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Potentially Exempt Transfers

By | Gifting | No Comments

Gifts made during lifetime may be considered when calculating IHT on death if they do not fall into any of the inheritance tax exemptions and allowances (see our previous newsletter). These are known as Potentially Exempt Transfers (or PETs). To be considered as a PET, the gift must be either a gift to an individual, to a disabled person’s trust or finally if an Interest in Possession (IIP) trust comes to an end but continues as a disabled persons trust. If the giver dies within 7 years of making the PET, the gift will become chargeable and be considered as part of their estate on their death. The deceased’s NRB will firstly be applied towards any PETs. If a person has made multiple PETs, NRB will be applied to the earliest PET first. If there is any NRB leftover, it will then be applied to the next PET until NRB…

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Powers to Carry on a Business

By | Business | No Comments

Clause 4.8 of the STEP Provisions (second edition) contain limited powers to allow the trustees to carry on the trading of any business interests which the testator may have at death. Where the testator was a sole trader, through these provisions the trustees have an implied power to continue the business in order that it is then sold. This power is only limited to realising the value of the business and through the implied power; this cannot continue indefinitely. Generally, the trustees running the business would be liable for any debts which they may sustain. If the business is only being carried on to realise the value then through the STEP Provisions the trustees have the right to an indemnity from the estate, which gives precedence to the testators creditors and also the beneficiaries. For this reason, it is recommended to include the Powers to Carry on a business clause…

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Inheritance Tax Review – An Update

By | Inheritance Tax | No Comments

Potentially changing the Inheritance Tax regime is big news at the moment and the past few weeks have provided some interesting developments. As mentioned in a previous article, the Chancellor of the Exchequer has requested that the Office for Tax Simplification carry out a review of the Inheritance Tax regime. Soon after this, the Office of Tax Simplification provided a scoping document for the review. On 27th April, the Office for Tax Simplification provided their call for evidence. This call comprises of two parts. Firstly, there is an online survey aimed at the public directly to access the public’s practical experience or understanding of Inheritance Tax. Secondly, the Office for Tax Simplification has also provided a set of consultation questions aimed at the public, professionals and business owners. These questions cover areas such as: Difficulties in completing IHT Forms Difficulties in administering an estate and completing probate Interacting between lifetime…

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Partial LPA Revocation

By | LPA | No Comments

After an LPA has been signed, it could be several months or years before the document is registered with the Office of the Public Guardian (OPG), or before they even need to be used. During this time the circumstances may change, and the donor may decide that he/she no longer wishes for one or more of their attorneys to act on their behalf, or an attorney may decide they no longer wish to act. In exceptional cases, an attorney may believe that another attorney is no longer trustworthy and does not wish that attorney to act. The solution to these issues can depend on the exact circumstances at the time, such as if the donor has capacity or not, or if the LPA is registered. If the donor still has the capacity to make decisions, and the LPA is unregistered, they have two choices. They could write a Partial Deed…

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Mutual Wills

By | Wills | No Comments

Mutual wills are wills made between multiple parties in which they are making some mutual benefit to the other parties and the parties involved agree that the wills cannot be revoked with the consent of the others. On the death of any of the parties the survivors will be bound by the terms of the mutual wills. Mutual wills are most commonly made between spouses, gifting assets to each other on first death and then over to children on the death of the second. Whilst all parties are alive, they can change their minds at any time and revoke the mutual wills. Once one party to this agreement dies and the others accept their benefit from the deceased’s Will, the agreement not to revoke becomes binding on the other parties. On the face of it, this seems beneficial, however mutual wills have numerous issues. There is no flexibility for the…

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LPA’s – Instructions and Preferences

By | LPA | No Comments

In Lasting Power of Attorney documents, the donor can choose to place rules or guidance within the documents themselves to state exactly how they would like the attorneys to approach certain decisions should they lose the capacity to make decisions for themselves. This can be achieved on Section 7, Page 8 of each type of LPA under Instructions and Preferences. Placing a preference into an LPA is a non-binding wish that the attorneys may consider when making decisions on behalf of the donor. An example of this could be; ‘I would like to donate £2 a month to Cancer Research UK’. When the attorneys are making any decisions regarding any preferences specified in the LPAs, they must consider if this is how the donor would act, and if this is in the best interest of the donor. If the attorneys deem such a decision is not in the best interest…

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Codicils – What are they and why don’t we draft them?

By | Drafting | No Comments

A codicil is a document which is used to add to, alter or revoke parts of an existing Will. A codicil may even amend a previously existing codicil and there are no limits as to how many codicils a person could have. A codicil should mention what changes are being made, reference the Will and any earlier codicils by date and what amendments those previous codicils made and confirm the remaining terms of the Will. Codicils are subject to the same requirements of a Will and should therefore be signed and witnessed in the same manner as a Will. The witnesses however do not need to be the same as those from the original Will. WillPack will not prepare codicils to Wills and we instead recommend that changes be made by rewriting the Will and issuing a new Will. There are several reasons behind this. As codicils are separate documents…

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From the Desk of the DG – GDPR

By | Admin | No Comments

There is a lot of misleading information going around about the interpretation of the rules surrounding GDPR, and like a lot of professions, professional Will Writers, have neither been considered by Brussels when the Act was first drafted and from what I have seen and heard the people, being employed as professionals, to advise us are no wiser as to how we work and the size of the majority of our organisations. I have, over the past two weeks done little other than lobby everyone I know, and some I don’t know to get a definitive answer as to whether we would find ourselves in deep water (there is another phrase I could have used) but taking everything that has been told to me, including information from the ICO, as long as we are following the spirit of the Act, that is not misleading the public or using data we…

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Disabled Person’s Trust

By | Trusts | No Comments

A Disabled Discretionary Trust (also known as a Disabled Person’s Trust or a Vulnerable Person’s Trust) can be utilised where a child or other relative has a disability. There are essentially two reasons why a trust is considered advisable for disabled beneficiaries. If this person inherits from a Will directly, their entitlement to any means tested benefits could be affected. Alternatively, depending on the exact disability, the beneficiary disabled person may be unable to manage a large sum of money due. If that person also lacks mental capacity and does not have a Property and Affairs LPA, it is likely that an application would have to be made to the Court of Protection to appoint a Deputy. This is a lengthy and expensive process and incurs ongoing costs and should be avoided. A disabled person’s inheritance should therefore be placed into a Disabled Discretionary Trust. The disabled beneficiary is the…

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Setting up a Will-Based Trust After Death

By | Trusts, Wills | 2 Comments

It has been brought to our attention that there are some misconceptions in regards to what action needs to be taken for a Will-based trust after the death of the Testator. The following article is intended to clarify these points. A trust in a Will, such as a Protective Property Trust, Flexible Life Interest Trust or Discretionary Trust, is not automatically set up on the death of the client. The Will trust is not itself the trust, it is more of a direction that a trust of those terms is set up upon the client’s death. There are further actions which need to be taken by the executors upon the Testator’s death in order to set up the trust and clients should be made aware of these steps. A formal trust deed would need to be drawn up on death to create the trust. This will most likely refer to…

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