Comments Off on Wills and Lasting Powers of Attorney – When is the right time to act?
Chris Kelly recently wrote an article for Age UK Essex about the importance of Wills and Lasting Powers of Attorney to ensure your personal wishes are met during later life and, ultimately, after your death.
Read the full article below…
If you wish to speak to anyone from our Wills, Probate and Later Years team about anything in this article you can contact them on 01245 504 904.
Comments Off on Clampdown on Tenant Fees is Now in Effect
In what some observers might see as merely the first step in the wider reform of the lettings and leasehold residential property markets, a number of fees routinely charged to tenants were abolished on 1 June 2019.
The new rules are likely to have some impact on landlords, who may find that the amounts they pay to their appointed lettings agents increase as their management charges are no longer passed to tenants.
The background
The Government pledged in its 2017 election manifesto to ban letting fees paid by tenants and generally improve fairness in the lettings sector.Its proposal to ban fees was formally announced in the Chancellor’s 2016 Autumn Statement.
Following a quite lengthy process in Parliament, the ban passed into law on 12 February 2019, receiving Royal Assent and becoming enshrined in the Tenant Fees Act 2019.
Official estimates state that the ban will save tenants around £240 million a year in letting fees.
What does the ban cover?
The ban will apply to both assured shorthold tenancies (in other words, most day-to-day short term tenancy agreements) and licences to occupy within the private rented sector.
It does not cover properties subject to ‘long’ leases, tenancies of social housing or holiday lettings.
Examples of the charges banned by the 2019 Act (“prohibited payments”) include:
Upfront application/referencing fees
Fees for check in/check out reports and inventories
Tenancy renewal charges
The ban will apply to new tenancies and licences granted on or after 1 June 2019.It will, however, apply to all tenancies and licences, regardless of when they came into effect, from 1 June 2020.
Some fees (“permitted charges”) are not covered by the ban and usually stem from the actual tenancy itself once it has been created, such as default payments for loss of keys or late payment of rent and for the variation, assignment and/or premature termination of tenancies.Payments for council tax, utilities, TV licences, and communication services also fall outside the scope of the ban.
In addition, rent should be paid in equal instalments throughout the duration of the tenancy, i.e. weekly or monthly.Rent cannot be increased/inflated, for the purposes of the first payment and subsequently lowered for the remaining rent payment dates.The difference or excess will be classed as a prohibited payment.
What are the consequences of failing to comply with the ban?
They could be serious.It is possible that repeated failures to comply may amount to a criminal offence, which can potentially attract an unlimited fine.Fines of up to £30,000 can also be imposed by trading standards authorities and/or district councils.
In addition, landlords who retain any prohibited payments will not be able to serve termination (‘section 21’) notices on their tenants, until the prohibited payment has been returned.This will stop landlords from regaining possession of their properties and re-letting them.
This article gives only a short summary of what lies ahead.If you are a landlord, it is very important you review immediately the charges you and/or your managing agents typically make to your tenants and consider the consequences the ban may have on your financial returns/profit.Speak with your agents now, as we are aware many of them are repackaging the services they provide to their landlord clients as a result of the ban.
Crucially, do make sure all your standard tenancy agreements and application forms are up to date and compliant by checking with our property lettings specialists at Leonard Gray, John Appleby and Daniel Clarke.Contact us for a no-obligation review of your documents and for suggestions as to how they might be updated.For further information, you can also visit the gov.uk website.
Comments Off on Avoiding Online Scams & Consumer Rights
On 28 May 2019 Erin Duffy, Head of Litigation, was pleased to speak on air with the BBC Essex Radio presenter Sadie Nine regarding the prevalence of online scams, how they can be avoided and what consumers can do if they are caught out by a scam.
It has been highly publicised recently that many celebrities are having their image used in online scams, where they appear to endorse a product that they, in fact, have absolutely no connection with.
For example, the BBC weather presenter Carol Kirkwood recently spoke out at her outrage upon discovering posts on Facebook connecting her to use of diet pills and stating that she was leaving the BBC. These allegations were completely false and her image used without her consent.
Whilst these posts are, of course, damaging for the celebrity involved they also pose a real risk to consumers who believe the content of the post and purchase the product advertised, allegedly being endorsed by the celebrity shown. Often where a product is purchased the sum of money taken from the consumer’s bank account is a lot more than the consumer had realised and/or authorised. They may receive more of the product than they believed they had ordered or the product may never even arrive despite payment being made.
