Using a Will Trust to protect a vulnerable loved one

Planning for your family’s future once you’ve gone can feel daunting. For those of you with a disabled child or grandchild, or other vulnerable loved one, this feeling may be amplified, not least because leaving a substantial inheritance could create all sorts of practical problems.

In particular, a loved one may not have the mental capacity to manage their own finances or live independently. You may also have concerns, regardless of their age, of exposing a loved one to a risk of exploitation — after all, a sizeable legacy could put them in an even more vulnerable position when it comes to opportunists. Equally, being bequeathed money or assets could impact their eligibility for means-tested benefits, leaving a loved one no better off.

By including a Trust in your Will, you can make financial provision for a disabled relative when you’re no longer around, safe in the knowledge that the money will be managed by Trustees for the benefit of that individual during their lifetime. In this way, your loved one will not be forced to look after their own finances, or be exposed to any risk of exploitation from unscrupulous characters, and nor will any inheritance affect their benefits.

What is a Will Trust?

A Will Trust is a legal arrangement, contained within a Last Will and Testament, that places any legacy left to a loved one in the hands of appointed Trustees. Upon your death, the Trustees will be tasked with managing that inheritance on behalf of the beneficiary, for example, by ensuring that your loved ones’ care needs are adequately met.

You can choose who to appoint as Trustees, including family members or even professionals. You can also leave a Letter of Wishes, setting out your preferences on how the Trust assets should be used, helping to guide the Trustees' decisions once the Will Trust comes into effect.

What are the risks of not having a Will Trust?

For some of us, the idea of putting in place a formal trust arrangement to financially protect a vulnerable loved one may seem wholly unnecessary, especially where there are, for example, siblings of a disabled child or grandchild that can be entrusted with their legacy. However, this is a risky strategy, even if you implicitly trust a surviving relative to honour your dying wishes. This is because an outright gift to another family member means that this legally belongs to them, where unforeseen circumstances may arise, such as debts, divorce or death.

For instance, if you have two adult daughters — one with a mental disability and one without — you may choose to leave your entire estate to the mentally able daughter, provided they promise to use half of that inheritance to financially support their sister. However, if the daughter without the disability accumulates debts or gets divorced, this will expose everything she owns, including the money intended for your disabled daughter, to creditors and divorce proceedings. If that daughter then dies a few years later, her estate may be distributed equally between her children, leaving your disabled daughter with nothing.

Why is a Will Trust beneficial?

A Will Trust offers a number of benefits for the parents or grandparents of disabled children, or those otherwise looking to make provision for a vulnerable loved one, including:

•   the beneficiary will be able to benefit from the assets at the Trustees' discretion, without having to personally manage their own finances

•   the beneficiary won’t own the assets contained within the Trust, so they cannot be coerced into using the money for other purposes and it won’t affect their means-tested benefits

•   the Trust assets aren’t owned by anyone else in a personal capacity, so cannot form part of a person’s estate for the purposes of debt, divorce or death.

A Will Trust can be used to effectively ring-fence the inheritance earmarked for a vulnerable loved one. However, specialist advice advice should always be sought, ensuring that any trust mechanism contained within your Will is tailored to your family’s needs after you’re gone.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Making a gift and minimising inheritance tax

Gifting money, property or possessions to a loved one during your lifetime can be such a great feeling, although the joy of giving can feel even greater when you also factor in the potential tax benefits on death. In fact, lifetime gifts can be one of the best ways to minimise the amount of inheritance tax that your estate will be liable to pay when you die. But what are the exemptions when it comes to lifetime gifts, and how can you make the most of any tax relief?

What are the inheritance tax rules relating to gifts?

Some lifetime gifts are automatically exempt from inheritance tax, whereas others are known as potentially exempt transfers (PETs) to which a 7-year rule applies.

Gifts that won't count towards the value of your estate include an annual exemption of up to £3,000 during every tax year, as well as the small gift exemption, where you can make an unlimited number of small gifts of up to £250 per person. Wedding or civil ceremony gifts, and payments toward the living costs of a child or elderly relative may also be exempt.

In contrast, PETs are gifts that are not automatically exempt under the rules, but will not be chargeable to inheritance tax if you survive for a period of more than 7 years from when the gift was made. This means that if a gift is made more than 7 years prior to the date of death, regardless of the nature or size of the gift, no inheritance tax will be payable. Accordingly, once you’ve given someone a gift, the inheritance tax clock will start to tick.

