Thursday, 9 October 2014

Best will for… Part 3: most married couples


I like the simple things in life. When it comes to wills, most of my married couple (and civil partnership) clients want to keep things simple too. ‘Everything to my spouse and then to my children equally, please’ is a common refrain. There is nothing wrong with that.

The only problem with keeping things that simple, though, is that you can be wrong-footed if your family’s circumstances have changed by the time you die, or afterwards. The child’s marriage doesn’t work out. The child’s ex-partner wants a stake in your child’s home. Your spouse loses capacity to manage finances after your death. Lawyers have a tendency to look on the black side and chances are none of these things will happen. However, the fact is that a simple will, leaving everything to heirs outright, gives no protection against any of these things, so you are taking a risk.

Thursday, 25 September 2014

Family businesses and pre-emption rights: a trap for the unwary

Business owners are a notoriously busy lot.  Trying to get them to put wills in place can require persistence on the part of the adviser.  However, care is needed when making wills for business owners as getting the will in place, on its own, may not be enough.



Trouble can ensue when the share transfer provisions in the articles of the company, or any shareholders’ agreements, prevent the deceased’s shares being transferred to the heirs named in the will, or the trustees of any trusts in the will.  Restrictions placed on transfers are commonly called pre-emption rights. 

Thursday, 11 September 2014

Choosing trustees? Not so fast!


What is the key decision which repays very careful thought when setting up a trust or a will containing a trust?  Is it who can benefit from the trust (the beneficiaries)?  Of course, that is very important.  Or whether it is a fixed interest or a discretionary trust?  Absolutely, money in the right hands at the right time, naturally.  But I would argue that there is one matter that trumps even both of these.  No prizes for guessing (the clue is in the title!) – the No.1 spot has to go to choice of trustees.  Poor decision-making on this front can lead to big regrets all round as it is far from easy to force trustees to retire once they have accepted the position.  Read on if you require further persuasion.   

Thursday, 28 August 2014

Fed up with trusts? Try a FIC!

If you want to give something away but retain some control over it, chances are that an English lawyer will tell you to use a trust. 

I am a great fan of trusts but, let’s be honest, they have some potential drawbacks.  For example, if an individual puts more than £325,000 into trust, a 20% Inheritance Tax (IHT) entry charge could be payable.  Most trustees currently pay Income Tax at between 37.5% and 45% and Capital Gains Tax (CGT) at 28%, which leaves less after tax to reinvest.  It is also very difficult to prevent beneficiaries interfering in the trust administration completely – the whole premise of a trust is that the trustees have to be accountable to the beneficiaries.  Laudable but not always wanted.

In many cases, with proper tax planning and a carefully crafted trust deed, most of these potential drawbacks can be managed.  But, let’s be radical and think the unthinkable, are there any alternatives to trusts out there?  Cue the FIC (Family Investment Company).

Thursday, 14 August 2014

Lucian Freud’s ‘secret will’

A court case over the £42 million residuary estate of the painter Lucian Freud has resulted in its true recipients remaining a closely guarded secret, despite the fact that his will was made public when it was proved at the Probate Registry.

So how was this feat achieved and, for anyone not wanting the world to know to whom they leave their wealth after death, is this a trick worth imitating?

Thursday, 31 July 2014

Carry On Giving: how to manage the CGT bill on gifts

With asset values on the rise, many of my clients’ thoughts are turning to Inheritance Tax (IHT) planning.  That can sometimes lead to thoughts about giving away assets to children in lifetime in the hope of surviving seven years.  However, it seems even the best laid IHT mitigation plans can come unstuck when Capital Gains Tax (CGT) is factored in. 

Unfortunately, gifts still count as disposals at market value for CGT purposes so, unless a relief (such as private residence relief) applies, gifts can trigger CGT and the giver may need to find extra, liquid funds, above and beyond the gift itself, to pay the resulting CGT bill. 

Thursday, 17 July 2014

‘One man, two guvnors’: appointing deputies in the Court of Protection

Since February, when the President of the Family Division and the Court of Protection issued practice guidance on the publication of Court of Protection decisions, there have been many more Court of Protection cases reported in the mainstream press. 

If publication of cases raises awareness among the general public of the benefit of planning for incapacity, that alone will make it worthwhile.  Many people are still unaware of what could happen to their assets if they become incapable of managing them or what the options are in this respect.