Contentious probate – the rules and how they apply to beneficiaries

Losing a loved one is a painful and difficult process, and sorting out their estate after they’ve gone can be a challenge. If they’ve made a detailed will and everyone is happy with the validity of the will and its contents, then that should make life for those left behind a little easier. Probate should be completed without any hassle, and is usually done and completed within around six months.

However, if a person dies without leaving a will (intestate), or even worse, when a will has been drawn up but is contested by either a beneficiary or someone who thought that they should’ve benefited from the will but didn’t, then the probate process can drag on for months, years, or even come to a complete stop.

What grounds are there for challenging a will?

While contentious probate is something that everyone wants to avoid, there are certain situations where contesting a will is legitimate. These include:

  • A will that hasn’t been executed correctly by the executor according to the law
  • The mental capacity or capability of the person making the will is in doubt (as is often the case with dementia sufferers)
  • The distribution of the estate doesn’t provide enough for any dependents (most often spouses and children) who may face financial hardship as a result.
  • When there’s suspicion that the deceased was forced or coerced into changing a will against their wishes
  • A will that has been fraudulently changed by a third party
  • A will where the distribution of the estate is contested by one or more beneficiaries, or by someone who expected to be included in the will but has been left out.
  • A will that beneficiaries feel has been dealt with in an improper manner

While all of these scenarios could be legitimate grounds to contest a will, there needs to be substantial proof if a will’s clauses are to be overturned by a court.

Who can contest a will?

The main parties who can contest a will are:

  • Direct beneficiaries
  • An individual who was contracting promised something by the deceased but finds they’ve been omitted from the final will.

The Inheritance (Provision for Family and Dependents) Act 1975 allows people with a certain relationship to the deceased to bring a claim to contest a will, including:

  • A spouse
  • A former spouse if the deceased has not remarried.
  • A partner who lived with the deceased for at least 2 years immediately before the death.
  • A child (direct descendent)
  • Any individual supported financially (partly or totally) by the deceased.

How is a will contested?

Surprisingly, most contested wills do not end up in the courts, and are usually solved as a result of mediation and negotiation through professional family law solicitors. If the process cannot be resolved then it may result in formal court proceedings, where the will is examined by a judge. Their ruling is final.

If you are planning to contest a will then it’s vital that you seek professional guidance as soon as possible. If you’re in the other camp and are forced to defend a contested will against someone who is challenging the validity of the contents, then again, it’s important to get expert legal advice from a family and probate law specialist.

Speak with our team today for an initial discussion. We offer expert advice, great value for money and our services can be provided remotely for your convenience. For more information please email or call us on 020 8349 0321.

Power of Attorney – what is it and why do you need it?

We all want to believe that life will be reasonably easy, with minimal bumps along the way. However, the truth is that as we get older, illness or even an accident can render us incapable of making our own decisions. If that happens then it’s vital that you’ve thought a step ahead and put in place a Power of Attorney to take care of your decisions on your behalf.

If your ability to make your own choices is taken away from you as a result of dementia, long-term conditions such as motor neurone disease, or a traumatic head injury, then it’s reassuring to know that your affairs will be looked after by someone of your choosing, and in the manner that you would want. This is what Power of Attorney is all about. It’s about ensuring that while you still have the ability to choose, you can put in place a safety net that will protect you once you are no longer able to make your own decisions.

Why do you need to choose someone with Power of Attorney?

Dementia and Alzheimer’s disease affects around one in 12 of the UK’s population. It’s not just a condition that’s confined to the over-75s – there are thousands of cases every year of what is termed as ‘early-onset dementia’, which can strike people in their 50s. Degenerative diseases such as Motor Neurone Disease, although rare, affect around 5000 people in the UK and can strike at any age. Similarly, severe head trauma as a result of an accident or medical condition such as a progressive brain tumour can affect people of all ages.

Once your ability to make your own decisions about your finances or your well-being and health care has been compromised, it is up to someone else to step up and take on the role on your behalf. To allow them to do this, you have to grant an individual Power of Attorney.

Without this safeguard in place, you’ll have no decision over what happens with regard to your healthcare requirements or financial management. Without a Power of Attorney in place, the role is taken on by your local council, who will decide when and where you receive care, and whether your assets such as your family home could be sold to pay for long-term care.

A lack of a trusted person in the role could also result in your financial affairs being handed over to a stranger to manage. This could seriously impact any inheritance your chosen benefactors could receive, as your assets could be used to pay for your care.

How do you avoid this?

The simplest way to avoid handing your future over to your local council (as well-meaning as they may be), is to arrange well in advance to have someone you trust to take on Power of Attorney on your behalf. This can be easily arranged with Power of Attorney solicitors, who will be able to provide you with expert legal advice on the process from start to finish. The charity Age UK also have extensive information on how to arrange a Power of Attorney for older people.

It’s quick and easy to do. Simply book an appointment with one of our experienced private client lawyers in London, who will sit down and go through the paperwork with you. You can contact the Office of the Public Guardian to get the relevant forms and information pack, and while you can technically complete it all online yourself, our top tip is to get expert legal advice before you sign the documents to ensure you’ve completed them correctly. This could prevent any legal challenges later on.

You’ll need to get your LPA (Lasting Power of Attorney) documents signed by a certificate provider, who can confirm that you haven’t been coerced or pressurised into signing the document. The document is then registered with the Office of the Public Guardian for a small fee, and within around nine weeks the status of your chosen Power of Attorney representative will be recognised and fully registered.

It’s simple, it’s straightforward, and it’s an essential process that could protect both you and your loved ones should the worst happen.

If you would like to talk in confidence to an expert about arranging a Power of Attorney document, please email or phone 020 8349 0321.

High Court Upholds 19th Century Test For Mental Capacity

Choosing to challenge a Will is not a decision to be taken lightly.  Any experienced, highly-regarded Civil Litigation Solicitor will tell you that testamentary freedom is a cherished part of English law and not one that the Courts are prepared to readily tamper with.  However, there are some cases where it is abundantly clear that something went wrong when the Will was made, and the Courts must intervene. 

