LEGAL ISSUES AND MAKING A WILL RHODD LLWYD HUMPHREYS 6TH JUNE 2013

1. LEGAL ISSUES AND MAKING A WILL RHODD LLWYD HUMPHREYS 6TH JUNE 2013 BBH Legal Services Limited Eastham Hall Eastham Village Wirral Cheshire CH62 0AF TEL NO: 0151 326 2340

2. INTRODUCTION • Today, three issues to consider: - • Making a will • Estate Planning to safeguard against care home fees and to mitigate any inheritance tax • Lasting Powers of Attorney

3. Making a Will • Why is it necessary to make a will? • If you die without a will, there are rules which dictate how the money, possessions should be allocated. The rules also limits the amount that certain people can receive on your death. • A Will gives you the opportunity to control your estate in terms of whom you would like to benefit as well as how and when that benefit is transferred. • Unmarried partners and partners without a registered civil partnership cannot inherit from each other unless there is a will, so a death of one partner may create serious financial problems for the remaining partner.

4. If you have children, you will need to make a will so that arrangements for children can be made if either or both parents die. • It may be possible to reduce the amount of tax payable on the inheritance if advice is taken in advance and a will is made. • If your circumstances have changed – you may have separated and your ex-partner now lives with someone else. • If you re-marry or enter into a registered civil partnership your previous will may be invalid. • IF A SPECIFIC DIRECTION OR GIFT IS NOT CONTAINED WITHIN YOUR WILL, THEN IT IS NOT VAILD.

5. THINGS TO PUT IN YOUR WILL • Executors – these are the people who will be responsible for carrying out your wishes and sorting out your estate. You may wish to consider appointing more than one executor • Funeral wishes • Appointing guardians for your children • Monetary legacies? • Personal Possessions? E.g. jewellery • The residue of your estate

6. REQUIREMENTS FOR A VALID WILL • Made by a person over 18 years old or over. • Made voluntarily and without any pressure from another person. • Made by a person who is of sound mind. • In writing. • Signed by the person making the will in the presence of two witnesses who must then sign the will.

7. 2. ESTATE PLANNING • Reasons for estate planning is two fold – to reduce inheritance tax liability and to protect against long term care fees. • The Nil Rate Band (the amount before Inheritance Tax is due) is currently £325,000.00. • Inheritance Tax is payable at 40%. • There are rules which allow the surviving spouse to use their deceased’s spouses inheritance tax allowance ( H dies in 2010 – NRB £325,000.00 and leaves everything to wife. W dies in 2012 value of estate £630,000.00 – No Inheritance Tax payable as we are able to combine both tax allowances).

8. Discretionary Trusts • Flexible arrangements which will enable you to provide for one or more group of potential beneficiaries. • Due to the fact that a potential beneficiary only has a ’hope’ of receiving something from the trust, the individual cannot be classed as being beneficially entitled to the assets so they are protected against claims by possible creditors, ex-spouses and their position if they are in receipt of state benefits or long term care. • This type of trust can be incorporated into the body of your Will or by a separate trust deed during your lifetime.

9. PROPERTY PROTECTION TRUSTS • A 'Property Trust' is based around three basic elements: the basis on which you own your property, the Trust terms, and your Wills, which contain the Trust instrument. • The Property trust can only be created whilst both partners remain alive and the property must be owned as Tenants in Common. The Trust instrument is then included in both Wills but does not come into force until after the death of the first. • Upon the first death their share of the property, typically 50%, is placed into the Trust.

10. The surviving spouse, under the terms of the Trust, has the right to remain living in the property for the rest of their life. On the death of the second spouse the trust comes to an end and the property passes absolutely to the beneficiaries. • There are two types of Property Protection Trusts, these are a Life Interest Trust and a Right to Occupy Trust. If you decide to include a Property Protection Trust in your Wills you will need to decide which type of.

11. 3. LASTING POWERS OF ATTORNEY • Everyone owns some kind of asset, whether it is a small amount of savings in a bank account or a business empire. No one, not even your spouse or business partner has the automatic right to deal with your assets if you lose mental capacity. Most banks and Building Societies now require sight of an LPA, Deputyship Order or Enduring Power of Attorney (pre October 2007) before they will provide information let alone access to your account. • An LPA allows you to plan ahead to protect your assets by appointing someone of your choice now to act as your attorney. It is the only legal document you can now use to appoint someone to deal with your property and affairs (and health and welfare) under any circumstances, including loss of mental capacity.

12. Lasting power of attorney - Personal welfare • The "Lasting power of attorney - Personal welfare", deals with matters relating to your personal welfare, i.e. your social and health care needs. If in the future you lack the ability to look after your own personal welfare, this document will entitle your personal welfare attorney(s) to do the following types of things : • Deciding where you live. • Making day-to-day decisions, what you will eat or what clothes you will wear. • Making decisions about what medical care you will receive, including (if you agree to it in the LPA) whether or not you will receive life-sustaining treatment. • Deciding when and where you will go on holiday. • Deciding what social activities you might participate in.

13. Lasting power of attorney - Property and affairs • The "Lasting power of attorney - Property and affairs" deals with matters relating to your financial affairs. If someday you lack capacity to look after your own financial affairs, this document will entitle your property and affairs attorney(s) to do the following types of things: - • Opening, closing or operating bank accounts. • Claiming and receiving on your behalf, for example, all pensions, benefits, allowances, services, financial contributions, repayments, rebates. • Making all tax returns and adjusting and settling any claim for tax. • Paying your household expenses. • Buying, leasing, selling property. • Paying for private medical care and residential care costs.

14. Safeguards • It is very important that you trust the person(s) whom you appoint to act as your attorney(s). A lasting power of attorney is a very powerful document. However, you should be aware that there are a number of safeguards in place to help prevent abuse of the system by any of your attorney(s). These safeguards are the following: - • Your LPA must be registered. This registration process acts as a safeguard because certain people have the right to object to the registration. • You, the donor, or your attorneys have to give notice of intention to register your LPA, giving all the 'named persons' in your LPA the chance to object. • Your attorney(s) must follow the Code of Practice which provides guidance on the Mental Capacity Act 2005. If they do not, and neglect their duties toward you, they can be found guilty of a criminal offence, with possible imprisonment. • If any evidence is presented to the Office of the Public Guardian of your attorney(s) not looking after your best interests, the Public Guardian will look into the matter and decide what action should be taken. • You have the option of placing restrictions in the LPA about what you want/do not want your attorneys to do.

15. ANY QUESTIONS? • For further details, please contact: - • Rhodd Humphreys on 0151 326 2161 or e-mail rhoddh@bbhlegal.co.uk • Roy Christian on 0151 326 2162 or e-mail royc@bbhlegal.co.uk