Are mirror wills right for us?

If you are married, in a civil partnership or cohabiting with a long term partner, and thinking of making or updating your will, you may have heard the expression ‘mirror wills’ and wonder if this would be suitable for you.

‘Mirror wills are wills made by two or more people in identical or very similar terms – effectively mirroring each other’s arrangements,’ explains Nigel Miller, a Director in the wills and probate team with Kidd & spoor Solicitors Limited.

‘For many couples, mirror wills may be the most appropriate option for your needs, but you should always check with a legal professional as some circumstances might mean that mirror wills are not the best approach for you.’

What are mirror wills?

Mirror wills are used to ensure that everything you own passes according to the shared wishes of both parties.

Most commonly, mirror wills are written in identical terms so that on the death of either one of you any sole or joint assets pass to your jointly chosen beneficiaries in the same way. Each will might sometimes include separate small gifts, such as personal items or gifts of low monetary value, and these gifts may not be identical in both wills.

How are mirror wills used?

A typical set up for mirror wills is for everything to pass to the surviving partner, and then after they die everything will pass to those people or charities that you both chose together. This might include your own children or grandchildren, members of your respective families, or any joint friends or charities that are close to your hearts.

Before making mirror wills, it is important to fully discuss your wishes together to ensure that you are both completely happy with the decisions made as regards who should receive what.

Mirror wills are particularly useful for those in second marriages or with children from previous relationships, as they help to ensure that both sides of the family are treated fairly and equally.

If you decide to make separate wills and you do not mirror your wishes, any money or property passing to the survivor after the first death, will then ultimately pass according only to their wishes.

Advantages of mirror wills

Mirror wills are useful to protect the interests of the survivor as well as the remaining family of the first person to die, for example:

  • If you have children from a previous relationship, and you and your partner make separate wills leaving everything to each other initially then everything to only your own biological children after the second death, the entire wealth of the first person to die would pass to the survivor and then onto the survivor’s children only, therefore leaving the children of the first person to die without any inheritance.
  • Alternatively, you may think it appropriate to make sole wills stating that everything passes to your respective children as soon as you die, however this could leave the surviving partner without sufficient funds for the rest of their life.

By contrast, mirror wills allow you to specify that everything should pass to each other initially but then to all of your children equally on the second death. This means that the survivor does not miss out on vital funds and that all of your children are treated fairly in due course.

For married couples and those in a civil partnership, mirror wills are also likely to be beneficial for the purpose of inheritance tax, as including each other as beneficiaries initially allows you to take advantage of the tax free allowances available.

Disadvantages of mirror wills

If you retain completely separate finances and do not rely on one another financially, mirror wills may not be for you. If one of you has your own business which does not involve the other, you need to provide for your co-owners – otherwise the shareholder agreement or partnership agreement might conflict with the benefit of making mirror wills. However you should always seek advice from a professional to help you understand the full implications of making separate wills.

Whilst mirror wills are often the most advantageous choice for couples, they do not come with any assurance that the survivor will not change their will, make a new will, or remarry following the first death.

Before making your mirror wills, it is imperative that you completely trust one another to stick by any joint decisions you make once one of you is no longer alive. As there is no legal obligation on the survivor to retain the terms of the mirror wills, they could simply make a new will leaving everything to beneficiaries of their own choosing, such as their own biological children. As such, mirror wills might not be suitable if there is any element of distrust or if your families do not get along, depending on the severity of the familial disagreement. There are alternative options available in these circumstances, so you should seek professional advice to make the appropriate choice for your needs.

It is also important to note that any later marriage or civil partnership would automatically revoke the survivor’s will. As such, your jointly chosen beneficiaries could miss out even if this is not the survivor’s intention. If the survivor does remarry, they should seek legal advice to ensure that their will continues to accurately reflect your joint wishes.

How can we help?

Mirror wills are often a good option, but this is dependent on your individual circumstances, and you should seek legal advice before making any new will.

Our solicitors can guide you through the process, ensure you are fully informed and help you to make the best choice for your needs.

For further information, please contact Nigel Miller, Philip Walker or Jess Sayer in the wills and probate team on 0191 2970011 or email wb@kiddspoorlaw.co.uk

 

Property, planning and paying for care ‘

A common concern for our clients and their families is the prospect of having to sell the family home in order to meet care costs,’ explains Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors Limited. ‘There are many articles and schemes online which seem to indicate that selling a home can be avoided, but often these schemes are not legal and could land you in even more trouble.’

When might your local authority deem that selling your home is necessary

If you require care, either in your own home or in a care home setting, your local authority will assess your ability to fund your own care by considering all of your finances and your circumstances as a whole.

The home in which you live is considered as part of your overall financial situation if it is owned by you. There may be some instances, however, in which the value of your home is disregarded by your local authority when they are assessing your ability to pay for your care fees.

