Monthly Archives: April 2017

Before You Forget…

At breakfast this morning, a woman said to her husband: “My memory is getting really poor, I went upstairs yesterday to get something and by the time I got to the top of the stairs I had forgotten what I was going for.”

The husband said: “How bad is your memory?”

She responded: “Sorry, what were we talking about?”

Old jokes are always the best, but early signs of a loss of memory are an uncomfortable reminder of the aging process and certainly no joke.  Some of us will inevitably get dementia or other debilitating conditions that could result in the loss of mental capacity.

Do you know you what happens if you or your partner becomes unable to make decisions for themselves due to old-age memory issues or dementia? Potentially you can find yourself in a position where you cannot pay for services or make decisions, without lawyers and something called the Court of Protection) being involved. It’s an expensive and long-winded process. That is, unless you have written a legal document called a Lasting Power of Attorney (LPA) in advance of your loss of mental capacity.

The Citizens Advice Bureau website says:

You should make an LPA if you have been diagnosed with, or think you might develop, an illness which might prevent you from making decisions for yourself at some time in the future.

 “The kinds of illness which might prevent you from making decisions for yourself include:

  • dementia
  • mental health problems
  • brain injury
  • alcohol or drug misuse
  • the side-effects of medical treatment
  • any other illness or disability.

“You must make an LPA whilst you are still capable of making decisions for yourself. This is called having mental capacity”

At legalmatters, we are experts in writing Lasting Powers of Attorney and talking you through the pitfalls. Whilst no one wants to think about the potential of problems in later life, writing an LPA could save you and your family considerable cost and grief in the not too distant future.

Call us today on 01243 216900 or email us at for a no obligation discussion about these issues.

Should I Be Trusting?

There are many positives to creating a trust. They can help you reduce your tax burden, protect your intended beneficiaries and avoid wills and probate disputes. However, there are many different types of trust; knowing the differences between them will help you establish which is right for your circumstances.

Discretionary trust

With a discretionary trust, the trustees have discretion over how to use the capital and income of the trust fund. While beneficiaries will be named in the trust deed, it is up to the trustees to decide which of the beneficiaries is to benefit.

A discretionary trust can be useful if you have a group of people that you know you wish to pass assets onto, but you don’t know which will need financial help in the future or what sort of help is required. For example, this could be your children.

Another bonus is that the assets within a discretionary trust are classed as being outside of the beneficiaries’ estates when it comes to Inheritance Tax. They’re also not counted when calculating means tested benefits.

Discretionary trusts are very flexible; you do lose control over exactly what happens to the assets you have placed within the trust. To counter this, you can appoint yourself as a trustee so you can have some influence over the decisions of the trustees.

Bare trusts

These are also known as simple trusts. Essentially, the beneficiary gains the immediate and absolute right to the assets in the trust and any income they generate. Once the trust has been set up, the beneficiaries cannot be changed.

This type of trust is generally used for transferring assets to a minor – a trustee holds the assets on trust until the beneficiary is 18.

The beneficiary will be responsible for paying Income Tax and Capital Gains Tax on the assets within the trust. However, they are viewed as ‘potentially exempt transfers’ for Inheritance Tax. In other words, so long as the person who put the assets into the trust does not die within seven years of doing so, there will be no Inheritance Tax to pay.

Parental trusts for minors

This is where a ‘relevant child’ of the settlor (the person setting up the trust) can benefit from the assets in the trust.

The child’s income from the trust is classed as being the income of the settlor when it comes to Income Tax, while Capital Gains Tax must also be paid.

Interest in possession trusts

This is where the beneficiary of a trust is entitled to the income from the trust as it arises. The trustee is duty bound to pass on all of the income received to the beneficiary.

There are two types of beneficiary within a trust like this – the income beneficiary is the one who is entitled to the income from the trust for life. However, separate beneficiaries will be detailed in the trust, and they are entitled to the capital of the trust.

An example where you might put your investments into a trust like this – your spouse could be the income beneficiary, while your children are the capital beneficiaries.

