Is a gift always a gift, or does it come with consequences?

When someone dies, a person's property and possessions, otherwise known as their estate, may become subject to inheritance tax (IHT). This is the tax payable on a deceased's estate where the value of that estate exceeds a certain threshold set by the government annually.

By making lifetime gifts to loved ones, it may be possible to reduce the amount of inheritance tax payable on death, in this way maximising how much you can pass on to your friends and family after you die. However, to be effective, where there are no inheritance tax consequences arising from making a gift, it must meet certain strict criteria. 

In broad terms, gifts fall into three categories: exempt transfers, potentially exempt transfers (or PETs), and chargeable lifetime transfers (or CLTs).

An exempt transfer is a gift that can be made at any time during your lifetime, whose value will be entirely ignored for the purposes of inheritance tax, even if you die shortly after making it. For example, this could include the £3,000 annual exemption that can be gifted to loved ones without this being added to the value of your estate. There are also various other low value exempt gifts that you can make without attracting any IHT. 

In contrast, potentially exempt transfers are gifts that will only become fully exempt from inheritance tax if you survive the date you made the gift by a period of 7 years. This is known as the 7-year rule. For a gift made between 3 to 7 years before your death, these will be taxed on a sliding scale known as taper relief. However, for gifts made less than 3 years between the date of the gift and death, these will be taxed at the full applicable IHT rate (currently set at 40% on the value of an estate exceeding the inheritance tax threshold of £325,000).

For those gifts falling within the chargeable lifetime transfer category, this may attract an immediate tax charge, with an additional charge should you then die within 7 years of the gift being made. A gift made into a discretionary trust may be treated as a chargeable transfer, although trusts can still prove to be useful tools as part of your overall tax planning, especially where there are minor beneficiaries.

The rules relating to gifts and the inheritance tax consequences that can flow from this can be complex. Even where something has a loss in value, it can be treated as a gift. For example, if you sold your house to an adult child for less than it is worth, the difference in value will count as a gift. There are also a number of other potential tax traps, or financial catches, that can arise when making a gift during your lifetime, including the following:

• reservation of benefit: where you gift an asset but continue to derive a benefit from it, like giving away your house but continuing to live there, you may be treated as still owning it for inheritance tax purposes, even if the gift was made more than 7 years before your death;

• deprivation of assets: where you gift an asset but subsequently require nursing care, you may be treated as still owning that asset for the purpose of the financial assessment undertaken by the local authority to determine your contribution to the cost of your care;

• capital gains tax liability: where you gift certain assets, such as shares or a second home, this may be treated as a disposal for capital gains tax purposes, where you may be liable to an immediate charge to tax if the asset's value has increased since it was acquired. 

It is important to always seek specialist legal advice when gifting money or giving away assets during your lifetime for the purposes of avoiding inheritance tax after you die. This can require careful estate planning and expert knowledge of the law.

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.

Vacancy Legal Assistant - Commercial Department

Primary responsibilities

To provide a high level of secretarial and administrative support to the Commercial Department.

 Main duties

• Preparation of legal correspondence and documents using digital dictation.

• File management. Ensuring that all files are up to date, including file opening, archiving and structure of paper files.

• Liaising with internal staff and external clients to arrange meetings and appointments.

• Undertaking all associated administrative tasks including diary management, legal billing.

• Any other duties commensurate with the job role as reasonably requested by your supervisor.

Department specific duties

• General understanding of Commercial practice and procedures.

• Carrying out searches.

• Dealing with pre-contract enquiries.

• Preparing contract documents.

• Exchanging contracts when required.

• Filing SDLT returns.

• Preparing completion statements and files for completion.

• Completing sales, purchases and re-mortgages.

• Registration of title at HM Land Registry.

• Assisting with the monitoring of compliance procedures within the Department.

Compliance

• You will be expected to be familiar and compliant with the full range of regulatory policies and procedures including: equality and diversity, data protection and confidentiality/security, anti-bribery and anti-money laundering etc.

