Melita Jackson passed away in 2004 leaving her £500,000 estate to three animal charities, RSPCA, Blue Cross and the RSPB. She made it clear within her Will why her daughter, Heather Ilott, was not to benefit from her Estate, however despite this, the Court has awarded Ms Ilott over £160,000 from her mother’s Estate.

Ms Ilott and her mother’s relationship deteriorated when Ms Ilott was just 17 and went to live with her boyfriend, who she later married.

Ms Ilott claimed that her mother had not made ‘reasonable provision’ for her and challenged the £50,000 previously awarded to her by the Court. Judges ruled that she should be awarded money from her mother’s estate due to her ‘basic human need’ and that it was ‘unreasonable’ for Mrs Jackson to not leave her daughter with anything.

Key factors that played a part in this decision was that Ms Ilott was in receipt of state benefits and the Court stated she would otherwise face a life of poverty – she could not afford holidays or buy clothes for her children. Lady Justice Arden said Ms Ilott’s mother had been ‘unreasonable, capricious and harsh’ and therefore ruled she should receive a greater share of the estate.

Furthermore, the Judges confirmed that the fact Mrs Jackson had little connection to the charities to which she left her money was a factor in the ruling.

This ruling means that although you can still disinherit your children, you’ll have to explain why and what connects you to those beneficiaries you do leave money to.

It is also thought that this ruling will make it easier for adult ‘disinherited’ children to challenge wills and claim greater amounts of money by way of claiming ‘reasonable provision’ has not been made for them.

If you have any concerns about the provision made in your Will or need to ensure you have a Will in place, please do not hesitate to contact me on 01908 660 966 or by email on Kathryn.oreilly@franklins-sols.co.uk.

Image courtesy of 123rf.com

Recently, I have seen a number of cases where people have used non-qualified organisations or companies to gift their homes into Trust on the pretence that this will provide protection from probate fees; divorce claims; estate claims; and care fees – just to name a few.

However, there are some significant disadvantages to gifting your property into a Trust which need to be carefully considered before anyone makes this decision:

1. Firstly, from an inheritance tax point of view the relevant transfer of the property into the Trust could be caught by the ‘gift with the reservation of benefit’ rule, if you still continue to live in the property. Although, the property would be no longer in your estate, it may still be counted from an inheritance tax point of view as being within your estate, unless you pay rent to the Trustees. In addition, the property would be liable to capital gains and disposal if owned by a Trust as the property could lose its principal private residence relief.
2. Secondly, you are making yourself vulnerable in your own home. You no longer own the property as it is held by the Trustees of the Trust and therefore if you ever wished to release money from your property in the future, say by down-sizing, this is a lot more difficult as the surplus money will form part of the Trust assets. Furthermore, as is common with a number of the companies offering these services, they often appoint themselves as Trustees, which again makes releasing monies from the Trust difficult if the Trustees themselves become difficult with you.
3. If you did have to enter into care in the future, the transfer into Trust could be seen as a deliberate deprivation of assets and could potentially be reversed by the local authority, to the extent that they treat you as technically owning that property when assessing the care home fees you need to pay. There is, strictly speaking, no limit on how far they can go back to look into assets people have given away and you can therefore find yourself in a difficult situation, whereby the local authority assess you as having monies to pay for care home fees, yet the property is in Trust.
4. Also, many people wish to live in a care home of their choice and they therefore may wish to top up their fees. Transferring your home into a Trust may therefore potentially unduly disadvantage you.
5. There can also be significant fees in setting up and running these types of Trust which may ultimately not work. These types of schemes offered by a number of companies are by no means cheap and usually have on-going charges year on year. Furthermore they are not foolproof, as some of the providers would lead you to believe.

Every case needs to assessed on its own facts and merits, these types of Trust are not suitable for many. There are usually tax consequences which need to be addressed and considered in detail.

The issues surrounding protecting the family home are complicated– so please do err on the side of caution. I would advise you seek independent legal advice before making a decision in relation to your home and it may also be necessary to seek independent financial advice. That way you can ensure that you have obtained advice on your individual circumstances.

There also may be other alternatives, such as if you are part of a couple, setting up life interest Trusts within your Wills. These types of Trust aim to protect the deceased’s half of the property when one of the couple passes away.