If you need to move into care permanently, it is likely that selling your home would be necessary in order to cover the costs of your care. However, you may enter into an agreement with your local authority that the costs are deferred until you choose to sell, rather than having to sell your home immediately. This might be beneficial if, for example, property prices are low and are likely to rise in the future. A solicitor can advise you as to the advantages and disadvantages of entering into such an agreement and help you decide whether it is right for you.

When selling your home might not be necessary

The rules surrounding when your home might be disregarded are complex and you should seek professional legal advice based on your specific circumstances. It may be that your home is disregarded on the basis of your personal circumstances and the care you require, where you live, who you live with, or how the property is owned.

Whilst not common, free care is available to some through NHS continuing healthcare or aftercare provisions under the Mental Health Act. Funding is only available in limited circumstances, and you would need to be formally assessed for either to be granted. You may take an independent legal representative with you to any personal assessment, and you may have a solicitor look over any documents or other paperwork that you receive in connection with the assessment. It is advisable to seek legal advice early on in the assessment process to ensure you have fair representation.

Your home is only included as an asset for the purpose of determining your ability to pay your own care fees if you own it. Therefore, if you rent your property or you have been permitted to live for free in a property owned by a member of your family, this will not be considered as part of your financial circumstances. In addition, if you own your home, this will not be considered if you continue to live in it and the care you receive is home-based.

If you live with your spouse or partner, a relative who is 60 or older, a child of yours who is under 18, or a relative who lacks mental capacity, the value of your home cannot be considered as part of your overall financial situation. If you jointly own your home with another person, your value of the shared home may still be taken into account, but this should be reduced to reflect the fact that another person has a financial interest. The rules around this are nuanced and, even if your home is disregarded this does not necessarily mean that it will continue to be disregarded forever. You should always seek legal advice based on your personal circumstances as those circumstances change.

Can you avoid selling your home altogether?

You cannot avoid selling your home by virtue of any illegal arrangement. Many people believe that they can simply give their home away to loved ones to avoid having to sell, but this will usually be deemed as a deliberate attempt to remove assets and the local authority would still calculate your ability to pay your own fees on the basis that the home continues to belong to you. This can result in even greater complications and unnecessary expense.

Careful estate planning with the guidance of a legal professional, however, can help you to structure your financial affairs in a way that is tax efficient, and which helps to ensure that your assets are as secure as possible to be able to pass on to your loved ones.

 How can we help?

Selling property is often something people only consider at the point that this becomes necessary, however, planning in advance is essential to provide the most appropriate options for you and your family. Advice should be sought early to ensure that your affairs are structured in a suitable manner.

If you have left your legal planning late, before undergoing any care fees assessment, it is a good idea to speak to a solicitor to help you understand the law, your rights, and the likely outcome. During the assessment process, a solicitor can be a valuable support to attend meetings with, or to simply review any paperwork.

If you believe your home should be disregarded from your financial assessment, a solicitor will be able to advise you based on your circumstances and help you to ensure that the local authority have considered all relevant factors. If your circumstances change at any point, you should involve a solicitor again to ensure that you are not missing out or inadvertently flouting the law.

Our solicitors can help you to ensure that you have chosen the best option available to you and that you have made a fully informed decision.

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

 

Probate and avoiding problems with chattels

While financial assets can be divided relatively easily when settling an estate, this is not usually possible with heirlooms such as a painting, a piece of furniture or individual pieces of jewellery. Even if items are not valuable, such items may be the cause of a dispute between siblings who have set their heart on something because of its sentimental value.

‘In law, chattels are any items of tangible and moveable property, such as jewellery or artwork or antiques,’ explains Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors.  ‘When dealing with estates, all the person’s assets are included, even personal belongings of low or no value. As such, it is important to ensure any potential issues are avoided wherever possible.’

Common issues arising with chattels

Often, because people might not realise that chattels need to be included and distributed as part of the estate, well-meaning family or executors might clear a property too promptly, getting rid of items that are meant to pass to a certain person or that should be valued to ensure the correct inheritance tax is paid.

Even if the executors clear the person’s home carefully, it could be the case that certain chattels included in the will cannot be found or have been lost or given away during the testator’s lifetime. In this case, the chattels cannot be gifted according to the will as the gift will fail due to the legal provision of ademption.

Where family members do not get along and are likely to disagree about certain items, if the will does not specify who should receive which personal belongings this can result in protracted disagreements.

Alternatively, a will could give executors too wide a discretion to pass chattels as they see fit. For example, a will might include a wish for a certain item of jewellery to pass to a particular family member, but if it is just a wish the executor will be free to sell the item instead or give it to a different beneficiary, causing the intended family member to miss out.

How testators can avoid common issues with chattels

When you are making your will, it is important to think about whether to include any specific instructions regarding chattels.