In most lifetime gift scenarios, this essentially means that you’ll have to survive for 7 years or more before your gift becomes 100% inheritance tax-free, although taper relief may still be available where the total value of any gifts made within the 7-year period prior to death exceeds the relevant tax-free threshold. Under the taper relief rules, inheritance tax is payable on a sliding scale, from the full rate of 40% for gifts made less than 3 years prior to the date of death, decreasing to as little as 8% for gifts made within 6-7 years.

How can the tax relief from lifetime gifts be maximised?

There are various ways in which the relief from inheritance tax can be maximised. In particular, giving someone a gift early in your lifetime increases the likelihood of you surviving for 7 years thereafter, and that gift becoming inheritance tax-free. You’ll also have the pleasure of seeing a loved one benefit from your generosity during your lifetime.

To understand more about the ways in which you can maximise the relief applicable to lifetime gifts, in this way minimising the inheritance payable by your estate, expert advice should be sought as soon as possible. The sooner you start to plan ahead, and make lifetime gifts, the faster the inheritance tax clock will start to tick in your favour.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

BSG Raise £2500 in Honour of Andie Brown

BSG Solicitors have raised £2,500 for St John’s Hospice in honour of their late Partner Andie Brown, who sadly passed away in 2021. 

Andie would have been 55 on 1st March and as she was always the life and soul of the party, so the firm organised a bake sale at their offices to mark her birthday with all manner of delicious treats produced by staff and friends of the firm. Their aim was to raise money for St John’s Hospice who took such good care of Andie. The bake sale was so well supported it lasted a whole week, just the kind of party Andie loved. Scott & Wilkinson accountants based in Lancaster also supported the fundraising by running their own bake sale at their offices.

Rebecca Lauder, Partner at BSG Solicitors commented: “We’d like to say a huge thank you to everyone who contributed to the bake sale, those who baked and the many friends, family and local businesses who donated. As a firm we are devastated to have lost Andie who was more like a 'work mum' or sister to all of us. Since Andie’s passing the volume of messages we have received from previous clients has reflected the huge and positive impact she had on the lives of many people.”

It costs over £5.1 million a year to run the hospice with around a third of this amount provided by local NHS funding. The remaining two thirds must be raised through events, community donations, grants and legacies.

Stuart Nelson, relationship manager at St John’s Hospice added: “This is a wonderful gesture on behalf of Andie and we would like to thank all who helped. We are reliant on the support of the many wonderful businesses in Lancashire and South Cumbria who run events in support of the hospice. BSG Solicitors have been involved with our fundraising activity over many years and we look forward to continuing our relationship in the future.”

Using a Will Trust to protect a vulnerable loved one

Planning for your family’s future once you’ve gone can feel daunting. For those of you with a disabled child or grandchild, or other vulnerable loved one, this feeling may be amplified, not least because leaving a substantial inheritance could create all sorts of practical problems.

In particular, a loved one may not have the mental capacity to manage their own finances or live independently. You may also have concerns, regardless of their age, of exposing a loved one to a risk of exploitation — after all, a sizeable legacy could put them in an even more vulnerable position when it comes to opportunists. Equally, being bequeathed money or assets could impact their eligibility for means-tested benefits, leaving a loved one no better off.

By including a Trust in your Will, you can make financial provision for a disabled relative when you’re no longer around, safe in the knowledge that the money will be managed by Trustees for the benefit of that individual during their lifetime. In this way, your loved one will not be forced to look after their own finances, or be exposed to any risk of exploitation from unscrupulous characters, and nor will any inheritance affect their benefits.

What is a Will Trust?

A Will Trust is a legal arrangement, contained within a Last Will and Testament, that places any legacy left to a loved one in the hands of appointed Trustees. Upon your death, the Trustees will be tasked with managing that inheritance on behalf of the beneficiary, for example, by ensuring that your loved ones’ care needs are adequately met.

You can choose who to appoint as Trustees, including family members or even professionals. You can also leave a Letter of Wishes, setting out your preferences on how the Trust assets should be used, helping to guide the Trustees' decisions once the Will Trust comes into effect.

What are the risks of not having a Will Trust?

For some of us, the idea of putting in place a formal trust arrangement to financially protect a vulnerable loved one may seem wholly unnecessary, especially where there are, for example, siblings of a disabled child or grandchild that can be entrusted with their legacy. However, this is a risky strategy, even if you implicitly trust a surviving relative to honour your dying wishes. This is because an outright gift to another family member means that this legally belongs to them, where unforeseen circumstances may arise, such as debts, divorce or death.

