Can I put a condition on a gift in my will?

Deciding who should inherit from you in your will, how much they will get and in what shares, are big decisions to make. This can be made more difficult if you have particular concerns about a beneficiary and whether the inheritance could be at risk.

‘Second marriages, family disagreements, or children who have a lot of debt can all be reasons why you might want to retain some control over your assets, even when you are no longer alive to enjoy them personally,’ says Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors Limited. ‘In these circumstances, a conditional gift can allow for greater flexibility. They can, however, also become problematic if not considered with appropriate care and diligence.’

What is a conditional gift?

Many gifts made in a will simply allow the recipient of the gift to receive their money, or other assets, outright once you have died. A conditional gift is one which the recipient will only receive if a certain condition is met.

The condition could be something which is certain to happen, such as the death of another beneficiary, although the timing of the event is uncertain. Alternatively, the condition could be something which is not guaranteed, such as the recipient obtaining a certain qualification.

Conditional gifts are often referred to as ‘contingent gifts’ as they rely on the occurrence of the specified contingency.

Common conditional gifts

Many people choose to leave money to young beneficiaries only once they have reached a certain age. This might be, for example, 18, 21, 25, or any other age.

Whilst this is a condition that is likely to be met, it is not guaranteed. The beneficiary would only receive their money if and when they reach the required age.

A conditional gift may also be in the form of a trust. It is common for couples who have children from previous relationships to include in their wills a life interest trust for each other. Typically, the ultimate aim is for the money, or assets, to pass to their own children after their new partner has died. The children, therefore, are the recipients of a gift which is conditional upon the death of the partner.

Other reasons for making a conditional gift could be, for example, if you have reason to dislike or distrust a beneficiary’s spouse or civil partner, in which case you may make the gift conditional upon them having divorced by the time of your death. You might want to leave money to a grandchild, but only if they attend university.

Making gifts conditional on speculative assumptions such as these is, of course, more risky, as it might be less probable that your grandchild will go to university than them simply living until they are 25. A gift attached to a less probable condition should be made with extra caution, and you should always give thought to the possibility that the condition may never happen and how you would like the gift to be distributed if the condition is not met.

There are many reasons why someone may wish to make a gift conditional, and the suitability and terms of such a gift are highly dependent upon personal circumstances. It is always advisable to seek advice before including a conditional gift in your will.

Pros of conditional giving

Conditional gifts do allow for a greater level of control of your assets post-death, as they take into account alternative circumstances that could occur. If carefully drafted by a legal professional, a conditional gift could allow for a variety of situations.

Gifts which are conditional upon the beneficiary reaching a certain age may protect an inheritance, as many parents and grandparents share the view that their children would be less likely to make sensible investments with their inheritance at 18 than they might at 25.

A gift which is conditional on the beneficiary’s divorce can protect assets from becoming embroiled in divorce proceedings if the relationship is already rocky and likely to end in divorce, ensuring that your assets do not end up in the hands of a loved one’s ex-spouse.

Any gifts which are made conditional upon the death of another person mean that the asset in question will continue to pass according to your own wishes, rather than under the will of someone else.

Cons of conditional giving

If you try to include conditional gifts in your will where the conditions are too stringent or very unlikely to actually occur, those who you would have liked to inherit from you could end up with nothing at all.

A gift with too many conditions imposed upon it can easily become confusing and difficult to administer under your estate.

Including a conditional gift in your will without having taken appropriate legal advice may lead to misunderstanding and misinterpretation, causing the gift to fail or to not achieve the goal you had desired.

How can we help?

Conditional gifts are a useful way of retaining some element of control over your assets, but you should always seek advice as to its appropriateness and legal effects. We can help to ensure that the gift will be legally valid and that it reflects your wishes.

Our solicitors can advise you on preparing a will in a way that ensures your choices are clear and legally binding, as well as helping you to ensure your assets are left in the exact way you intend.

For further information, please contact Nigel Miller or Noel Dilks in the wills and probate team on 0191 2970011 or email nm@kiddspoorlaw.co.uk or nd@kiddspoorlaw.co.uk.

Legal considerations if you are tempted to buy a holiday home

Summer is around the corner, and it is not uncommon to want to prolong that holiday feeling and dream of investing in a holiday home which allows you to return to your favourite spot more frequently. Holiday home ownership has boomed recently and in 2021 second homes accounted for more than 24,000 purchases. Many of these were on the coast or other areas of natural beauty, where house prices have also seen rapid growth.