Vulnerable beneficiary

Beneficiaries may be vulnerable for two main reasons – either they are mentally or physically disabled, or they are under the age of 18 and one of their parents have died.

These may qualify for special tax treatment.

Unsure whether you would like to set up a trust? At legalmatters we are happy to talk you through things. Feel free to call us today on 01243 216900 or email us at

HMRC Loses Tribunal Over Pension Transfer Rule

Changes might be on the horizon for the rules surrounding inheritance tax (IHT) on pension transfers, after an appeal from HM Revenue & Customs (HMRC) was recently rejected.

The case centred on a Mrs Staveley, a woman who did not want her former husband to benefit from a pension she had originally set up with him. Following a bitter divorce, she transferred a portion of this pension into a new, personal one.

Mrs Staveley sadly died a few weeks after making the transfer.

She had been terminally ill at the time, so the transfer was classed by HMRC as a “chargeable lifetime transfer”. This meant that IHT was applied and can arise where the individual is aware that their life expectancy is impaired and they then die within two years of making the transfer.

After challenging the tax and in another follow-up appeal, HMRC lost the case.

It was held that, if any IHT benefit had been gained from the transfer, it was “not intended to confer gratuitous benefit”.

Commenting on the case is *NAME OF PERSON* from *NAME OF COMPANY*:


In order to properly clarify the situation, more of a substantial overhaul of HMRC guidance may be needed. This is because the specific circumstances of Mrs Staveley’s case do not automatically set a precedent for all other pension cases.

The intention behind her transfer was clearly to prevent her ex-husband from accessing pension money. In other cases, the motivation might actually be to avoid IHT.

Although HMRC might publish guidance on this in the future, it’s important to know where you stand now.

The law around IHT can seem complicated, but talking to an expert can make things much clearer. When it comes to the future of you and your loved ones, it’s essential that you get the best advice.

We at legalmatters are experts in helping you make plans for your future. With issues like this, it pays to use a professional. Talk to us today by calling 01243 216900 or emailing us at

Will Current Political Events Change Your Future?

While 2016 was undoubtedly one of the most turbulent in living history, 2017 is already shaping up to be similarly eventful. That doesn’t mean there’s plenty to watch on the news – these political events can have a significant impact on your finances.

Donald Trump

Obviously one of the big headline grabbers throughout this year will be the US President Donald Trump. Charitably, you can describe his performance so far as unpredictable, and that uncertainty will be a concern for the fund managers who look after so many of our pensions. Only time will tell exactly what impact ‘Trumponomics’ has on our finances.

Article 50

We have our own massive political change taking place here in the UK in the form of Brexit. The first step towards leaving the EU will come with the triggering of Article 50, which is due to happen at the end of March.

While the dire economic warnings about what would happen if we voted to leave haven’t yet come to fruition, it’s important to remember that we haven’t actually left yet. The value of the pound has, however, fallen significantly since the Brexit vote, while inflation has risen and is predicted to continue to do so.

It seems likely that there will be further bumps along the road as we leave the EU.

European elections

There are a host of significant elections taking place in Europe this year; all of which will have an impact on the investment markets, and as a result the British economy – and your pension savings.

There are general elections due to take place in France, the Netherlands, Germany and possibly Italy. Who would bet against further unexpected results?

The Lifetime ISA

One of the Government’s big ideas to get us saving more is the Lifetime ISA, which launches in April.

You can save up to £4,000 per year, and you’ll get a 25% bonus from the Government on your savings on top, up to the age of 50.

Auto enrolment

Another of the Government’s initiatives is the auto enrolment scheme, where employers are duty bound to enrol their employees in a pension and contribute towards it.

Thousands of employers across the country will have to join the scheme this year; if you work for a firm of smaller than 30 people, then chances are you’re one of them.

The importance of a will

There’s not a lot that you can do about the ups and downs of the political world. Though you can set in stone exactly how you want your assets to be divided between your loved ones after you die.

It isn’t a nice thing to think about, but a will is crucial if you want to determine who gets what. Speak to legalmatters today about your plans by calling 01243 216900 or email us at