If you wish to leave a relatively small, low value item to a specific person (and your family get along well) it can be more sensible to make a separate letter of wishes. This protects against the potential complication that the item may no longer be in your possession at the time of your death.

Alternatively, if your family do not get along and are likely to argue over your personal belongings, detailing gifts in the will is a safer option. Dealing with your chattels this way may also be better if you have particular wishes about who should receive certain items, and you do not want your executors to deviate from this in any circumstances. In the case of warring families, it can also be better to appoint independent executors to ensure that arguments are kept to a minimum.

If you are leaving items by way of a letter of wishes, it is important that your executors understand that they should only deviate from your wishes with very good reason. A professionally drafted will and letter of wishes will ensure that this is clear from the wording used.

How executors and family can avoid common issues with chattels

After someone has died, before clearing any property, it is important to ensure that the valid will has been seen, read and fully understood. If in any doubt, a solicitor can help you to interpret the will to make sure you do not take any action which could adversely affect any of the beneficiaries.

If a will, or a separate letter of wishes accompanying the will, mentions any specific chattels, it is the executor’s duty to ensure that the property is thoroughly searched so that all items mentioned are found. If any items cannot be found, you should document the details of your investigations and notify the intended beneficiary as early as possible.

If the will is accompanied by a separate letter of wishes, it is important that you understand the difference between the two. Broadly speaking, a gift made in the will itself must be given to the person specified whereas a letter of wishes simply expressed a clear wish as to who certain chattels should pass to and an executor may deviate from this wish with good reason. If you are unsure, you should seek the advice from our lawyers.

While financial assets can be divided relatively easily when settling an estate, this is not usually possible with heirlooms such as a painting, a piece of furniture or individual pieces of jewellery. Even if items are not valuable, such items may be the cause of a dispute between siblings who have set their heart on something because of its sentimental value.

‘In law, chattels are any items of tangible and moveable property, such as jewellery or artwork or antiques,’ explains Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors.  ‘When dealing with estates, all the person’s assets are included, even personal belongings of low or no value. As such, it is important to ensure any potential issues are avoided wherever possible.’

Common issues arising with chattels

Often, because people might not realise that chattels need to be included and distributed as part of the estate, well-meaning family or executors might clear a property too promptly, getting rid of items that are meant to pass to a certain person or that should be valued to ensure the correct inheritance tax is paid.

Even if the executors clear the person’s home carefully, it could be the case that certain chattels included in the will cannot be found or have been lost or given away during the testator’s lifetime. In this case, the chattels cannot be gifted according to the will as the gift will fail due to the legal provision of ademption.

Where family members do not get along and are likely to disagree about certain items, if the will does not specify who should receive which personal belongings this can result in protracted disagreements.

Alternatively, a will could give executors too wide a discretion to pass chattels as they see fit. For example, a will might include a wish for a certain item of jewellery to pass to a particular family member, but if it is just a wish the executor will be free to sell the item instead or give it to a different beneficiary, causing the intended family member to miss out.

How testators can avoid common issues with chattels

When you are making your will, it is important to think about whether to include any specific instructions regarding chattels.

If you wish to leave a relatively small, low value item to a specific person (and your family get along well) it can be more sensible to make a separate letter of wishes. This protects against the potential complication that the item may no longer be in your possession at the time of your death.

Alternatively, if your family do not get along and are likely to argue over your personal belongings, detailing gifts in the will is a safer option. Dealing with your chattels this way may also be better if you have particular wishes about who should receive certain items, and you do not want your executors to deviate from this in any circumstances. In the case of warring families, it can also be better to appoint independent executors to ensure that arguments are kept to a minimum.

If you are leaving items by way of a letter of wishes, it is important that your executors understand that they should only deviate from your wishes with very good reason. A professionally drafted will and letter of wishes will ensure that this is clear from the wording used.

How executors and family can avoid common issues with chattels

After someone has died, before clearing any property, it is important to ensure that the valid will has been seen, read and fully understood. If in any doubt, a solicitor can help you to interpret the will to make sure you do not take any action which could adversely affect any of the beneficiaries.

If a will, or a separate letter of wishes accompanying the will, mentions any specific chattels, it is the executor’s duty to ensure that the property is thoroughly searched so that all items mentioned are found. If any items cannot be found, you should document the details of your investigations and notify the intended beneficiary as early as possible.

If the will is accompanied by a separate letter of wishes, it is important that you understand the difference between the two. Broadly speaking, a gift made in the will itself must be given to the person specified whereas a letter of wishes simply expressed a clear wish as to who certain chattels should pass to and an executor may deviate from this wish with good reason. If you are unsure, you should seek the advice from our lawyers.

How we can we help

Chattels are an important part of any estate and require advanced legal planning in the same way as other assets.

Our solicitors can guide you through the issues when making a will or drafting a letter of wishes, and we will help you to make appropriate and legally valid provisions to ensure that your entire estate (including your chattels) passes as you wish.

