Wills, tax, trusts & probate

A dispatch on the “Dementia Tax”
14 December, 2017

In her manifesto for the 2017 general election, Theresa May set out proposals for reforming the care fee funding regime which sparked a backlash about the so called “Dementia Tax” that, arguably, cost her a majority.

Stung by the reaction, the government has not pursued the proposals but instead promised a consultation. Whatever happens, the problem of funding social care needs to be addressed. A recent “Dispatches” programme highlighted the issues and is available to view on All4 until 20 December.

So what is the “Dementia Tax” and can it be avoided?

Eligibility for financial assistance from the state is currently means-tested. People with assets worth over £23,250 have to pay in full for their care. The value of a person’s home is taken into account when a person is living in a residential care home, but not when receiving care in their own home and this is what the Conservatives proposed to change.

Many people are forced to sell their homes in order to pay for their residential care costs using up assets which might otherwise have been left to their families.

You will come across companies (some of which feature in the Dispatches investigation) who will claim confidently, for a hefty fee, to help you avoid paying for any of your care by placing all of your assets in trust during your lifetime. As with most things in life, if it sounds too good to be true, it usually is. Trusts can be helpful in specific circumstances but often this planning is seen as a “deliberate deprivation of assets” which stops the planning from working for care fees.

The best way to avoid the pitfalls of the funding regime is to take specialist advice on your rights and options including when the value of your property should be disregarded, the possibility of obtaining NHS continuing care funding and the how Wills can be updated to protect assets if a surviving partner requires care. If you do have to pay for your care fees then expert financial advice is invaluable to boost your income in order to slow down the depletion of savings.

If you would like more information, Stephen can be contacted on 01892 506 341 or email stephen.horscroft@cripps.co.uk.


Death in the Brexit fog…
4 December, 2017

….. and what a fog!  For every question asked about Brexit there is no certain answer.  Will there be a trade deal?  Will London keep its financial dominance?  Will there be Customs Points between Northern Ireland and Eire?  Endless questions and no certainty anywhere.

 

Actually, not quite true.  There is certainty in one area. Where?  Brussels IV, of course.  This is the snappy term for new cross border succession rules on death brought in by the EU in August 2015.  Of course, the new rules have many complex parts but for Brits they are a great help. 

 

Until recently if, as a UK National, you owned a cottage in Brittany, then you could not always be sure that it would be inherited on your death by those you chose in your will.  So, if you had children from a previous marriage and left your French property to your new partner, Monique, under French law your children could override your wishes and claim a share in the property; which could prove quite tough on Monique. 

 

No more.  Under the new rules your can now apply UK succession law in your will or by separate declaration; and our law (other than one or two Scottish exceptions) has no forced heirship.  You can leave whatever you like to whoever you like.

 

Make sure you review your will if you have assets in any EU country other than Denmark or Eire, who have opted out of the new rules along, of course, with the UK.  Make sure your will applies UK law and, subject to specialist advice if necessary, consider making a separate will in the relevant EU country itself.

 

Obviously then the UK’s opting out of the new rules does not affect a UK National’s right to apply UK succession law in an EU country.  Americans, Australians, Canadians and any non-EU person can do the same. 

 

However, things can get a bit tricky the other way round.  Frenchman Pierre owns a London flat.  If he tries to apply French law in his will to the flat the outcome could get complex, because of the UK’s non-participation in the new rules; no space here to go into that!

 

What happens after Brexit?  No change at all.  The European Commission have even put out a recent citizen’s guide which effectively says so.  Link to guide dated 29 September 2017.

 

Nothing is more certain in life than death and taxes, Benjamin Franklin once said in so many words.  We have no idea how Brexit will affect our taxes.  Another uncertain answer in the Brexit fog.  But at least we are clear about death.  No change.

 


Let there be light!
4 December, 2017

Welcome to our new blog.

 

As a team dedicated to shining a light on complex probate, estate and tax matters, as well as the creation and administration of trust structures, we are launching a blog to share our knowledge and experience.

