Uncategorized

Planning for your Digital Assets/Estate

What are digital assets?

Digital assets include e-mail accounts, online banking, online investments, social media accounts (Facebook, Twitter etc.), online purchasing/selling accounts (e-Bay, Amazon etc.), data stored on Pc’s, tablets, laptops, mobile phones  and blogs just to name a few.

Digital assets tend to have little value but some may have significant value or sentimental value.

What would happen to these assets when we die?

Much of the information stored on computers, hard drives and online accounts are user name and password protected. Unless prior arrangements are made, family members or your Executors/Administrators may not be able to access these which leave the information unobtainable.

Practical steps to put in place

Planning for your digital estate is similar to planning for other assets.

  • You need to make create a comprehensive inventory of your digital assets. Make a list of your user names, passwords and security questions for each digital asset.
  • Make a Will – your Executors are empowered by the Court to administer and realise all assets including your digital assets.
  • Safely store these details with your Will or in a safe place so that your Executors have access to this information on your death.
  • Maintain and update the information on a regular basis.
  • Provide instructions for what you want to happen to your digital assets i.e. if you want it to continue, someone to take it over or should it be closed down.

Don’t Delay

It may take some time for you to get the relevant information together. If you don’t do this, your family will not know where to start and could miss something valuable. The more you do now to put things in order, the easier it will be for your family on your death.

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Inheritance tax, Uncategorized

Residence Nil Rate Bands

It seems that Residence Nil Rate Bands are here to stay.  Complicated as they are, they provide for an increase in the Nil Rate Band against Inheritance Tax (IHT) for people who have had a property in which they have resided and who leave it to their “direct descendants”.

Putting it simply, the Nil Rate Band is a tax free amount that is available to all individuals before IHT is calculated.  The current Nil Rate Band is £325,000, and after that IHT is charged at 40% of the estate above that figure (subject to various reliefs and exemptions).  The main exemption is when an estate is left to a spouse and the spouse’s inheritance is free of IHT.

The Nil Rate Band is increased by the “Residence Nil Rate Band” (RNRB) in cases where the person dies leaving a property in which they have lived and the property passes to “direct descendants”.

It is not necessary that the deceased was living in the property at the date of death.  There are transitional provisions for properties sold by the deceased after July 2015 and before death.

The definition of “direct descendants” is quite wide, and specifically includes step children.  However, the RNRB is not available to individuals who leave their estate to nephews and nieces, for example.

The RNRB is currently £100,000 for deaths on or after 6th April 2017.  This is going to rise to £175,000 for deaths on or after 6th April 2020.

What does this mean for a “typical” couple who have a house and are leaving their estate to the children of either or both of them? 

The Nil Rate Band is £325,000 per person.

The additional RNRB is now an extra £100,000 increasing to £175,000.

Hence effectively each individual could then achieve a £500,000 threshold before IHT is payable.

Due to the availability of transferable Nil Rate Bands (which have been around since 2007) then it is quite possible that between a couple who are married or in a civil partnership (or for the survivor of such a union) the IHT threshold will be £1,000,000.

In a complicated way (and biased towards individuals with “children” – in the widest possible definition of the word) the IHT threshold has increased quite significantly.  The legislation is, however, quite complex and is worth looking at closely when dealing with the estate of someone whose estate may or may not be liable for IHT.

Specialist advice can be obtained from Tom Morrish at Morrish Solicitors, telephone 033 3344 9609, email tom.morrish@morrishsolicitors.com.

Lasting Power of Attorney, Power of Attorney, Uncategorized

Lasting Powers of Attorney – helpful or not?

Denzil Lush, former Senior Judge of the Court of Protection, warned the public recently that he believed Lasting Powers of Attorney (LPAs) may leave elderly people open to abuse.

An LPA is a powerful legal document that allows a person to appoint trusted individuals to make important decisions about care and finances on their behalf, in the event of a loss of mental capacity through an accident or illness such as dementia.

In the foreword to a new book on the subject, Mr Lush raised concerns about the “lack of transparency” in how appointed attorneys manage older people’s finances.

However, we in the Morrish Solicitors elderly client team, think LPAs are effective safeguards when created responsibly and national organisation Solicitors for the Elderly (SFE) agrees:

“Senior Judge Lush’s comments have given rise to fears that LPAs are a direct avenue for financial abuse. However, his comments must be put into context, as his 20-year career at the Court of Protection will have presented him with the very worst cases of financial abuse.