For further information, please contact Nigel Miller of Philip Walker in the wills and probate team on 0191 2970011 or email nm@kiddspoorlaw.co.uk or pw@kiddspoorlaw.co.uk.

 

Business planning and the importance of making a will

A will is an important part of everybody’s legal planning no matter your circumstances, but for anyone who is in business a well written will is vital to ensure the minimum disruption after your death.

‘Whether you are a sole practitioner, a partner in a partnership, or a director of a limited company, you need to consider how your business will continue if you should die while still working or controlling the company,’ says Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors.

Problems can be particularly acute for sole traders, startups, and small businesses, and this can be especially stressful for family beneficiaries who rely on income from the business.

Consider the risks

Just as you consider risks such as health and safety or employment law, it is worth spending some time thinking about the implications for your business if you should die prematurely.

Different businesses will face different risks and issues.  For example, a property letting business might continue with few problems, especially if you have an efficient letting agent.  Whereas a creative business, such as a web designer or bespoke tailor, will have orders to be fulfilled, and a manufacturer will also have stock to deal with.

How likely is it that the business could continue without you? Some businesses are synonymous with the founder and may simply need to be wound up efficiently. Other businesses might be an attractive acquisition target, in which case your executors need the skills to maximise the sale value for your beneficiaries.

Tax planning is also important for entrepreneurs as the provisions in your will can make a big difference to the amount of tax that may need to be paid after your death.

Check your business agreements

If you are in business with other directors or partners, then you should have an existing shareholder or partnership agreement which sets out what should happen if you die. Typically, this would allow the others to continue with business as usual and will state whether they have an option to buy your shares and how their value would be calculated.

These written agreements will outweigh any provisions in your will, so your will should simply act as a confirmation of those wishes. It is also important to ensure that all directors or partners provide for the business in their individual wills.

If you do not have such an agreement, or it is out of date, then we can introduce you to our commercial colleagues who can help address this.

Where there is no business agreement

If you are a sole trader or work with other members of your family, then there may be no written agreement. If you do not provide clear instructions for the business in your will, it would fall to your executors to ascertain whether they have the power to continue running the business.

If they do not have the powers that they need, a lengthy and costly application to court may prove necessary.

For example, your executors may be unable to:

  • continue relations with external providers;
  • ensure that employees continue to be paid; or
  • serve notices on behalf of the business.

Choosing executors

You need to consider who would be an appropriate executor when it comes to the business. While you may be content to let someone manage things while you are on holiday, they may not be the best person to continue to run things after your death.

Choosing capable executors for business purposes can significantly reduce the burden and stress on family members who do not have the requisite business knowledge.

Key provisions

It is advisable to include some specific provisions in your will to ensure that your business continues to run smoothly, such as:

  • who will run the business day to day;
  • what is to happen to your shares in the business;
  • what is to happen to any employees; and
  • if the business should continue to use the same professionals, such as accountants and solicitors.

Speaking to a legal professional about your will provisions will help to ensure that all these points are covered.

A letter of wishes

Often, it is more appropriate to set out exactly how you wish your executors to act in a separate letter of wishes and this is no different when it comes to your business. For example, if you have given your business executors a general authority to run your business day to day, you might wish to make a letter of wishes to more detailed instructions about:

  • any employees who assist with specific areas of the business, whether formally or informally;
  • your preferred suppliers and external service providers;
  • any usual bonus structure the business may have;
  • the frequency and content of the business’s social media engagement; or
  • any other aspect of the business that you feel it is important for your executors to consider.

A letter of wishes is not legally binding, and you should ensure that you seek legal advice to ascertain exactly what can be included in this way, and what should be set out within the will.

How can we help?

If you run your own business, no matter the type or nature of business, it is important to consider the implications your premature death may have on the continuation of that business when making your will.

Our solicitors can guide you through the process and help you to make appropriate and legally valid provisions, helping to reduce any unnecessary tension between your family and your business interests.

For further information, please contact Nigel Miller or Philip Walker in the wills and probate team on 0191 29700911 or email nm@kiddspoorlaw.co.uk or pw@kiddspoorlaw.co.uk

When does a power of attorney take effect?

If you have been asked to act as an attorney for someone you may wonder when it will come into effect, especially if the power of attorney was made some time ago when your friend or relative was in good health.

‘There was an important change in 2007, and so the way that a power comes into effect will depend upon the type of power or attorney,’ says Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors in Whitley Bay. ‘Each type of power of attorney is distinct and takes effect in a different way and at different times, so it is important to be aware of these variations.’

Nigel Miller outlines the differences.

Enduring power of attorney (up to October 2007)

Before 2007, it was possible to create an ‘enduring power of attorney’ which related only to financial decisions. Any enduring powers of attorney that were made before 2007 remain valid and many are still in use today.

