Welcome to the BBS Law Private Client round-up of news and cases of interest from the first few months of 2022.

Probate News

Probate Applications on the Rise

The Ministry of Justice has confirmed that there were 63,414 applications made for Grants of Representation (‘Grant’) in October to December 2021. For the whole of 2021 there was a 7% increase on applications for a Grant from 2020– with a total number of 273,422 applications.

The average time for a Grant to be issued after submission of the application is 8 – 12 weeks with 81% of applications being made digitally using the Probate Service’s online system.

The speed of issuing a Grant is affected if the case has been ‘stopped’ for any reason (which can occur when there’s a dispute about either who can apply for probate or issues with a Will or proposed Will, or if an error is identified and a request for further information made). It takes on average 17 weeks to issue the Grant in these cases.

When a probate case is contested, the Chancery Division of the High Court deals with the matter. In 2021 there were 104 contested probate cases, up from 68 cases in 2020 as there has been an increase in people who seek to challenge Wills.

Probate Fee: Another Price Increase

The Ministry of Justice has announced a fee increase for all users. Previously there were different fee levels depending on whether a solicitor was making the application (£155) or a non-solicitor (£215).

As from 26th January 2022 there is now a single flat fee of £273.

The Law Society of England and Wales president I. Stephanie Boyce responded:

“We support the MoJ’s aim to make a simpler, more streamlined process for users of the probate service, and we understand funds are needed to help this change and development.

“However, we query why the UK government has decided to increase fees at this time, particularly as the probate service is still facing delays… This is unacceptable, the service must be timely and allow executors to settle a loved one’s estate.”

Whilst this is a significant price increase (to which we are all becoming accustomed at present), it is a considerable improvement on the proposals from recent years suggesting that the probate fee should be based upon the value of the estate.

Will News

Remote Witnessing: Time Limits Extended

The government has extended legislation to permit the remote witnessing of Wills until
January 2024.

Prior to Covid it was unthinkable that Wills could be witnessed in any way other than in the physical presence of two witnesses. Indeed, a leading case on this issue dated back over two hundred years, so this was unambiguously settled law.

However, in July 2020, the UK government brought in measures to allow remote witnessing of Wills via video link for an initial two-year period to make this easier during the pandemic period. This has now been extended to 31 January 2024 to support people who are isolating, vulnerable or in case of further restrictions.

A recent Law Society survey found that only 14% of responding solicitors who drafted Wills during lockdown utilised remote witnessing. Indeed, it is always our preference to witness Wills in the presence of our clients wherever possible. However, remote witnessing is a useful tool as a last resort and infinitely preferable to a testator feeling unable to execute their Will at the present time.

Testamentary Capacity: The Benefit of Using an Experienced Solicitor

The recent Court of Appeal case Hughes v Pritchard has raised some important issues about evidence provided when the issue of a testator’s capacity is subsequently challenged.

Mr Hughes (the deceased) was a wealthy farmer who died in March 2017 aged 84, having executed his final will in July 2016 (the ‘2016 Will’) when he was living with moderately severe dementia and was grieving for his son Elfed, who had died a few months earlier.

Mr Hughes left significant land and business interests to his surviving son and executor, Gareth. When the Will was submitted for probate, Elfed’s wife and son challenged the Will on the grounds that Mr Hughes lacked mental capacity in 2016.

The solicitor who prepared the 2016 Will had acted in accordance with the ‘Golden Rule’ for preparing Wills with those who have questionable mental capacity. The solicitor made very detailed attendance notes and asked the deceased’s GP for a medical assessment of his capacity to make a Will. As a result of this, the GP determined that Mr Hughes did have capacity to make his Will.

During the Court hearing the parties also instructed a single joint expert to give his opinion on capacity based on the records from the time. The expert also agreed that the deceased did have capacity to make his Will in 2016.

During the first hearing of the case, the GP changed his opinion as to Mr Hughes capacity. This was on the basis that the GP had thought that the 2016 Will was only making some small changes to Mr Hughes’ previous Will rather than making significant changes. On this basis the Judge stated that the Will should be disregarded and the previous Will would take effect.

This decision was challenged in the Court of Appeal, which overturned the previous judgment and held that the 2016 Will is valid. The Court of Appeal stated that there is a very strong presumption that a Will which has been drafted by an experienced independent lawyer should only be set aside on the clearest evidence of lack of mental capacity. This was also combined with the clear medical opinion which had been obtained at the time that Mr Hughes did have testamentary capacity. The combined contemporaneous evidence of the GP and solicitor, and the subsequent independent expert did not allow for a possible finding of lack of testamentary capacity.