If you have any questions about Trusts and gifting your property – please do give me a call on 01908 660966, or drop me an email.

Following yesterday’s Autumn Statement, the government has dropped plans to introduce a single settlement nil rate band to be shared between all Trusts set up by a settlor in lifetime or on death.

Under current rules, an individual can establish several Trusts and as long as they are set up on different days each will have its own £325,000 nil rate band. Furthermore, if for example an individual placed a gift equivalent to the nil rate band (currently £325,000) into a Trust and survived this by seven years, it would fall outside of their estate for tax purposes. Then that individual could repeat the process, once again having to survive the gift by seven years.

In previous proposals the government stated that it planned to change the inheritance tax rules so that there would instead be one settlement nil rate band, in an aim to target tax avoidance by people setting up a number of Trusts throughout their lifetimes.

The settlement nil rate band proposal was heavily criticised as an overly complex, and unfairly retrospective solution to inheritance tax avoidance. However, it is something of a surprise that the government has decided to make a U-turn with its plans.

The government does however intend to introduce new rules in the future to target tax avoidance through the use of multiple Trusts and they also plan to simplify the calculation of Trust rules.

We await further details on this turnaround – however if you are unsure how this affects you or your inheritance plans – please feel free to comment below, call me on 01908 660 966 or email me on kathryn.oreilly@franklins-sols.co.uk. I would be pleased to help.

In the absence of a valid Lasting Power of Attorney or Enduring Power of Attorney, no one has legal authority to make decisions on behalf of an incapacitated person about their property or welfare until a Deputy is appointed by the Court of Protection.

Who can be appointed as a Deputy?
A Deputy must be over the age of 18 and in the majority of cases is a family member, relative or friend. However, anyone can apply to the Court of Protection to be appointed as a Deputy and in some cases it is appropriate to have a professional Deputy appointed. An application to the Court may be refused if the person making that application is a bankrupt or has previous criminal convictions.

Can more than one Deputy be appointed?
The Court may appoint more than one Deputy and you can specify whether the Deputies are to act ‘jointly’ or ‘jointly and severally’. If Deputies are appointed jointly all decisions have to be made by the Deputies together, whereas if they are appointed jointly and severally, the Deputies can act together but they can also act independently which is often more practical.

What are the duties and responsibilities of a Deputy?
Deputies must act in accordance with the five statutory principles of the Mental Capacity Act 2005, and at all times ensuring they act within the person’s best interests.

They must also:-

• make only those decisions authorised by the Court order;
• have regard to all relevant guidance in the Code of Practice;
• ensure that their personal interests do not conflict with their duties as a deputy, and not use their position for any personal benefit; and
• apply a high standard of care when making decisions.

Are there any restrictions on what a Deputy can do?
There are a number of restrictions on a Deputy’s powers. Some examples of what Deputies are unable to do are as follows:

• make decisions if they believe the person has capacity to make that particular decision for themselves;
• make a decision that is intended to physically restrain the person, unless it is necessary to prevent them coming to harm and the restraint is reasonable and proportionate;
• make decisions about life-sustaining treatment;
• make a Will for the person lacking capacity;
• act in a situation where there is a conflict without first seeking direction from the Court.

Property & Financial Affairs Deputy and Health & Welfare Deputy
There are two types of Deputyship Order, one to cover property and financial affairs and one to cover health and welfare matters.However, many people are not always aware that Health and Welfare Deputy Orders are granted much more sparingly – and many are rejected by the Court.

Before the Court will even consider an application for a Health and Welfare Deputy they will first need to decide whether to grant permission for the application to be heard, to ensure the application is actually necessary and well founded. Therefore before an application is made specialist legal advice should always be sought.

What is the procedure involved?
An application to Court of Protection is required and the correct forms will need to be filed with the Court, together with the application fee. There are strict time limits in which to serve notice to interested parties and thereafter a Judge will consider the application before granting an order appointing the Deputy. There is also a Security Bond to pay and on-going annual supervision fees.

I am able to assist with Deputyship applications to the Court of Protection – so please do contact me if you would like help in making a Deputyship Application. Alternatively if you have a question, please feel free to ask a question in the comment box below – or contact me on 01908 660 966 or Kathryn.oreilly@franklins-sols.co.uk.