An enduring power of attorney became effective immediately on being signed by all parties, in so far as attorneys can use the documents to assist the person who made the enduring power of attorney (referred to as the donor) provided the donor asks the attorney to do so. For example, if the donor has trouble physically getting to the bank, and does not have online banking, they could ask you to handle some transactions for them.

If the donor becomes ill and no longer has mental capacity to direct you in this way, the enduring power of attorney will need to be registered so that you can act or continue acting. The enduring power of attorney can only be registered once the donor no longer has mental capacity.

Registration of the documents is completed via the Office of the Public Guardian and the registration process takes approximately 8 to 10 weeks. During this time, you will be unable to use the enduring power of attorney and, if you find yourself in this position as an attorney, you should seek legal advice as to how to deal with the donor’s affairs during this interim period.

The registration process for enduring powers of attorney requires certain persons to be notified and this follows a strict order. If you are unsure about the registration process, we can assist.

Enduring powers of attorney relate to financial decisions only. If you made an enduring power of attorney and would like your attorneys to also assist with your healthcare decisions, should the need arise, you will need to make a newer lasting power of attorney for healthcare decisions.

If you are an attorney acting under an enduring power of attorney and the donor no longer has mental capacity, you do not have any powers in relation to their healthcare decisions. Any healthcare decisions will be made by the medical professionals involved in the person’s care.

Whilst an enduring power of attorney remains legally valid, these do not allow for as much flexibility as the newer lasting powers of attorney, and you may wish to consider whether an upgrade may be appropriate in your circumstances.

Lasting power of attorney (after October 2007)

Lasting powers of attorney were introduced in 2007 to allow people to appoint attorneys in respect of both their financial decisions and their healthcare decisions. Separate documents are required to appoint each type of attorney, although there is no obligation to make both types.

LPA – financial decisions

When the donor created the lasting power of attorney for financial decisions, they needed to decide whether the document could be used whilst they still had capacity (i.e. as soon as the lasting power of attorney was registered) or only in the event that they lose their mental capacity.

If the donor chose to give the power immediate effect, then you can only deal with the donor’s financial affairs when they instruct you to do so, for as long as they continue to have mental capacity.

If the donor prefers to manage their financial affairs until they lose their mental capacity, then you will not be able to act for them until such time.

When the donor has lost mental capacity, the lasting power of attorney must be registered with the Office of the Public Guardian. Unlike the enduring power of attorney, a lasting power of attorney can be registered at any time, even when the donor still has capacity. Most lasting powers of attorney are, therefore, registered in advance to ensure that they are available and ready to use in the event of loss of capacity, as the registration process is rather lengthy. Registration of a lasting power of attorney takes up to 20 weeks.

LPA – healthcare decisions

A lasting power of attorney for healthcare decisions follows the same registration process as the one for financial decisions. However, the key difference is that a healthcare lasting power of attorney may only be used if the donor no longer has mental capacity. There is no option for the donor to delegate their healthcare decision making sooner.

A general power of attorney

A general power of attorney has limited functions, which may relate only to a specific decision that needs to be made or, as the name suggests, they may be more general in nature. For example, a donor may make a general power of attorney allowing someone else to sign on their behalf for the purchase or sale of property. The general power of attorney may specify that it is solely for this purpose, or it may be granted only up until the property transaction completes.

A general power of attorney takes effect as soon as it is signed. It can prove a useful interim measure during the lasting power of attorney registration process if a donor wishes for their attorneys to act immediately.

If the donor loses mental capacity, a general power of attorney becomes ineffective and can no longer be used.

General powers of attorney have limited uses and should be used sparingly. Whilst many do implement these as an interim measure, the idea of lasting powers of attorney are that they are insurance documents that are useful to have in place in plenty of time should a loss of capacity occur.

Important considerations

If you have been appointed as an attorney for someone, it is important to remember that the power of attorney is the donor’s document, not yours.

It is the donor who makes the power of attorney and who determines how this can be used and, in some cases, when it will be effective. An attorney cannot override the donor’s decisions in this regard.

How can we help?

Powers of attorney are important documents, and they hand over a lot of control and responsibility to another person. It is important that you understand the nature, effect, and effectiveness of any power of attorney before starting to act.

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

Avoiding common delays in obtaining probate

Probate is a term which is loosely used to cover the administration of an estate, and it has a reputation for being a lengthy process. The administration includes a number of key stages, including obtaining the grant of probate, paying out to beneficiaries, and finalising the estate. Complications and delays can arise in each of these stages, which mean the probate process can prove lengthier than many executors anticipate.

‘Liaising with financial institutions, beneficiaries, and other parties takes time,’ says Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors in Whitley Bay. ‘The speed at which others respond is out of an executor’s control, but some common causes of delay can be anticipated and planned for in advance.’