Ways to avoid online scams:
1. If a deal seems too good to be true it probably is.
2. Check the relevant celebrity’s own website to see if they do in fact endorse and advertise the product. If there is no mention of the product, or they give a warning against it, then do not make the purchase.
3. Check the website address from where you are thinking about making the purchase. Does it match the company or product name? Does the website address begin with ‘https’? If it only shows as ‘http’ (without the ‘s’) then the website is not secure.
4. Watch out for poor spelling and grammar. This usually indicates that you are not dealing with a legitimate company. Most companies pay for their website to be thoroughly checked so it looks professional and doesn’t contain errors. If you spot poor spelling, grammar and use of the English language you should proceed with caution.
5. Check the returns policy on the company website to see what your rights are to return the product and get a refund.
6. Don’t pay by bank transfer. You have a much better chance of getting your money back, if it is a scam, if you have paid by debit or credit card.
What to do if you realise you have been scammed?
If after making an online purchase you realise it was a scam – perhaps because of the sum of money taken from your bank account or the amount of product that is sent to you – you should take the following action:
1. Call your bank to cancel any payments that have not already been taken if possible.
2. For payments that have already been taken from your bank account you can seek to reclaim these monies with your bank’s assistance in one of the following two ways if you used a debit or credit card to make the payment:
If you used a credit card for a purchase over £100, under section 75 of the Consumer Credit Act, consumers can seek reimbursement from the credit card company since they are jointly and severally liable for any breach of contract or misrepresentation by the seller.
If you used a debit card, you can use your banks ‘Chargeback’ scheme. There are no guarantees with this scheme that you will get your money back but the bank will attempt to reclaim the money from the bank that received your money. This scheme is particularly useful as it also applies to purchases under £100 unlike section 75 above.
3. Report the scam to the Police through Action Fraud (the national fraud reporting centre) by phoning them or through their website.
4. Speak to the Citizens Advise Consumer Service who will be able to advise you and report the scam to trading standards.
Unhappy with your purchase?
If you are simply unhappy with your purchase (not because of a scam) then remember you as a consumer do have protection under the Consumer Rights Act 2015.
Goods that are sold must be as described, of satisfactory quality and fit for purpose. If something you have purchased does not meet these criteria then you are able to claim a refund.
If the seller is not willing to refund your money you may wish to consider taking legal action against them.
Erin Duffy and her colleague Joe Sandercock would be pleased to advise and assist you in this regard.
Comments Off on Making Gifts as an Attorney or a Deputy
Attorneys acting under an Enduring or Lasting Power of Attorney, or deputies appointed by the Court of Protection, should be aware of their limited power to make gifts from the funds they manage.
Any gifts made must always be in the best interests of the incapacitated person. The attorney or deputy has a duty at all times to protect the interests of the person they are looking after and not allow personal interests to come into conflict with their role.
What counts as a gift?
Gifts are not just defined as using a person’s money to buy something for someone else (including you) such as on a birthday or at Christmas. A gift can be where you move the ownership of an asset from the person whose affairs you manage to yourself or to another person, without full payment in return.
It can also include:-
giving the person’s money or possessions to another person
donations to charity
paying someone’s school or university fees
living rent free or at a ‘friend/family’ rate in a property belonging to the person
selling the person’s property less than the market value
Who can give gifts?
Provided the person has mental capacity they should be the one making a decision about any gifts being made. The decision should be their own without the influence or pressure from others. Where possible the gift should also be made by the person themselves if they have capacity and not by you on their behalf.
If the person’s mental capacity changes and they can sometimes make decisions about things such as gifts, you must try to involve them in any gift-giving decisions. This means taking the time to communicate with them about the gift being proposed.
If the person cannot decide and you have taken all steps to help them make their own decision then the attorney/deputy can make the decision for them.
Agreeing to make a gift from the person’s finances must be in the person’s best interest and the following should be considered:-
the person’s wishes, views and values and how these might affect what they give
what family members and friends think they would have wanted
whether they might regain capacity and be able to make a decision about the gift
the person’s current needs – consider whether the person can still afford to make the gift now, taking into account their current circumstances
Who can you make a gift to?
A gift can only be made to a family member, friend or acquaintance of the person on a ‘Customary Occasion’. A gift can also be made to charities to which the person has some connection or if they have given money to them in the past.
