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The need for contingency planning in family businesses is highlighted by a recent case

7th March 2018

Making a comprehensive will, putting in place partnership agreements or other arrangements for a Limited Company and making Lasting Powers of Attorney which relate specifically to your business, can avoid disputes in the event of the death or incapacity of an individual who is the founder or owner of the business.

In a recent case a Somerset farmer, Lucy Habberfield, has been awarded £1 million in damages in a dispute over the inheritance of a family run farm following the death of her father.

Lucy worked for over 30 years since leaving school introducing a dairy herd to the farm. She and her partner, Stuart worked on a full time basis running and developing the dairy farm and worked for low wages with few holidays. Lucy claimed that her father had assured her that she would take over the farm when he retired but when he died in 2014 his promises and assurances were not carried out.

Lucy brought a case relying on the legal principle of Promissory Estoppel which allows for compensation where a claimant is able to establish that in reliance on a promise made to them in respect of ownership of land, they have acted substantially to their detriment and it would be unconscionable to go back on the assurance made. Her mother contested the case. The court heard from 20 witnesses, many of whom were local farmers and found in Lucy’s favour. To compensate her for the detriment which she had suffered over the years she was awarded £1 million in damages.

This case highlights the importance of contingency planning in family businesses putting wills and lasting powers in place which set out plans for the business in the event of death or incapacity of a business owner. The principle of Proprietary Estoppel has been used over recent years in cases relating to farms.

Has Bruce Forsyth avoided inheritance tax?

It has been reported that the late Sir Bruce Forsyth has left his £17 million fortune to his wife, Lady Wilnelia and as a result his estate will not be liable to pay inheritance tax.

Current law provides that transfers between husband and wife or between civil partners are exempt from inheritance tax. Once Sir Bruce’s estate has been administered, Lady Wilnelia will be free to retain or distribute her inheritance as she sees fit.

If she chooses to give assets to Sir Bruce’s children and grandchildren then provided that she survives for 7 years from the date of these gifts, they will not be included as part of her estate for inheritance tax purposes. This arrangement works well if there is trust between husband and wife and this is particularly relevant if one of the parties has remarried and has children from a former marriage. A surviving spouse may choose not to benefit step-children and if the inherited assets are in their sole control, this makes challenging what they do with those assets more difficult.

Second and third marriages are commonplace and the testator often has a dilemma between providing for their new spouse and passing assets to all children, including those from earlier relationships. Additionally, the testator will be keen to minimize the impact of inheritance tax on their estate.

By leaving everything to his spouse, Sir Bruce ensures that there is no inheritance tax to pay on his assets for the moment and with significant gifts made by Lady Wilnelia, the tax bill is likely to fall further.

It should be noted that this arrangement does not suit everyone and many married couples in this position do not leave their estate to their spouse outright. Some couples in this position choose to leave assets to each other in trust. By doing this the survivor can use and enjoy the assets in their lifetime but on the survivor’s death or remarriage the assets pass in tact to children as beneficiaries of the trust.

For more information about minimizing the impact of inheritance tax please call 01245 698534.

16th August 2017

Making wills online is becoming increasingly popular but this article highlights the dangers in doing so for vulnerable and elderly clients. Face to face interviews with a solicitor are particularly beneficial for vulnerable, elderly clients where capacity to make a will may be challenged by disgruntled beneficiaries in the future.

https://www.lawgazette.co.uk/practice-points/wills-and-probate-face-to-face-with-online-wills/5062360.article

13th July 2017

An interesting article about bringing wills into the modern world:

http://www.bbc.co.uk/news/uk-40590117

21st June 2017

This sad article reflects the need for all professionals to be alert to the best interests of vulnerable clients. A carer in Bridlington rewrote the will of her elderly charge benefiting herself in the will. She also set up a joint bank account with her elderly client enabling her to steal money and purchase property.

Solicitors are trained to be aware of the dangers of family and friends influencing vulnerable clients and apply this training when taking instructions from elderly clients. Professional advice is essential before giving someone a bank mandate or rewriting your will.

Read the full article here.

Business Contingency Planning

When starting a new business we are often so busy focusing upon the needs of our business that we often forget to make plans for potential future risks. This short blog is a guide to contingency planning for the future.

What is a business will?

It is a formal agreement which details what should happen to your business or a share in your business if you die. As a business owner it is important to think about what would happen if the owner/co-owner were to die and to ensure the continuation or winding up of the business in a way which would not negatively impact upon close family members who have had no involvement with the affairs of the business.

Wills Express can ensure that your Will provides for the continued operation or smooth winding up of a business in the event of death of an owner.

Can a Will be used if a business owner becomes critically ill?

