Wills, estates & tax planning

Wills

Client peace of mind underpins Morrisons approach to wills.

By taking advice from a qualified solicitor, making a will can be simple and straightforward; giving clients absolute confidence they have control over their estate.

But despite the ease with which a will can be created, it is estimated by the National Consumer Council that more than two-thirds of British adults have not made one.

Some Will facts:

• It is a common misconception that, in the absence of a will, your estate passes to your surviving spouse or civil partner
• Government figures suggest there are currently 3,600 spouses and civil partners at risk of losing their family home to meet claims as a result of intestacy – the legal definition for dying without making a will
• When the consequences of dying without a will are considered – confusion, distress, legal battles over assets and even financial hardship – their importance becomes clear

For those who have worked hard to build up savings, investments and other assets over their lifetime, failure to make a will can result in needless sums being paid in tax or legal fees, instead of going to loved ones and good causes.

At Morrisons, our STEP-qualified trust and estate-planning experts ensure assets are distributed exactly as clients intend. Our advice will also guard against any unwanted claims on an estate, even in the most complex of situations.

In business a will should also be an essential part of succession planning. Our specialist lawyers work with our Corporate & Commercial department and your Corporate advisers to maximise any tax saving opportunities.

Will questionnaire

Trusts

Trusts are an invaluable estate and succession planning tool.  They provide a way for a person, family or business to securely transfer assets to an individual or company, ensuring their safe future management for the benefit of others.

Like a will, trusts provide a means for people to control the way in which their accumulated wealth or assets are distributed. They can be brought into effect at any time, not only after death, as is the case with a will. Trusts can also be created under the terms of a will.

In addition to the control over an estate or asset that they provide, trusts can protect assets against claims from creditors and considerably reduce tax liabilities - sometimes completely, in the case of inheritance tax.

We ably advise on the most suitable form of trust; reducing your tax liability through the creation of trusts; removal or appointment of trustees; varying existing trusts; or dealing with disputes.

For more than 200 years, Morrisons has advised generations of families on the creation and management of trusts. In particular, our specialist lawyers and trust accountants can ensure compliance with all responsibilities and duties placed upon trustees, including tax returns, preparation of annual accounts and ensuring trust structure continues to be highly tax efficient. 

Many of our lawyers are members of the Society of Trust and Estate Practitioners -STEP. David Kingham, the Head of Private Client, is also a member of the Chartered Institute of Taxation.

Administration of estates

At a time of bereavement, the thought of dealing with a loved one’s financial affairs, even if they have left a will, is a daunting prospect.

Our team can help ensure the process is taken care of sensitively and efficiently, placing the least amount of stress on you and your family.

As the personal representative of an estate, you have the responsibility of its administration; this means establishing its value, paying debts and distributing the balance. At Morrisons we diligently support and guide you through legal procedures and related tax issues. Our probate questionnaire will give you a guide to the issues that would be discussed at the initial meeting.

See our Guide of Considerations during the estate administration period, before it can be wound up.
 
1. The grant of representation
A person’s representatives require a grant of representation from the Probate Registry, showing their entitlement to deal with the estate (unless the estate is very small and with no freehold or leasehold property, such as a house or flat).  We can usually tell you straightaway if a grant is needed and handle all the necessary paperwork. 

If the deceased left a will, the application to the Probate Registry is for a ‘grant of probate’; if the deceased did not make a will and therefore died ‘intestate’, the application is for a ‘grant of letters of administration’. 

If properly created, a will should detail the full value of an estate and how it will be distributed. In the absence of a will, the law sets out who is entitled to any inheritance.  Our team can usually tell you at an early stage which members of the family are entitled to the estate and in what shares.

Before applying for a grant of representation, the value of an estate is assessed. This could involve writing to Banks, Building Societies, Company Registrars, Investment Managers and Financial Advisers, National Savings and Life Insurance Companies. Valuations of assets such as shareholdings, personal effects (such as furniture or jewellery) and any property or land owned, including a house or flat, may also be needed.  We will be able to advise you about the forms which need to be completed and signed by you.

In a smaller, simpler estate there will be less paperwork to complete than in a larger, more complex or taxable estate.

Details of any outstanding bills and funeral expenses will be needed, as these can be deducted before inheritance tax is calculated. We can usually arrange payment of funeral expenses from any building society or bank balance.

Personal representatives are responsible for settling all liabilities of the estate, even those unknown to them. We can advise you about procedures that will limit your liability as a personal representative for unknown debts.

2. Applying for the Grant of Representation
When the papers have been prepared, representatives are required to swear an oath before a solicitor before signing. At this stage any other papers for submission to HM Revenue & Customs are also signed. We can arrange this for you.