When can gifts be made?
A gift can be made on ‘Customary Occasions’ for example, birth, birthdays, wedding/civil partnership or an anniversary. This also includes Christmas, Diwali and Chinese New Year etc.
How much can the gift be?
A gift must be reasonable; however there is no clear definition as to what this amounts to. In any event the gift must be of reasonable value given the size of the person’s estate and financial situation.
When considering whether or not a gift is reasonable the following points should be considered:-
The impact of the gift on the person’s financial situation. Consider both the person’s current and future income, assets, capital and savings but also their present and future needs.
Whether the gift would be in the person’s best interests. For example is this a gift the person would normally have made before they lost capacity and would the gift affect that persons financial affairs to an extent that they cannot meet their living expenses in the future, for example. If the gift is seen as unreasonable you could be breaking the law.
A gift must also be ‘affordable’ and should not leave the person in a worse financial position. For example a gift of £500 has a bigger impact on someone with £10,000 than someone with £100,000.
It is always good practice for an attorney to keep a record of any gifts made and for deputies such gifts must be recorded on the annual report to the Court of Protection.
It is worth noting that attorneys and deputies cannot give away the person’s property as gifts, or spend their money on gifts, to avoid contributing to care home costs. If it is believed that gifts were made in this manner then it could be seen as a deprivation of assets and the local authority may include the value of any such gifts when assessing the financial position.
Remember that when a local authority carries out a financial assessment for residential care it will ask about previously-owned assets, not just those that are owned currently. If the local authority funds someone’s residential care costs and later rules that a person has ‘deliberately deprived’ themselves of assets, they have the power to claim care costs from the person that the assets were transferred to.
This includes giving away things as gifts to make the person qualify for benefits or for government help with care costs etc.
Consent to make a gift
If in any doubt whether a gift is reasonable or for a gift not on a ‘Customary Occasion’ (as set out above), deputies and attorneys should apply to the Court of Protection for permission to make gift(s).
The Court of Protection will then assess whether such gift should be given. Please note that the Office of the Public Guardian cannot make such decisions.
If you make gifts that go beyond your authority without getting prior approval from the Court of Protection, the Court may:-
Apply to have you removed as an attorney or deputy
Apply to have your role as an attorney or deputy suspended and freeze the persons accounts for their own protection
Ask that the gifts are returned
Refer the matter to the police or other organisations with legal powers
Should you have any concerns about your role as an attorney or deputy and would like to discuss matters in more detail please contact a member of our team on 01245 504904.
New legislation comes into force from 6 April 2019 which requires all employers to (a) provide payslips to all workers and (b) show hours on payslips where the pay varies by the amount of time worked.
These changes are pursuant to the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018.
The statutory right to receive an itemised payslip will be extended to all workers. Currently this right only applies to employees, a sub-category of workers.
From 6 April 2019, a payslip must show the total number of variable hours a worker has worked. This is only required when workers get a different wage depending on the hours they have worked. This might be because they have worked overtime, the number of hours they work changes in each pay period, or the rate they get for working certain hours is different.
The payslip only needs to show the hours that actually vary. For example, if a worker is salaried to work for 20 hours in a pay period but also works 4 hours of overtime, only the additional 4 hours must be recorded
The new rules mean that employers will have to ensure that they provide a payslip to all workers and that the payslip includes the following:
1. Gross salary or wages;
2. Net salary or wages payable;
3. Where there are deductions, specify the amount and what they relate to;
4. Where it is paid in parts, the amount and payment method for each part;
5. If any part varies due to time worked, specify both rate of pay and total number hours worked. This can be either as a single aggregate figure, or separately for each rate of pay or type of work
A payslip may be provided in either a physical format or an electronic format that the worker can print.
If a worker’s pay does not vary by time worked (for example because they are paid a fixed salary each month) there is no need to include an hourly figure to account for variations in pay caused by taking unpaid leave or being on statutory sick pay.
A worker who thinks that they have not received a payslip, or that the payslip they have received lacks the required information, may bring a claim before an Employment Tribunal. Therefore it is important that all employers check their payroll processes and amend them as necessary to comply with the new rules.
If you should require any advice in relation to these changes, or in relation to any other employment law related matter, please contact Erin Duffy, Head of Litigation, who will be pleased to advise you.
Comments Off on How do I reduce the risks of my Will being contested?