• You will also be required to undertake mandatory compliance training as required.

Experience & Technical Skills

• Previous experience of working within a similar role is essential – the role will be predominantly dealing with Commercial matters but Residential Conveyancing knowledge is also required.

• Previous experience of a case management system.

• Previous experience of using digital dictation.

• Thorough knowledge of Microsoft Office – Outlook/Word/Excel/PowerPoint.

Personal Skills

• A team player, able to work on own initiative but as part of the team when appropriate.

• Must be well organised and methodical with excellent attention to detail and prioritisation skills.

• Will be able to prioritise a heavy typing workload whilst delivering a high level of administrative support.

• Effective communicator with the ability to problem solve, directing enquiries where appropriate.

• Confidential and discreet but able to re-direct information when appropriate to ensure areas of concern are resolved efficiently and effectively.

• Reliable and hardworking.

• Positive, helpful and enthusiastic.

• A proactive, professional and flexible approach to work, conscientious, takes personal responsibility for own work and is accountable for its delivery and quality.

• Commitment to continuous improvement of the practice.

Please note that this job description is not an exhaustive list of duties but merely an outline of some of the key components of the role. You may be required by your supervisor to take on additional responsibilities when requested.

To apply please email your CV and covering letter to acm@blackhurstbudd.co.uk

Vacancy: Legal Typist / Assistant - Residential Conveyancing Department

Primary responsibilities

To provide typing support to the Conveyancing Department.

Main duties

• Preparation of legal correspondence and documents using digital dictation.

Compliance

• You will be expected to be familiar and compliant with the full range of regulatory policies and procedures including: equality and diversity, data protection and confidentiality/security, anti-bribery and anti-money laundering etc.

• You will also be required to undertake mandatory compliance training as required.

Technical Skills

• Previous experience of a case management system.

• Previous experience of using digital dictation.

• Thorough knowledge of Microsoft Office – Outlook/Word/Excel/PowerPoint.

Personal Skills

• A team player, able to work on own initiative but as part of the team when appropriate.

• Must be well organised and methodical with excellent attention to detail and prioritisation skills.

• Will be able to prioritise a heavy typing workload whilst delivering a high level of administrative support.

• Effective communicator with the ability to problem solve, directing enquiries where appropriate.

• Confidential and discreet but able to re-direct information when appropriate to ensure areas of concern are resolved efficiently and effectively.

• Reliable and hardworking.

• Positive, helpful and enthusiastic.

• A proactive, professional and flexible approach to work, conscientious, takes personal responsibility for own work and is accountable for its delivery and quality.

• Commitment to continuous improvement of the practice.

Please note that this job description is not an exhaustive list of duties but merely an outline of some of the key components of the role. You may be required by your supervisor to take on additional responsibilities when requested.

To apply please send your CV and covering letter to acm@blackhurstbudd.co.uk

The pandemic break-up boom: how divorce rates are on the rise

The emotional and socio-economic stresses arising from the COVID-19 pandemic, especially with the disruption to daily routines, loss of face-to-face contact with friends and family, as well as the removal of external leisure activities, have led to many couples reassessing their domestic arrangements and deciding to go their separate ways. This, in turn, has recently led to a significant rise in divorce rates, both in the UK and globally.

With couples being forced to spend more time together due to lockdown and social distancing measures, this has magnified any differences and thereby acted as a catalyst for the failure of those relationships already on the brink of a break-up. Even for couples in previously healthy relationships, the pandemic has taken away the comfort and stability of well-established work and leisure routines, with limited opportunities to seek other forms of support, stimulation or release beyond their own partnership or immediate family unit.