This case is an example of how important it is that a Will is prepared by an experienced professional solicitor. We understand the disputes that can happen and ensure that Wills are prepared correctly so as to minimise future successful challenge.

LPAs

UK Government urges more public awareness of LPAs

Accordingly to UK-wide research by Which?, the general public does not fully understand Lasting Powers of Attorney (‘LPAs’) and often has difficulty getting banks to deal with them correctly.

A wide-ranging survey found that on average only one in seven people have given someone else power of attorney over their affairs due to a lack of awareness, combined with an outdated and difficult system.

Whilst 85% of respondents had heard of LPAs, there was widespread confusion about their use. For example 16& of people thought that completing an LPA meant they lost control of their finances, and 77% of people did not realise that an LPA could not be created by someone who has lost mental capacity.

The survey also found that even those with a valid, registered LPA could experience difficulty in dealing with the donor’s finances.

The Office of the Public Guardian (a department of the Ministry of Justice responsible for registering LPAs) (‘OPG’) is now being urged by the Society of Trusts and Estate Practitioners (STEP) to focus on resolving these issues. Emily Deane, STEP Technical Counsel and Head of Government Affairs stated:
‘A “fast-track” procedure and channel should be established to deal with urgent matters’,
‘We are calling on the OPG to do more to end the emotional, financial and physical abuse of older or vulnerable people, and protect them from controlling or coercive behaviour’,

Deane adds:

‘The government also needs to focus on educating and informing the public about LPAs and why they are so important.’

The Ministry of Justice recently held a consultation on LPA reform in England and Wales and we now await their response and proposals for improvement going forward.

Office of the Public Guardian confirms Attorneys are entitled to see donor’s medical records

New guidance for NHS Staff has been released by the OPG regarding the disclosure of a Donor’s medical information to their Attorneys.

The new guidance clarifies that Attorneys appointed by an LPA should be able to access medical records if these assist them in making decisions which are in the Donor’s best interests.

On this basis, NHS staff should comply in providing access in a timely manner.

Currently there is no current statute allowing an Attorney to make a subject access request for medical records on behalf of an incapacitated person, but the advice given by the Information Commissioner’s Office is that ‘it is reasonable to assume that an attorney with authority to manage the individual’s property and affairs, or a person appointed by the Court of Protection to make decisions about such matters, will have the appropriate authority’.

Discretionary Management Schemes – OPG issues welcome clarification

A question we always ask clients who are preparing a Property and Finance LPA is whether they have any investments managed by a third party – known as a discretionary management fund (where day-to-day management of investments is carried out by regulated financial professionals). Currently we need to insert a standard clause in Property and Finance LPAs to let any such managed investments continue in the event of a loss of capacity.

The OPG has now confirmed that it will change its guidance on the need to have such an express clause.

The news has been welcomed by the Law Society of England and Wales as a positive step as it could mean a reduction in expense and bureaucracy for those who have omitted to include such a clause. Currently an Attorney wishing to invest a donor’s funds in a managed fund would have to make an application to the Court of Protection if the LPA did not include the relevant express provision.

Following discussions with practitioners, including members of the Law Society’s Mental Health and Disability Committee and Wills and Equity Committee, the OPG has agreed to review and revise its position and is now committed to changing its guidance so that an attorney can invest funds via a discretionary management fund without having to make a Court application.

Trusts

New Trust Registration Rules

With the introduction of The Money Laundering and Terrorist Financing (Amendment) Regulations 2022, the deadlines for extended trust registration have been changed with certain low-risk trusts being excluded from the need to register. In addition, from 1 September 2022 the information held on the register will be available to any third party who can demonstrate a ‘legitimate interest’ in the information held on the register rather than only available to law enforcement agencies.

The registration deadline for trusts newly required to register has been deferred until 1 September 2022, and the time limits for trustees to inform HM Revenue & Customs (HMRC) of changes to the information held on the register is extended to 90 days from the previous 30 days.

Certain types of life insurance trusts that pay out only on death, serious illness or disablement are added to the list of excluded trusts, as are bank accounts held on behalf of minors or adults who have lost capacity.

Baroness Penn, confirmed to the House of Lords:

‘This instrument will amend the money-laundering regulations as they relate to trust registration, to ensure that the regulations strike the appropriate balance between providing an effective anti-money laundering tool for law enforcement and minimising the administrative burden on those who use trusts for legitimate purposes’,

HMRC has stated that it will take a ‘proportionate approach’ to any registrable trust that comes to its attention after the 1 September 2022 registration deadline.