This is an extremely emotive, usually case-specific, subject and this article is aimed at being a brief overview of the subject.
Anyone making a Will (known as the “testator”) is deemed to have “freedom of testamentary disposition”. In simple terms this means that you can dispose of your estate however you wish.
However, there are certain categories of people that can make a claim against an estate under the Inheritance (Provision for Families and Dependants) Act 1975 if they think they have been inadequately provided for. These categories of people include:-
a spouse or civil partner of the deceased
a former spouse or civil partner who has not remarried
a child of the deceased (including children of a non-marital relationship, an adopted child or a child as yet unborn)
a person treated by the deceased as a child of the family (ie step-children)
a person being maintained (wholly or partly) by the deceased immediately before the death
a person who was cohabiting with the deceased person in a relationship as their (unmarried) husband/wife/civil partner for at least two years immediately prior to their death
If you do wish to exclude somebody from your Will and you think there is a possibility that they will object, there are certain things you can do to try to reduce the risk of a claim. These are as follows:
Declaration and Letter of Wishes
Generally our advice is to include a short declaration in the Will which gives a “snapshot” of the situation, for example, “I have had no contact with X for 20 years and therefore feel I do not owe him/her any financial or moral obligation”. This proves that the testator has not just ‘forgotten’ that they may have had an obligation to that person in the past but has considered matters in detail before excluding them. It is not necessary to go into detail in the Will itself.
However, we strongly recommend that the testator also writes a letter of wishes to be kept with the Will. This letter should go into more detail but in a factual rather than emotional way setting out the background to the situation and saying exactly why they have decided to omit that person. In the event of a claim, this letter can then be produced as evidence that there was a good reason to exclude that person. Ideally, this letter should be handwritten by the testator, signed, dated and witnessed. If handwritten, it is much harder for somebody to claim foul play (for instance that somebody else typed the letter for the testator and forced them to sign it).
Forfeiture Clause
Sometimes, a person is not completely excluded from the Will but may be given a legacy or a lesser percentage of the estate than they might have wished for or expected. Once again, if that person falls into one of the categories above, they may make a claim.
However, in order to try to prevent a claim against the estate in this situation, it is possible to include a forfeiture clause which says that if anybody (or a named person) makes a claim against the estate, that person’s entitlement fails and this share is then divided between the remaining residuary beneficiaries. Once again, the testator can include a letter of wishes covering the background to any unequal split and explaining the provisions of their Will.
Diversion of Funds from an Excluded Beneficiary
Sometimes in a situation where a child is to be excluded, if the testator wishes, they may choose instead to include that child’s children (their grandchildren) instead. This may work as a deterrent in that to make a claim against the estate, the ‘errant’ child would essentially be claiming against his or her own children.
Video Recording
It may also be suitable in some circumstances for a video recording to be made at the time of signing the Will to allow the testator to provide a more detailed explanation of their reasons behind their Will provisions. This can be undertaken in an informal question and answer session and the recording stored alongside the Will.
Mental Capacity Assessment
In some situations, for example if the testator has certain medical conditions, is undergoing certain types of medical treatment or if the testator is simply advancing in age, our advice is to obtain a letter from a medical practitioner confirming that, at the point that instructions for the Will were given, the person concerned had the required understanding to make the Will.
Once again, this in an invaluable document to produce in the event that a Will is contested on the basis that the testator concerned lacked the mental capacity to make a Will due to their medication/medical condition/age.
Claim of Undue Influence
Many of our clients come into the office to give instructions for a Will with another family member for moral support, particularly where there have been upsetting circumstances leading to that person wishing to exclude another family member. It is therefore extremely important that, especially in a situation where the person providing moral support is included in the Will and somebody else is excluded, we see the person giving the instructions alone and document this.
This then gives the testator the opportunity to speak freely and for us to ensure that there is no coercion in relation to their Will instructions.
Summary
These are some of the methods we use to try to minimise the risks. They do not necessarily stop anybody making a claim but may prove to be a sufficient deterrent or a means of successfully defending a claim.
