Author: Emma Wallace

This article is based on an article written by STEP: Wills and Trusts | STEP

Estate planning is an essential aspect of managing one’s legacy and ensuring the well-being of loved ones after passing. The primary instruments in this process, Wills and Trusts, are meant to provide peace of mind by clearly outlining the distribution of assets. However, the rise of unqualified advisors in the estate planning sector is becoming a problem and sometimes leading to severe financial and emotional repercussions for grieving families.

The Growing Concern

The Society of Trust and Estate Practitioners (STEP) has long been aware of the dangers posed by unqualified advisors. These individuals and firms, lacking the necessary specialist skills and knowledge, are unregulated and can, at times, lead to them taking advantage of their clients. The fallout from their inadequate advice can be devastating, with families facing unexpected legal fees and tax bills due to poorly crafted Wills.

Alarming Statistics

A recent survey conducted by STEP among its UK members in May 2023 reveals the extent of the problem. The findings are alarming:

• 79% of respondents reported encountering Wills with errors.
• Over half (54%) expressed concerns about rogue firms making false claims that lead to increased tax liabilities.
• 63% of respondents had seen cases where a will writing company quoted an initial fee but then charged additional, hidden costs.
• 54% of those surveyed came across firms making false claims about the benefits of the wills they were selling.

The data indicates a widespread issue, where clients can be misled and can end up with documents that do not serve their intended purpose. One particularly troubling aspect is the misrepresentation of Trusts as a means to avoid care home fees. Advisors have wrongly told clients that transferring their home and assets into a trust or gifting them during their lifetime would protect these assets from being assessed for care home costs. This advice is not only incorrect but also constitutes a deliberate deprivation of assets, which can have serious legal implications.

Real-World Impact

The consequences of such poor advice can be devastating. Families, already dealing with the emotional toll of losing a loved one, find themselves facing financial chaos. Substantial portions of estates are unnecessarily spent on legal fees or taxes, diminishing the intended inheritance. Furthermore, the false sense of security provided by unqualified advisors means that families might discover too late that their assets are not protected as they believed.

The Call for Qualified Advice

Given these findings, the importance of seeking qualified, competent advice for estate planning cannot be overstated. Clients must ensure that their advisors possess the necessary expertise and credentials. Qualified solicitors and STEP members, for instance, are subject to rigorous training and adherence to professional standards, offering a level of assurance that the advice given will be sound and, in the clients’, best interests.

Conclusion

Estate planning is too critical a task to leave in the hands of unqualified advisors. The repercussions of bad advice can last for generations, affecting not only the financial stability of families but also their emotional well-being. It is highly advisable for individuals to seek out qualified professionals who can provide reliable guidance and ensure that their estate plans fulfil their intended purpose. By doing so, they can truly achieve peace of mind and protect their legacy for their loved ones.

Please get in touch if you need by contacting our Private Client Solicitor, Lara Thomas at lthomas@astonbond.co.uk or our Private Client Paralegal, Emma Wallace at ewallace@astonbond.co.uk.

In the world of Private Client, you might often hear the word ‘capacity’ being used, and what we mean by this is whether person has mental capacity.

Mental capacity is the ability to understand information and to make appropriate decisions. This could be a decision effecting your daily life, i.e., what clothes to wear that day, or could be something more significant such as whether to make a large financial investment.

How is Mental Capacity Assessed?

The Mental Capacity Act 2005 sets out the test to assess capacity. There are five statutory principles which underpin the legal requirements of the MCA 2005:

• A person must be assumed to have capacity unless it is established that they lack capacity.
• A person is not to be treated as unable to make a decision unless all practicable steps to help them to do so have been taken without success.
• A person is not to be treated as unable to make a decision merely because they make an unwise decision.
• An act done, or decision made, under the MCA 2005 for or on behalf of a person who lacks capacity must be done, or made, in their best interests.
• Before the act is done, or the decision is made, regard must be had to whether the purpose for which it is needed can be as effectively achieved in a way that is less restrictive of the person’s rights and freedom of action.