‘If you are planning to buy a holiday home, it is important to consider the issues carefully and not get swept away by enthusiasm or high-pressure sales tactics,’ says Christine Blenkinsop, a Licensed Conveyancer in the conveyancing team with Kidd & Spoor Solicitors Limited. ‘Buying any property is a major investment, and holiday home ownership can involve additional considerations with long-term consequences, so there is plenty to think about.’

 Second homes and tax

Tax may not be the first thing on your mind when choosing your holiday bolthole. However, the special tax treatment of a second home can result in extra costs, not always immediately apparent.

If you already own a property, or a share of one, stamp duty will be payable at a higher rate. This will be an extra three per cent of the purchase price on top of any duty ordinarily payable. So, on a home costing £300,000, you will pay £14,000 in duty instead of £5,000.

The rules are different for certain types of second homes, like static caravans or some lodges, which do not form part of the land. In these cases, there may be no duty. Unfortunately, it is not always clear which category a property falls into. Taking specialist advice could save you money or avoid problems later with HMRC.

When you sell, unless the property has become your main residence, you must also pay capital gains tax on any increase in value. The property will also usually form part of your estate for inheritance tax and is unlikely to attract any reliefs. This may not seem a priority now, but always consider your longer-term plans before buying. If your purchase is linked to retirement, this could be a good opportunity to discuss estate planning.

Mortgages and second homes

If you are buying with the help of a mortgage, you will need to satisfy lenders you can afford the repayments. They will consider your outgoings, including any current mortgage payments, as well as your payment history. With most residential mortgages, you will also need your lender’s consent to rent your home out, and many buy-to-let mortgages restrict Airbnb-style lettings. So, your choice of mortgage product may be limited. Consider using a specialist advisor and check the terms of any mortgage carefully before committing yourself.

Council tax and business rates

You may have read news stories about plans to restrict tax relief on holiday homes. Not everyone will be affected, but you should consider the impact on your plans.

Currently if your property is available for holiday lets 140 days a year, you pay business rates rather than council tax. You may then qualify for small business rate relief, which can reduce your outgoings. However, from April 2023, different rules will apply. To qualify then you must also prove you let your property commercially for at least 70 days.

This change reflects wider concerns about the impact of second homes on house price affordability. In theory, local authorities can give discounts for council tax on second homes. In practice few do, and in parts of Wales second homes could incur premiums of up to 300 per cent. You should check the rules in your chosen areas before buying, as council tax can add to the ongoing costs of ownership.

Renting out your holiday home

Letting your holiday home can be an attractive proposition, whether to offset your costs or as a commercial venture. Short term holiday lets should not give your guests the security of tenure of a residential tenant. However, you must ensure the contracts with them are correctly documented. You must also comply with regulations which are different from those associated with personal home ownership or being a buy-to-let landlord, for example, on gas and fire safety.

 Legal title to your holiday home

With a bricks and mortar property, the same legal issues apply as with any house purchase. However, you may have more flexibility on completion dates as you will not have a property to sell. Your solicitor will conduct the usual conveyancing searches and check the seller’s title. This is vital as any title problems could affect the property’s value, making it harder to sell in the future.

In addition, there will be some holiday areas meriting special consideration. For example, some properties have planning conditions limiting occupancy to agricultural workers or those with an established local connection. Local planning policies may also make it harder to change the use of a building or how it looks. If your home is in an Area of Outstanding Natural Beauty or a National Park, for example, you may need planning permission for work when you would not elsewhere. Your solicitor can explain the impact of any policies in your chosen location.

Buying an apartment can be an appealing option, minimising the amount of time spent on upkeep. However, title is likely to be leasehold and could contain restrictions on its use. These could affect your plans, for example, by making it harder for you to reconfigure or rent your property out. You will also need to consider the impact of ground rent and service charge provisions, which could add to the ongoing cost of ownership.

If you are buying on a holiday park, the site owner may claim you do not need an expert solicitor as the sale does not involve the transfer of land. Unlike buying a conventional home, you would own the park home but not the land on which it is situated. Instead, you enter into a licence agreement for the pitch. However, this arrangement can easily create additional issues. You will, for example, want to ensure you can enjoy your holiday home in the years to come without facing large fee hikes, so it is advisable to take legal advice.

Think carefully about alternative ‘ownership’ schemes

There are various schemes, such as timeshare, holiday clubs and bonds, which may seem to offer some of the benefits of holiday home ownership at a fraction of the cost. Unfortunately, they are not always as good as they appear. Hidden costs and difficulty selling on your interest may make them a poor investment in the longer term.