Problems with the will

It may be that you are certain the person left a will, but you are unable to find it. Or perhaps you have only found a copy of the will or an unsigned draft. Professionally drafted wills that have been prepared with the help of a solicitor are typically stored at the solicitor’s offices, therefore reducing the likelihood of the original will becoming lost. With the help of a solicitor, not having the original will is not necessarily an insurmountable issue, but it will usually take longer to go through the probate process with only a copy of the original will.

If the will has been located, this could be invalid, in whole or in part. An invalid will means the intestacy rules have to be applied and researching the family history takes time. Similarly, if the person simply did not make a will, intestacy rules must instead be followed, and it will naturally take longer to establish these than it does to merely adhere to the terms of a will.

Some wills, particularly homemade wills, can be legally unclear. Interpreting the terms of an unclear will to the agreement of everyone concerned can prove time consuming and can lead to delays that could have been avoided with a professionally drafted will.

Obtaining valuations

The ease with which a valuation can be obtained will depend on the type of asset and the financial institution that you need to deal with. Whilst high street banks are often quick to provide information about basic current and savings accounts, it can be trickier to obtain details from more unusual investment arrangements.

Certain assets, such as artwork, antiques, collectibles or cryptocurrencies will need expert valuations, and it takes time to arrange for experts to view items.

Assets that are held overseas can prove particularly tricky, not least of all because communication is often especially protracted. As other countries have their own probate rules, even once valuations are obtained for overseas assets, withdrawing the funds often requires additional time-consuming steps, such as arranging for documentation to be translated or even reapplying for probate in the country concerned.

When seeking probate valuations from financial institutions, it is important to be as clear as possible about what information is required. Solicitors deal with many estates and are familiar with exactly what details are needed from financial institutions in order to apply for probate, this means that they know precisely what to ask for from the start.

Realising investments

While a single prompt payment is preferable, some assets pay out to the estate long after the date of death, thus preventing the estate from being finalised. This might be the case with some occupational pensions, or with certain complex investment arrangements such as peer-to-peer lending where you need to wait for all the loan parts to be repaid, possibly over a number of years.

Liaising with beneficiaries

Sometimes executors are unable to locate beneficiaries, or they cannot ascertain whether the beneficiary is still alive. While there are steps which can be taken to locate missing beneficiaries, these take significant time.

Even if all the beneficiaries have been located, there is no guarantee that they will be cooperative. Sometimes, a beneficiary may refuse to communicate, or to provide the details an executor needs to pay their share of the estate. Alternatively, there could be factors which prohibit a beneficiary from being able to deal with requests in a timely manner, or at not all.

All the time estate funds remain undistributed, the executors cannot conclude the probate process. As an executor, you must act in the best interests of the beneficiaries and, in some cases, this may mean taking additional steps to ensure their understanding or their ability to be involved in the process.

If you are facing problems locating beneficiaries, or if you are dealing with an awkward beneficiary, a solicitor can help you to navigate the steps needed to track the person down or to negotiate with them.

Inheritance disputes

In some instances, certain people are entitled to claim for a greater inheritance if they feel that they have not been sufficiently provided for from a loved one’s estate. The probate process cannot be finalised until any such disputes are resolved which can take several months, or even years.

If you feel that a dispute is likely, it is best to seek legal advice as early in the process as possible to encourage a swift resolution. Often when someone makes a will, if they are already aware of a likely disagreement between their chosen beneficiaries, the best advice is to appoint professional executors to ensure that any dispute can be dealt with expeditiously.

How can we help?

While some delays cannot be avoided, seeking legal advice early in the process can at least prepare you in advance so that you, and the beneficiaries, are able to anticipate the likely timescales and plan accordingly.

Solicitors are well versed in the complications of overseas assets, continuing payments from certain investment types, missing or difficult beneficiaries, and other factors which may slow progress. Obtaining legal advice at the outset will ensure that you are on the best path to dealing with the entire process as smoothly and swiftly as possible.

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

 

Passing on royalties after you die

Royalty payments are often earned from creative activities such as writing a book or composing music, but they can also be earned from a patent or brand licensing, or from a franchise or even licensing of mineral rights.  While some arrangements may have a limited time frame, other income streams may be indefinite.  If you derive some of your income from royalty payments, how should you deal with these in your will?

‘As with any asset, if your estate includes a right to receive income from royalties, you may pass these to whoever you choose in whatever way you choose,’ says Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors Limited in Whitley Bay. ‘However, royalty income could continue for a considerable time, so passing a legacy of royalties is likely to require more consideration than a straightforward cash legacy.’

Leaving royalties under your will

The key things to consider are:

  • How are the royalties earned?
  • How much do you anticipate they will be worth?
  • How long do you think they will generate income?

Evaluating the value and regularity of your royalties in the present may help you to predict their future worth. An industry expert could help you to predict the future of your royalties more accurately.