How is Mental Capacity Assessed when making a Will?

There is a specific mental capacity assessment necessary to execute a Will is referred to as ‘testamentary capacity’. It is based on a case called Banks v Goodfellow which states that a testator (a person making a Will) must:

• Understand the nature of making a Will and its effects
• Understand the extent of the property of which they are disposing
• Be able to comprehend and appreciate the claims to which they ought to give effect
• Have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of their property by Will.

The Mental Capacity Assessment (above) is used alongside this as  a useful cross-reference.

The ‘Golden Rule’

The golden rule as set out in Kenwood v Adams states that where there is an elderly testator or someone who has been seriously ill, it is advisable that a medical practitioner assess the testator’s capacity to make a will and that they make a clear record of their findings.

Lasting Powers of Attorney (LPAs)

It is important to be aware that once a person has lost mental capacity, they can no longer apply for a Lasting Power of Attorney. Indeed, a person must have full capacity when they put an LPA in place as they must sign this document, understanding the full extent of what this document does and appointing their chosen attorneys.

If someone has lost capacity and you wish to make decisions for them, you must apply to the court of protection for a guardianship which is more time consuming and costly than creating an LPA. This is why you must consider putting LPAs in place early.

We hope that this blog gave you more insight into mental capacity and how it is used in a Private Client context. Should you need any further guidance, please feel free to contact one of our friendly Private Client team members at Ewallace@astonbond.co.uk and Lthomas@astonbond.co.uk

Firstly, what is probate? Well, probate is Latin for ‘to prove’, and in modern day English, it is the process of proving the Will. In other words, it is the legal and financial process of dealing with someone’s money, house and possessions when they die.

Dealing with the death of a loved one can be extremely distressing and overwhelming, especially if it is the first time that you have experienced a bereavement.

If you are a personal representative in charge of dealing with an estate, this can come with a lot of responsibility which you may not feel up to when grieving the loss of someone close.

This is why many people choose to instruct a firm of solicitors to take care of these responsibilities for them. It also ensures that everything is carried out accurately, legally and correctly.

What probate services can we offer?

We obtain accurate date of death figures for each asset and liability that the deceased owned at the date of their death and use it to obtain a Grant of Representation, if required (a Grant of Probate when there is a Will or a Grant of Letters of Administration if there is no Will). For smaller estates, a short probate application will suffice, but for larger estates, you may require a full account to be submitted to HMRC which can be a daunting process to tackle on your own.  

With our probate clients, we always ask how much work we should take on in terms of the administration of the estate. Our service is not one-size-fits all, so instructing us as your solicitor does not mean that we must do everything. Although we can provide a full service, it is up to our client as to how much work we carry out. We can be as involved or uninvolved as you’d like us to be.

Please contact our private client team for a free initial consultation to discuss probate should you require our assistance.

Jargon Buster:

Executor: The person/people named in a Will who is responsible for dealing with the administration of the estate.

Administrator: The person/people responsible for dealing with the administration of the estate when there is no Will.

Personal Representative: A blanket term for Executor or administrator.

Grant of Probate: A legal document which confirms that the Executors of a Will have the authority to deal with the deceased’s assets. This will be required to sell the deceased’s property and some financial organisations require this to encash the funds, depending on the amount of money held in the account.

Grant of Letters of Administration: As above, but when there is no Will. It confirms that the administrators have authority to deal with the estate.

Grant of Representation: A blanket terms for Grant of Probate or Grant of Letters of Administration.

Lasting Powers of Attorney (LPAs) are legal documents which allow you, as the ‘donor’, to appoint one or more people, to act as your ‘attorneys’, to assist you in making decisions or make decisions on your behalf should in the future you be unable to do so yourself.

There are two types of LPA, and you can choose to make one or both, although most people put both in place to maximise their powers and protection.