Similarly, buying a property ‘off plan’ may appear attractive, but will involve additional risks. For example, the developer could become insolvent, and the true level of service charge or the property’s resale value is untested.

You should consider all the facts carefully. Be wary of any high-pressure sales techniques; there is no need to rush. Remember that a pushy sales executive may have an ulterior motive in wanting you to sign up quickly. There are various rules and regulations which operators should comply with. However, sometimes they may tailor their product to avoid these or may fail to explain your rights. So, always get some independent advice before committing yourself.

How we can help

Whatever type of holiday home you have in your sights, we can help ensure your purchase goes smoothly, and, just as importantly, that there are no hidden legal issues to spoil your future enjoyment.

For further information, please contact Christine Blenkinsop or Neil Shearer in the conveyancing team on 0191 2970011 or email cb@kiddspoorlaw.co.uk or ns@kiddspoorlaw.co.uk.

 

Can a non-molestation order prevent someone bothering me?

Domestic abuse can impact men and women, of any age or race and is seen across all parts of society.  Unfortunately, statistics from the Office for National Statistics reveal that domestic abuse is on the increase, with cases having risen by six per cent since 2020, and it now represents an astonishing 18 per cent of all reported crime in England and Wales.

These statistics will bring little comfort to those in the midst of an abusive relationship, but a non-molestation order can provide a great comfort to someone who has bravely taken the step to leave.

‘I often see clients that are frightened, perhaps having been cut off from family and friends, and having endured abuse for such a period of time that their own self-worth is diminished,’ says Jo Scott family law expert at Kidd & Spoor Solicitors Limited. ‘Obtaining a non-molestation order can prevent your former partner contacting you again and can give you the breathing space to rebuild your life.’

What is a non-molestation order?

A non-molestation order is a type of injunction.  It is an order from the court that forbids a person you know from threatening or using violence against you.  It bans them from pestering, molesting, or harassing you, or, from encouraging any other person to do so.  It can also order that they must not come within a certain radius of your home or even your place of work.

Who can be stopped?

A non-molestation order can be obtained against a partner, a former partner and other relatives too.  The legislation states you must be associated to the person you are seeking the order against.  The following list provides examples of who would be considered an associated person:

  • your spouse or partner, a former spouse or cohabitee;
  • someone you have been engaged to marry;
  • people living in the same house as you (but excluding tenants, lodgers or employees);
  • the parent of your child;
  • a relative; or
  • a person involved in the same family court proceedings as you.

If you are unsure if you would fall within one of the above categories then please contact us for advice, as alternative options may be available.

What are the grounds for a non-molestation order?

When deciding whether to grant a non-molestation order, the court will consider all relevant circumstances including the need to protect you and any children.  What constitutes molestation is not defined in the legislation, but it has been found in practice to cover a wide range of abusive behaviours.  For example, this could be sexual abuse, financial abuse, pestering, verbal abuse or coercive behaviour.

Often abusive behaviour can be ongoing for so long that it can almost seem normalised.  One of our expert family lawyers will take the time to discuss with you the nature of your relationship and look at all aspects of how you have been treated.

How can I obtain a non-molestation order?

It is necessary to provide a statement to the court outlining the abuse you have suffered and why you require the protection of an order.  We will draft this statement for you after taking your detailed instructions.  We will also prepare the necessary supporting court forms.

Most non-molestation orders are obtained ex-parte, which means without notifying the other person first.  Normally this would be seen as an unfair hearing, as one person is having a court order made against them without being able to have their say.  However, it is permitted in these cases due to the higher level of protection it gives to you.

In most domestic violence situations, we would recommend that you apply ex-parte as it means you have the protection of the order without fear of your former partner contacting you to dissuade you from applying, or worse, threatening you.  If an ex-parte order is made, then the order will be served on your former partner and a new court date will be set to allow them to attend and have their say.  They may agree to the order or decide to contest it.

If a non-molestation order is contested, then a hearing will be needed.  The judge will hear evidence from you both before making a decision.  We will represent your interests at the hearing and cross examine your former partner regarding their abusive behaviour.  If an order is granted it can be for a set period, or until a further order.  Most orders are made for a 12-month period. This can be extended or varied if circumstances should change.

What happens if a non-molestation order is breached?

Sadly, not all non-molestation orders are respected by the person they are made against as there is a section of society that has no respect for the law and may ignore the order.