That said, this is not a new phenomenon, where separations typically spike after families spend longer periods of time together, such as during the school holidays. However, lockdown has created enormous additional pressures, like the need for home-schooling and an increase in domestic workloads, not to mention the loss of employment or reduction in income from being furloughed. With these extra everyday and potentially long-term stresses, inevitably comes an increase in mental health issues, including anxiety and depression, and in some cases, an even greater incidence of domestic abuse, both physically and emotionally.

For many couples, where both individuals have felt unable to cope with their own personal problems, let alone what is going on between them and their partner, this has put a significant strain on their relationship, ultimately leading to permanent separation or divorce. For newly weds in particular, the stripped-back lifestyle and economic downturn created by the pandemic is also likely to represent the first major life challenge for a young married couple, where their relationship has not been previously tested. This will be a far cry from the wedded bliss they envisaged, and for many has signified a premature end to married life.

If you add into the equation the uncertainty as to when couples will be able to resume their pre-pandemic lifestyles, even with the promise of vaccines being quickly rolled out, there may be an even greater increase in divorce rates over the coming months. Indeed, the impact of the pandemic is likely to have long-term financial implications for many marriages. It is also possible that even an upturn in economic fortunes could result in a new wave of break-ups, where couples whose marriage has already suffered irreparable damage may be delaying getting divorced for practical and logistical reasons during the current tiered restrictions.

Given the enormity of the personal consequences caused by the pandemic, not least emotionally and psychologically, many couples are likely to have spent some considerable time scrutinising their lifestyle and relationship choices - from how they want to spend their time to whom they actually want or need in their lives. As such, as with the epidemic itself, the pandemic break-up boom may be far from over.

For advice on divorce or family matters please call 01253 629300 or email info@blackhurstbudd.co.uk

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 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 be sought.

Rules on Moving Home During Lockdown 3

• You can still move home. People outside your household or support bubble should not help with moving house unless absolutely necessary.

• Estate and letting agents and removals firms can continue to work. If you are looking to move, you can go to property viewings.

• Follow the national guidance on moving home safely, which includes advice on social distancing, letting fresh air in, and wearing a face covering.

For a no obligation conveyancing quote please call 01253 629300.

The ‘Do Not Resuscitate’ decision - who makes this?

With the recent pandemic, and the significant media coverage relating to coronavirus deaths, many of us have become more concerned about our future care, and that of our loved ones, especially if a difficult decision had to be made as to whether or not to resuscitate.

Understanding how the law works in relation to a ‘Do Not Resuscitate’ decision can help to provide us with some much needed peace of mind, and even allow us to make suitable provision in advance to ensure that, if the time came, our dying wishes would be honoured.

What is a ‘Do Not Resuscitate’ order?

A ‘Do Not Resuscitate’ order is an order not to attempt cardiopulmonary resuscitation, more commonly known as CPR. This is an emergency life-saving procedure, typically combining rescue breaths, chest compressions and even electric shocks, that can be carried out when someone has ceased breathing and their heart has stopped beating.

However, when someone’s breathing and heart stops because they are dying from an advanced and irreversible condition, vigorous physical intervention by way of CPR can actually deprive them and those close to them of a dignified death. For some patients this may prolong the process of dying and, in doing so, prolong or increase their suffering.  

As such, a ‘Do Not Attempt CPR’ (DNACPR) decision can be made and recorded in advance, to guide those present if a person subsequently suffers a cardiac arrest. 

Who makes a ‘Do Not Resuscitate' decision?

While you still have mental capacity as a patient, you can accept or refuse life-sustaining treatment in a number of different scenarios. For example, you might decide that you don’t want to be given antibiotics for a life-threatening infection if you’re suffering from terminal cancer.

It’s only when a patient loses mental capacity that decisions relating to medical treatment become more difficult. This means that if you lose the ability to make your own decisions, for example, you are unconscious or otherwise too poorly to participate in any discussion, unless you have clearly set out your wishes in advance, the decision as to whether or not to resuscitate will need to be made by the leading physician in charge of your care. 