“An LPA can be a positive and effective legal tool, which ensures your wishes are respected should you ever lose capacity. Senior Judge Lush’s comments should highlight the clear need for professional advice when considering powerful legal documents of this nature.”

Top tips on drafting a lasting power of attorney

SFE is an independent, national organisation of over 1,500 lawyers, such as solicitors, barristers and chartered legal executives, who provide specialist legal advice for older and vulnerable people, their families and carers. SFE has been campaigning to ensure essential checks and controls are conducted when making an LPA. Here are their top tips to ensure your LPA is effective, legally robust and safe:

Plan early – While you have capacity, it’s vital that you get your affairs in order and choose the best people to manage your affairs, in case of an accident or illness. You can’t appoint an attorney once you lose capacity.

Choose carefully – Think carefully who you want to appoint as your attorney and have an open conversation with them so they understand your wishes and what their responsibilities will include. Consider appointing more than one person as your attorney so they can share the responsibility.

Consider appointing a professional – A family member might not always be the best person to act as your attorney. Instead, you can appoint a professional such as a solicitor. They can act as a neutral third party and make unbiased decisions that are in your best interests. Bear in mind this usually involves a cost.

Think about different circumstances – Consider how you would like your attorney to manage your property and financial affairs in different situations. For example, are you happy for your property to be sold to pay for your care costs?

Address the difficult questions – Your attorney might have to make difficult decisions about your health and welfare. If you have specific wishes around your care plans, medical treatment, or end of life wishes, make sure you discuss this with them and make your choices clear in your document.

Seek professional advice – Shop-bought and online LPA kits may be suitable for those with very straightforward financial situations or with considerable legal experience, but for most people, seeking professional legal advice is the best way of ensuring that an LPA is what they want.

Keep your plans current – Make sure you keep your LPA updated if your circumstances change. Your choices around the people you want to be responsible for your finances and wellbeing may change, such as following a marriage or divorce, when children reach adulthood, or if parents pass away.

Tom Morrish and Monika Volsing of the elderly client team here at Morrish are both fully accredited members of Solicitors for the Elderly. They and their colleagues would be happy to discuss LPAs with you – contact us on 0333 3449609.

Probate

BREAKING NEWS – Increase in Probate Court Fees

When applying for a Grant of Representation  (this is the document required to enable the Personal Representatives of the estate to deal with the deceased’s estate)  the Personal Representatives  are aware that there will be a court fee payable.

It is currently a manageable amount of £155 via a solicitor, £215 without the assistance of a solicitor and £0 if the value estate is under £5,000. These  can be paid by an individual without too much financial hardship and it can later be reclaimed by the estate.

Following a recent Government consultation options were discussed to increase the fees charged to obtain the Grant of Representation. The new fee structure is significantly different to the current structure and is now based on the value of the deceased’s estate –

Value of estate (before Inheritance Tax) Proportion of Estates in England and Wales Proposed Fee
Up to £50,000 (or not requiring a Grant) 58% £0
Over £50,000 but under £300,000 23% £300
Over £300,000 and up to £500,000 11% £1,000
Over £500,000 and up to £1Million 6% £4,000
Over £1Million and up to £1.6Million 1% £8,000
Over £1.6Million and up to £2Million 0.3% £12,000
Over £2Million 0.5% £20,000

Under the new fee structure the majority of estates would not be required to pay any fees for obtaining a Grant of Representation, however –please be reminded that very few estates under £50,000 actually require a Grant of Representation so this would not have a great impact on many estates under the changes.

The greatest changes will be felt for the 23% of estates over £50,000 but under £300,000 and the 11% of estates over £300,000 but under £500,000 whereby the Probate Court Fee is significantly more than the current £155.

This would pose financial hardship on Personal Representatives should the estate not have sufficient cash assets to cover the fees (as the banks will release payment from the deceased’s bank account for the Probate Court Fee). For example, if the main asset is a property. In this instance the Personal Representatives may have to seek assistance in the form of a loan to cover the fees from the deceased’s bank or in deed their own.