It is therefore always important, first and foremost to take practical steps to protect your safety.  You may want to look at installing cameras around your house or a panic button.  You should consider changing the locks to your house if your former partner previously had keys.  You may even want to let a few neighbours know to be on the lookout for your former partner.

If a non-molestation order is breached, then you should contact the police immediately.  They will arrest your former partner if they have breached the order, as this constitutes a criminal offence.  The current punishment is up to five years of imprisonment.  You should also let your lawyer know, as it may also be possible to consider an alternative route of seeking their committal via a civil process if the police do not prosecute.

For further information, please contact Jo Scott in the family law team on 0191 2970011 or email cbennett@kiddspoorlaw.co.uk.

Planning your legacy through charitable giving in your will

There are many reasons why someone might choose to leave money to charity in their will. Tax planning may be a key incentive, or it could be due to a lack of close family members. Some may simply wish to create a longer lasting personal legacy or they might have strong feelings about a certain cause.

‘Last year, Fisherman’s Friend heiress Doreen Lofthouse hit the headlines when she left £41.4 million from her family’s fortune to the Lofthouse Foundation.’ Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Kidd & Spoor Solicitors, explains ‘Doreen contributed generously to causes close to her heart throughout her lifetime and leaving such a significant sum on her death was designed to allow the foundation to continue her philanthropic work.’

Nigel Miller explores the key motivations for charitable legacies and highlights the benefits.

Charitable gifts are a great option for those without close family

Whilst Doreen Lofthouse did leave behind a son who has carried on her family legacy, sometimes a person might be the last living family member.

If you no longer have any close family or friends, you might not want your money to end up with distant relatives you never speak to or see. If you find yourself in this situation, a gift to charity could have more meaning to you. Or perhaps, like Doreen, you may feel that your family is not in need of your entire estate and that you would prefer to leave a portion of it to causes you care about.

Making a will in which you clearly set out your wishes is the only way to ensure that any charities can benefit from your estate. If you die without a will then the predetermined intestacy rules apply, and these never provide for money to pass to charity. Even if you leave no distant relatives, intestacy will mean all of your assets end up being left to the Crown. Most prefer for their money to pass to a good cause of their choosing.

Creating a lasting personal legacy with charitable gifts

Leaving any sum to charity under your will allows you to ensure that you are remembered for the causes that mean the most to you.

In Doreen Lofthouse’s case, her sizeable donation was made to allow the Lofthouse Foundation to use the funds for revitalising her hometown of Fleetwood in Lancashire. Having set up the foundation for this purpose in 1994, this was clearly a goal of Doreen’s throughout her lifetime. Not only will the donation benefit those in the area, but locals have also called for a memorial to be erected in Doreen’s honour to ensure her personal legacy will endure beyond the monetary gift.

Whilst not everyone who leaves money to charity ends up with a permanent memorial, charities are grateful for any sums they receive and your legacy will live on in the meaningful work they are able to provide as a result of your gift, whatever size it may be.

The effect of charitable giving on inheritance tax

For many, tax saving is not the key consideration for leaving sums to charity, but it is usually a welcome side effect.

Any gifts you leave to charity in your will pass free of inheritance tax, as charities count as exempt beneficiaries. This reduces the value of your estate by the amount of the gift before any tax-free allowances are taken into account, leaving a smaller pot to fall subject to inheritance tax.

In addition, if you leave 10 per cent or more of your estate to charity the remainder benefits from a reduced inheritance tax rate, meaning a greater share for your other beneficiaries. Inheritance tax calculations and tax-planning is complex, and it is advisable to seek advice before finalising decisions on the basis of tax.

How can we help?

If you wish for some, or all, of your assets to pass to a charity close to your heart, the only way of ensuring this happens is to include clear instructions in your will. Making a will allows you to control how your estate passes when you die, including specifying charitable gifts, whilst making sure everything passes in the most tax efficient way.

Our solicitors can advise you on preparing a will in a way that ensures your choices are clear and legally binding, as well as helping you to create the legacy you wish to leave.

For further information, please contact Nigel Miller or Noel Dilks in the wills and probate team on 0191 2970011 or email nm@kiddspoorlaw.co.uk or nd@kiddspoorlaw.co.uk.

Transferring property between partners

Your home is often your most important asset, and you may be lucky enough to own other property such as a holiday home or a buy-to-let investment.  Over time, if your personal circumstances change; you may want or need to transfer a share in a property.  This could be the transfer of a share in the value of your home to your former spouse if you are getting divorced, or to a new partner if you have moved in together.