The recent High Court decision in Re Clitheroe (Deceased) [2021] EWHC 1102 (Ch) is an example of where the Courts will uphold a challenge to a Will.  Furthermore, it confirmed that despite being decided in 1869, the test for testamentary capacity set out in Banks v Goodfellow remained good law.

The background to the decision

The Respondent, Sue Bond was almost entirely cut out of her mother’s Will.  The Testator called the Respondent a ‘shopaholic’ and believed her daughter would ‘fritter away’ any money left to her.  The Testator had also accused the Respondent of stealing various items from her home including her treasured set of Harry Potter books.  Therefore, she bequeathed most of her estate to the Appellant, Ms Bond’s brother.

The County Court Judge found that the Testator’s beliefs were irrational to the point of being delusional.  He also accepted expert evidence that showed the Testator was suffering from an affective disorder which included a complex grief reaction and depression which impaired her testamentary capacity.

Ms Bond’s brother appealed the decision on the grounds that the County Court Judge should not have applied the Banks v Goodfellows test and instead should have applied the test under the Mental Capacity Act 2005.  He also argued that the Judge had misapplied the test regarding whether the Testator suffered from delusions when he said it was not necessary to prove that she could not be talked out of her beliefs.

The High Court’s ruling

The High Court reviewed the case law which confirmed that the Banks test had not been superseded by the Mental Capacity Act 2005.  Under the Banks test, the following needs to be present for testamentary capacity to exist:

  • The Testator must understand the nature of making a will and its effects.
  • The Testator must understand the extent of the property of which they are disposing.
  • The Testator must be able to understand and appreciate the claims to which they ought to give effect (i.e. who can bring a claim against the Will).
  • The Testator must have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of their property by Will.

The Court observed that there was nothing within the Mental Capacity Act 2005 indicating that determining the validity of a Will was one of its purposes or powers.  Although it was important not to simplify the distinction between the test for capacity under the Mental Capacity Act 2005 and the Banks test to merely one of whether the person whose capacity is in question is living or dead, it was relatively clear from the terms of the Act that Parliament did not intend to alter the common law test for testamentary capacity provided by the 152-year-old case.

Regarding the correct test for delusion, the Court once again turned to an ancient case, that of Dew v Clark and Clark 162 E.R. 410, [1826] 1 WLUK 63 which established the legal concept of ‘insane delusion’ –  a Testator’s false conception of reality that may invalidate a Will altogether, or one or more of its provisions.  For a delusion to exist, it had to be:

  • more than a simple mistake that could be corrected
  • irrational and fixed in nature, and
  • out of keeping with the Testator’s background.

Justice Falk concluded that Dew did not lay down an absolute rule that a delusion could only exist if it were shown that it was impossible to reason the Testator out of the belief. 

The case was adjourned for three months to offer the siblings a chance to reach an agreement without the expense and distress of a further Court hearing.

Comments 

This case is one of many clarifying that the Banks v Goodfellow test remains good law in testamentary capacity cases.  Further test cases will inevitably be brought in the future, however, for now, the Courts have made clear that Banks may be an ‘oldy’ but it is still a ‘goody’.

Please note that this blog is intended for information purposes only and does not constitute legal advice. 

Tax and Trusts in the Cryptic Cryptosphere

Bitcoin, Ethereum, even Dogecoin – many will have been scratching their heads in recent months over the latest mania to grip the nation and the wider financial community. We could talk about non-fungible tokens (also known as NFTs), but it is perhaps best to leave that aside for now. This article looks at the growth of cryptoassets and it can form part of an estate for tax purposes. 

Current estimates put the market capitalisation of all cryptoassets at around $2 trillion following an astronomical surge in interest and investment so far in 2021. This burgeoning market and its underlying asset class is the internet’s gold with a new generation of investors rushing to reap the initial gains, even with the plentiful supply of critics and naysayers.

What might appear to be 2021’s version of the late 1990s dotcom bubble or 1636’s tulip mania, institutional investment is on its way and, with that, wider societal acceptance and faith in this new asset class. By way of comparison, the total value of the world’s gold is estimated to be around $9 trillion and the value of all global investments (including publicly traded shares, bonds and real estate etc) is around $360 trillion. By comparison, the market capitalisation of cryptoassets is not yet even 25% the size of gold and less than 0.3% of the value of all globally invested wealth.  

To understand cryptocurrency, let us consider gold further. Gold has been in circulation for  the purposes of trading and as a store of value since time immemorial. It is a curious metal as it serves little practical purpose in industry, but it has retained its value over time due to two fundamental characteristics: its attractive appearance and use in jewellery and, most importantly of all, its finite supply. Markets fluctuate, but supply and demand are its essential forces. For what is a marketplace other than the convergence of human sentiment and feeling in a financial context? For there to be demand for gold, there has to be widespread faith and acceptance not just in the value of the asset but also the knowledge that you own something that not everyone has but that everyone, potentially, wants. Enter cryptoassets…

Let us talk tax, shall we?

Rather than delving too deeply into this cryptic world and championing its merits as an asset class, let us turn to the more wearisome world of tax and estate planning.  We are witnessing a seismic transfer in wealth from traditional capital assets to cryptoassets and investors are increasingly asking how their assets might be taxed and how they should be held both during their lifetime and on death.  

First and foremost, what is a crytoasset? HMRC appear to have also been scratching their institutional head in recent years and perhaps, to the displeasure of some, we finally have some certainty on their interpretation. Of course, we should not forget that this is a fast changing area and HMRC’s interpretation is not yet enshrined in law. We should not, however, underestimate HMRC’s efforts to legislate in the absence of legislation

Importantly, HMRC does not consider cryptoassets to be currency or money.

For individuals, anyone disposing of cryptoassets will be subject to UK capital gains tax (CGT) on the gain, and the gain should be reported on their self-assessment tax return.

There is some possibility, however remote, that HMRC considers that an individual’s activities fall under the category of trading as they are buying and selling the assets on an ongoing basis. HMRC will evaluate each case on its fact and will consider factors such the frequency, level of organisation and sophistication whereby such activities could constitute trading. To the disappointment of avid crypto investors, for UK tax purposes, profits will be treated as income and so be subject to UK income tax and not CGT. This would invariably mean that trading in cryptoassets attracts a higher rate of tax than if an investor bought cryptoassets and disposed of their holdings as a later date. Investors should be aware of this possibility at the outset.

