Wills, Trusts & Probate - Recent News

For further help or information regarding the articles below, please contact Gary De’Ath or Sarah Lee

ELDERLY CARE vs. FAMILY INHERITANCE?

We frequently meet clients who are concerned about the prospect of spending all their savings on paying for care in their old age, leaving little or no inheritance for their families. Even though leaving an inheritance may not be a priority, questions of how they are to fund their care without being a burden on their family, but whilst maintaining their independence, need to be answered.

Making a decision to move into a care home is difficult. Statistically, one in three women and one in four men will require some form of long term care. The average cost of care in a residential home is about £25,000 per year, whilst the annual fees for nursing home care average about £35,000.

If a local authority agrees that care is required, they will assess the physical needs of the individual to determine the type of care that is appropriate. The ability to pay for that care is then assessed to establish the contributions that the individual will be liable for. This is based on a means test and it is rare that there is no contribution to pay. The State will only pay for the very poorest people.

If there is a shortfall of funds to pay for the care, this must be met from assets. Options to meet fees currently include renting or selling the home, cash deposits, purchase of an impaired life annuity, constructing an investment portfolio, pre-funding, regular premium contracts and the purchase of a deferred annuity. Specialist advice is essential before taking steps to follow any of these options.

It seems there is no end to the extent to which local authorities can access assets. Even though the Government recently published a Green Paper proposing several funding options, the position remains uncertain. It is clear that the State cannot afford to bear the nation’s care costs, making it increasingly important for our expanding ageing population to seek expert legal and financial advice.

We can rarely offer quick fixes or easy solutions. However, we are happy to discuss what best suits your needs and circumstances. If you would like to do this, please contact:

Sarah Lee sl@gross.REMOVE-THIS-BARRIER-BEFORE-SENDING.co.uk

MUST MY CHILDREN INHERIT?

Under English Law, a testator is free to leave by Will his or her estate to whomever he or she pleases, including leaving everything to charity.

In a recent case, an elderly mother left her estate of £500,000 jointly between two charities. She was widowed, and had one daughter, who she had rarely seen since her daughter left home at 17. Her daughter had known for some time that she had been excluded from her mother’s Will. However, when her mother died she made a claim against the estate.

Under the Inheritance (Provision for Family and Dependants) Act 1975, a dependent of the deceased can make a claim for a provision out the estate, on the ground that the testator did not make a reasonable financial provision for the applicant. When deciding whether to make a provision for the applicant, the Court must follow guidelines, which include:

The daughter, who was in her early forties, was married with five children, lived in a Council house and had lived on benefits for most of her life. The Judge awarded the daughter £50,000.

The daughter wanted more, and appealed the decision of the Judge. The Charities also appealed on the basis that there should have been no award made to the daughter.

On appeal, the Judge decided that the fact that the daughter was in a difficult financial position was only one of the factors to be considered. The fact that the mother had made a conscious decision to disinherit her daughter, and that the daughter knew of this, was also important. The Appeal Judge decided that the first Judge was wrong in awarding the daughter anything out of the estate.

This does not mean that it is impossible for a disgruntled child, or other dependent to make a case against an estate if they have been excluded from a Will. However, if a testator has a clear intention to disinherit someone, their wishes will carry great weight.

This case illustrates that to ensure that your wishes are carried out, it is extremely important to make a clear and comprehensive Will. Please feel free to contact us to make a no obligation free initial meeting to discuss your wishes.

COURT OF PROTECTION vs. LASTING POWERS OF ATTORNEY

Press headlines have highlighted flaws in the workings of the so-called “secretive” Court of Protection system designed to look after the affairs of vulnerable people.

Why involve the Court of Protection?

Occasionally, the onset of mentally incapacitating illnesses means that people cannot look after their own financial or healthcare affairs. When this happens, an application to appoint a family member or some other person as their Deputy is made. The Court of Protection Order authorises the Deputy to make decisions about, and manage the affairs of a vulnerable person, ensuring that bills, care fees and other expenses can be paid on their behalf.

What is not always made clear is that Deputies can be asked to place significant sums of money in a special account that is run by the Court. This makes it necessary to apply to the Court if large sums are required. Occasionally, a Court Order may also be necessary to authorise the sale of someone’s home, if they move to residential or nursing care.

Media coverage also highlighted the fees the Court levy, the time it takes to obtain authority to manage finances and the need to apply for funds from the special account. This can be several months in each case.

How to avoid involving the Court of Protection?

As long as someone has capacity, a Lasting Power of Attorney (“LPA”) can be the answer. There are two formats – one deals with property and financial affairs, the other health and welfare decisions. The choice of Attorney who acts on your behalf is yours and the law states that the Attorney must act in your best interests. It makes sense to appoint a trusted family member or close friend to make these important financial or health decisions. The Attorney, effectively, steps into your shoes to deal with the day to day issues that you can no longer cope with. Whilst useful in the event of an emergency or physical disability, an LPA can also be used after the onset of mental incapacity.

Although an LPA must be registered with the Office of the Public Guardian before it is valid, making one is far simpler than an application to the Court of Protection. Once in place, it may not be necessary to use the authority granted by the LPA immediately, but peace of mind that there is someone to help in the future is added protection for the management of your finances.

The answer is clear. To avoid the risk of not being able to choose who looks after your financial and personal affairs and the potential for Court of Protection delays and fees, making a Lasting Power of Attorney is the obvious route.

If you would like a more detailed chat about LPAs, please contact

Sarah Lee sl@gross.REMOVE-THIS-BARRIER-BEFORE-SENDING.co.uk

DYING WITHOUT HAVING MADE A WILL - NEW RULES ON INTESTACY

Where a person dies without having made a Will (intestacy) on or after the 1st of February 2009, the legacies payable to surviving spouses or civil partners are increased. The limits were last increased in 1993 and were regarded as well overdue for review.

Before the 1st of February 2009 where the deceased left a surviving spouse or civil partner and children, the amount of the legacy payable to the surviving spouse or civil partner is £125,000. On and from the 1st of February 2009, the legacy payable to the surviving spouse or civil partner is £250,000.

Before the 1st of February 2009 where the deceased leaves a surviving spouse or civil partner and parents or siblings but no children, the legacy payable to the surviving spouse or civil partner is £200,000. On and from the 1st of February 2009, the legacy is £450,000.

Whilst the legacies have been increased, the overall solution as to who benefits on intestacy is often far from satisfactory. Consider these examples:-

  1. If there are no available relatives, everything goes to the state. In a similar circumstance were a Will drawn, the deceased could, perhaps, have nominated a charity or charities.
  2. Where the deceased leaves a spouse or civil partner and children, the spouse/partner receives the personal chattels, £250,000 if the death occurred after 1 February 2009 and the right to receive the income of the capital of the remainder of the deceased’s estate. The other half of the deceased’s estate will be shared equally between the children (this includes illegitimate and adopted children but not step-children). When the surviving parent dies, the capital supporting their life interest also passes to the children.
  3. Where the deceased leaves a spouse or civil partner and relatives but no children, the spouse/partner receives the personal chattels, a legacy of £450,000 if the death occurs after 1st of February 2009 and one half of the remainder of the estate. The surviving relatives receive the other half of what is left according to a fixed priority list – for example, if the parents are still alive, they will receive but if they have died, the brothers and sisters or their descendants will receive the half share.

The advice we give to our clients is unchanged as a result of the new Rules: a Will should be made by anyone who has married and particularly an adult who has children, either within or outside of a marriage. Relying upon the Rules of Intestacy, may not give protection for those nearest and closest to you.