For instance, if you have two adult daughters — one with a mental disability and one without — you may choose to leave your entire estate to the mentally able daughter, provided they promise to use half of that inheritance to financially support their sister. However, if the daughter without the disability accumulates debts or gets divorced, this will expose everything she owns, including the money intended for your disabled daughter, to creditors and divorce proceedings. If that daughter then dies a few years later, her estate may be distributed equally between her children, leaving your disabled daughter with nothing.

Why is a Will Trust beneficial?

A Will Trust offers a number of benefits for the parents or grandparents of disabled children, or those otherwise looking to make provision for a vulnerable loved one, including:

•   the beneficiary will be able to benefit from the assets at the Trustees' discretion, without having to personally manage their own finances

•   the beneficiary won’t own the assets contained within the Trust, so they cannot be coerced into using the money for other purposes and it won’t affect their means-tested benefits

•   the Trust assets aren’t owned by anyone else in a personal capacity, so cannot form part of a person’s estate for the purposes of debt, divorce or death.

A Will Trust can be used to effectively ring-fence the inheritance earmarked for a vulnerable loved one. However, specialist advice advice should always be sought, ensuring that any trust mechanism contained within your Will is tailored to your family’s needs after you’re gone.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Does living abroad stop you from getting a UK divorce?

If your marital relationship has permanently broken down, you may be looking to apply for divorce to enable you to move on with your life — but what happens if you’re living overseas?

Can I get a UK divorce if I live abroad?

The simple answer to this question is “yes”, you can get divorced in the UK, even if you currently live overseas. That said, there are certain statutory requirements that must be met to be able to demonstrate that a court in England and Wales has jurisdiction to entertain proceedings for divorce. There are different rules applicable for Scotland.

Below we look at the basis of these jurisdictional requirements, as set out under section 5(2) of the Domicile and Matrimonial Proceedings Act 1973. However, this is a complex area of law, where expert advice should always be sought from a family law specialist.

What are the jurisdictional requirements?

In order to establish jurisdiction to get divorced in England or Wales, one of the following criteria must apply on the date of application:

•   Both you and your ex are habitually resident in England and Wales

•   Both you and your ex were last habitually resident in England and Wales, and one of you continues to live there

•   The person receiving the petition is habitually resident in England and Wales

•   The person issuing the petition is habitually resident in England and Wales, and has resided there for at least the last 12 months

•   The person issuing the petition is domiciled and habitually resident in England and Wales, and has resided there for at least 6 months

•   Both you and your ex, or either of you, are domiciled in England and Wales.

Habitually resident means that you have established a fixed stable base in the country, and you usually live there or spend most of your time there and your life is centred there.

Domicile is acquired at birth, and is essentially the place where you have, or consider to have, your permanent home, even if you’re not currently living there. This means that you can be domiciled in a different country from the one in which you’re residing, for example, you can be resident in Europe but still domiciled in the UK. However, you can only have one domicile at any given time, where moving to a new country in the long-term, whilst severing all ties with your domicile of origin, may mean that you’ve acquired a new domicile overseas.

Should I get divorced in England and Wales?

Divorce laws differ around the world, where the financial outcome in some countries may be more likely to favour either you or your ex, depending on your circumstances.

In addition to the types of financial orders that the court is likely to make, the country in which you divorce can also have a significant impact on other important factors, such as the costs involved, the length of time it takes to get divorced, any arrangements for children, and how easy it is to enforce orders made by the court.

It can therefore be best to seek legal advice at the earliest possible opportunity, in this way allowing you to explore the benefits and drawbacks of your jurisdictional options, not least before your ex issues proceedings first. Becoming embroiled in a forum dispute can be costly and time-consuming, which is highly unlikely to be in anyone’s best interests.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

BSG Win National Conveyancing Award

On 15th March, BSG Solicitors was crowned Boutique Conveyancing firm of the year at the British Conveyancing Awards 2022, at a ceremony held at Church House in London, and hosted by journalist Samira Ahmed.

The awards celebrated professionals from all aspects of the conveyancing process, including law firms, search providers, risk management specialists, and more. The judges praised BSG for demonstrating broad technical expertise and a commitment to training staff for long term development and progression within the firm.

Pippa Weld-Blundell, Partner and Head of Residential Property commented:

“We’re still in shock at winning, given these are national awards and we were up against some tough competition from around the country. This was an ideal award for our firm as we always offer a highly personal service to our property clients across Lancashire and Cumbria.

We’d like to thank our team for their hard work, and for consistently delivering an outstanding level of service.