There is, however, one curious cultural characteristic of the crypto community: HODLing. This term was popularised after an early crypto investor explained that his strategy with Bitcoin was to HODL, a clear misspelling of the world HOLD. In more recent years, HODL has become the defining feature of the crypto world and now means that you intend to Hold On for Dear Life and therefore never sell! The expectation is that by HODLing, investors will limit the supply of cryptoassets on the market and therefore inflate the price as demand continues to rise.

Now, naturally, if an investor is ‘sitting’ on and not realising a gain then no tax arises in such circumstances. However, given the UK’s current debt crisis, perhaps the government will ponder a wealth tax which could target holdings of wealth including cryptoassets. This is will be an area to watch in the coming months.

Where is my asset located for tax purposes?

For the majority of clients who are UK resident and domiciled for UK tax purposes, HMRC will treat your disposals of cryptoassets in the same way that they would treat any gain arising anywhere in the world, namely that it falls into the UK tax net. For UK resident non-UK domiciled clients, the answer is far less straightforward. To summarise, individuals who are resident but not domiciled here will pay tax only on their UK source income and gains and on non-UK source income and gains only to the extent that they are remitted (ie brought back) to the UK.

As for cryptoassets, how do we determine whether they are UK situated or not and therefore whether they fall into the UK tax net for non-domiciled individuals? Cryptoassets are intangible and digital assets comprising a set of code that is recorded on a decentralised ledger also known as blockchain. As there is no central register or geographically identifiable ledger, the usual rules on determining the situs of intangible assets are thrown up into the air.

HMRC released guidance at the end of 2019 setting out their view that the taxpayer’s cryptoassets are situated in the jurisdiction of the taxpayer’s residence. We assume that HMRC is referring to tax residence (determined by the UK’s Statutory Residence Test) and not habitual residence. The consequence of this, to the extent that it is upheld and perhaps passed into law at a later date, is that a non-domiciled individual who is tax resident in the UK will pay UK tax on the disposal of their cryptoassets merely because they are resident in the UK for tax purposes. This is a departure from the typical rules relating to the remittance basis of taxation (applicable to many UK resident non-doms) such that these individuals can no longer shelter ALL of their offshore income and gains from the UK tax net.

A practical example best illustrates this departure from the rules. Mr X has been tax resident in the UK for the past five years but has not acquired a domicile of choice in the UK and nor is he considered deemed UK domiciled under the 15/20 year rule. Mr X makes a purchase of 50 ETH (the underlying coin on the Ethereum blockchain platform) and the transaction takes place through an offshore exchange using funds from an offshore bank account so that there is no UK nexus to the transaction. A year later, Mr X decides to dispose of his ETH, triggering a substantial gain and Mr X subsequently transfers the sale funds from the exchange to an offshore bank account. In such circumstances, as Mr X is UK tax resident as the time of the disposal he will have made a remittance of the 50 ETH and the gain will be subject to CGT in the UK irrespective of the offshore element and the applicability of the remittance basis of taxation.

What about succession planning and trusts?

This is where the complication really begins to add up. Focusing on lifetime trusts and the relevant property regime (effectively UK trusts with non-excluded property), an individual (the settlor) is liable to a UK inheritance tax (IHT) entry charge of 20% when assets go into the trust, to the extent that the value of the assets exceeds the settlor’s available nil rate band (currently £325,000). If the value of the assets falls below the available nil rate band, it follows that there is no immediate charge to IHT.

The transfer into trust may also trigger a gain for CGT purposes when the cryptoassets are settled on trust, as the transfer is treated as a disposal. In this scenario, it may be possible to claim hold-over relief. This relief has the effect of deferring CGT whereby the base cost will be the original acquisition cost and this is used when calculating the CGT due on a subsequent distribution from the trust. The relief is not obtained automatically but is instead claimed by the trustees and the recipient of the asset and notified to HMRC following certain formalities.

The availability of the nil rate band to mitigate IHT and hold-over relief to defer CGT are all well and good, but there is one major stumbling block – valuation. Using residential property as an example, the market for bricks and mortar is steady and stable, and a valuation three days before a transfer into trust is unlikely to change when the transfer is effect. With publicly listed shares, the market opens and closes at fixed times (closed over weekends and Bank Holidays) and so a valuation at market close is not a complex scientific endeavour. With cryptocurrency, the challenges are far greater. For starters, the market never closes as there is no centrally located exchange. To make matters worse, the crypto market remains extremely volatile and a so-called well-performing cryptoasset could swing 10% up or 10% down in one day – perhaps even as much within a single hour at midnight when UK taxpayers are asleep!

How, therefore, is the value of cryptoassets determined for the purposes of creating or even dismantling trusts? The same issues arise with Will trusts. If, say, the testator creates a discretionary trust for the benefit of his children on death, do we look at the very minute of death to determine the value of the cryptoassets going into trust? Many questions remain and it is beyond doubt that HMRC will be thinking of ways to claw as much tax as possible, however difficult it may be to value these assets.

Practical considerations for Cryptoassets 

In an increasingly digitised world, passwords are practically as valuable as the assets that they protect. Cryptoassets are now commonly stored in a digital wallet, which can be stored online or on external hard drives. Storage and security are clearly of paramount importance to the crypto world. The major takeaway from this is that cryptoassets are only valuable if you have the key to access them. If an individual owning £1 million of Bitcoin does not share the password and provide access to his intended beneficiaries of his estate, the estate would be treated as if it never owned the Bitcoin and the beneficiaries would never receive the benefit. The Bitcoin would be irretrievably lost and no value could ever be obtained. Of course, this would mean that the Bitcoins cannot attract IHT on death as the value has been lost. This is arguably one of those circumstances where a substantial IHT bill would be very well received.

Take the example of James Howells from Newport, Wales. Mr Howells owned 7,500 Bitcoins on an external hard drive, which he accidentally threw away in 2013 when cryptocurrency was worthless by today’s standards. On today’s prices, this crypto holding would be worth somewhere in the region of £300 million and unless the hard drive can be extracted from landfill and the data recovered, that value will be forever lost.