Knowing the value of your royalties means that you will have a greater idea of the level of income you will be gifting, and this might affect your decision as to who to leave your royalties. Perhaps a certain family member or friend would benefit more from a regular income than a one off capital payment.

How to leave royalties

Royalties can be gifted in a number of ways.

You may prefer to leave your royalties as an outright gift to one person, several people, or to a specific charity. J M Barrie’s generous gift to Great Ormond Street Hospital of the rights to Peter Pan in 1929 has provided a valuable source of income for the charity ever since.

Leaving any asset as an outright gift means that, once the estate is finalised and the asset parted with, your estate relinquishes all control. Your right to the royalties then becomes the property of the person (or entity) to whom they were left, and they could ultimately end up passing from them to someone entirely unrelated to you after they die.

A more suitable alternative could be to protect your royalties under a trust. A trust allows you to retain greater control over who receives the royalty income, both immediately after your death and for future generations. Trusts are, however, subject to very strict rules regarding their longevity so you should seek advice to ensure that your plans do not contravene the perpetuity rules.

If you have royalties to leave and you do not pass them by way of a specific gift, they will fall into the residue of your estate and pass accordingly.

Other factors to consider when leaving royalties

You may prefer for your royalties to pass to a charity, or to several charities, instead of any individuals. A charitable gift of this nature can allow you to create a longer lasting legacy, as a charity is likely to continue for longer than an individual’s lifespan. A charity may also publicise the legacy you leave.

If you have a variety of royalties from a number of sources, you do not have to leave them all in the same way to the same beneficiaries. For example, a musician with several albums may, for example, leave the royalties from one album to an individual and the royalties from another album to a charity.

Another highly significant consideration is that if you do not make a will at all, predetermined intestacy laws will decide who should benefit from your royalties after your death. This may not be the person, or people, you would otherwise choose.

How can we help?

An income from royalties can require more careful planning than many other assets and you should always seek advice before deciding to whom and how your royalties should pass. The only way to ensure that they pass according to your own wishes is to leave a well drafted and valid will.

If you receive income from royalties and are not sure how best to account for these when planning your legal legacy, our solicitors can guide you through the process and help you to make an informed decision as to how to leave this important asset.

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

 

 

Legal steps to consider when diagnosed with a life-limiting illness

On top of the heartbreak and worry that a diagnosis of a life-limiting illness can cause, there will be a raft of concerns and uncertainties about your care and financial affairs, and it can be difficult to know exactly how to prepare from a legal standpoint.

‘There are steps you can take to ensure that your care runs smoothly following a diagnosis,’ says Nigel Miller, a Director in the wills and probate team with Kidd & spoor Solicitors Limited. ‘A health and welfare lasting power of attorney can be an essential part of future care planning for those with a life-limiting illness, alongside an advanced care plan.’

Considerations for a health and welfare lasting power of attorney

You may make a lasting power of attorney for your health and welfare decisions either alongside a property and financial affairs lasting power of attorney or independently.

If making both types of lasting power of attorney, it is not necessary to appoint the same attorneys for each. What is more important is that you are certain your chosen attorneys have the suitable experience and character to make difficult decisions on your behalf. You should also bear in mind your relationship to them, as well as the nature of your condition when considering their suitability.

Once you have chosen a suitable attorney, or attorneys, it is important to remember that they will have the power to make decisions about your care and personal welfare. They will only acquire these powers when you no longer have capacity to make decisions yourself.

Whilst any decisions they make should, ultimately, be in your best interests, they should also consider any specific wishes you have made. It is, therefore, imperative that you communicate openly with your attorneys about the types of decisions you would like them to consider in various circumstances that could arise whilst you have capacity.

Many people prefer to ensure that their views are recorded by including instructions and preferences within their lasting power of attorney. Having your choices written down makes it easier for your attorneys to recall your views and to refer to them as circumstances change over time. You do, however, need to be careful when including instructions and preferences to ensure that these are legally valid.

A health and welfare lasting power of attorney also allows for you to decide who should make any decision about life sustaining treatment if one needs to be made. You may either choose for your attorneys to make this decision or for the medical professional to do so. Either way, your care providers should always discuss the options with your attorneys before a decision is reached. If you leave this decision up to your attorneys, it is vital that you ensure it is a decision they will be comfortable making.

Other advanced care planning

A health and welfare lasting power of attorney will likely be the most valuable part of your legal planning following a diagnosis, But, as its main purpose is to provide your attorneys with authority to deal with your affairs, the opportunity to incorporate your own views and wishes is somewhat limited.

In addition to your lasting power of attorney, an advanced care plan allows you to set out in greater detail your personal choices regarding the care and treatment you should receive. Typically, this is prepared with the help of your care providers and is essentially a written document which sets out your choices. Those choices can include anything from a specific care home in which you wish to live to dietary requirements or personal care, such as haircuts and manicures. Your advanced care plan should be provided to your attorneys and to anyone involved in your care to ensure that everyone understands your wishes and is working together with the same aims in mind.

