How to Put your Affairs in Order

Can't take it with you

Making a Will and the issues which doing so raises is a subject which does not normally attract much media attention. However, a BBC2 programme broadcast during January and February 2011 and the recent reporting of other cases have put the subject firmly to the fore.

This six-part BBC2 series entitled Can't take it with you, addresses in detail all aspects of making a Will. For programme details go to www.bbc.co.uk/programmes/b00xk532

"Thank you and your colleagues for all your help and kindness in dealing with the estate."

The first programme featured two couples both wrestling with uncomfortable dilemmas as to who should benefit from their estates. As a result of discussions with both a Solicitor and the presenter, all the parties eventually signed Wills that they were happy with. The programme illustrated that the role of a Solicitor need not be limited to an explanation of the law and any tax consequences, but may extend to discussing and resolving such difficult issues with the help of their training and experience in this field.

A recent case involved the RSPCA where a Will leaving the family farm to the Charity had been set aside in favour of the daughter of the surviving spouse. The Charity appealed but the Court of Appeal was satisfied that on the facts the surviving spouse's Will was not made with her knowledge and approval - so the existing decision stood.

In another case, the RSPCA decided to take to the Court of Appeal a case in which the wording of a Will was sufficiently unclear for the division of the estate between the Charity and other beneficiaries to be agreed. In this case, the Court of Appeal decided in favour of the Charity, reversing the decision of the Court of first instance, which ultimately meant that it received a greater share of the estate than the other beneficiaries and HMRC a lesser share. In other words, it was left to the Courts to decide the Testator's exact intentions and even they could not agree.

Finally, there were reports in the local press of a recent case in which the father of a family had died without leaving a Will. The resulting division of the estate under the intestacy rules resulted in the surviving members of the family taking legal action amongst themselves in order to arrive at a satisfactory division of the estate.

The Inheritance Tax rollercoaster

For a period starting in the summer of 2007 and culminating in the 2010 General Election Campaign the possibility of the individual Nil Rate Band being raised to £1,000,000 was a distinct one. If it had been, the vast majority of people would have been taken out of the Inheritance Tax net overnight. However, the formation of the new Coalition Government quickly put an end to any such thoughts with the new Government adopting the policy set by its predecessor in its final Budget. The Nil Rate Band would be frozen at its 2009/10 limit until 2014/15. It is worth noting that the amount of some of the other exemptions from Inheritance Tax, e.g. the annual and small gifts exemptions, have been frozen since it was introduced in 1986.

Different arguments can be made as to the effect this will have on the taxpayer. Property prices remain flat and the possibility of strong growth seems a distant one. However, some share and securities markets enjoyed double digit growth in the last calendar year. The likelihood is that between now and 2014/15 more rather than less people will be drawn into the Inheritance Tax net.

Lasting Powers of Attorney ("LPA")

It is now more than three years since the introduction of the two versions of the LPA, one replacing the existing Enduring Power of Attorney in respect of property and financial affairs and the other introducing an equivalent document to deal with health and welfare issues in the event of loss of mental capacity. The changeover was not seamless but after a prolonged period of adjustment the form of the documentation is now settled and the Office of the Public Guardian is processing applications more quickly than previously. Further, practitioners have had the chance to become familiar with the documentation which means that in general they are able to complete the process more quickly.

By making an LPA, the Donor appoints Attorneys who they want to look after their affairs should that become necessary and can impose restrictions on them if desirable. Once appointed, the Attorneys can act without delay. In the absence of an LPA, the same end can be achieved by an application to Court but at significantly greater expense and delay with the Court having a constant supervisory role in their affairs. More importantly, the Donor has no say over the identity of the person or persons who would look after his or her affairs.