 

We will be blogging tips, guidance and updates which we hope will be useful for those interested in inheritance tax planning, as well as the administration of trusts and estates. Members of the team will be covering topical news and tips for individuals, including whether or not the proposed increase in probate fees is still a possibility, the new Residence Nil Rate Band; Powers of Attorney; Court of Protection issues and much more!

 

We hope you will enjoy reading our blog and that you will find the posts informative and interesting. Please do get in touch if you have any feedback, would like any further information or have suggestions for topics of interest.


Top rankings for Cripps’ private client team
4 December, 2017
by: Cripps

We are very proud that our team has received excellent comments and rankings in the Chambers High Net Worth 2017 Guide, the Chambers Guide 2018, and the Legal 500 2017.

 

Chambers UK Guide 2018 – ranked 2nd UK-Wide

Having been ranked in the top tier in Kent by Chambers UK Guide for more than 10 years, we are thrilled that the private client team has also been ranked in the 2nd band UK-wide for the first time.

 

 

Legal 500 2017 – ranked 1st in the South East

In the Legal 500,  we are ranked 1st in the South East for our personal tax, trust and probate work.  We are delighted with some of the comments which include: the team ‘manages to combine being a commercial outfit while still delivering a very personal and individual service’. Anne Lewis was particularly pleased to be described by an interviewee as having ‘wisdom, experience and business acumen of a very high standard’. Managing associate Stephen Horscroft was described as ‘professional, reassuring and approachable’; partners Kate ArnoldJessica Jamieson, and Chris Wilkinson are also recommended.

 

Chambers HNW Guide 2017 – ranked top in Kent

The Chambers Guide reports that the team has a ‘very good reputation’ for its private client practice; with one interviewee stating they were ‘very, very impressed with the firm’, and another describing the team as ‘innovative, forward looking and flexible.’ Simon Leney is ‘a very well-respected individual’, with Chambers saying he ‘enjoys an excellent reputation among his peers for his advisory practice’.

Thank you to all of our clients and contacts who have contributed to these guides!


What is the Residence Nil Rate Band?
4 December, 2017

From 6 April 2017 a new Residence Nil Rate Band (RNRB) was made available meaning that the first £100,000 of a residence’s value (rising by £25,000 every year to £175,000 by 2020) is exempt from inheritance tax if the residence passes to a direct descendant (children, grandchildren etc). 

 

The following conditions must be satisfied to claim the RNRB:

  • You die on or after 6 April 2017; and
  • You leave an estate valued at less than £2million (to be increased in line with inflation from 2021); and
  • You leave a residence (not necessarily your home) to direct descendants

 

Any unused portion of the RNRB can be transferred to a surviving spouse, provided the surviving spouse leaves their property to a direct descendant. This is available even if the first spouse died before 6 April 2017, as long as the surviving spouse dies after 6 April 2017.

 

What does the RNRB mean for you?

The RNRB will result in many people paying less or no inheritance tax. For example, for the tax year 2017-2018, a married couple making use of the full transferable nil rate band and RNRB will be able to pass £850,000 free of inheritance tax (if they meet the conditions). This will rise to £1million by 2020-2021. 

 

Do you need to do anything to claim the RNRB?

For many people, their executors will automatically be able to claim the benefit of the RNRB without difficulty. However, to ensure that your family receive the full benefit of the RNRB, it is advisable to review your Will. This is particularly important where you have, or are considering:

 

  • Leaving some of your estate to someone other than a direct descendant
  • Leaving your estate to a direct descendant subject to an age contingency g. to grandchildren so long as they reach 25
  • Placing all or part of your estate into a discretionary trust which includes direct descendants as beneficiaries

 

For further information about the RNRB, or to arrange a review, please contact Anne Lewis, a partner in the private client team at Cripps on 01892 506 356 or email her at anne.lewis@cripps.co.uk.