For this reason, it is essential that clients consider leaving a confidential side letter to the executors and trustees of their estate setting out their passwords and any other relevant information relating to access of valuable data and cryptoassets. Of course, this document will have to be kept under lock and key, given its implicit value, with access to it only shared with only the most intimate family members.

Our specialist tax advisers at OGR Stock Denton will be well placed to guide you through the tax regime relating to cryptoassets and would be delighted to advise further. 

If you would like to discuss any of the above issues, please contact Ben Rosen, on 020 8349 0321 or by email

Please note that this blog is intended for information purposes only and does not constitute legal advice. 

Understanding Testamentary Capacity

The number of Wills being challenged over the past decade has risen consistently, and it is easy to see why.  The stakes are much higher given the increase in house prices, meaning that many peoples assets are now worth hundreds of thousands (if not millions) of pounds. Furthermore, the younger generation are struggling to get on the housing ladder, and are increasingly reliant and / or expecting to receive an inheritance to do so. At this point, you may be wondering what Will disputes have to do with testamentary capacity. The the answer is that if a Will is not entered into with full understanding, it may be challenged and be declared invalid. 

What is testamentary capacity, and how is it established?

The word ‘testamentary’, in this case, refers to the act of bequeathing through a Will.  ‘Capacity’ refers to the cognitive ability of the testator (the person making the Will) to enter into the Will in a way that they fully understand.  Hence if a Will is entered into by a person who lacks the mental capacity to comprehend the implications of what is being stated, this would be considered to be a lack of testamentary capacity and will likely render the Will invalid. 

If the last Will is declared invalid the estate will be administered under the terms of the previous Will (if one exists) or under the rules of intestacy. This is a formula sued to distribute an estate if there is no will.  

Solicitors and other legal practitioners specialising in Wills must check that they are satisfied someone has testamentary capacity when taking instructions for a Will for a client. By doing so, its validity is less likely to be challenged following death. 

The risk with online and DIY Wills is that, in addition to the lack of professional legal guidance to ensure the Will is drafted to reflect all of the necessary provisions and life scenarios for your situation, it will lack evidence that checks were undertaken to verify capacity.  A professional Wills Solicitor will go out of their way to secure the proof needed, including requesting contemporaneous medical opinion, asking a medical professional to witness the Will, and attaching any other proof of capacity to the Will.

There are two main tests used by the Courts to prove testamentary capacity:

Banks v Goodfellow Test (Case law test)

 This common law test relates to the case of Banks v Goodfellow (1870), which used the following criteria to test for the existence of testamentary capacity:

  • The testator must understand the nature of making a will and its effects.
  • The testator must understand the extent of the property of which they are disposing.
  • The testator must be able to understand and appreciate the claims to which they ought to give effect (i.e. who can bring a claim against the Will).
  • The testator must have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of his property by Will.

Despite being over 150 years old, the Banks v Goodfellow test has stood the test of time due to its clarity, the fact it is based on case law principles going back three centuries, and because it covers the elements necessary to establish an all-round understanding of what is being entered into.

The Mental Capacity Act 2005 (MCA 2005)

 The MCA statutory test uses five core principles to establish mental capacity, as follows:

  1. A presumption of capacity – everyone has the right to make his or her own decisions and must be assumed to have capacity unless proved otherwise
  2. The right for individuals to be supported to make their own decisions – people should be given the necessary assistance before it can be concluded they are unable to make their own decisions
  3. Individuals have the right to make what might be seen as eccentric or unwise decisions
  4. Best interests – anything done for or on behalf of people without capacity must be in their best interests; and
  5. Least restrictive intervention – anything done for or on behalf of people without capacity should be the least restrictive of their basic rights and freedoms.

The MCA 2005 test for capacity was not intended to replace the Banks v Goodfellow test; rather the intention was to allow judges to make their own decision as to which would be most applicable.  However, the High Court case of James v James and others [2018], confirmed that the Banks v Goodfellow test should be applied when assessing mental capacity in relation to making a Will.

Ensuring testamentary capacity for your Will

Establishing testamentary capacity at the time of Will creation will mitigate the potential for it to later challenged.  For solicitors, ensuring their client understands what they are entering into and providing supporting evidence where necessary is a paramount consideration.  By failing to undertake this key step, a well-drafted Will, with all elements considered, witnessed, and signed correctly, could be rendered useless via a challenge.  Don’t cut corners and allow your Will to be judged invalid due to concerns over capacity – your loved ones deserve certainty that your wishes were made with sound mind and judgment.

If you would like to discuss any of the above issues, please contact Ian Pearl, on 020 8349 5506 or by email

Please note that this blog is intended for information purposes only and does not constitute legal advice. 

What To Consider When Looking For The Best Inheritance Tax Solicitors

For some people, it is hard to think about what will happen to their assets after they die. Others want to ensure that their legacy is passed on in the most efficient way so their heirs can benefit from what they have worked hard to accumulate during their lifetimes. Whichever camp you fall into, pertinent, up-to-date advice from an inheritance tax solicitor can be invaluable. Everyone needs to consider making a will to ensure their estate is dealt with smoothly and in accordance with their wishes after their demise. But if your estate looks set to be valued at over £325,000, you will especially benefit from guidance from inheritance solicitors.

Inheritance tax (commonly abbreviated to IHT) is the tax that’s payable after the death of an individual on the money, property, and possessions they leave behind – their estate. It’s based on the value of the estate at the time of death, but can also include gifts given by the individual in the seven years preceding their demise. The value of the estate is calculated after any outstanding debts and funeral expenses have been deducted.

At present, the IHT threshold is £325,000, though changes to the whole framework are imminent. Currently, there’s no tax payable on the first £325,000 – this is known as the nil-rate band or NRB. If you have a spouse or civil partner, then you can pass the entirety of your estate to them tax-free, and they then benefit from an increased IHT allowance of up to double (i.e., £650,000) on their own death.

But otherwise, any value of the estate over £325,000 is taxed at a rate of 40%. This is usually settled by the executor of your will, if you have one, or administrator of the estate if there’s no will in place.