‘Transferring property between family members is not always straightforward,’ warns Christine Blenkinsop, a Licensed Conveyancer in the conveyancing team with Kidd & Spoor Solicitors. ‘Your plans will need to take account of ownership structure and should be consistent with your longer-term goals.’

Christine Blenkinsop looks at the issues to consider when transferring property between partners.

Establishing the legal and beneficial interests

The first step will be to establish the current ownership structure. Land ownership can be multi-faceted, but basically there are two types of interest in land: legal and beneficial:

  • The legal owner is the person in whom the property’s title vests. With registered land, this will be the person entered as proprietor in the Land Registry’s register of title.
  • The beneficial interest in a property exists independently from the legal title. It represents the value of the property, for example a financial stake or the right to live there.

This division can sometimes be difficult to appreciate fully, but any transfer needs to address both the legal and beneficial interests in a property. On the plus side, it allows a lot of flexibility in dealing with joint property ownership and the creation of multiple interests in land.

If you already own property with someone else, the ease by which you can transfer your share of the property will depend on whether you are tenants in common or joint tenants. The legal estate will always be held jointly. However, you can hold the beneficial interest as joint tenants or tenants in common. The law treats a joint tenancy as indivisible: neither you nor your partner own a defined share in the property. In contrast, as tenants in common, you and your co-owner each own a distinct share. You can hold the beneficial interest in equal shares, or another split, which means either of you can choose to transfer your respective share to someone else.

If it is not clear whether you are joint tenants or tenants in common, we can help you work it out by examining the HM Land Registry records and the deeds.

Transferring ownership when your relationship changes

If your relationship breaks down, you could buy your partner out or they could agree to buy you out. In this case, a transfer of equity would ensure both the legal and beneficial interest in the property pass to the buyer. As there is usually no need to carry out the full range of property searches, a transfer of equity usually takes less time than a conventional purchase. However, if the property is subject to a mortgage, you will need your lender’s consent.

If you are joint tenants, you will also need to sever the tenancy first. You can do this by serving notice. This will effectively convert your joint tenancy into a tenancy at common, leaving you free to deal with your respective shares. It is important to follow the correct procedures for this to be effective. We can prepare the notices and ensure their correct service, guarding against the risk of any subsequent challenge. You and your co-owner can then sign the transfer of equity, which we will send to the Land Registry to record the change in ownership. Without this, problems could arise when you come to sell or take out a new mortgage.

Instead of buying a partner out, one of you may agree to gift their share. However, if you are getting divorced, always discuss your proposals with your solicitor first. This can avoid the risk of having to reverse the transfer later if the court orders a different settlement.

Becoming a co-owner with someone else

Conversely, you may already own a property but now want to share ownership with someone else, for example a new partner. The process is very similar to the one described earlier except as the sole owner you will not need to sever the tenancy. You and your new co-owner will, however, need to agree whether to be joint tenants or tenants in common and, if the latter, the proportions in which you will share the beneficial interest in the property.

If your property is subject to a mortgage, you will also need your lender’s consent. Your lender may need to carry out credit checks on your partner if they will also be responsible for the mortgage. Alternatively, you may choose to pay off your mortgage in full or remortgage. So, it is a good idea to discuss your plans with them early on. We are familiar with the requirements of all the major lenders, and we can complete the necessary formalities smoothly, ensuring the release of the old charge and registration of the new one at the Land Registry at the same time as the transfer.

The transfer should include a declaration of trust setting out your respective interests. This will determine the split of the net sale proceeds in the future, which reduces the risk of any dispute arising.

When dealing with the Land Registry, as well as ensuring the register reflects the change in ownership, we will check the appropriate restriction is entered. In practice, should you die before your co-owner, this helps ensure your personal representative, and ultimately your chosen beneficiary, can step into your shoes. Your co-owner will then have to agree with them what to do with the property.

Tax and other implications

You should always take independent advice before transferring property, especially if you are gifting it to another family member. There will often be tax implications.

Our conveyancing team can help

If you are looking to transfer property because of a change in your relationship we can ensure it is effectively legally and we can advise you of any wider implications.

For further information, please contact Christine Blenkinsop or Neil Shearer in the conveyancing team on 0191 2970011 or email  cb@kiddspoorlaw.co.uk or ns@kiddspoorlaw.co.uk.

 

Parental responsibility and assisted conception via IVF or a donor

Nearly 60,000 people benefit from invitro fertilisation (IVF) and donor insemination at HFEA licensed fertility clinics in the UK, and it is not uncommon for an unlicensed clinic or ‘at home’ informal arrangement to be used for sperm donation.