Tax

The Spring Budget

The Chancellor did not announce any new changes to the Inheritance Tax regime, with an announcement being made in March that IHT bands will remain frozen until 2026.

Accordingly, those with estates worth more than £325,000 (or £650,000 for a married couple or civil partners, potentially increasing to £1m where the family home is left to direct descendants) who face a future IHT liability can continue to plan and take legitimate steps to mitigate the exposure of their estate to this 40% tax.

Despite the fact that planning can reduce tax exposure, HMRC is receiving increasing revenues from IHT, as more estates become liable due in large part to rising property prices. From April 2021 to February 2022 HMRC received £5.5 billion in IHT receipts, being £0.7 billion higher than in the same period a year earlier.

Looking forward, any changes by the Chancellor to the IHT regime may be influenced by the Office of Tax Simplification’s 2019 report. The headline recommendations of this report were as follows:-
1. Removal of rebasing of capital gains tax (‘CGT’) on death when a relief (such as business relief) or an exemption (such as spouse exemption) is available.
2. Removal of excess income gifting (a very valuable tool when estate planning)
3. Tightening up of business relief and agricultural relief.
4. Removal of taper relief and instead reducing the gifting window from 7 year to 5 years.

It remains to be seen what changes will be made in due course and what impact this may have on existing estate planning. On this basis we always recommend regularly reviewing your Wills to take into account any changes in the law, or in your own personal circumstances.

Kerry Blackhurst
Private Client Solicitor
March 2022

A Lasting Power of Attorney (LPA) is a legal document that lets you appoint people to help you make decisions or make decisions on your behalf.

The people you appoint to help you are referred to as your ‘Attorneys’. An Attorney can be any person aged over 18. They do not have to live in the UK or be a British Citizen. You may wish to appoint a family member or friend, or you can appoint a professional such as an Accountant or Solicitor to act on your behalf.

“You can only create an LPA whilst you have capacity.”

You can only create an LPA whilst you have capacity.  If you lose capacity and someone needs to manage your affairs, they will need to apply the to the Court of Protection for a Deputyship Order.

LPAs have to be registered with the Office of the Public Guardian before they can be used. Once everything is in place you can have peace of mind that you have appointed someone to champion your best interests when you are unable to do so, whether it is caused by illness, old age, or an accident.

Types of LPA

There are several types of LPAs:

  • Property and Financial Affairs
  • Health and Welfare
  • Business LPA

Property and Financial Affairs LPA

A Property and Financial Affairs LPA gives your Attorney(s) the power to manage your property and finances in the same way they could manage their own. For example, they could sell your property, open close and operate your bank accounts, deal with the sale of any other investments and manage any pensions, benefits or allowances that you receive.

Property and Financial Affairs LPA have proved themselves as a vital tool where joint bank accounts are involved. For example, if a husband and wife have a joint account and one spouse loses capacity, then the spouse with capacity will not be able to access or make decisions regarding the joint account without a Property and Financial LPA.

“Property & Financial Affairs LPAs are useful for joint bank accounts”

If you run a business, then it is possible to have two separate Property and Financial Affairs LPAs. One can be dedicated to your personal affairs, and the other dedicated to business affairs. For more information, please see Business Lasting Powers of Attorney below.

Health and Welfare LPA

A Health and Welfare LPA allows you to appoint Attorneys to make decisions on your behalf regarding your personal health and welfare. These decisions can only be made when you lack capacity to make these decisions for yourself, for example if you are unconscious or because of a condition such as dementia.

You can grant your Attorneys the power to make decisions regarding life sustaining treatment and other significant decisions such as the type of medical treatment and health care you could receive and making decisions about care homes. It is important to know that you can include instructions and guidance to your Attorney about how they should make decisions.

Business LPA

Business LPAs are a form of Property and Financial Affairs LPA which only takes effect over your business affairs.

If you had a Property and Financial Affairs LPA in place, but not a Business LPA in place, it could mean the persons you have appointed under your Property and Financial Affairs LPA are able to make these corporate decisions on your behalf. The Attorneys appointed under the Property and Financial Affairs LPA may have no knowledge of your business, and ultimately may not be the best persons to be managing such affairs.

A Business Lasting Power of Attorney allows you to appoint the best people to administer your commercial affairs when you are unable to. These are often people who have a good working knowledge of your business affairs.

The Attorneys appointed under your Business LPA will be able to sign cheques and other important documentation on your behalf. This can be particularly useful if you become unwell, seriously injured or become mentally incapable.