Unfortunately, a will only takes effect after death and does not cover lifetime illness. A Lasting Power of Attorney can be used to ensure the smooth running of a business by appointed Attorneys if a business owner becomes ill. This reduces the burden on family members in respect of business matters.

What happens if I, as a business owner, become ill without having a Lasting Power of Attorney in place?

Your family may have to apply to the Court of Protection to gain the ability to sort out your business affairs. This is a lengthy and costly procedure and is unnecessary if a Lasting Power of Attorney is in place.

For help with contingency planning for your business, contact Alison Goodier at Alison.Goodier@WillsExpress.co.uk.

12th February 2017

An important landmark decision from the Supreme Court allowing an unmarried woman to claim an entitlement to her deceased partner’s pension. Read the full story here.

21st December 2016

The Paul Briggs case yesterday highlights the importance for everyone to make a Health and Welfare Lasting Power of Attorney. Read the full story here.

16th December 2016

Listen to BBC Radio 4’s ‘You and Yours’ here to discover why you should only use qualified people to make your Will.

14th December 2016

If you are a parent wishing to disinherit an adult child, read this case in which an adult child is contesting her mother’s will which leaves the estate to 3 charities. Please call for more advice.

Establishing capacity to make a will is essential

7th December 2016

The case of Michael Inchbald deceased, reminds us of the importance of taking steps to minimize potential claims when making a will.

Michael Inchbald, a famed interior designer who designed the interior of the QE2 and the Savoy Hotel died in 2013 aged 92. He made a will in 2007 leaving his estate equally between his son Courtenay and his daughter Amanda with the exception of a few smaller gifts. He had made an earlier will in 2005 which placed half of the estate in trust giving Amanda an income for life with Courtenay to receive the capital upon Amanda’s death.

Courtenay disputed the later 2007 will claiming that his father could not know or approve the changes made in this will because he had dementia.

Amanda argued that the changes made in 2007 giving an equal split between herself and her brother were neither unusual nor suspicious.

Amanda was successful in the High Court battle. Deputy Judge John Martin found that Mr Inchbald deceased was fully able to to understand the nature of the dispositions he was making in the 2007 will and this therefore should be upheld.

A challenge to a will can never be prevented but the risk of a claim can be minimized by one of the following methods:

-A comprehensive letter to your Executors justifying clauses contained in a will.
-A dispute clause
-A medical opinion as to capacity of the person making the will.

Please speak to Alison Goodier should you require more information about minimizing claims against your estate.

21st November 2016

It has never been more important to plan future care. Read this BBC news feature.

Good reasons to make a will

16th November 2016

If you haven’t made a will yet, here are some good reasons to take that first step. For a small price you gain peace of mind and ensure that your estate is left to the people who you care about. https://www.theguardian.com/money/2016/nov/14/writing-a-will-dying-intestate

21st February 2016

www.theguardian.com/law/2016/feb/16/woman-wins-court-fight-home-shared-married-man-joy-williams

The is a cautionary news article from the Guardian today. Cohabitees need to make Wills to protect their partners in the event of death. Mr Martin, a dentist lived with his partner, Ms Williams for 18 years but had never divorced his wife. When he died, his share in the house owned with his partner, Ms Williams, as Tenants in Common, passed to his estranged wife, Mrs Martin.

Ms Williams had to take the matter to a contested trial to fight for entitlement to Mr Martin’s estate. To prevent this it is sensible for all cohabitees to make a Will.

11th February 2016

For those who have received a diagnosis of early onset dementia, this is an interesting article in the ‘Law Society Gazette’ about an online tool which assists you, if your family/ Attorneys are faced with difficult treatment decisions and have indicated that they do not agree with your point of view about possibly refusing certain medical treatment in the future.

Contact Wills Express for further guidance about the information contained in this article.

http://www.lawgazette.co.uk/law/practice-points/wills-choice-and-control-at-the-end-of-life/5053028.article

Lasting Powers of Attorney

28th January 2016

Many people do not think about the need for making a Lasting Power of Attorney before it is too late. It is important to make a Lasting Power of Attorney whilst you have mental capacity because if you are diagnosed with early onset dementia or you lose capacity due to an accident, you will not be able to appoint Attorneys for yourself. Your relatives will then be left with the unenviable task of applying through the Court of Protection to assist with either making decisions about your financial affairs or your welfare. It is a complex procedure and many families require a solicitor to guide them through the process which is will be expensive and your relatives may have to fund this themselves before they are entitled by the Court of Protection to deal with your assets.

A Lasting Power of Attorney is less of a burden for your relatives or close friends and allows those who you appoint as Attorney to make decisions for you in accordance with your wishes. It allows you to appoint people that you trust to act as Attorneys and they can act independently without interference from the Court of Protection provided that they act in your best interests.