There are no specific details as to whether the Probate Court will permit a payment plan arrangement with the Personal Representatives with full settlement of the balance of the fee payable once the estate is in funds eg after the sale of the property. It  is hoped that given these significant changes the Probate Court will be open to such an arrangement.

It appears that the fees will be chargeable on all estates where the values are in excess of £50,000 regardless of whether the estate is to be left to a surviving spouse or a charity, which would qualify for an exemption for Inheritance tax purposes.

The legal profession on a whole have been very disappointed with the changes as the fees are highly disproportionate to the work undertaken by the Probate Court. The work involved in issuing a Grant of Representation in a higher value estate does not justify the proposed cost in comparison with the work involved in an estate which does not exceed £50,000 and therefore no fee is payable.

The new fees are due to be implemented in May 2017 but there is no fixed date at present.

Court of Protection, Lasting Power of Attorney, Power of Attorney

The mysteries of the Court of Protection

What is the Court of Protection?

This is the Court which deals with matters relating to the affairs of people who are not able to handle their own affairs. Typically it deals with cases where elderly people develop dementia or other illnesses affecting mental capacity, which means that the individual is not able to manage their own financial affairs. Other cases involve people who suffer head injury following clinical negligence or road traffic accidents.

Why is the Court needed?

When people cannot make their own decision, then the Court needs to ensure that appropriate decisions are made for these individuals, allowing actions to be taken which are in the best interests of the person concerned.

What if there is a Power of Attorney?

If the individual has signed a Power of Attorney at a time when they were fit and well, then the person appointed as Attorney will be able to make the decision, and usually this will avoid the need for the involvement of the Court of Protection.

An individual might have signed an Enduring Power of Attorney (before 1st October 2007) appointing someone to manage their financial affairs. From the beginning of 1st October 2007 individuals have been able to sign a Lasting Power of Attorney for property and financial affairs (appointing someone to deal with their financial affairs) or for health and welfare (appointing someone to make decisions about health and welfare needs).

What is a Deputy?

A Deputy is someone appointed by the Court of Protection to supervise the affairs of a person who is unable to manage their own affairs. A Deputy might be appointed for finance, which means that that person can manage the financial affairs of the person concerned, subject to supervision from the Office of the Public Guardian. The Court may appoint a Deputy for health and welfare, which means that the Deputy can make health and welfare decisions for such persons in cases where that person cannot make their own decisions. Appointments of Deputy for health and welfare are much less frequent than for financial affairs, but the Court will make such an Order in necessary cases.

Specialist Advice

Members of the Elderly Client Department at Morrish Solicitors are experienced in handling Court of Protection matters. Tom Morrish has been appointed as Court of Protection Deputy in dozens of case over the last fifteen years or so supervising the financial affairs of elderly persons who have lost their mental capacity, or of persons who have suffered head injuries as a result of an accident or clinical negligence.

Can the Court of Protection be avoided?

In many cases this can be avoided by advance planning. Getting your affairs in order by signing Lasting Powers of Attorney in most cases avoids the need for the Court of Protection, even if later in life you suffer deteriorating health and an inability to manage your affairs.

Contact one of our Elderly Client Team for advice in this area of work. It’s always best to obtain specialist legal advice rather than dabbling on the Internet or obtaining misleading advice or comment from friends who think they know the answer.

Yeadon Office
Tom Morrish
Kiranjeet Chana
T: 033 3344 9609

Pudsey Office
Charlotte Bandawe
Christina Taylor
T: 033 3344 9607

Living Wills, Wills

Where is your will?

When making a Will it is important to know where the original document is kept.

If a Solicitor has made your Will you may have been given the option to leave the original Will with your solicitor for safekeeping in their deed store department. If this is the case then you will most probably have received a copy of your Will and will have peace of mind that your original is Will is safe.

If a Will has been made some years ago maybe through your Bank, the Bank may have stored your original Will. You may have been issued with a receipt with a storage number and address where you can request the original documents from if needed. Once again your Will will be safe and you should have a copy.

In either of these cases what happens if:

Your firm of solicitors has closed
Your solicitors have been taken over by another firm and moved their offices
Your bank has amalgamated with another bank (this has happened in recent years)
The local branch of your bank has closed
Ideally you, as the client of either the solicitors firm or the bank should have been notified in writing of the changes which have taken place and be advised as to where your original Will is being stored.