Obtaining possession of a property after 1 October 2018, the Transitional Provisions of the Deregulation Act 2015 and the new role of Local Authorities
Following the introduction of the Deregulation Act 2015, all Assured Shorthold Tenancy Agreements entered into on or after 1 October 2015 were caught by further requirements. From this date, there was also a transitional period of three years in which Assured Shorthold Tenancy Agreements entered into before 1 October 2015 would be exempt from the requirements of the Act. However, from 1 October this year, the provisions of the Act now have retrospective effect to ALL Assured Shorthold Tenancy Agreements irrespective of when they were entered into. Therefore, all Assured Shorthold Tenancy Agreements have to be treated as falling within the scope of the Act, and landlords must be aware of their responsibilities and the consequences of failing to adhere to the new law under the Act.
In view of the changes to the law, a landlord must take certain steps before they are able to serve a valid Section 21 Notice on their tenant, requiring them to vacate the property.
Let’s now discuss the changes.
A landlord must provide their tenant with an Energy Performance Certificate
A landlord must now provide this to their tenant without further delay and, in any event, before serving a Section 21 Notice. If this is not provided to the tenant, then the Section 21 Notice will be invalid and a Judge will dismiss your claim for possession.
A landlord must provide their tenant with a Gas Safety Certificate before the start of the Tenancy Agreement
This is a problematic provision of the Act because it places a requirement on a landlord to provide the tenant with the certificate before the Tenancy Agreement starts. Therefore, the approach that landlords should take is to give the certificate to the tenant before they move in and before they sign the Tenancy Agreement. The landlord should also obtain a signed certificate from the tenant stating that they have received the Gas Safety Certificate.
The difficulty that landlords will face is that a Tenancy Agreement may have started before 1 October 2015 and then become a statutory periodic tenancy. In this situation, the landlord will not have provided the tenant with the certificate at the start of the tenancy. In this situation, there are two possible remedies:
Enter into a new Tenancy Agreement with the tenant and provide them with the Gas Safety Certificate, Energy Performance Certificate and “How to Rent” Booklet, as well as complying with the law concerning the protection of tenancy deposits. This will ensure that a fresh Tenancy Agreement is created and there are no doubts about the landlord’s compliance. The drawback with this is that it will delay you obtaining possession because you have created a new Tenancy Agreement.
Provide the tenant with the Gas Safety Certificate part way through the Tenancy Agreement and then serve your Section 21 Notice. This is a more risky approach to take because the certificate has not been provided to the tenant before the Tenancy Agreement started. However, it is hoped that Judges will take a pragmatic approach and see that it is not practical to proceed with option 1 in circumstances when a landlord wishes to re-take possession of their property.
Provision of the Government’s “How to Rent” booklet
Under the transitional provisions, it is not a requirement for a landlord to provide the “How to Rent” booklet to a tenant retrospectively. However, I feel that it would be good practice for a landlord to provide it to the tenant now, in any event. Obviously, for all Tenancy Agreements entered into on or after 1 October 2018, the landlord will need to provide this to the tenant as they are new Tenancy Agreements.
The Local Authority’s New Approach to Possession Claims
Prior to April this year, many Local Authorities throughout the country would take the approach of advising tenants to remain in properties until they were physically evicted by Court bailiffs. This would present a number of difficulties to landlords because they were left in a position where tenants remained in their properties and the only option was to proceed with a possession claim and see the matter through to conclusion via the Courts.
However, on 3 April 2018 the Secretary of State for Housing, Communities and Local Government issued guidance to Local Authorities, which has now changed their role. The guidance now requires Local Authorities to be more proactive in dealing with tenants facing a possession claim and potential homelessness, and give more advice and assistance to the tenant from the outset. It also requires Local Authorities to make contact with the landlord and discuss the possibility of allowing the tenant to stay at the property.
The guidance states that:
a) where the Local Authority considers the tenant has received a valid Section 21 Notice; and
b) the Local Authority is satisfied that the landlord intends to take possession and further efforts by the Local Authority to resolve the situation and persuade the landlord to allow the tenant to remain in the property are unlikely to succeed; and
c) there would not be a defence to the possession claim
then it is unlikely to be reasonable for the tenant to continue to occupy the property beyond the expiry of the Section 21 Notice, unless the Local Authority is taking steps to persuade the landlord to allow the tenant to live at the property for a longer period of time. As such, the Local Authority must take steps to try to locate alternative accommodation for a tenant. Furthermore, the Local Authority are not allowed to consider it reasonable to expect a tenant to remain in a property until Court bailiffs physically evict the tenant.
In theory, this means that Local Authorities should provide tenants with alternative accommodation and landlords would not need to commence Court proceedings for possession. Although in practice, the situation may be different because if a Local Authority has a shortage of housing then they are going to be unlikely to re-house the tenants straightaway and Court proceedings would be inevitable.
