be that the business will need to be sold or shut down. If there are redundancies, there may be liability to make payments.

If it is advantageous to keep the business running while a buyer is sought, then someone needs to be appointed to do that. If there are other owners or partners, then liaising with them will be essential.

As well as dealing with probate, the executor or administrator may also find themselves having to deal with questions of employment law, company law, property law and insolvency.

For this reason, it is highly recommended that when the deceased owned a business, professional legal help is sought.

If errors are made during the administration of an estate, executors or administrators may be held personally liable.

If you would like expert help in dealing with a probate matter, call us on 01243 216900 or email us at info@legalmatters.co.uk.

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Big rise in contested estates attributed to DIY wills…

The continuing rise in numbers of contested Wills is being attributed to more and more people attempting to write their own Will.

The number of cases heard by the High Court went up from 227 in 2016 to 282 in 2017 and 368 in 2018.

Drafting a Will

Drawing up a valid Will can be a complicated undertaking. Matters to be considered include whether to leave beneficiaries lump sum gifts or a percentage of the estate, who will inherit first if your estate is smaller than expected, how to ensure first and second families are both provided for, even if you die before your new spouse and how to minimise Inheritance Tax liabilities.

A small error made in drafting a Will can mean that it is invalid. If this happens, then there is a risk that the estate will pass under the rules of intestacy. This details which relatives will receive the estate and in what proportions. Unmarried partners and stepchildren do not inherit anything under the rules.

Why a Will might be challenged

If the wording of a Will is ambiguous or the wrong terminology is used, there may be an opportunity for someone to challenge it in court. Even the incorrect execution of a Will by the signatory and witnesses can mean that a Will is invalid. Mistakes are easy to make in this complicated area, with the risk that will result in a long and expensive court case.

What happens if a Will is challenged

Dealing with a death can be difficult and when family members feel that they have not been left what they felt they were entitled to, problems can arise. When emotions run high, if there is ambiguity or an error in the Will, then they may take the opportunity to bring a legal case. These can take years to resolve and are likely to be expensive. Saving a few pounds now by drafting your own Will can result in the loss of thousands later on if the Will is proved to be invalid or ambiguous.

Why a professionally drafted Will is always recommended

Speaking to an expert Will writer allows you the opportunity to explain exactly what you would like to happen to your estate. If, for example, you have remarried and you would like your spouse to live in your home after your death, but ultimately want it to pass to your children, a professional will be able to explain to you how this can be done and draw up a Will that you can have confidence in.

They will be able to help you avoid pitfalls, such as leaving cash gifts that might reduce your residuary estate far lower than you anticipate and will be able to translate your wishes into a legally binding Will. When a Will has been clearly thought out and well drafted, it significantly reduces the risk that your family will start to wonder if it was exactly what you meant to do.

To speak to one of our expert Wills lawyers, call us on 01243 216900 or email us at info@legalmatters.co.uk.

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