Other considerations are many, but include the recent Transferable Main Residence Allowance (TMRA), which came into force in April 2017. This allows the deceased to pass on a property in which they have been living to descendants, raising the tax-free allowance to £500,000 in total (£1 million for those who are married or have civil partners).

Reducing Liabilities Through Inheritance Tax Planning

what services do inheritance tax solicitors offerOf course, no-one likes paying more tax than they have to, and this is often where consulting inheritance tax specialists in the UK can be beneficial. It’s important that you do this at an early stage if you think your estate will be liable for IHT.

The above description of IHT and associated matters is the briefest of summaries and only scratches the surface of the complex framework surrounding inheritance tax. The landscape is likely to change in the near future too, so it’s vital that you seek legal advice from qualified and experienced experts before taking any action yourself. HMRC imposes severe penalties on breaches of tax legislation and you or your heirs could end up in trouble if you inadvertently break the rules.

Inheritance tax planning solicitors will first gain an overview and more detailed information about your specific circumstances. They will then detail options for ways in which you can manage your affairs now and at the time of your death to limit tax liabilities and benefit your heirs as much as possible.

Among these will be consideration of making a will; of giving tax-free gifts; of making charitable donations; establishing a family trust; making specialist investments; taking out insurance to cover the costs of IHT; gifting property to children or a loved one, and more, all of which can be tailored to your own unique circumstances.

Expert Legal Advice From Specialists

As noted above, IHT can be a minefield and the costs of getting your affairs wrong can be huge in financial terms, not to mention costly in terms of the emotional distress on your heirs that can result from dealing with HMRC at an already difficult time.

However, the cost of an investment in sound legal advice at an early stage can be more than offset by the savings you’ll make in tax liabilities in the future.

Come to OGR Stock Denton, where we have been advising on legal matters for personal and business clients for over 50 years. Our consultants will assess your situation and offer the best legal advice for your circumstances, explaining everything simply and clearly without blinding you with legal jargon.

Remember, while a difficult subject to contemplate, the sooner you start putting your affairs in order, the easier it will be for your loved ones after your demise. Call 020 8349 0321 today to make an appointment to speak to one of our experienced inheritance solicitors.

FREQUENTLY ASKED QUESTIONS

Can solicitor’s fees be offset against inheritance tax?

which inheritance tax solicitors to hireLiabilities and debts incurred prior to the deceased’s demise, such as mortgages, credit card, and household bills, can be deducted from the chargeable estate, as can funeral expenses. However, other costs that have been incurred after death, like probate and fees for solicitors or death tax lawyer services cannot reduce the value of the estate for Inheritance Tax (IHT) purposes.

How much do solicitors charge for being executors of a will?

When sourcing a lawyer to act as executor of an estate, ask how they will charge for carrying out the service. Some charge an hourly rate, while others will base their fee on a percentage of the value of the estate, usually between 1% and 5%, plus VAT.

How do you calculate inheritance tax?

The threshold for IHT is £325,000. If your estate is worth less, it’s classed as being in the Nil Rate Band (NRB). You’ll typically pay 40% tax on any amount above £325,000, unless the entirety is left to a spouse or civil partner, or an exempt beneficiary like a registered charity. Inheritance tax solicitors can advise further.

What is the UK inheritance tax threshold?

At present, the inheritance tax (IHT) threshold is £325,000 per individual, but the government is planning some changes in 2021. Currently, if you have a spouse or civil partner, any unused NRB on the death of the first person can be transferred to the survivor, increasing the amount of NRB available to up to £650,000.

Will my children have to pay inheritance tax?

Your children pay inheritance tax at 40% on any amount you have left them above the £325,000 personal inheritance tax-free allowance. You can establish a trust before death to reduce the percentage paid to 20%, but if you die within seven years, an additional 20% is charged. The law is complex, so seek advice from a family tax planning attorney.

how can inheritance tax solicitors help youA Guide To Inheritance Tax

Inheritance tax is a highly complex area. Broadly speaking, only a small percentage of estates are large enough to attract IHT – those with a value of over £325,000. Assets that count towards this sum include money in a bank, property and land, jewellery, cars, shares, pay-outs from insurance policies, and jointly owned assets. If your estate falls below the £325,000 threshold; you leave everything above the threshold to your spouse or civil partner; or you leave everything above the threshold to a charity or other exempt beneficiary, then there is normally no tax to be paid.

The recently-introduced Residence Nil Rate Band, aka home allowance, may also apply. If your main home or a share of it is passed to children or grandchildren, that can increase the amount that can be passed down tax-free. Planning ahead with the help of inheritance tax solicitors in London can mitigate tax paid.

Overview Of Inheritance Tax

The deceased’s estate usually pays 40% inheritance tax on any amount held over £325,000. If you’re a beneficiary, you don’t generally have to pay tax on an inheritance unless the estate hasn’t or can’t do so. If you inherit assets, you may have to pay income tax in future years – on dividends from shares or on rental income from an inherited property, for instance.

If you later sell inherited assets like shares or property, you may have to pay Capital Gains Tax. Assets. And if the deceased gifted you money, property, or possessions within seven years of their death, you may have to pay IHT on that.

What An Inheritance Tax Solicitor Can Do For You

An IHT attorney can help ensure:

  • There’s no conflict between your heirs after your death.
  • Your will is legally valid before your death.
  • You have a chance to organise your affairs with the help and advice of a qualified solicitor, to ensure your beneficiaries gain most value from your life’s work and their inheritance.

Inheritance Tax is a highly complicated area and is constantly changing. It’s easy to fall foul of the complexities of the law and that can mean your heirs and dependants receive less than they might otherwise have done. Make an appointment with our team at OGR Stock Denton LLP for help, advice and assistance in planning what will happen to your assets after your death.

What The 2021 Budget Means For Homebuyers, Employers, and Investors?

On 3 March 2021, Chancellor Rishi Sunak delivered this year’s budget. A year ago, two weeks before the first Coronavirus lockdown, the Conservative Party was promising to spend enormous sums in order to ‘level up’ and reward the so called ‘red-wall’ voters. Then everything changed almost overnight, and most of the money set aside for infrastructure spending etc was diverted into saving the economy, people’s jobs, and the NHS. This year’s budget was about continuing to provide Coronavirus support and paying for the mountain of debt accrued in fighting the pandemic. However, given the circumstances the country (and the world) are in, there was some surprisingly good news from the Treasury.