Appointing Attorneys

As previously mentioned, you will need to appoint people to act as your ‘Attorney(s)’. They must be over 18 and must not have been declared bankrupt. When appointing someone to act, some things to think about include about how well you know them and if you trust them to make decisions in your best interests.

You can appoint a minimum of one person to act as your Attorney. In practice, most people appoint two or three at most, but you can appoint more than this. You can also appoint replacement Attorneys. Your replacement Attorneys will step in if your initial Attorneys are no longer able to act.

One you have chosen who should act as your Attorney, you can stipulate how they can act and how they should make decisions. You can also include guidance to your Attorneys to aid them in the event they need to make any decisions. For example, you can instruct your Attorneys to act ‘jointly and severally’. This means that your Attorneys could act together or apart when making decisions. Alternatively, you could appoint them to act jointly only, meaning that all Attorneys have to make decisions together.

There is no ‘one size fits all’ approach to appointing and instructing your Attorneys. There are individual advantages and disadvantages in doing so, and it is best practice to obtain legal advice before making any decisions.

Costs

As well as legal fees, there is a registration fee payable to the Office of the Public Guardian. This fee is £82 per document to be registered. If a Lasting Power of Attorney is not registered, it cannot be used by your Attorneys.

If you have any questions about Lasting Powers of Attorney or if you would like help with any estate planning, please contact either Kerry Blackhurst (Kerry@bbslaw.co.uk) or Carolyn Watson (carolyn@bbslaw.co.uk) in the BBS Private Client Team.

By Kerry Blackhurst

In a word, yes.

The authority of the Executors to deal with the property comes from the Will and then is confirmed by the Grant of Probate. Where there is no Will, or valid appointment of Executors, then the authority comes from the Grant itself.

But there are some important considerations

  • Although you can exchange without the Grant of Probate, you will need the Grant to register at the Land Registry so any exchange should therefore be conditional upon Probate being granted and the contract should stipulate a completion date for a set number of days after the Grant of Probate has been issued.
  • As with all conditional contract situations you should consider other relevant issues. For example, a Grant of Probate may take a lot longer to receive than anticipated so the parties ought to include a suitable backstop date in the contact. The buyer will have considerations about its mortgage expiry and even valuation expiry which need to be factored into any time period provided for the Grant to be obtained.
  • Remember also that where a deposit is paid on exchange, where completion is delayed, that deposit will be tied up and may prevent the buyer being able to pursue other property transactions.
  • Exchanging subject to a Grant of Probate is unlikely to work where the buyer is in a chain as a fixed date for a completion is not going to be achieved.

It is also worth noting that in some limited circumstances there is an exemption for some or all of your SDLT where a property is purchased from Personal Representatives.

So, in summary, yes you can exchange before you receive a Grant of Probate is received, but plan ahead.

Kerry Blackhurst is head of our Private Client team.  Kerry works closely with our property team and provides advice to clients on a variety of estate planning matters.

By Kerry Blackhurst

The current COVID-19 situation has understandably led to many people wishing to make or update their Wills, with reports indicating a 30% surge in client enquiries nationwide.  BBS Law are very happy to assist in these times and this summary will be helpful in reminding you on what the requirements are for a valid Will and how we can help you with the formalities.

The difficulty (aside from the fact that most solicitors favour face-to-face meetings when taking instructions for preparing a Will) is that there are very strict formalities required to make a valid Will – not least the need for two witnesses to be present at the time when the Will is signed.

Whilst the Ministry of Justice, Law Society and other key parties are debating whether the formalities relating to the preparation of Wills can be relaxed, it is important for our clients to know that by adapting and innovating, we are still able to provide the service they require.

What are the Requirements for a Valid Will? 

The law relating to Wills is set out in the Wills Act 1837. A Will must be executed in accordance with the provisions of this law in order to be valid. If a Will does not comply with these requirements, it will be held to be invalid and means that the deceased’s estate will have to be administered as an intestacy. This can bring unintended and unacceptable consequences for the original beneficiaries.

The relevant requirements are that the Will should be:

  1. In writing, and signed by the testator, or by some other person in their presence and by their direction
  2. The testator intended by their signature to give effect to the will
  3. Signed by the person making the Will (the testator) in the presence of two independent witnesses (who must be present at the same time).
  4. The witnesses must each sign the Will in the presence of the testator

During the current time it would be very helpful if the requirement for testator and witnesses to be “present” could extend to a virtual presence, for example over Zoom. Unfortunately, this has not happened and the requirement remains to be that testator and witness must be physically in each other’s presence.