Inheritance Tax is paid at this stage. The application for probate is also lodged with the Probate Registry with the probate fee, usually £45. When the papers have been prepared and signed, we can let you know how quickly we expect to receive the grant from the Probate Registry. 

3. After the Grant has been obtained
Official copies are sent to banks, building societies and others holding money and property. Assets may need to be sold to meet fees and debts. But it’s then possible to close accounts and sell property and investments. The proceeds can be paid into a Client Account, protected by the Solicitors Regulation Authority’s rules. At this stage we prepare estate accounts which will show assets and payment of bills and legacies.

Once the bills are settled, legacies under the will can be distributed. Finally, confirmation is sought from HMRC that no more tax is due, allowing us to finalise accounts, hand over remaining entitlements to beneficiaries and obtain receipts.  We can also deal with setting up the necessary trusts under the will or intestacy, if any.

We also offer expert advice on the more complex areas of estate administration, including:

• International aspects of the deceased’s affairs (such as foreign tax on property)
• Post-death tax reduction, including deeds of variation
• Establishing and winding up discretionary trusts in wills following the introduction of the transferable nil-rate band
• Resolving disputes relating to Contested Probate

And don’t forget, we have a dedicated Residential conveyancing team, which can assist in the legalities of selling any property in the estate.

If the estate you are dealing with is straight forward and you are seeking a cost effective solution, please see our Probate Direct section.

Guide to inheritance tax

Sound inheritance tax advice is vital to ensure no more tax than necessary is paid from a deceased person’s estate.

Currently inheritance tax is only payable on estates of £325,000 (the nil rate band) and above and is charged at a rate of 40%. There is usually no tax at all, whatever the value of the estate, on property going to a widow or widower, or to a registered charity.

This is known as exempt property and is deducted from the value of an estate before any inheritance tax calculations are made.

Property can be given as gifts to husbands, wives, civil partners and charities to reduce the value of an estate. With careful, timely planning making such gifts can reduce an estate to below the nil rate threshold.

If the deceased had a life interest in any trust or had made gifts of capital during the seven years prior to his or her death, the value of these will usually be added to the rest of the estate, thus increasing the inheritance tax payable.

In the case of an estate of a widow or widower who has not remarried and whose death occurs after 9th October 2007, it may be possible to claim a further allowance against inheritance tax, known as the ‘transferable nil-rate band’. Any part of the nil-rate band unused on the first death can be claimed and added to the nil-rate band available to the survivor, with an additional increase to reflect any change in the nil-rate band between the first death and the second death. We can advise you in further detail about this.
 
Inheritance tax has to be paid before we can obtain the grant of representation from the Probate Registry. Because the estate is ‘frozen’ at the date of death, raising funds to pay inheritance tax before the grant is obtained may mean borrowing money from the banks, building societies, former building societies and some other institutions are usually willing to advance funds that they are holding in order to enable payment of inheritance tax.

Inheritance tax is generally due to be paid six months after the end of the month in which the death occurs. There are special arrangements for payment of tax in respect of land (including a house or flat) and shares in a private company, where tax can usually be paid in instalments over 10 years. However, any Inheritance tax paid after the end of six months from the date of death will attract interest at the current HM Revenue & Customs rate.

Guide to powers of attorney

If mental incapacity affects you, a family member or friend, particularly when there are no arrangements in place to manage financial and healthcare matters, it can be deeply worrying.

This situation can be avoided by creating a lasting power of attorney.

Power of attorney is a legal process where you hand over to someone else (the attorney) the power to make decisions on your behalf. This can include acting in your financial affairs and dealing with property.

The power itself is given as a simple Deed by you, the donor, to the attorney. An ordinary power of Aatorney can only be given while you continue to be mentally capable of managing your affairs.

What is a lasting power of attorney?
It provides authority to continue managing his or her affairs even if the donor has become mentally incapable.

There are two types of lasting power of attorney:

• A property and affairs lasting power of attorney, which allows your attorney to deal with your property and financial matters, as you specify
• A health and welfare lasting power of attorney, which allows welfare and health care decisions to be made on your behalf, only when you lack mental capacity to do so - this could also extend, if you wish, to giving or refusing consent to life-sustaining treatment

Who can be my attorney?
A lasting power of attorney, like any power of attorney, is an important document and you should take care when you appoint. An attorney should be trustworthy and have appropriate skills for making the proposed decisions.

