Self Isolation and Lasting Power of Attorney

During self isolation it will be increasingly important for vulnerable people to have lasting power of attorney in place for their property and financial affairs. If you are not able to leave your home for fear of contracting the Coronavirus you will need someone to help you with your financial affairs. Whether it be paying for groceries on your behalf or paying bills at the bank.

These valuable documents take several weeks to become registered usable documents. The government has suggested that this time of strict social distancing may last for many months. If you would like to get these documents in place and would like advice then we can guide you through the process, preparing the documents on your behalf and overseeing the registration process.

For more information call Nicola on 01275 851056 or email nicola@richardsonswills.co.uk


Inheritance Tax and the Executor

A recent article from the Telegraph revealed how a personal representative was left with a staggering Inheritance Tax (IHT) bill of £341,278 when he was administering a £1.2 million estate. Mr Harris misguidedly distributed the assets to the beneficiaries before all of the Inheritance Tax had been paid. He did this with the understanding that one beneficiary (who received the majority of the estate) would pay any Inheritance Tax that was still owed. However, this did not happen as the beneficiary left the country without paying, leaving Mr Harris to foot the bill.

In this case, Mr Harris was personally liable for paying any Inheritance Tax that was due on the estate, as he had taken on the financial and legal responsibility for the estate when he became the administrator in 2013. Mr Harris was appointed to distribute Helena McDonald’s estate by the court when she died without a Will.

When a Will has been left, a chosen Executor is stated and if they choose to accept the role, they will have this same financial and legal responsibility. Executors and administrators are by no means obliged to take on the responsibility. They have a choice of whether or not to accept the role, the right to seek advice from a professional, and can even ask a professional estate administrator to manage the estate on their behalf.

Mr Harris attempted to appeal his responsibility to pay the £341,278 owed to HM Revenue and Customs (HMRC) on the grounds that he no longer holds the estate’s funds. Harris’ attempt was unsuccessful as Judge Nicholas Aleksander rejected the tax appeal, stating that “IHT is clear. It is the personal representatives of the deceased (in this case, Mr Harris as administrator) who have the obligation to account for any inheritance tax arising in respect of the deemed transfer on death.”

He added, “It is no defence to any inheritance tax determination that Mr Harris may have transferred the assets of the estate to a beneficiary on the basis that the beneficiary would be responsible for payment of the inheritance tax due. Nor is it a defence that Mr Harris was ignorant of his obligations, as a personal representative, to pay the inheritance tax owing.”

This case highlights the lack of understanding amongst the public about what to do when someone dies and more specifically, the liability that is associated with administering an estate. Incorrectly distributing the assets or making mistakes whilst handling the estate can be of great consequence, as highlighted in Mr Harris’ case.

If you need help administering an estate then we can help you.


Home

The way couples own their home

For most couples their home is their largest asset. The thought of it ending up in the wrong hands on our death or our partner’s death is horrifying.

Most couples own their homes as ‘Joint Tenants’. This means that when one dies, the survivor automatically becomes the owner of 100% of the property. The majority of couples who have made Wills, have simple Mirror Wills which gift everything to the survivor when the first spouse dies and then onto the children on second death. There is nothing wrong with this type of Will.

However, the disadvantage comes should the survivor remarry, suffer bankruptcy or need long term care. If the survivor remarries, then marriage automatically revokes previously prepared Wills. This means that the new spouse would inherit under the Intestacy rules if the surviving spouse did not make a new Will for the benefit of your children.

If the survivor fell out with any of the children, there is nothing to stop the survivor cutting them out of the Will after the first spouse passed away. This is particularly relevant when there are children from previous relationships.

Tenants in Common

If the way the home is owned is changed to ‘Tenants in Common’ and your Will is changed to include a Life Interest Trust. Then whoever dies first, their share in the property is protected against second marriage or bankruptcy along with long term care costs; the interest is ring fenced for your children.

If you would like a free consultation to discuss making a Will or Lasting Power of Attorney or to review your existing Will please call 01275 851056 or email nicola@richardsonswills.co.uk


I’ve been named as an executor. What does this mean?

Around six million people have experience of acting as the executor of a Will but just 4% realise that they are legally responsible for the accurate distribution of the estate that is entrusted to them.

An executor is responsible for administering the estate and is accountable to Her Majesty Revenue and Customs (HMRC) and the beneficiaries. The process of administrating the estate can be daunting given the legal paperwork, tax calculations and various administrative tasks that need to be accurately completed.

The main duty of an executor is to ensure that the assets and liabilities associated with an estate are managed and dealt with efficiently.  This normally involves collating information on all assets such as property, investments and personal possessions, and liabilities such as outstanding debts or mortgages.

The executor is responsible for valuing the assets, settling all liabilities and then distributing what is left to the nominated beneficiaries in line with the instructions left in the deceased’s Will.  If an executor breaches their duty they can be held financially and legally liable for the consequences, even if they were unaware of their wrongdoing. Something as simple as failing to notify an insurance company that a house has now been left empty, could result in the executor being held liable for any loss that is incurred in the event of a burglary or even worse a fire.

We work in partnership with estate administration specialists Kings Court Trust who can remove this stress from the executor and take on full legal liability for administering an estate. If you would like to find out more about this service, please contact us on 01275 851056.


Appoint Guardians

Currently in the UK, only 67% of adults have a valid Will, and whilst not all of them will have needed to appoint guardians for their children, it is certainly something that many of them will have considered. Deciding who you would like to bring up your children is likely to not be easy. However the thought of knowing that someone you trust will be looking after them after you’re gone should certainly bring some comfort to the matter. After all, the alternative is letting the courts decide on their guardians, something that surely any parent would wish to avoid.

The appointee will only become the child’s guardian if at the death of the testator:

  1. No parent with parental responsibility survived him; or
  2. There was a residence order in his sole favour relating to the child.

Without any guardians in place, under Section 5 of the Children Act 1989 the courts can appoint guardians for a child if there are no parents with parental responsibility, i.e. not named on the child’s birth certificate. Guardians may also appoint a successor, and this is not something that needs to be done in the testators Will.

When appointing guardians in your Will, you should always advise that you seek consent of those you wish to appoint, prior to naming them in your Will. The loss of a friend or family member can be shocking enough without unexpectedly having to take on the responsibility of children.

Having appointed guardians for you children, you shoul also think about writing a letter of wishes to lay out how you want your children to be raised specifically. You can express how you wish for your children to continue with certain activities such as music lessons, or afterschool clubs. Other examples may include guidelines as to religion, or their education. It should however be remembered that a letter of wishes is just that. It is not legally binding and cannot be enforced and as such it is advisable that when appointing guardians, you choose somebody who will follow the wishes you have set out.

Guardianship – give it some thought.