It is hoped that landlords will be aware of these changes to the law and will comply with their new obligations. However I would recommend that landlords take legal advice before deciding to serve Section 21 Notices.
For further information and advice on any of these matters, please telephone me on 01245 504 904 or contact me by email at jsandercock@leonardgray.co.uk .
Comments Off on An increase in Probate fees: to be, or not to be? Act II
For those keen readers of the Leonard Gray “News & Downloads” section of the website you may recall my article from May 2017, “An increase in Probate fees: to be, or not to be?” and the proposed changes to Probate fees by a draft Order at that time which was dubbed widely in the media as a “stealth tax”.
The 2017 draft Order was initially passed by the Commons committee but there was not enough time for the Order to complete its passage through Parliament due to the General Election called by Theresa May in June 2017.
It appears that, sadly, despite all the current Brexit issues, Probate fees are still appearing on the Government’s agenda.
The lady doth protest too much, methinks.
On 5th November 2018, the junior Justice Minister, Lucy Frazer QC MP, provided the following statement:
“I have today laid before Parliament new legislation to implement a new, banded structure of fees for a grant of representation, commonly known as a grant of probate.
Fees are an essential element of funding an effective, modern courts and tribunals service, thereby ensuring and protecting access to justice.
The Government is investing £1 billion to modernise and upgrade the courts system so that it works even better for everyone, including victims, witnesses, litigants, judges and legal professionals. This includes introducing changes to our Probate Service, who offer an important service to those who are bereaved.
The reform of the service allows people to apply for a grant of probate online, access assisted digital support for those who many not necessarily have the skills or access to engage digitally and empowers individuals to make applications themselves instead of needing to instruct and pay for solicitors. This aims to reduce the burden on applicants, by providing a more efficient and simpler application process.
But such a courts system is simply not possible without proper funding. Since the previous Government set out its intentions to introduce a banded fee structure for grants of probate in February 2017, a number of concerns were raised. We have listened to these very carefully, and under today’s proposal we have revised fees so they will never be more than 0.5% of the value of the estate.
Moreover, by raising the estate value threshold from £5,000 to £50,000, we will be lifting around 25,000 estates annually out of fees altogether. For those who do pay, around 80% of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service.
It has long been the case that the users of our courts make a contribution to its costs, and we believe this remains both relevant and reasonable – minimising the burden on other taxpayers. Crucially, by asking those who use the courts to pay more, where they can afford to do so, we are able to fund areas where we charge no fees to vulnerable victims and users, including for example domestic violence and non-molestation orders, and for cases before the First-tier Tribunal concerning mental health.
This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system. We are also confident these fees will never be unaffordable. The cost of the fee is recoverable from the estate and executors have several options to fund it. Moreover, the Lord Chancellor retains a power to remit a fee if he considers there are exceptional circumstances.
We will also publish a guidance document before the Statutory Instrument comes into force, entitled Guidance on Ways to Pay for Probate Fees. This will benefit from external stakeholder input, and will help applicants to choose the option to pay which most suits their circumstances, providing reassurance at a difficult time.”
What are the proposed Probate fees?
The new proposed fee structure under the draft Non-Contentious Probate (Fees) Order 2018 will be as is set out below:
On an application for a grant where the assessed value of the estate:
Fee
(a) exceeds £50,000 but does not exceed £300,000;
£250
(b) exceeds £300,000 but does not exceed £500,000;
£750
(c) exceeds £500,000 but does not exceed £1,000,000;
£2,500
(d) exceeds £1,000,000 but does not exceed £1,600,000;
£4,000
(e) exceeds £1,600,000 but does not exceed £2,000,000;
£5,000
(f) exceeds £2,000,000
£6,000
SOURCE: legislation.gov.uk
The current Probate fee is a flat fee of £155 so, other than for estates below £50,000, this will mean an increase in Probate fees. In particular, the Probate fees for estates in excess of £300,000 will be five times higher and for estates in excess of £500,000, a whopping sixteen times higher!
At the very top end of the scale, for estates exceeding £2m, the Probate fee will be around 39 times more.
This will, of course, add further complexity to Probate work generally as the Probate fee needs to be paid along with an initial instalment of Inheritance Tax (if relevant) before Executors can even obtain the Grant of Probate. Finding the fee or releasing funds for the fee may prove difficult in some estates.