There are two types of Lasting Power of Attorney. One relates to Health and Welfare and this allows your Attorneys to make decisions about your health care or welfare when you cannot make those decisions for yourself. This means that if you are in hospital and a decision needs to be made about whether to resuscitate you because you are too ill to make this decision, the decision can be made by your Attorney upon presentation of the Lasting Power of Attorney to the hospital. You can record your wishes on the Lasting Power of Attorney form and give your Attorneys guidance or you can allow your Attorneys complete freedom to make a decision which they feels reflects your best interests.

A Finance and Property Lasting Power of Attorney allows your Attorneys to deal with your finances, such as paying bills, overseeing investments, dealing with utility providers and could entitle them to sell your home if required, for example to meet care home costs. You can impose restrictions or guidance within the document which your Attorneys are required to follow or you can give your Attorneys unrestricted freedom to act as they see fit.

It is advisable to talk to your family prior to making a Lasting Power of Attorney to discuss why you are considering taking this step and who you are proposing to appoint as Attorney. Many families find this difficult because it can create animosity between children where not all children are to be appointed Attorney by a parent. As a result some people find these conversations difficult and it should be borne in mind that who you appoint as Attorney must be your decision and this decision must be made without influence from other people. A certificate provider is required to sign the Lasting Power of Attorney form to confirm that in their opinion, you the donor, understands the purpose of the Lasting Power of Attorney and that no fraud or undue pressure is being used to induce the donor to create a Lasting Power of Attorney. This gives you some protection from the influence of dominant family members because safeguarding of potentially vulnerable people is taken very seriously by all professional required to act as Certificate Providers.

Wills Express offer a no obligation consultation prior to making a Lasting Power of Attorney to discuss what is involved and how the procedure works.

Written by Alison Goodier

Qualified solicitors like Wills Express or unregulated will writers?

An article in the Law Society Gazette in the week beginning 18th January 2016 says that the public and business need to be informed that if they do purchase from an unregulated provider they will get less protection. It states “Solicitors are trained, qualified, regulated, required to carry insurance and have professional standards”. A copy of the article is attached and it is recommended that before making a will, completing a Lasting Power of Attorney or completing a Probate Application, you obtain the advice of a qualified solicitor rather than an unregulated will writing company because a solicitor can advise you on the correct procedure and the potential risks involved in this process and advise you on how to guard against risk.

The article can be found here.

Why You Should Make a Will

4th January 2016

The start of a new year is a good time to put your affairs in order.

Making a will is an important step because it ensures that the money and property which you have worked so hard for passes to people or organisations of your choice. If you do not make a will, the Government has a list of relatives which your estate can pass to and the list is strictly applied (see https://www.gov.uk/inherits-someone-dies-without-will).

The problems with this list, known as the rules of Intestacy, are many but here are a few examples of difficulties which can occur without proper advice and estate planning:-

1) A couple have lived together for 15 years and have had one child together. The male partner has been previously married and has two children from his first marriage. The couple’s house, mortgage, bank accounts and small savings are in the man’s name. He dies suddenly without leaving a will. His partner of 15 years does not automatically inherit the house in which she has lived in for 15 years or what is in the bank accounts or savings. The Intestacy Rules provide that the 3 children, namely the children from his first marriage and the child of his second relationship have first claim on his estate. This is a complex situation, the surviving partner may have a claim against the estate but the procedure is not simple and much anguish could have been saved if the couple had had proper advice and planned for their deaths.

2) A married couple have 6 children. When the husband dies, one child does not attend his funeral and terminates all contact with his mother. This state of affairs continues for 15 years until she passes away. She leaves no will but has expressed the opinion many times that her estate is to pass to the 5 children with whom she is on good terms and not to the sixth. The Intestacy Rules provide that all 6 children are to benefit from the estate and this situation could easily have been prevented by making a will expressly excluding one child as a beneficiary.

3) A couple have been married for 10 years but separated 6 months ago due to the husband’s violent outbursts. The wife dies without making the will but has expressed a wish to her best friend that her estate is to pass to her 2 cousins. Her parents have died and she has no close family. With a formal ending of the marriage, the intestacy rules provide that her husband would benefit from her estate.

Clearly these situations show the importance of getting sound advice when planning for the future. The reason to use a solicitor rather than a will writing company or other unregulated body is that solicitors are qualified in will writing, are regulated by the Solicitor’s Regulation Authority and undertake compulsory update training every year to maintain their skills. Will writers and other unregulated bodies do not have this level of training and do not have to have compulsory insurance which is required by the Solicitor’s Regulation Authority. Solicitors are often regarded as aloof and difficult to approach but at Wills Express we aim to provide good quality advice in a manner which is clear and easy to understand from qualified solicitors.

Written by Alison Goodier

Where there's a will, there's Wills Express.