1. LPA for Property and Financial Affairs – these covers decisions such as:
2. Looking after and paying your bills
3. Managing your bank accounts and investments
4. Buying, selling, or maintaining your home

The LPA for Property and Financial Affairs gives you the option to also allow your attorneys to act on your behalf with your consent while you still have capacity, should you wish. This could be helpful in circumstances whereby you are perhaps out of the country on holiday or simply unwell and require assistance but still have mental capacity.

• LPA for Health and Welfare – these covers decisions such as:
• Where you live
• Daily routine
• Medical care
• Life sustaining treatment

The LPA for Health and Welfare can ONLY be used should you lose capacity and be unable to make decisions anymore.

Why should you put LPAs in place?

LPAs are designed to extend your powers rather than limit or give them away. With rising cases of dementia in the UK and other common illnesses such as cancer they enable you to plan effectively for the future and choose people you trust to make decisions for you.

Having an LPA can avoid conflicts among family members about who should make decisions on your behalf, and what that decision should be. Different opinions on what course of action to take can lead to disagreements during an already stressful time. An LPA would explicitly state who your trusted attorneys are and your wishes providing clear guidance.

What could happen if you don’t make an LPA?

If you don’t make an LPA, you will not be able to decide who makes decisions for you should you lose capacity. This means that your loved ones might be excluded from making important decisions on your behalf.

Additionally, your family or friends may have to apply to the Court of Protection for a Deputyship Order to be able to make decisions on your behalf. A very costly and time-consuming process for all involved.

Our team at Aston Bond is experienced in handling Lasting Power of Attorney applications and can assist you throughout the whole process. Please do not hesitate to call us today on 01753 486777 or email us on info@astonbond.co.uk to arrange a meeting to discuss your requirements.

For your information, we prepare Lasting Powers of Attorney on a fixed fee basis. Please see below for our costs:

• Individual Lasting Power of Attorney X 1 (Finance & Property OR Health & Welfare) – £500.00 + VAT
• Individual Lasting Power of Attorney X 2 (Finance & Property AND Health & Welfare) – £600.00 + VAT
• Couples Lasting Power of Attorney X 1 (Finance & Property OR Health & Welfare) – £600.00 + VAT
• Couples Lasting Power of Attorney X 2 (Finance & Property AND Health & Welfare) – £750.00 + VAT

There is also a further registration fee of £82.00 per application for registering the documents with the government body that manages LPAs The Office of the Public Guardian. The documents must be registered before they can be used.

There is also an additional one-off charge for fixed fee Lasting Power of Attorney files to cover our case management, archiving, and administration fees. This is £45.00 + VAT. There are no ongoing annual charges for these services, and we also offer to store your original Lasting Power of Attorney documents without any additional charge!

Are you ready to delve into the world of Estate Planning? Here, at Aston Bond, we’re passionate about making sure that you and your loved one’s futures are secured. Estate planning may sound intimidating, but we’re here to simplify it into simple language and bite-sized chunks. From clever Will drafting, to efficient ways of reducing inheritance tax, we’ve got you covered. Whether you are completely new to estate planning and only just starting to consider it, or whether you are wanting to adjust existing plans, read on so that we can navigate this process together.

What is estate planning?

Estate Planning is the process of arranging how your assets will pass on your death. Your assets can be anything you own, such as property, vehicles, money, shares, or even personal property, such as jewellery. It allows you to decide where and who everything will pass to, including ensuring that your loved ones are taken care of financially in the future.

What is the process of estate planning?

1. The first step of estate planning involves creating an inventory of all your assets, including its value. You can do this by simply writing a list of everything you own, taking extra care to include more obscure assets like digital assets, cryptocurrencies, or shareholdings.
2. After you have done this, it is essential that you consider making a Will, to clearly state how your estate should be distributed on your death. If you don’t make a Will then your estate will pass under the intestacy rules, which is a statutory order of priority, and may not align with your wishes.
3. During the process of making your Will you should consider the following
   1. Executors – this is who will deal with the administration of your estate on your death.
   1. Guardians – this allows you to decide who would look after any of your children if you died whilst they are under 18.
   1. The possibility of including and utilising Trusts to best protect your estate for your loved ones. A trust is a legal arrangement where you give control of your assets to trustees to manage and distribute for the benefit of your chosen beneficiaries.
   1. Potential claims against your estate – although it is quite legal to make a Will in whatever terms you wish there is in existence a statute which allows certain categories of persons to make a claim against your estate on your death if they feel that you have failed to make sufficient provisions for them. It is therefore essential you take legal advice to minimise any potential claims against your estate.  