While the primary focus will undoubtably be on having a healthy baby, it is also important to think about your legal position as a parent. This may be important in the future if you should separate or divorce from your partner.

‘The legal position in regard to parental responsibility differs according to the method of assisted conception used,’ says Jo Scott family law expert at Kidd & Spoor Solicitors. ‘It can even vary depending on where you go to get medical help with conception, as licensed clinics provide more protection than unlicensed ones.’

Being clear from the outset who will have parental responsibility can save a lot of heartache and legal expense in the future.

What is parental responsibility?

‘Parental responsibility’ is a legal term which reflects the rights, duties, powers, and responsibilities you have for a child.  It gives the holder the legal right to make certain decisions about a child, such as which school they attend and if they will undergo medical treatment.  More than one person can hold parental responsibility.

If you are attending a clinic licensed by the Human Fertilisation and Embryology Act 2008 (HFEA), then you should receive advice prior to conception, and this is the ideal time to establish clarity about parental responsibility via an agreement. Although preconception agreements are not legally binding, the courts have shown that they will give weight to them when asked to consider arrangements for children.

HFEA sets out a number of different scenarios and explains who will have parental responsibility in relation to an assisted conception.

In this article Jo Scott outlines the position for invitro fertilisation and donor insemination.

Who has parental responsibility after in-vitro fertilisation (IVF)?

The simplest situation is where a couple is helped to conceive with their own egg and sperm.  Here, the parents are in much the same position as if IVF had not been used:

  • if you gave birth to the child, you will be regarded as the legal mother and have parental responsibility;
  • if you are married to the mother, you will also have parental responsibility; and
  • if you are the father, but you are not married you will need to take steps to formally obtain parental responsibility (see below).

If IVF also involves egg or sperm donation, then the rules become more complex.

Who has parental responsibility after egg donation?

If conception has been achieved with an egg from a donor and:

  • you gave birth to the child, you will be regarded as the legal mother and have parental responsibility even if you have used a donor egg;
  • you donated the egg, you have no automatic rights to parental responsibility.
  • you are the father and you are married to the mother, you will have parental responsibility;
  • you are the female partner of the mother and you are in a civil partnership or married at the time of artificial insemination, you will also have parental responsibility;
  • you are the female partner of the mother and you are not in a civil partnership or married, then you can acquire parental responsibility (see below).

Where a same sex male couple uses an egg donor, this would be treated as a surrogacy and is beyond the scope of this article.

Who has parental responsibility after sperm donation?

If conception has been achieved with sperm from a donor, the position will depend on whether this happened in an HFEA licensed clinic, at an unlicensed clinic or informally.

If you gave birth to the child, you will be regarded as the legal mother and have parental responsibility, regardless that you have used a sperm donor.

Sperm donation in an HFEA licensed clinic

  • if you are the married spouse or civil partner, you will have parental responsibility so long as you provide consent;
  • if you are not married or in a civil partnership, you will need the mother to nominate you (by consent) as the second parent by completing the correct forms prior to conception;
  • if you are the sperm donor, you will not have any parental responsibility or any legal obligations to the child such as paying child maintenance.

Sperm donation via unlicensed clinic or at home

  • if you are the married spouse or civil partner, you can be named as the second parent at birth registration and obtain automatic parental responsibility;
  • if you are not married or in a civil partnership, you cannot be named on the birth certificate and will not be able to obtain parental responsibility automatically.
  • if you are not married or in a civil partnership, the sperm donor will be considered the second legal parent and can register the birth and obtain parental responsibility if you both consent.

In an at home arrangement, if a child is conceived with sperm donated via sexual intercourse rather than artificial insemination, then the sperm donor will be considered the second legal parent regardless of if the mother is married or in a civil partnership.

In an unlicensed clinic or at home arrangement, it is important to note that the sperm donor could be liable for child maintenance or future inheritance claims even if they do not register the birth.

How can I obtain parental responsibility?

If you are not married or in a civil partnership, and did not sign an agreement at an HFEA clinic, you may be able to obtain parental responsibility for the child in the following ways:

  • by being named on the birth certificate;
  • by subsequently marrying or entering a civil partnership with the mother;
  • with a legal parental responsibility agreement; or
  • through a court order.

Speak to our family solicitors if the first three options are not available to you.

How our family solicitors can help

It is extremely important that all parties involved in an assisted conception understand what their role will be, if any, in raising the child.

