Wills & Probate
Wills, Powers of Attorney and Deputyship
Everyone should make a Will as it greatly facilitates the administration of their estates and saves time and costs. The choice of suitable executors and, where applicable, testamentary guardians for infant children, is essential. A persons will should deal with the disposition of all their property and possessions. Gifts can be outright or impose conditions or restrictions through the use of trusts.
Home visits are possible to discuss individual requirements and without obligation.
Powers of Attorney
Ordinary Powers of Attorney allow a person to delegate to the person to whom they give the Power, authority to do acts which the person giving the Power could do if physically present in the place where an act needs to be performed. Where a person loses normal mental or physical faculties, they are still able to delegate tasks to individuals before the loss of these faculties but in this case a more formal document, a Lasting Power of Attorney, has to be used.Lasting Powers of Attorney are of two kinds. One type deals with a person’s property and financial affairs, the other,with an individual’s health and welfare. It is common to organise the production of both types for an individual at the same time.
Prior to the introduction of the Mental Capacity Act 2005 on the 1 October 2007, documents called Enduring Powers of Attorney were used as a means of allowing an attorney’s authority to continue in relation to property and financial matters despite the loss of the Donor’s mental capacity. Some Powers in this form still exist but, where the Donor of such a power loses capacity, the attorney cannot use the Power until it is registered with the Office of the Public Guardian.
As Lasting Powers of Attorney can take some time to be completed, General or ordinary Powers of Attorney can be used in conjunction to bridge the time between a person signing a Lasting Power of Attorney and its registration, provided they retain capacity in the meantime.
Where mental capacity is lost and there is no appropriate Power of Attorney in force or existence to allow others to make decisions on behalf of people who lose mental capacity, it is still possible to obtain authority to make decisions through applying to the Office of the Public Guardian for a Deputyship Order. This can be a long drawn-out process and depends largely on the opinion of a person’s general practitioner in relation to his or her state of mental health. The involvement of the GP is of crucial importance in the application process and should be sought at the earliest possible stage.
Probate, Administration, Trusts and Estate Planning
Probate is a term applied in common usage to the procedure involved in dealing with a deceased person’s assets and possessions. In its technical sense it is used to refer to the Grant or document of authority issued by the Court to a deceased’s Personal Representative which enables them to deal with that person’s assets and possessions.
The term Personal Representative is used to refer to a deceased’s Executors appointed in the Will if one were made, or Administrators where a person dies without making a Will in which case their estate is referred to as an Intestacy.
This is the process of obtaining a Grant of representation after full details of the deceased’ assets and liabilities have been provided by the personal representatives, collecting the assets and paying debts, distributing specific gifts, paying pecuniary or money legacies and preparing estate accounts to enable a proper and safe distribution of the residue to those entitled. “Residue” is the term used to refer to the estate’s assets, whether in cash or other fixed form, after all its liabilities are paid/discharged.
To avoid having to pay what are seen as unnecessarily high fees charged by solicitors, banks and similar service providers, many people these days choose to apply for grants of representation themselves . However, applying personally without the help of a solicitor can result in delays and there are higher Court or application fees. Further, self-help is not recommended where the distribution of the estate is unusually complex and/or where charities are involved in a share of the residue.
Sometimes either before estates start to be administered or during the administration, disputes can arise. The use of Mediation rather than litigation is strongly recommended in achieving the resolution of such disputes. Mediation is less formal and costly than litigation and conducted by experienced mediators.
What are they?
The transfer or treatment of assets/property from the lawful owner to Trustees obliged to deal with the assets and property for the benefit of others in accordance with the wishes/directions of the Settlor/transferor, the person establishing the Trust.
How are they created?
By Deed in a person’s lifetime or in a person’s Will. Although the majority are expressly created in writing they can be implied by behaviour. Some Trusts are special Trusts, ie, protective for disabled beneficiaries made under a Court Order, or established by Pension Funds or Charities.
Why create them?
- To protect the Trust property (i.e., its assets) or the beneficiaries or both
- To divide the right to the income produced by and the capital value of the assets/property
- To save tax
- To avoid the need for a Grant of Probate to continue to deal with the trust assets on death of the Settlor/transferor
Estate planning is one aspect of financial planning and consists, in the main, of passing wealth onto the next generation or beneficiaries (not necessarily the same!), either during lifetime or on death.
It starts by taking a look at a persons assets, both capital and income. Some people can afford to make lifetime gifts and still retain enough wealth to lead a comfortable life. They may wish to make outright gifts, so that the beneficiary is able to have immediate use, or they may wish to impose conditions, through the use of trusts. In such cases, full consideration of the tax consequences of making such gifts, and what happens when the trust is brought to an end, is vital. However, in deciding to create them from a tax efficiency point, one should never “let the tax tail wag the dog!”.