You may appoint more than one person to act as attorney. If you appoint more than one attorney, you can appoint them to act together at all times, or to act together and independently in certain specified matters. This should only be done with professional advice, as it may cause problems when using a lasting power of attorney.

You may also choose to appoint a successor to your attorney, in case the attorney dies or is otherwise unable to act for you.  This ensures you create a document that will last.

How can a lasting power of attorney be used?
Powers of Attorney can be used in many circumstances: you may be abroad, or suffering from illness or injury; or you may be busy and need someone else to deal with matters. You may cancel a lasting power of attorney at any time if you have the mental capacity to understand the effect of cancellation.

A lasting power of attorney will normally only be effective within England and Wales, though its authority is increasingly recognised in some foreign countries.

When can the attorney act?
The attorney will only be able to act when the Lasting Power of Attorney has been signed by you and everyone who is to act as your attorney.

Your signature must also be certified by another suitably qualified or knowledgeable person, who can confirm that you understand the nature and scope of the Lasting Power of Attorney and have not been unduly pressured into making the power. The certificate will also need to confirm there has not been any pressure put on you to sign or another reason why you cannot make the power.

The lasting power of attorney must then be registered with the Office of the Public Guardian before it can be used.

A property and financial lasting power of attorney can be used both if you have capacity to act and if you lack mental capacity to make a financial decision. Health and welfare lasting powers of attorney can only be used if you lack mental capacity to make a welfare or medical decision.

What if I have made an enduring power of attorney?
Enduring powers of attorney were replaced by lasting power of attorney legislation in 2007. However, enduring powers of attorney validly made before 1st October 2007 will continue to be capable of being used, but only in respect of your property and financial affairs. If you wish to give authority over your health or welfare you will need to make a health and welfare lasting power of attorney.

What happens if I have not made a lasting power of attorney or enduring power of attorney?
If you lack capacity to make a financial decision, then it may be necessary for an application to be made to the Court of Protection for an appropriate order, such as appointing another person to make decisions on your behalf. This is both costly and time consuming.

Most care and treatment decisions can be made on your behalf without the need for a court application. However, you can avoid potential disputes by making a health and welfarelasting power of attorney.

General or ordinary powers of attorney
Powers of attorney can be used if you are planning to travel abroad, if you are away for long periods of time or find it difficult to complete paperwork.

This type of power of attorney is known as an ordinary power of attorney and gives someone else the power to handle your financial affairs on your behalf.  You can enable that person to do anything you would do yourself or you can restrict that power so they are only allowed to do certain things, such as buying or selling a house, or operating a bank account.

A power of attorney made by an individual can operate for a long period of time. An Ordinary Power of Attorney made by a donor in the capacity of trustee (which includes jointly-owned property) cannot last for more than a year, whereas lasting power of attorney can last indefinitely.

Trusts for disabled individuals

Several Morrisons solicitors are listed on MENCAP’s register of specialist lawyers who advise on issues affecting the disabled and vulnerable.

It is vital that the vulnerable individuals and those with a disability, and those closest to them, seek specialist advice regarding future financial arrangements. We’re experienced at providing advice in a sensitive and discrete manner.

A number of our lawyers specialise in advising disabled individuals and their loved ones in respect of their Wills and the tax treatment of trusts for the disabled. In particular, we can assist in preparing Wills to ensure that individuals who are in receipt of means tested benefits can still be adequately provided for without affecting their benefits entitlement.

We can also advise on the use of Disabled Persons’ Trusts, which make the person with the disability the principal beneficiary. Using this type of trust means a beneficiary does not lose their entitlement to benefits.

The taxation regime applicable to Disabled Persons’ Trusts is more favourable than other trusts.

There is a balance to be achieved between the type of trust that may be most suitable and taxation associated with that trust. Our experts can offer sympathetic and specialist advice to guide you through the complex and competing issues when providing for disabled and vulnerable loved ones.

The elderly and vulnerable

The Court of Protection and Office of the Public Guardian protect and manage the financial affairs and personal welfare of people with mental incapacity.

The involvement of the Court of Protection can result from an accident rendering the client incapable; mental illness; medical accident; negligence or degenerative diseases.

Our dedicated team of specialist lawyers work with vulnerable clients to allow them to make decisions themselves as far as is possible, while ensuring they are given advice with their best interests in mind.

We can also assist you by providing support in dealing with the Court of Protection. This may include help in the process of the appointment of a Deputy by the court to act in a person’s interests. Our specialist team may also assist existing attorneys and Deputies in fulfilling their duties as well as in the appointment of new trustees to enable sale of a property, authorisation of gifts and making a statutory will, as well as a variety of other circumstances relating to elderly and vulnerable clients.