Inheritance Tax Planning

Inheritance tax (IHT) is the tax on the estate of someone who has passed away and is calculated based on their total assets minus liabilities on the date of death. There are various ways of reducing IHT by tax planning during your lifetime and by having a Will that is drafted in a tax.

There are various inheritance tax allowances that you should be aware of. For example, the spouse exemption allows your estate to pass to your spouse or civil partner entirely tax free no matter how large the estate. Another allowance is the charitable exemption which allows money left to charity under a Will to pass entirely tax-free, which can reduce your overall inheritance tax liability.

The above exemptions are only two of many, so it is very important to seek legal advice when it comes to estate planning to avoid missing out on tools available to you.

One of the most efficient ways of decreasing the value of the estate is the use of lifetime gifts. This is the process of giving away assets during your lifetime, rather than waiting until death to leave them to beneficiaries under your Will. This can reduce the overall value of your estate and potentially lower the amount of inheritance tax owed. There are several ways you can do this.

• You may transfer any amount to a spouse or any UK registered charity that is free of the inheritance tax.
• You could also gift non-exempt beneficiaries up to £3,000.00 total annually. This is called an annual exemption. If you haven’t used your annual exemption for the previous tax year, the unused portion can be carried forward for one tax year.
• If a gift is made to an individual but doesn’t fall within any of the exempt categories, it falls within potentially exempt transfers. This means that, providing that you survive for seven years from the date of the gift, the value of the gift will fall out of your estate. If you don’t survive for seven years, the gift is added back to your estate for inheritance tax purposes. However, the longer you survive after making the gift (subject to surviving a minimum of three years), the lower the inheritance tax payable. It is crucial that you also do not retain any benefit from the gift whatsoever or HMRC will not regard it as being outside of your estate no matter how much time has passed.
• You are also eligible to make gifts from your income to any person without affecting your inheritance tax position. This is only if your gifts form part of your normal expenditure and do not affect your quality of life. There must also be a clear, consistent pattern of giving, for example, paying the premiums on a life policy for another person’s benefit or payment of school fees.
• Another way to use lifetime gifts is by making small gifts to any one person. You are allowed to make gifts up to a maximum of £250.00 to any one individual during a tax year. Unlike the annual exemption, however, it is not possible to carry forward any unused portion to the following tax year.
• You may make gifts on the occasion of a marriage or civil partnership, but this has limitations depending on your relationship to the person married. This means that; each parent can gift a maximum of £5,000.00, each grandparent (or remoter ancestor) can gift £2,500.00, either of the couple can gift each other £2,500.00, and any other person can gift £1,000.00. The gift must take place before or on the ceremony and must be conditional on the ceremony taking place.
• Another way to reduce inheritance tax liability is to make inheritance tax efficient investments. We are unable to provide investment advice but can recommend local Independent Financial Advisors who can assist.
• Charitable donations are another efficient way to decrease inheritance tax liability. The Finance Act of 2012 introduced a lower rate of the inheritance tax for individuals who leave a minimum of 10% of their net estates to charity.

Estate planning is not just about securing your assets; it is about securing your loved one’s futures as well as your own. At Aston Bond, we understand that starting this process can be tedious (and daunting!), which is why we strive to simplify it for our clients as best as possible. We tailor our advice based on your individual needs and deal with issues in a considerate and sensitive manner.

So, if you’re ready to take control of your family’s financial future, please book an appointment with our friendly private client department. Just call us on 01753 486 777!