In these circumstances, although advice will usually be sought from your next of kin as to what’s in your best interests, the final decision will ultimately lie with the healthcare professionals.

Can a ‘Do Not Resuscitate’ decision be made by family?

Your family cannot refuse life-sustaining treatment on your behalf, not unless you have specifically granted them this power by way of a Lasting Power of Attorney (LPA).

An LPA allows you to appoint an attorney, providing them with the power to make decisions about your health and welfare should you lose the capacity to make these decisions for yourself. It is up to you who you appoint, for example, a relative or close family friend. You can also appoint more than one person, where decisions about your daily care routine can be decided by one attorney, and the bigger decisions about life-sustaining treatment made jointly.

You can record your wishes while you are mentally well, so that any attorney acting on your behalf has some guidance on what decisions you would like to be made. You can also make an ‘Advance Decision to Refuse Treatment’ (ADRT), or a Living Will, in clearly defined circumstances. This will let your family, carers and health professionals know your wishes about refusing treatment if you're unable to make or communicate those decisions yourself.

This will be a legally binding decision that cannot usually be overridden by either your family or your physician.

For personal advice please call 01253 629300 or email info@blackhurstbudd.co.uk.

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 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 be sought.

Protecting your life assurance policy for your loved ones

A life assurance policy will often form an essential part of estate planning, where policy proceeds can be used to provide the necessary funds to see your loved ones through the estate administration process, until other money and assets can be released. It may also be sufficient to set them up financially for their future or, at the very least, maintain or improve their standard of living.

That said, where a life assurance policy has not been written into a trust prior to death, this will automatically be treated as part of your legal estate after you die. This means that the policy proceeds will not usually be made available until a grant of probate has been obtained, causing unnecessary delay in gaining access to these funds.

It also means that where the value of your estate exceeds the relevant threshold, the policy will be subject to inheritance tax in the same way as any other estate asset.

What estate planning steps should I take to protect my policy?

By using a trust mechanism for your life assurance policy, this will help to avoid going over the inheritance tax threshold and will allow your loved ones to bypass probate, at least in respect of this particular asset. Probate is the legal process of granting your personal representatives the authority to deal with your possessions. 

A trust essentially allows you to set aside an asset, in this case the proceeds of your policy, to benefit a specified person or people. These are known as the beneficiaries. By putting a policy into a trust you can control what happens to the payout from a policy in the event of your death, in some cases providing an immediate tax-free lump sum for your beneficiaries, depending on the type of trust used.

What types of trust can be used to protect my policy?

An absolute trust is ideal for where you would like to name a specific beneficiary or beneficiaries, such as your spouse and/or any children. This type of trust will give each named beneficiary an absolute entitlement to a fixed share of the proceeds on the death of the policyholder, in this way ensuring that the trust fund is paid directly to your loved ones rather than to your legal estate. This means that the money can be released without the grant of probate and will not usually be taken into account for inheritance tax purposes.

In other cases, especially where your children are under 18, you may prefer the flexibility of a discretionary trust. This will again allow you to name a number of beneficiaries, although none of them will have an absolute entitlement. Under a discretionary trust your trustees have a high level of discretion about which beneficiaries to pay and when, although you can provide them with a letter of wishes outlining your intentions as to how the trust should be administered.

The discretionary trust can be useful in the case of parents or grandparents who wish to benefit future generations, depending on the stage that each potential beneficiary has reached in their life when the policyholder passes away.

What advice should I seek when protecting my policy?

If you are considering putting a life assurance policy into trust, you must always seek advice from an independent legal advisor, as the practical aspects and advantages will vary depending on the type of policy and your situation.

It is also worth noting that in some cases there may be tax implications when putting a policy into trust, especially when using a discretionary trust mechanism, so it’s important to secure expert advice tailored to your particular circumstances.

For personal advice please call 01253 629300 or email info@blackhurstbudd.co.uk.

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 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 be sought.

Can I still move house?