Is this the Final Act?
Whether the 2018 draft Order will pass through both Houses of Parliament and become law in 2019 remains to be seen.
Will this simply be another case of much ado about nothing?
Comments Off on Deputyship Orders: Don’t delay your LPA!
Many people put off making a Lasting Power of Attorney (LPA) due to a number of reasons.
These can include the cost, hoping that illness or injury will not affect their mental capacity in the future, or the good old excuse of ‘I shall do it later’…but what if later is too late?!
Deputyship Applications
If an illness or injury affects your ability to make decisions for yourself in relation to your property and affairs, it may no longer be possible for you to make a LPA. This can lead to a very traumatic time for family members and would leave them with no other option but to apply for a Deputyship Order from the Court of Protection.
The powers conferred by a LPA and a Deputyship are very similar, and share the same underlying principle that any decisions made on a person’s behalf must be made in their best interests. There are, however, some very big differences between the two options which should be considered carefully before leaving it to chance:-
Cost: A Deputyship is more expensive than a LPA, with a £385 application fee and £320 annual supervision fee (or £35 where Deputies are managing less than £21,000). LPAs cost £82 each to register and there are no ongoing expenses. The Court will allow solicitors to charge a fixed fee of £950 plus VAT for assisting with a Deputyship Order application. For a single LPA we will charge only £495 plus VAT.
Time: The Deputyship application process can take up to 6 months, with a series of formalities to be dealt with. On the other hand a LPA can be registered within 8-10 weeks and requires fewer formalities to be adhered to.
Scrutiny: A Deputyship is much more heavily scrutinised than a LPA. Deputies are required to report to the Office of the Public Guardian (the supervisory body for Deputyships) on an annual basis to show exactly what has been spent during the year. Such obligation does not exist for Attorneys; although it is recommend that they keep records of any actions taken.
Protection: Deputies are required to take out an insurance policy, known as a ‘security bond’ each year, which protects the incapacitated person’s assets should they be mismanaged. No such insurance policy is required for Attorneys.
It is worth noting that the Court may not grant a Deputyship Order covering all aspects you require on the Order. As such, further Orders and Directions may be required from the Court in the future, in turn incurring further costs and delay.
Just like a LPA there are two types of Deputyship’s that can be applied for.
Property and financial affairs
This is the most common form of Deputyship and will allow your Deputy, the person appointed by the Court of Protection, to deal with your financial affairs on a daily basis. Your Deputy will be able to manage your bank accounts, pay bills and deal with your property as if they were you.
Usually, the Court will not appoint a Deputy when a person who lacks capacity has no property or savings and their only income is social security benefits. In these situations the benefits can be managed by an appointee, appointed by the Department for Works and Pensions.
During the Deputyship process, the Deputy will have to sign a declaration which will outline your circumstances and include details of the tasks and duties you as a deputy must carry out. You must be able to assure the Court that you have the skills, knowledge and commitment to carry them out. You must also assure them that there is nothing that might make your appointment inappropriate, for example if you have severe health problems, you are in a difficult financial position, or are bankrupt.
Health and welfare
The Court of Protection rarely grants Deputyships for health and welfare unless there are extreme circumstances. An example of when a health and welfare deputyship might be granted is if there has been a history of disputes within the family or there is a high risk of abuse etc.
Decision-making in relation to personal welfare matters are essentially a collaborative process between family members, healthcare professionals, care staff, social workers and anyone else concerned with a person’s care. As such it would seem unjust to provide an individual with a special legal status to make such welfare decisions.
If, however, you feel very strongly about authorising a certain trusted individual to make decisions about your welfare, a LPA for health and care is the best way to achieve this. In practice your Attorney will not be the only person able to make decisions relating to your personal welfare. Decisions can be made by your primary care team without the need to consult/gain permission from your Attorney. In any event, the importance of having an Attorney for personal welfare comes when there is a disagreement about an element of your care or treatment. An Attorney’s opinion in these circumstances will carry much more weight than someone without such authority.
How can I prepare for the worst?
At Leonard Gray we can discuss and advise you on your particular needs and circumstances; whether that is in relation to putting in place a LPA or assisting you with a Deputyship application on behalf of a loved one.
If you would like to know more, please contact a member of our team on 01245 504904.