How Does COVID-19 Affect the Making of a Will?

The key impact is that the requirements or recommendations of social distancing, especially for elderly or vulnerable clients, make it difficult to arrange for witnesses to be present at the time of signature, as it is likely that any members of their household are beneficiaries of the Will and therefore should not also be witnesses.

The law is very clear that witnesses of a Will should be independent and should not be beneficiaries of the Will. Indeed, any gift to a Witness would be held to be invalid.

How Can BBS Law Help?

Whilst our solicitors are working from home for the time being, we are regularly speaking to our clients to take instructions over the telephone or by video conferencing (WhatsApp and Zoom are especially popular). We are therefore fully able to advise upon and draft Wills to meet our client’s needs.

For our clients in the London or North West England we offer all manner of solutions to arrange for the signature of Wills, as we are able to provide two witnesses who will undertake a home visit. We have witnessed Wills through windows, in cars and in gardens, all safely observing current requirements for social distancing, and resulting in valid Wills being executed.

For clients elsewhere, we are able to provide final versions of Wills with full instructions for the signing of the same. We can also be present over the telephone or by video call to supervise the signing of the Will by testator and Witnesses to ensure that this is completely in the correct manner.

BBS Law continues to be open for business and meeting our client’s needs, so please do not hesitate to contact Kerry Blackhurst who heads our Private Client team on 0161 832 2500 to discuss your own circumstances.

By Kerry Blackhurst (Head of Private Client Team)

Coronavirus has brought many issues into sharp focus, and in the midst of the pandemic you may find yourself thinking about your personal affairs and how you should now put these in order whilst you have a little more time on your hands to do so.

Most of us recognise that managing issues relating to our estate and end of life is important but we do have a tendency to leave these matters to another day because we are so busy living our lives. Whilst matters are on a “temporary” hold this may be the very best time to put in place the appropriate safeguards for the benefit of your family in the future.

As a firm we have always focused on our clients’ needs and at a time like this we want to reassure you that our Private Client Team is still fully available to assist with whatever you need including advice on:

Wills

Wills are vital to ensuring that your assets pass in accordance with your wishes. Our team can draft bespoke Wills to suit your requirements. Although we usually prefer to see our clients on a face to face basis, we are able to offer alternative solutions to accommodate current social distancing requirements.

Dying without a Will means that you die intestate. There are strict rules to dictate who inherits from an intestate estate which may produce an outcome you would not want. Those you care about, particularly vulnerable persons, unmarried couples and step-children can experience significant difficulty from an intestacy.

Even if you have a will in place already, you want to consider if now is a suitable time to update a previous Will.

Lasting Power of Attorney

A Lasting Power of Attorney (‘LPA’) is a vital document in the event you become incapacitated. An LPA is a legal document that allows you to appoint people to help you make decisions, or make decisions on your behalf. There are two different LPAs: Property & Finance and Health & Welfare.

A Property & Finance LPA allows you to appoint trusted people (your ‘Attorneys’) to deal with your property, bank accounts, investments and similar assets when you are unable to do so. Your Attorneys will also be able to manage direct debits, pensions and apply for benefits on your behalf.

A Health & Welfare LPA allows your Attorneys to make decisions about your healthcare and everyday life when you are unable to do so yourself.

LPAs must be registered by The Office of the Public Guardian (‘OPG’) in order to be effective. The OPG is still registering LPAs at this time, although it may take slightly longer that the usual 10 – 12 weeks registration period.

General Powers of Attorney

A General Power of Attorney (‘GPA’) can be effective immediately and temporarily enables an Attorney to make certain decisions on your behalf regarding your property and finances. A GPA does not have to be registered by the OPG and can only be used for as long as the person who made it has capacity.

Advance Directive 

Also known as an ‘Advance Decision’ or ‘Living Will’ this is a legally binding document that allows you to make decisions about your future care, specifically the circumstances in which you would wish to refuse clinical treatment.

Advance Directives help communicate your preferences with your loved ones and clinicians when you are no longer able to do so.

Care

If you have a family member requiring care at home or care in a residential setting, we can provide you with advice and assistance to help you understand how this can be funded, whether privately or with financial contribution from your Council or NHS. Arranging care for a loved one can be a stressful and complex issue and we can provide you with straightforward advice to help you make the right decisions.

 

For Further Information: If you require any advice, please do not hesitate to contact our Private Client Team on 0161 832 2500 or kerry@bbslaw.co.uk