Residential Property Solicitors in London can help more people buy their home

Those looking to purchase a home have been given a double-shot of good news. Not only is the Stamp Duty Land Tax (SDLT) holiday being extended to the end of June, first home buyers are also set to benefit from a government-backed low deposit mortgage scheme.

Stamp Duty Land Tax

Introduced in July 2020 to help the residential property market recover after it came to a virtual standstill in the first lockdown, the SDLT raised the tax-free threshold to £500,000. This meant most homebuyers have not had to pay SDLT when buying a new home, saving them thousands of pounds. There was concern that the property market would fall off a cliff-edge if the tax break was abruptly ended on 31 March, as many transactions would not have completed, leading to buyers pulling out of sales as they would not be able to afford to pay SDLT. Thankfully, the Chancellor announced that the tax-free threshold would remain until 30 June 2021. From 30 June to the end of September 2021, the nil rate band will be set at £250,000 – double its standard level.

Low-deposit mortgages

Low-deposit mortgages have essentially disappeared over the last 12 months (although the number of lenders offering them has been declining since the 2008 financial crisis). This has made it almost impossible for first-time buyers, especially in London and the South-East, to save enough for a minimum 10% deposit. The government has said it is determined to turn ‘generation rent’ into ‘generation buy’.

To help all home buyers (not just those trying to get on the property ladder), the Chancellor confirmed that:

“several of the country’s largest lenders including Lloyds, Natwest, Santander, Barclays, and HSBC will be offering these 95% mortgages from next month.”  

Buyers will pay just 5% deposits to buy homes worth up to £600,000. The government will offer lenders a guarantee to provide mortgages covering the remaining 95%.

Businesses can continue to benefit from the Furlough Scheme

For both employers and employees, the Budget announcement that the Government’s Job Retention Scheme is being extended until September will be welcome. 

Speaking in the Commons, Mr Sunak said:

“As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Mr Sunak told the Commons: “As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Despite this positive news, there is likely to be redundancies when the Furlough Scheme does come to an end. For employees, this may mean seeking employment law advice on Settlement Agreements and whether they have a claim for unfair dismissal. Employers may need to see an employment lawyer for advice on ensuring the strict statutory redundancy process is correctly followed.

Inheritance Tax Solicitors can advise on the best estate planning strategies

For some, the budget did not bring good news. Although the Chancellor did not raise Income Tax, National Insurance, or VAT, a freeze was put on Inheritance Tax, pension ‘lifetime allowances’, and the personal tax allowance thresholds. As wages and the value of assets increase over the next few years, more people will be subject to increased taxes.

To protect your wealth, tax planning is essential. An Estate and Inheritance Tax Planning Solicitor will carefully evaluate your investments and advise on actions to take to avoid paying more tax than is necessary. Because the government’s need to repay the deficit will become more pressing over the coming years, it is vital to get your tax planning in order immediately.

To make an appointment to discuss any aspect of residential property, employment, or tax planning law please send us an email or phone 020 83490321.

 Do We Really ‘Care A Lot’ About The Elderly? 

In February 2021, a new dark comedy ‘I Care A Lot’ was released on Netflix. Starring Rosamund Pike as a court-appointed (but really self-imposed) guardian for elderly wards of the State, the American movie illustrates how a con can easily divest an elderly person from their money and property.  However, Ms Pike’s character meets her match when a seemingly docile ward turns out to have some unsavoury connections and is just as ruthless (and nasty) as her guardian. 

Although ‘I Care A Lot’ is entertainment, Lasting Power of Attorney (LPA) Solicitors in London and elsewhere in the country know only too well the extent to which elderly abuse is rife in our society.  Although most media reports focus on abuse in care homes, Solicitors working on Court of Protection and LPA matters regularly advise and intervene (via the police) in cases where an Attorney is suspected of defrauding the elderly person who appointed them to manage their financial affairs.

The extent of elderly financial abuse 

In 2018, care home managers reported almost 13,000 cases of concerns regarding elderly people in care experiencing financial abuse to the Care Quality Commission (CQC).

Because the victims of elderly financial abuse are often suffering from serious health problems, including dementia, establishing the extent of the problem is challenging. A 2015 report by Age Concern suggests:

“On average, the best estimate for the UK is that between 1 and 2 per cent of people aged 65 or over in the United Kingdom today have suffered (or are currently suffering) financial abuse since turning 65. For estimation of numbers of those older (65+) people living in the community in the UK, there is no strong reason given in the literature to change the original CR/DH study estimate of 1.2%, which would mean approximately 130,000 people living in the community aged 65+ in the UK have suffered financial abuse at some point since turning 65.”

What is elderly financial abuse? 

The World Health Organization (WHO) defines elderly financial abuse as:

”The illegal or improper exploitation or use of funds or other resources of the older person.”

Another researcher defines it as:

“the unauthorised and improper use of funds, property or any resources of an older person.” This included the use of theft, coercion or fraud to obtain or try to obtain the older person’s money, possessions or property.”

Most Attorney’s carry out their duties with care and compassion.  However, those that do abuse their positions of trust can cause irreparable damage to the Donor (the person who creates the LPA), their family, and the wider community.

LPA Solicitors tips on how to spot elderly financial abuse

Bank staff, family members, health and care professionals, and Private Client Solicitors are all in a position to spot elderly financial abuse.

Signs of abuse include:

  • anomalies in bank account transactions, including large cash withdrawals
  • sudden changes in bank account or banking practice
  • unexplained withdrawals from a savings account
  • changes in authorising signatures on bank accounts
  • family members taking a sudden interest in protecting their inheritance
  • sudden changes to the Donor’s Will
  • anomalies between the Donor’s financial position and the standard of care home they are placed in
  • the Donor suddenly does not have enough money to pay their bills
  • the sale of possessions and assets which the Donor is unlikely to have approved of

It is sometimes the case that no clear signs are visible, but family members have an inkling that something is not right.  For example, Christine Beeston was jailed for two and a half years in 2018 after she stole £50,000 from her parents who had dementia.  She had obtained Power of Attorney and shortly afterwards, her parents moved to a care home, resulting in Ms Beeston having complete control over their financial affairs. Her brother became suspicious, and after obtaining joint Power of Attorney, he began making enquiries which led to the horrifying discovery of deliberate fraud and theft against his vulnerable parents.