As far as we currently understand the answer is yes, though we will of course continue to monitor the situation. Our conveyancing department will continue to progress existing matters and if you require a quote for a new move please click here to email our new business team or here for an instant online quote.

Robert Jenrick, Secretary of State for Housing, Communities and Local Government made this statement via Twitter:

“Yes – the housing market will remain open throughout this period. Everyone should continue to play their part in reducing the spread of the virus by following the current guidance.

• Renters and homeowners will be able to move

• Removal firms and estate agents can operate

• Construction sites can and should continue

• Tradespeople will be able to enter homes

But all must follow the Covid safety guidance”

Firm Becomes An Alternative Business Structure

Blackhurst Budd Solicitors has become an alternative business structure (ABS) to enable greater flexibility on ownership of the company as it looks to the future.

Historically law firms could only be owned and invested in by qualified Solicitors and external investment was not possible. In 2012 new rules came into effect, which enabled ‘Alternative Business Structures’ to be formed and these permitted investment by non-lawyers.

As of May 2020 there were 875 Alternative Business Structures in England and Wales and 10,300 law firms.

Warren Spencer, Managing Director commented:

“Converting to an Alternative Business Structure gives us an advantage when looking at future investment in the company. Previous rules meant that highly qualified members of staff such as Chartered Legal Executives or Licensed Conveyancers could never become shareholders.

The company will now have access to a larger pool of investment from external sources and the potential to offer a wider range of client services.”

The company now has five Directors including one non-lawyer.

Pictured right: Warren Spencer

When is a statutory will needed?

A will is an important document that, assuming we are of sound mind to make it and understand its implications, can be used to set out how our worldly belongings will be distributed after we die. But what if someone has money, possessions and property but they lack the mental capacity to make a will?

Below we look at how a statutory will can provide the loved ones of someone lacking testamentary capacity with a suitable way forward.

What is a statutory will?

A statutory will is a will that is overseen by the Court of Protection. This court has jurisdiction over the property, financial affairs and personal welfare of people who lack mental capacity to make decisions for themselves.

The Court of Protection has a number of duties towards a person lacking mental capacity, including a duty of care to make suitable provision for the fair distribution of that person’s assets once they have died.

In considering the contents of any statutory will, the court will have regard to the personal circumstances of the individual, including any feelings or wishes they might have previously expressed that could be relevant to the distribution of their estate, as well as the views of those closest to them.

It is this careful and thorough assessment of an incapacitated person’s best interests that can bring the necessary peace of mind for the loved ones of someone who no longer has the capacity to make or amend their own will.

How is a statutory will put in place?

If you would like to make or amend a will on behalf of someone who can longer do this for themselves, for example, because they have become incapacitated through illness or injury, you will need to apply to the Court of Protection.

You can apply for a statutory will in circumstances where the person is not able to understand what making or changing a will means; how much money they have or what property they own; or how making or changing a will might affect the people they know, including those mentioned in the will or those left out.

That said, someone who has merely lost the mental capacity to manage their own finances may still have the ability to make or amend a will. As such, the Court of Protection will need medical proof that the person is lacking testamentary capacity. You will also need to provide various documents in support of an application, including a copy of any proposed will or amendments.

What if someone dies without a statutory will?

If a loved one who has become incapacitated dies without a statutory will, any will that existed prior to their illness or accident will usually still stand. If, on the other hand, they die intestate, ie; without having a will in place at all, certain rules will come into play here. These are known as the rules of intestacy, where no protection whatsoever is offered under these rules for unmarried partners.

Further, in circumstances where the deceased was married or in a civil partnership at the time of death, depending on the value of their estate, this may mean that no provision is made for the deceased’s children.

It is therefore important to seek expert legal advice as soon as possible to ensure that adequate financial provision is made for any dependants and loved ones of the incapacitated person by way of a statutory will.

For further advice please call 01253 629300 or email info@blackhurstbudd.co.uk

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 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 be sought.