For many clients we act as a professional Deputy, liaising closely with the family and/or carers to fulfil their needs and act in the best interests of the client.

In most cases the need for the appointment of a Deputy and the lengthy application process involved can be avoided if you make a lasting power of attorney.

Many of our lawyers are members of Solicitors for the Elderly, a national organisation providing and promoting comprehensive and independent legal advice for older and vulnerable people, their families and carers.

Elderly care and long term care planning

The legal issues affecting elderly clients, their families and carers can become complicated and there is often a need for clear and reliable advice in the important area of long-term care planning.

We offer sound advice in a professional and empathetic way on a wide variety of issues, including powers of attorney, Court of Protection, management and protection of assets and effective planning for long term care.

We can also advise on the impact of nursing home fees and the effect this will have on your ability to leave assets to your family. If required we can refer you to a suitable independent financial adviser.

Contact a member of the elderly care team If you or a loved one need advice in respect of any of these issues.  We are happy to set up home, care home or hospital appointments.

Advance decisions (living wills)

An advance decision, commonly referred to as a Living Will, is a statement you can make during your lifetime about the medical treatment you may or may not wish to receive.

The terms of the Advance Decision come into effect during your lifetime if you lack the capacity to make such decisions.

An Advance Decision can be in oral form with supporting evidence, but this may result in ambiguity about your wishes.It is therefore always advisable to have a written Advance Decision to ensure clarity in this respect.

If the Advance Decision includes a refusal of life-sustaining treatment, it must always be in writing.

It is also possible to sign a health and welfare lasting power of attorney appointing a friend or relative to make decisions relating to your health and welfare in the event of future mental incapacity.

Foreign wills, assets and domicile

With free movement of employment within the European Union and large employers operating on a global scale, increasing numbers of people have their assets located in more than one country.  This has radically increased the complexity of the issues relating to wills and estate planning. 

If you or someone in your family finds themselves in this situation, it is extremely important that you seek specialist legal advice. Our expert lawyers will ensure that your wishes are carried out effectively with the minimum payment of tax.

Foreign assets and wills
If you have assets located outside England and Waless, it may be advisable to have a will drawn up in the jurisdiction in which they are located. It is very important, if you have a will in more than one country, that you inform your legal advisers in both countries to avoid any conflict between the wills and ensure that one has not been revoked by the other.

You must also ensure that legislation in a foreign country in which you have assets does not conflict with your will. For example, a number of countries have the legal concept of ‘forced heirship’. This can supersede your will and means certain individuals may automatically be entitled to an asset in your estate irrespective of your wishes.

Domicile
This is a concept that is particular to England and Wales and has consequences for inheritance tax.  In English law, everyone has a ‘domicile of origin’, which is usually that of their father’s. This cannot be changed unless you acquire a ‘domicile of choice’, making that country your permanent home with the intention to remain there for the rest of your life. In practice, this can be very difficult and involves severing numerous ties with your ‘domicile of origin’. 

Our advice is to seek specialist advice if you think issues of domicile may apply to you. Morrisons’ team of experts can guide you through the tax pitfalls and minefield associated with foreign wills to ensure an integrated approach to all your affairs.

We provide lawyers who specialise in this area and are registered Trust and Estate Practitioners and members of the Society of Trust and Estate Practitioners (STEP) .

Asset protection

Many of our clients have worked extremely hard over a number of years to build up their personal and family wealth. 

There have also been dramatic increases in property prices, particularly in the South East of England, in recent years, often making the family home an increasingly valuable asset. Unwittingly, many individuals find themselves in a situation where inheritance tax, capital gains tax and income tax could significantly erode the value of their estate.

At Morrisons we provide comprehensive advice and in each case develop a strategy for the best ways in law to protect the value of your home and reduce or eliminate inheritance tax and capital gains tax, often using a combination of trusts and available exemptions or reliefs. This advice and tax mitigation strategies developed by our experts will be tailored to your specific needs based on a detailed understanding of your family circumstances and objectives.

We act for many owner-managed businesses, high net worth individuals and those domiciled outside theUK. We have the expertise to advise on the most complex of situations, either working in partnership with your existing advisers, or through the combined expertise of our specialist lawyers across all departments to provide a deeply integrated approach to your affairs.

Our lawyers specialise in advising on making tax efficient wills, lifetime gifts, trusts, reducing the potential taxes payable on your death and protecting your home and other assets should you need to go into nursing care.

Many of our lawyers are registered Trust and Estate Practitioners and members of the Society of STEP. David Kingham, Head of the Private Client department, is also a member of the Chartered Institute of Taxation.