Unfortunately we couldn’t attend the event in London, but were able to watch live via the online stream, and then celebrate with a glass of bubbly!”

David Opie, Managing Director at Today’s Media who run British Conveyancing Awards added:

“Congratulations to BSG Solicitors on winning this award. The category had a high number of entries from a wide range of firms so this is a great achievement. The awards proved to be a huge success once again and we look forward to returning next year.”

BSG Solicitors Shortlisted for British Conveyancing Award

Lancashire law firm BSG Solicitors has been shortlisted at the British Conveyancing Awards in the ‘Boutique Firm of the Year’ category.

The awards highlight achievement and recognise the success of those in the residential property sector. The 2022 Awards will see journalist Samira Ahmed return as host of a hybrid event with the in-person ceremony at Church House in London simultaneously live streamed via The British Conveyancing Awards website from 4pm on 15th March 2022.

Pippa Weld-Blundell, Partner at BSG Solicitors commented:

“I am delighted that we have been shortlisted for this national award. This is a new category for the British Conveyancing Awards and one that really suited our firm. The service we provide is very much ‘boutique’. We take a very personal approach and pride ourselves on the service we provide to clients from both our Lancaster and Preston offices. Fingers crossed for the ceremony!”

David Opie, Managing Director at Today’s Media, the publishers of Today’s Conveyancer and organisers of the awards, added:

“The shortlist is testament to the incredible work of individuals, firms and all those who support home movers up and down the country. We’re delighted to be able to showcase the cream of the conveyancing crop through these awards.”

Using a Lasting Power of Attorney to safeguard your business

In a world where the unimaginable can and does happen — where sudden illness or injury can leave any one of us mentally incapable of dealing with our own affairs on either a temporary or permanent basis— a Lasting Power of Attorney (LPA) can provide you with the peace of mind that your financial interests will be adequately protected if the worst happens.

For many of us, this will be a case of appointing someone we trust, a family member or close friend, to deal with our property and personal finances. However, for those responsible for running a business — operating as either a sole trader, or via a limited company or partnership — an LPA can help to safeguard the survival and success of that business.

What is an LPA and how does this work?

An LPA is where an individual, described as the donor, appoints an attorney, or more than one attorney, to manage any pressing financial affairs on their behalf in the event that the donor is unable to make decisions for themselves, whether this be in the short or long-term.

Commonly, spouses or civil partners, or cohabiting partners, will appoint each other to act in the other’s interests should either one of them become incapable of making decisions due to mental incapacity. However, LPAs are also commonplace when it comes to risk management in the context of a business, providing a financial lifeline in cases of long-term incapacity or, alternatively, protecting the livelihood of the donor during any short-term incapacity.

However, as a business owner, it’s vital that you carefully consider which individual(s) you’d entrust with decisions about your business. In some cases, this may not necessarily be your other half, not least if they lack the know-how to handle these types of decisions. Luckily, it’s entirely possible, and advisable, to consider making two LPAs with different attorneys: one for financial decisions in relation to your business, and the other to cover your personal affairs.

What are the risks of not having an LPA in place?

The making of an LPA should form part of any crisis management plan to help minimise the risks to your business in the event of critical illness. The risks of not having an attorney appointed under an LPA can be many and varied, from being unable to access business accounts, causing problems with cash flow, to incomplete contracts and disgruntled clients.

Even if you already have an LPA in place, but the intention behind this was for your attorney(s) to solely deal with your personal finances, rather than any business matters, you should act immediately. This is because any current appointed attorneys, in the event of your incapacity, would have the legal authority to make business decisions on your behalf.

By putting in place a separate LPA, specifically designed to deal with the survival and success of your business, this will help to guarantee a financial lifeline and/or livelihood to return to. By securing expert legal advice from an LPA specialist, this can also help to guarantee that the needs of both your business and your personal affairs are adequately met where needed.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

With Inheritance Act claims, is it really worth making a Will?

The potential for a posthumous dispute over a Will can seem disconcerting for anyone who has taken the time to carefully consider, and have committed to writing, what they’d like to bequeath to those that they leave behind.

The question is, therefore, is it really worth making a Last Will and Testament?

What are Inheritance Act claims?

When insufficient or no financial provision has been made for a particular individual under the terms of a Last Will and Testament, that person may be able to make a claim against the deceased’s estate. This is known as an Inheritance Act claim, or more accurately a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

The 1975 Act gives the court a relatively wide discretion, within certain legislative parameters, to vary the distribution of the deceased’s estate so as to make financial provision — such as a single lump sum, regular payments or transfer of property — for relatives and dependants.