Comments Off on Who should I appoint as my Executor and what will they do?
“Who should I appoint as my Executor?”
This is a very common question that I am asked by clients making their Wills and also by people who are named as an Executor, who are then expected to deal with an estate. The simplest answer is that Executors ascertain exactly what the deceased person owned and owed at the date of death, consider the Inheritance Tax position, obtain a Grant of Probate (if required), gather in the assets, pay the debts and expenses and then distribute in accordance with the terms of the Will.
However, it is not quite as simple as this! Most people opt to appoint family members as Executors. But, it is important that if there are multiple Executors, they should be able to work together to administer the estate. You should therefore think carefully about who you wish to appoint and the personalities involved. Although you may wish to appoint all of your children, if they don’t get on or haven’t spoken to each other for many years over a family argument or perhaps live abroad, it may be better to appoint somebody else.
If you only appoint one Executor, you should ensure that you appoint substitute or reserve Executors to step in if the primary Executor has predeceased you or is for any other reason unwilling or unable to act. For example what if the Executor you have appointed is unwell or has lost the capacity to deal with their own affairs? For this reason, it is often preferable to appoint somebody of a younger generation as a substitute Executor.
When appointing Executors you may also want to consider individuals who are methodical and fiscally responsible. If you don’t think that there are any suitable family members or friends then it may be better to appoint a professional (for example a Solicitor) to act as your Executor. They would then liaise with the family and the beneficiaries of the Estate during the administration and can add an element of impartiality, if required.
It is a very common misconception that somebody who is an Executor cannot be a beneficiary of a Will. This is not the case. For example, there is absolutely no reason why your children cannot be appointed as your Executors and also the beneficiaries of your Will.
“What does an Executor actually do?”
An Executor may have to apply for a Grant of Probate (see Do I need a Grant of Probate?) as part of the administration of the estate. A Grant of Probate is a Court Order which confirms that the named Executor/Personal Representative has the authority to deal with the assets in the Estate. As part of this process the Executor must confirm the Inheritance Tax position in the estate for H M Revenue & Customs (HMRC). Depending on the circumstances, these forms can be quite daunting, especially at what can be a quite challenging time emotionally. It is extremely important that this paperwork is completed accurately and in a timely fashion. HMRC can apply penalties for late filing of the Inheritance Tax paperwork and, for example, if estate assets are not fully disclosed on the paperwork.
Most Executors are also appointed as “Trustees” of an Estate. This allows them to hold money for minor beneficiaries or on behalf of a beneficiary of a Trust. This may involve ensuring that Tax Returns are carried out and that assets are suitably invested and/or protected.
Of course, if the named Executors do not feel able to deal with the estate themselves, they can ask a Solicitor to assist them with the application for the Grant and the administration of the estate.
If a named Executor does not wish to act in an estate, they can renounce probate if they have not already been involved in the estate administration, known as “intermeddling”. In this situation either the remaining joint Executor(s) can continue to act or, if appropriate, a named substitute Executor. If there are no Executors willing or able to act then the residuary beneficiaries can take on the role and act as “Administrators” of the estate.
In a situation where several Executors are named, it may not be necessary for all of them to act in the role and in this case, if everybody agrees, one or two of the named Executors apply for the Grant reserving power to the others. This means that they do not actually sign documents but could take over the administration if required to do so at a later date.
One of the most important points to remember, especially if you are appointed as an Executor, is that an Executor is personally liable. An Executor should never hand over estate assets before all debts, expenses and Inheritance Tax have been paid. This point has been recently highlighted in the case of Harris v H M Revenue & Customs (2018) where the Executor, who was not a beneficiary of the estate, passed a substantial amount of the estate assets to a beneficiary on the assumption that the beneficiary would pay any outstanding Inheritance Tax. The beneficiary returned home to Barbados with the money and, of course, didn’t settle the Inheritance Tax. It was held in this case that the Executor was personally responsible to pay the Inheritance Tax in excess of £340,000 to HMRC.
Summary
The bottom line is that being appointed as an Executor is an honour but also a big responsibility. So if you are asked to be an Executor, think carefully about whether this is a role you are willing to undertake. If you are appointing Executors, please ensure that the named people are the most suitable candidates for the role and, perhaps, in advance discuss with them if they would be willing to act for you.
If you would like further advice on any of the above issues then please feel free to contact us on 01245 504904 to book an appointment to discuss these in more detail.
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