We do not live in an ideal world unfortunately and often notification will not always be provided.

Therefore it is beneficial to ensure that you keep regular contact (maybe every year or two) with the business who is holding your Will. This will provide confirmation that they are still in existence and your original Will is safe.

To make enquiries about the whereabouts of the documents held by a firm of solicitors who have closed or moved their offices, it is beneficial to contact the Law Society who may hold the records of where the documents are or who took over the firm of solicitors. If this is not possible enquiries can also be made with other firms of solicitors who have offices in the local area as these may be questions often asked of them in the past or they have knowledge of the local area.

The banks may be more straightforward as they should have retained records as to where the Wills originally stored with them are held and it may be that they have outsourced to another company or a firm of solicitors.

Knowing the location of your Original Wills is important because if a Grant of Probate is required after death the original Will is needed. If the Will cannot be located and only a copy is held, there are many additional procedures which have to be followed to submit an application for a Grant of Probate of a copy of a Will. This can often be costly.

Even if a Grant of Probate is not required in the deceased’s estate, it is beneficial to ensure that you know where the original Will is. At this time only the Executors can request the original Will with a death certificate. The Original Will may never be needed again but if there is ever a claim to pursue on behalf of the deceased’s estate eg – medical negligence or a challenge to the payment of care home fees a Grant of Probate may be requested to permit the claim to proceed to settlement.

Therefore if one spouse has died, and a Grant of Probate is not required, the surviving spouse is advised to keep the Original Will with their own Will as it may be needed for such a claim, or to show who benefited from the deceased’s estate (for inheritance tax purposes).

If a parent or elderly relative has been in a care home and has privately funded their own care for several years, it may be once enquiries have been made that they were eligible for funding from the NHS. (There are specialist firms who undertake such claims). The original Will will be needed to apply for a Grant of Probate, even if the Will was made many years ago, if it was the original last Will made by the deceased relative it will still be valid.

Once again the knowledge of the location of the Original Will is essential.

Lasting Power of Attorney, Uncategorized

The Importance of Instructing a Solicitor or Professional when Preparing a Lasting Power of Attorney

A Lasting Power of Attorney is a powerful and important legal document.  By making a Lasting Power of Attorney you are setting up an arrangement which will potentially give someone authority to deal with everything you own and your personal care at a time when you will be at your most vulnerable.

The benefits of using a solicitor/professional are as follows:

  1. A dedicated professional whose expertise are those of drafting Lasting Powers of Attorney. They will look after you throughout the whole process.
  1. They will prepare all documentation for you and explain all options that can be taken.
  1. They will deal with the registration process with the Office of the Public Guardian.
  1. They will agree a fixed price up front with no hidden charges.
  1. They will act as your certificate provider so that no third party is required.

There are many errors that can be made when preparing a Lasting Power of Attorney but by using a solicitor/professional who specialises in Lasting Powers of Attorney, these errors are less likely to occur.

Some common errors are:

  1. When appointing more than one Attorney and you appoint those Attorneys jointly, if one Attorney predeceases the Donor or is unable to act for any reason, then the other Attorney cannot act alone. Therefore, the Lasting Power of Attorney becomes void.  This would result in a new Lasting Power of Attorney having to be made.
  1. There is a strict order of signing the Lasting Power of Attorney which must be maintained. First must be part A, then part B and finally part C.  If these are signed and dated in the incorrect order the Lasting Power of Attorney would be rejected at registration with the Office of the Public Guardian.
  1. Any mistakes made on the Lasting Power of Attorney must be crossed through, written again and initialled by the person completing that particular section and witnesses if appropriate. If the mistakes are not initialled again, the Lasting Power of Attorney could again be rejected at registration.

These errors are just to name a few but there are many more that could cause a Lasting Power of Attorney to be rejected when registering.

In some cases, the Donor may require use of the Lasting Power of Attorney quite urgently.  Registration is currently taking 2-3 months, however, if the Lasting Powers of Attorney is rejected at registration this can hold things up considerably.

Therefore, it is beneficial to instruct a Solicitor/Professional to prepare a Lasting Power of Attorney. Please contact our Elderly Client Department for more information on:

Pudsey – 0033 3344 9606

Yeadon – 033 3344 9609

or email info@morrishsolicitors.com