It is best to obtain early specialist advice in order that the appropriate arrangements and agreements can be put in place if necessary.

For further information, please contact Jo Scott in the family law team on 0191 2970011 or email cbennett@kiddspoorlaw.co.uk

Is a prenup part of your business risk management strategy?

Managing risk is an essential part of any business operation and while personal relationships do not often appear high on a business risk register, an acrimonious divorce has the power to devastate a small business.

‘While few anticipate or want to believe their own marriage will break down, sadly recent statistics show that over a third of all marriages end in divorce,’ says Jo Scott family law expert at Kidd & Spoor Solicitors Limited. ‘It is not uncommon for directors of a family business to insist that members of the next generation enter into a prenup before they get married, in order to protect the business assets from the effects of a divorce.’

It is sensible for all entrepreneurs to consider a prenuptial agreement if they are thinking of getting married or entering a civil partnership just in case the relationship does not last.  This provides important protection for any assets which have been built up prior to the marriage, and any contributions to the business that are made at the time of marriage.

What impact can divorce have on my business?

It will be necessary to agree a financial settlement as part of a divorce, with the wealthier spouse often having to provide for the other person.  This may involve paying a significant lump sum, for example to purchase a property, or ongoing financial maintenance.  Either situation can put a strain on a business if this is the sole source of income or if capital is tied up in assets rather than cash.

Alongside the financial concerns, a divorce can have an impact on fellow partners or shareholders, family members and employees who rely on the business.  Sometimes a couple may work together, or one may be an employee of the other; each scenario bringing its own complications. Divorce can be a stressful experience for anyone, but when it is tied to your livelihood there is no doubt that the stress is magnified.

How is a business considered within the financial settlement?

A business is an asset which, like any other, will be taken into account during the calculation of the financial settlement.  Your business will need to be valued, usually by an independent accountant.  This will involve disclosing your business accounts and assets both to the independent valuer and to your former spouse.

Once a valuation has been placed on your business then it will be considered as part of the overall matrimonial pot, which needs to be fairly shared.

Fortunately, the courts recognise the importance of enabling a business to keep trading, and they tend to be keen to allow businesses to continue as a going concern.  This then means that you may need to trade off an interest in another asset, such as a pension or the matrimonial home, in order to keep your business intact.

How can a prenup protect business owners?

A prenuptial agreement allows you to set out in advance how your business assets should be treated in the event of a divorce.  It may be that you wish for the entire asset to be outside of the matrimonial pot, or that you specify a certain interest or capital which would be due to your spouse should you divorce in the future.  We can advise you on what is a realistic division of your business depending on your circumstances and what other assets are held.

If your new spouse will also be joining the family business as an employee, then the prenup can specify how they would be compensated for their work.  If they receive a market wage, then it is unlikely they could claim any higher interest in your business on this basis.  If on the other hand your spouse is an integral part of the business and shares in profits, then reasonable provision will need to be made for them financially to allow them to readjust to their new lifestyle outside of the business.

A prenup can also cover how a business would be valued in a divorce; what if any percentage interest your spouse would receive on divorce; and how that should be calculated.  For example, you may want this to cover only growth during the period of the marriage and not prior to marriage or after separation.

What type of business assets can be covered?

A prenup can cover a range of business assets, such as cash in the bank, property, land, machinery, equipment, vehicles, intellectual property, stock, artwork and furniture.

You can choose to be specific about these assets or if the business has a separate legal entity, such as a company or LLP, then you may choose simply to refer to the business assets generally.

Any income stream that you receive from your business will need to be given careful consideration when considering your prenup.  If your income will be used to fund the family lifestyle, then reasonable provision will need to be made for your spouse in the event of a divorce.  Failure to do so could risk the agreement being found invalid.

How can I obtain a binding prenup?

In England and Wales, a prenup is not yet legally binding, but since 2010 our courts have shown that they are highly likely to enforce the terms of a prenup provided certain conditions are met.  These conditions are to ensure fairness and include:

  • you and your spouse must obtain independent legal advice on your rights and the implications of the proposed prenuptial agreement;
  • you both must make a full disclosure of all assets and liabilities held;
  • the prenup should allow for future family changes, such as what will happen if/when children arrive; and
  • neither of you must have been unduly pressurised into signing.

Bearing in mind the above, it is also important to factor in the timing of any agreement.  It should be a well thought out agreement that both spouses have had adequate time to consider.  An agreement in the run up to a wedding day, with all the emotion at that time, is more likely to fail in court as one or other spouse was under undue pressure.  Seeking early expert advice is the smart option to minimise your business risk.