Those eligible to make a claim under the Act include the deceased’s spouse or civil partner, or former spouse or civil partner, provided they’ve not remarried or entered into a subsequent civil partnership; anyone cohabiting with the deceased for a period of at least two years prior to the date of their death; any child of the deceased, including adult children; anyone treated as a child by the deceased during their lifetime, including adopted or stepchildren; and anyone else who was financially dependent on the deceased immediately before they died.

The court can make an order where it's satisfied that reasonable financial provision has not been made under the Will. A spouse or civil partner will usually be entitled to such financial provision as is deemed reasonable in all of the circumstances, regardless of whether or not that provision is actually required for their maintenance, whilst other family members or dependants will be entitled to such reasonable financial provision as is deemed necessary.

Is it still worth making a Will?

The legal starting point is that you can leave your worldly assets to whomever you choose, although the 1975 Act provides a safety net for eligible claimants who can show that they require more financial provision than they’re entitled to receive under the terms of any Will.

That said, Inheritance Act claims are not clear cut, where much will depend on the nature of the relationship between the claimant and deceased during their lifetime. The court will also take into account, for example, the financial resources and needs of the claimant, and of any beneficiaries, and the size and nature of the deceased’s estate. The court can even have regard to the claimant’s conduct. This essentially means that a claim will not automatically succeed.

In short, the possibility of a claim, which must usually be brought within just six months of the grant of probate, combined with the hurdles that a claimant must clear to persuade a court to grant their demands, should not deter you from making a Will. In the majority of cases, family members and dependants will accept a testator's final wishes without protest.

It’s also worth bearing in mind that by failing to leave a Will, under the strict rules of intestacy, those that you would want to benefit from your estate may be left with absolutely nothing — leaving them with the overwhelming burden of bringing an Inheritance Act claim.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

The benefits of buying a new build

Buying a new build not only means you will benefit from a brand new home to live in, it can also provide you with significant financial and practical benefits when compared with buying an older or resale residential property. Below we highlight some of the advantages of buying a newly-built home, whilst flagging up the potential pitfalls that might arise along the way.

The benefits of buying new

When buying a new build, you may be eligible for financial assistance in the form of a low cost loan through the Help to Buy: Equity Loan scheme. This is a government scheme designed to help over 18s in England buy a new property with just a small deposit. The new scheme will run until March 2023 and, as with the previous scheme, the government will lend homebuyers up to 20%, or 40% in London, of the cost of a newly-built home with a registered homebuilder.

The government has also recently launched the First Homes scheme for local first-time buyers and key workers earning less than £80,000 per year, or £90,000 in London, albeit lower if set by the local authority. The scheme is designed to help those providing essential services or with local connections to get on the property ladder by offering residential properties discounted by at least 30% compared to market prices. With properties already on sale in the East Midlands from June 2021, further designated sites are now set to launch across England. 

Even if you’re not eligible under one of these government schemes, very often developers will provide potential purchasers of a new build with attractive financial incentives, from paying any stamp duty or legal fees due to giving you the option to select certain design and decor aspects for your new home — typically including a warranty to protect you against any defects in respect of the entire build that may later come to light after you’ve moved in.

For existing homeowners, the developer may even offer a part-exchange on your current property. Even though you may get less than you would if you were to sell your house on the open market, by partly funding your new home with the proceeds of a part-exchange deal this can make the process far simpler and less stressful — not least because this will facilitate exchange and completion of both properties, removing the risk of your buyer pulling out.

The drawbacks of buying new

Although the advantages of buying a new build can be tempting, there are also several drawbacks. Unless you buy a new home that is already built, this runs the risk of running into complications during the construction phase – from unavoidable delays due to poor weather, to the developer being unable to complete the build at all down to a lack of funding. Further, with off-plan properties, where you’ve seen the show-home and chosen a replica property, this doesn’t guarantee that yours will be completed either on time or to the same standard.

In most cases, you will be given the option to pull out of your purchase prior to completion, where any warranty should cover your deposit. This means that you will not lose your deposit if a major problem comes to light either during or post-construction. You will also usually be given the opportunity to complete a snagging list for more minor issues. Still, waiting for your home to be completed can be a stressful time, especially if you’re in a chain where the buyer of your existing property needs to exchange and complete by a certain date.

All that said, many of the potential pitfalls arising from buying a new build can be safely navigated with the help and advice of a specialist conveyancer — from helping make sense of the developer’s terms and conditions to the protection afforded to you under any warranty.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.