When preparing an advanced care plan, you should consider the current and future anticipated effects of your illness, the type of care needed bearing in mind accessibility and affordability, the benefits and risks of different treatments, and the type of care or treatment you are happy to receive. Your advanced care plan should be continually reviewed by you and clearly communicated to your attorneys, family, friends, care providers, and anyone else who plays an important role in your life.

Whilst it is a good idea to set out your wishes in this way, you should avoid being too rigid and you should try to consider as many eventualities as possible and how you would like to be treated in each case. Before writing an advanced care plan, it is always a good idea to obtain legal advice to ensure that your wishes are legally valid and that they do not contradict anything already contained within your lasting power of attorney or any other legal document.

Will considerations

Putting plans in place for the remainder of your lifetime will, naturally, be your key priority, but the diagnosis of a life-limiting illness may also prompt you to consider your will and any wishes related to your death.

If you have not already made a will, you should think about who you would like to benefit from your estate after your passing. If you already have a will, it is important to revisit this to ensure that it remains in line with your wishes. If you are in any doubt about whether your current will is still suitable, you should seek legal advice to either ensure that you are entirely satisfied with the terms or to make a new will to reflect your current wishes.

How can we help?

If you are struggling to know how to prepare yourself legally following the diagnosis of a life-limiting illness, our solicitors can advise you on all aspects of your legal planning.

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.

Reporting an estate’s value for inheritance tax

Acting as an executor means that you are responsible for reporting the value of the estate and declaring any inheritance tax due, so it is important to make sure you follow correct procedures.

‘Since January 2022, new rules apply in respect of reporting inheritance tax’, says Nigel Miller, a Director in the wills and probate team with Kidd & Spoor Solicitors Limited. ‘Whilst it is intended that these rules should make the probate process smoother, you could easily be caught out if you are not familiar with their full scope.’

When the estate value still needs to be reported

Under previous rules, in order to obtain probate, it was necessary to report the value of all estates to HMRC using either a short form or long form return. Whilst this used to be the case even when no inheritance tax was due, the new rules mean that when there is no inheritance tax to pay reporting to HMRC may no longer be a requirement. However, if you are an executor of an estate on which inheritance tax falls due you must still report to HMRC using the long form return.

You also need to be careful if you are an executor of an estate which is not subject to inheritance tax, as it is not the case that all non-taxable estates need not be reported.

The new rules apply only to deaths which occurred from 1 January 2022 onwards. If the person whose estate you are dealing with died prior to this, you will still need to submit an account to HMRC even if no inheritance tax is due.

For deaths on or since the introduction of the new rules, you may still need to report to HMRC if the deceased made gifts during their lifetime. If they made gifts within the seven years prior to their death which exceed £250,000 in value, or any gifts from which they continued to benefit personally during this time, you will need to send valuation details for the estate.

Certain assets may also mean that reporting remains necessary. If the deceased held foreign assets worth more than £100,000, or if they left a life insurance policy to be paid out to someone who was not their spouse or civil partner, you will need to report to HMRC. Trusts may also mean that you are required to report. Where the deceased benefited from a trust which has a value greater than £250,000, or if they held more than one trust, you may need to submit a return.

Another consideration is where the deceased lived when they passed away. Different, more complex, rules apply in relation to foreign domiciled or deemed domiciled persons. These terms have very specific legal meanings, and you should seek advice if the domicile of the deceased is in any doubt whatsoever.

One further factor is the overall value of the estate. Where it exceeds £3 million HMRC require valuation details even if no inheritance tax falls due, such as where the entire estate passes to charity.

It can be difficult to determine when reporting is needed, but if you are an executor, it is your responsibility to ensure that you are compliant with HMRC’s requirements. If you are in any doubt, you should seek professional advice.

When the estate value need not be reported

If inheritance tax does not apply to the estate, and provided you are satisfied that none of the reporting requirements exist, you can now obtain probate without reporting the estate valuation to HMRC.

In such cases, you must still obtain accurate up-to-date valuations for all of the estate assets, as the Probate Registry will require these details.

Reporting the estate valuations to HMRC for the purpose of inheritance tax was, and remains, only a small part of the overall probate process. As an executor, your duties are to the beneficiaries and are governed by pre-existing inheritance and estate administration laws. If you fall foul of your duties, you can find yourself personally liable for any loss arising. If you are in any doubt about the probate process, it is wise to speak to a solicitor. Being an executor is a big responsibility and should be tackled with care and diligence. Always seek advice if you are at all unsure about the process.

How can we help?

If you are an executor and you are struggling to get to grips with the new HMRC reporting rules, our solicitors can help to guide you through the process and can explain your duties to help make these clear.

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.

 

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.