For further information, please contact Jo Scott in the family law team on 0191 2970011 or email cbennett@kiddspoorlaw.co.uk.

Paying inheritance tax when estate funds are tied up

When applying for probate in regard to an estate which is subject to inheritance tax, the Probate Registry requires tax to be paid before the grant of probate application. This can prove difficult as most financial institutions will not pay out sums to executors without first seeing the grant, but there are ways to deal with this dilemma.

‘If assets are tied up in a business or property, then executors may not be holding sufficient liquid funds to pay the inheritance tax up front,’ says Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors Limited. ‘However, executors can apply to a bank which is holding estate assets and request the bank to pay HMRC directly. In addition, certain inheritance tax payments can be deferred.’

What are the rules for paying inheritance tax?

If inheritance tax falls due on an estate you are dealing with, you must pay this within six months of the person’s death. Payments made after the six month deadline will be subject to interest and possible fines.

This six month period represents a maximum time limit, as inheritance tax must be paid upon submitting the inheritance tax account to HMRC. Without first paying the inheritance tax liability, HMRC will not allow the Probate Registry to release a grant of probate, and without the grant of probate you cannot continue the administration of the estate.

As a grant of probate is needed in order to access most estate assets, it is common for executors to apply to one or more of the banks holding funds and to request the bank pays the inheritance tax due directly to HMRC. Once the tax liability has been settled HMRC will confirm this to the Probate Registry, and you will be free to obtain the grant of probate.

If funds held in bank accounts and other liquid investments are insufficient to cover the tax liability in full, you may find yourself in a position where you are unable to clear the tax until a grant of probate is obtained and assets can be sold, whilst also being unable to obtain the grant of probate until the tax liability is paid. In these circumstances speak to our solicitors to discuss whether deferred payments could be an option for you.

Paying inheritance tax by instalments

HMRC do allow inheritance tax to be paid by instalments over a ten year period on certain estate assets which are:

  • land and real property;
  • business assets;
  • shares which gave the deceased complete control of a company; and
  • certain unquoted minority shareholdings (dependent upon specific criteria).

Inheritance tax falling due in respect of any of these types of assets can be split into 10 equal instalments. However, the first of the 10 instalments is payable prior to the grant of probate being issued.

When opting for payment by instalments, it is important to note that interest may accrue. If instalments relate to business assets or shares, interest only arises on each instalment if it is paid late. With land or real property, the instalments carry interest from six months following the date of death until the full inheritance tax is settled, even if all instalments are paid on time.

Because of this, many executors opt for the instalment option in order to obtain the grant of probate but then pay all of the inheritance tax due as soon as assets are sold to minimise interest. When assets are sold which themselves are subject to inheritance tax by instalments, the full inheritance tax due on that asset must be paid at the point of sale. The minimisation of interest should also be a key factor when executors are considering their duties to the beneficiaries, as it is of course in the beneficiaries’ best interest to pay as little interest on inheritance tax as possible.

What can be done if funds are not sufficient to pay the first instalment of inheritance tax?

If you are the executor of an estate where all, or most of, the assets are land or real property, you may find yourself without available funds to pay any of the inheritance tax due prior to obtaining the grant of probate. You, or the beneficiaries, may have to temporarily meet the inheritance tax liability personally, by way of a loan to the estate. Alternatively, you can apply for a bank loan to cover the tax due.

Either of these options will require you to ensure that the terms of the agreement are clear and fair, and you should seek advice as to the suitability of these options in your individual circumstances.

Where executors and beneficiaries are unable to cover the cost of inheritance tax and a bank loan is not an option, HMRC may agree to the issue of a grant of credit. HMRC will require a professional undertaking that inheritance tax will be paid once assets are sold and may even require confirmation that a purchaser has already been found. As such, this option will usually only be available when you have a legal representative acting on your behalf.

How can we help?

Payment of inheritance tax can be tricky to navigate, as is it often a circular issue between payment of tax and release of the grant of probate. However, it is not an insurmountable issue and can be resolved with the correct professional advice. Obtaining advice as early as possible can prevent stress and unnecessary interest.

Our solicitors can advise you on the payment of inheritance tax and which options are likely to be the most suitable for your needs.

For further information, please contact Nigel Miller or Noel Dilks in the wills and probate team on 0191 2970011 or email nm@kiddspoorlaw.co.uk or nd@kiddspoorlaw.co.uk.