Using an experienced Lasting Power of Attorney solicitor for your affairs 

In July 2019, Demos, a think-tank and Cifas, the UK’s fraud prevention community, published a report on the financial abuse of vulnerable people, including the elderly.  The report recommended that to prevent fraud, stricter controls should be placed on LPAs and a “register of people with active Lasting Powers of Attorney, or under Court Order of Protection with real-time updates should be established, which consumer services companies are able to check against”.

One of the best ways to mitigate the risk of your Attorney stealing funds from you is to have your LPA set up by an experienced Solicitor.  Not only can they advise you on how to select an Attorney, but they can also advise on how to limit an Attorney’s power and/or choose multiple Attorneys who can provide checks and balances on each other’s decisions.

To make an appointment with one of our North London Lasting Power of Attorney Solicitors please visit email or phone 020 83490321. 

People who die without leaving a valid Will

As experienced solicitors dealing with Wills, we understand that Will Writing is something that many people tend to put off. Understandably, nobody likes to think about their death, but putting off making a Will can have a detrimental impact on those left behind, and it could mean that you lose the chance to expressly state who should benefit from the estate you leave behind.

In this post, our Wills team discusses what happens when a person dies without leaving behind a valid Will.

What happens to an Estate when there is no Will in place?

When a person dies without leaving a valid Will, their estate will be distributed according to a specific set of rules. These rules are known as the Rules of Intestacy. You may have already heard of the term ‘Testator or Testatrix’ being used where Will writing is concerned; if a person dies without making a valid Will, they are referred to as an intestate person.

According to the Rules of Intestacy, only civil and married partners or a number of other close relatives can inherit an estate. In the case of an invalid Will, the expressed wishes of that Will are usually voided, and the Rules of Intestacy will ultimately determine how a person’s estate will be divided.

Civil or Married Partners

If a civil or married partner is in a civil partnership or married at the time of a person’s death, they will inherit under the Rules of Intestacy. As such, if the civil partnership was legally ended or you are divorced, then a person cannot automatically inherit under the Rules of Intestacy.

If there has been an informal separation, then a partner can still inherit an estate under the Rules of Intestacy. Common-law or Cohabiting partners who were neither in a legal civil partnership or married cannot inherit under the Rules of Intestacy.

If you are part of a couple that jointly owns a property, then it will depend on whether you have a tenancy in common or a beneficial joint tenancy as to what happens.

Tenants in common – in this case, the surviving partner will not automatically inherit the share owned by the other partner.

Beneficial joint tenants – in this case, when the first partner passes away, then their share in the property will be automatically inherited by the surviving partner.

If you have a joint building society or bank account and one partner dies, then the other partner will inherit all of the money in the joint account. Any money or property that is inherited by the surviving partner will not count as part of the estate of the individual who has passed when it undergoes valuation for the Rules of Intestacy.

If you live with a partner but not married or in a legal civil partnership, you will likely want to ensure the right provisions are left for your partner. Our local Will writing solicitors can help you put the right measures in place to ensure their needs are taken care of according to your wishes.

Children

In the event there is no surviving civil or married partner, then the children of the intestate person will usually inherit the entire estate. If there is more than one child, then each child will inherit an equal share of the estate. If there is a surviving partner, the children will only benefit if the intestate’s estate is valued at more than £270,000. In this situation, then the children will inherit one half of the estate’s value, above the £270,000 threshold.

The most notable consideration here is that under the Rules of Intestacy, the first £270,000 will be awarded to the spouse, and the remaining assets are then equally split between the spouse and the children. In this scenario, you might end up in a situation whereby you have minor children or adult children who are unable to handle a vast sum of money. If this happens, the family inheritance could be squandered. Where substantial sums of money are being passed over to the next generation, inheritance tax is another major consideration.

When you work with an expert Solicitor dealing with Wills, you can implement specific provisions to avoid such issues.

If the parents of a child were not married at the time of death, or they have no registered civil partnership to speak of, then a child can inherit from their parent’s estate if they die without leaving a valid Will. In addition, these children may also inherit from any of their great grandparents or grandparent’s estates if they die without leaving a valid Will.

If a child is adopted, and this also refers to step-children adopted, they also have rights to inherit an estate under the Rules of Intestacy.  If inheritance is left for a child, then they will either receive this when they are 18 years of age or when they form a civil partnership or marry below this age. Up until this point, any inheritance is managed by trustees on their behalf.

Grandchildren or Great Grandchildren

Either a great-grandchild or a grandchild will not inherit from the estate of a person who has died without leaving a valid Will unless:

  • The grandparent or parent dies before the intestate person; or
  • When the intestate person dies, their parent is alive, but they die before reaching 18 years of age, without having formed a civil partnership or getting married.

In this situation, the great-grandchildren or grandchildren will receive equal inheritance shares of the portion to which their grandparent or parent would have been entitled to.  

Close Relations

Parents, brothers, nephews, sisters, and nieces of a person who dies without leaving a Will may inherit according to the Rules of Intestacy. However, this depends on a number of very specific circumstances; namely

  • If there is either a civil or married partner
  • If there are children, great-grandchildren, or grandchildren
  • With respect to nieces and nephews, whether the parents who are related to the deceased is also dead
  • The estate’s value

If the person who died without leaving a Will has no surviving partner, children, grandchildren, great-grandchildren, sisters, parents, brothers, nieces, or nephews, then other relatives could be entitled to inherit some or all of their estate. There is an order of priority that applies to other relatives:

  • Grandparent
  • Aunts and Uncles
  • A cousin could be entitled to inherit in the event the uncle or aunt who would have inherited died prior to the intestate person
  • Half-Aunts and Half-Uncles
  • A half-cousin could be entitled to inherit in the event the half-aunt or uncle who would have inherited died prior to the intestate person

As local Will writing solicitors, we are here to help you with Will writing. Our team can provide you with the guidance you need to correctly express your exact wishes and ultimately avoid any confusion or doubt over who you want to leave your estate to.

Call us today for a conversation about getting help from a specialist Will solicitor.

Who cannot inherit when a person dies without leaving a Will?

Under the Rules of Intestacy, there are some people who cannot claim any rights to a person’s estate if they die without leaving a Will; such as

  • Close friends
  • Carers
  • Unmarried partners
  • Relatives through marriage

It is important to note that while these individuals cannot inherit any part of a person’s estate who dies without leaving a Will, there is a possibility that any of these individuals could make an application to the court for financial provisions from the estate.

In the event there are no surviving relations to inherit the estate, it will pass to the Crown. If this happens, it is known as Bona Vacantia and falls under the responsibility of the Treasury Solicitor to deal with any left behind estate.

While the Rules of Intestacy are designed to ensure a fair distribution of an estate if somebody dies without leaving a valid Will behind, they are not going to provide anywhere near what an individual would have wanted, should they sat with a professional Will solicitor and prepared.

As solicitors dealing with Wills, we can help you make sure you leave a valid Will that provides complete clarity over who should receive what in the event of your death.  Our team also specialise in Estate and IHT planning services, and we can help you understand the different options based on present-day inheritance tax guidelines.

Speak with our team today for an initial discussion about one of our local Will Solicitors dealing with your Will. We offer expert advice, great value for money and our Will writing services can be provided remotely for your convenience.

Executing A Will During COVID-19

As Will Solicitors in London, we have seen an increasing number of clients wanting to know if it’s still possible to execute a Will during COVID. According to statistics released by deVere Group, enquiries about making a Will in the UK have risen sharply, by just over 75% since the beginning of the coronavirus outbreak. Whether or not this is a case of individuals feeling anxious about the increasing number of deaths, people certainly seem to be more alert to the need for financial planning; and with lockdown restrictions in place, people now have the time to consider writing or amending their Wills to reflect their present-day wishes.

To make a valid Will in England, it is essential that the Testator/Testatrix has their signature witnessed correctly by two independent witnesses. However, with lockdown and the associated social distancing measures in place, not to mention homeworking and self-isolation to combat, it has become increasingly challenging for people to do this correctly and in such a way that ensures it is done correctly. Indeed, although it is possible to get many legal documents signed electronically, for lasting powers of attorney and Wills, the rules have always been slightly different.

To avoid potential issues with inheritance tax, contested probate, and the execution of Wills without witness, we have put together this post to offer guidance on the topic of executing a Will during the COVID-19 epidemic.

Why Should you Make a Will?

The COVID-19 epidemic has already impacted the demand for Will writing Solicitors across London. Aside from this, there are many reasons why everybody, regardless of wealth or status, should consider writing a Will.

  • It gives you and your family peace of mind that your ‘estate’ will go exactly where you wish.
  • It can help avoid any bad feelings or family disagreements about what you would have wanted after you pass.
  • It gives you the option to choose exactly who you would like to manage your ‘estate.’

If you fail to leave a valid Will, then the intestacy rules will ultimately govern how your estate is going to be distributed.

How Has Coronavirus Impacted Will Writing in London and the Wider Area

COVID-19 initially presented obvious issues, with perhaps the most significant of all being the signing of the Will and getting the Will witnessed. The purpose of having two independent witnesses for a Will signing is to protect individuals from undue influence and fraud. Under normal circumstances, solicitors dealing with Wills request that the witnesses be physically present at the same the Testator/Testatrix undertakes the signing.

Not being able to do this is one of the biggest challenges presented to Will writing solicitors and clients who need to make or amend a Will during the COVID-19 epidemic.

New Changes to the Law Impacting the Witnessing of a Will

On the 25th of July, 2020, Ministers announced there would be changes made to the law in order to accommodate the remote witnessing of Wills in England and Wales.  The new legislation was indeed passed in September 2020, and this means that Will writing solicitors and their clients are now able to legally get a Will witnessed virtually, making it easier for people to outline and record their final wishes during the COVID-19 epidemic.

Whether or not these changes will continue to be permitted once the COVID-19 epidemic is through remains to be seen. For now, the change will remain in place for two full years, taking us to the 31st of January 2022. However, what matters most, is that all local solicitors for making a Will and their clients can have peace of mind that any Wills witnessed by the appropriate independent witness via a video link will be legally recognised. In addition to this, reforms will also be backdated to the 31st of January 2020. This backdating means that any Will that was witnessed by any form of video technology will be legally accepted, as long as the witnesses you use meet the usual criteria and are fully independent.

Who can witness a Will signing via a Video Conference facility?

Despite these changes to the law, you must ensure that you use appropriate people to witness a Will signing. Whether you use Will writing solicitors to make sure everything is carried out correctly or not, it is advisable that you do not call upon any of the below people to witness a Will signing.

  • A family member or spouse
  • A beneficiary of the Will
  • A person under the age of 18
  • A person who is partially signed or blind
  • The spouse/s of any of the beneficiaries
  • A person who does not have sufficient mental capacity to understand what they are witnessing

If you fail to observe the correct guidance around who can and cannot sign a Will, it could lead to issues with the execution of your Will should you pass.

To find out the cost of a Will through a solicitor or get advice regarding any aspect of Will writing services, please contact a member of our team to get further advice.

OGR Stock Denton – Will Writing Solicitors in London

If you’re looking for the best local solicitors for making a Will, we believe we have everything you need and offer expert guidance over the phone or via video conference. As a trusted and established Will writing solicitors, we provide value for money and IHT specialist advice to help with all aspects of your estate and IHT planning needs.

The cost of a Will through a solicitor could be lower than you think, and in doing so, you can rest assured that all matters are being handled professionally and shall be fully guided by the current laws and legislations.  As North London Probate Solicitors, we understand everything needed to fully prepare a Will, and we offer value throughout the entire process.

Call us today for an initial discussion about our Will writing services, and a member of our friendly team will be happy to answer your questions and set things in motion on your behalf.

If you would like to arrange a consultation or have questions about probate advice, please email me or speak with a team member directly on (0)20 8349 5500.