The Land Registry, in their useful IHT guide number 70, go on to explain what happens if you didn’t make the trust before the first death of a couple and talks about how you can changes a person’s will after they have died; but there are specific rules that govern this.

Trust created after the first death

If spouses or civil partners whose families would benefit from such a scheme do not take the necessary steps before the first death, the surviving partner and their family can enter into a deed (often called a deed of family arrangement) to create one. The deed will vary the disposition of the property comprised in the deceased’s estate that has already taken place at the time of the death – whether effected by will, under the law relating to intestacy or otherwise (for example, under a right of survivorship in respect of joint property) – in order to put the appropriate scheme in place and permit the IHT savings described in section 3.1 (Trust created before the first death of a joint proprietor). Provided this is done within the period of two years after the first death, tax law treats the arrangements as if they had been made by the partner who has died.

Finally, a section of the guide answers the long lost question about ending a trust ‘How can a trust be ended?’

Bringing the trust to an end during the surviving partner’s lifetime A nil-rate band discretionary trust may subsequently be found to offer no tax advantage, either because of the introduction of transferable nil-rate band on the death of the second partner on or after 9 October 20075, or because increases in the individual IHT exemption have taken the nil-rate band above the combined value of the assets in the trust and the survivor’s own assets. If this is the case, a surviving
partner may, with the agreement of the trustees, decide to bring the trust to an end in order to make the assets available during their lifetime. Provided it takes place within two years of the first partner’s death, HM Revenue & Customs will treat an appointment of the trust assets in favour of the survivor as if they had been left to them outright.

The appointment is of no interest to Land Registry, as it is not of the legal estate. But if, as a result, the surviving partner becomes entitled to the whole of the beneficial interests free from any encumbrance, they may apply to cancel any Form A restriction, and those with the benefit of other restrictions can apply to withdraw them. A statutory declaration or statement of truth by the applicants, or a certificate by their conveyancer, that none of the beneficial shares in the property has been encumbered will need to accompany an application.

Our genuine thanks goes to the Land Registry for their completion of this guide.

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The Land Registry finally got around to producing an inheritance tax Practice Guide, number 70, at the end of 2009. It’s use is only about 7 years late (the general public could have done with this back then), but it neatly falls into action when 50% of inheritance tax (IHT) planning is no longer necessary since the chancellor changed the rules and allowed married couple to pass on unused IHT to their spouse. At the least the other 50% or those with IHT wills, will find this invaluable.

Nevertheless, the guide does have some very useful insights which is why it’s brought to your attention here. The Land Registry have a high number of very good guides to help and explain to the general public, as well as professionals, how to operate within their rules.

What is a nil-rate band discretionary trust?

A discretionary trust is one whose trustees have discretion about how to use the income generated by the assets placed in trust and how eventually to distribute those assets among a class of potential beneficiaries.

A nil-rate band discretionary trust is a version of such a trust used in estate planning to reduce liability to IHT on the death of a surviving joint proprietor. It is commonly used in areas where residential property prices exceed the IHT threshold, with the additional aim of avoiding the need to sell the family home to meet IHT liability.

Such a trust can also be used to protect assets that are intended to go to particular beneficiaries (eg children from a previous relationship) in the event that the survivor remarries. It can also protect assets that otherwise could be liable to means testing if the survivor had to go into long-term care, or could be vulnerable to creditors if the survivor got into financial difficulties.

We couldn’t have written this better ourselves, so they have at least managed to grasp the task of simply explaining what an IHT trust is and what it does.

The guide then proceeds to inform us of the differences of creating the trust before the death of a joint owner of the property.

If any real property to be involved in the trust is not already held under a tenancy in common, the proprietors sever their joint tenancy. Each spouse or civil partner makes a will leaving a bequest equal to the value of an individual’s IHT exemption (the ‘nil-rate band’), which, on the first partner’s death, will pass not to the surviving partner but to trustees who will hold it under the terms of the trust, also created by the will, for a class of discretionary beneficiaries, usually including the surviving partner and the children and/or grandchildren of the family. Normally, the surviving partner can benefit from the trust by receiving discretionary payments or loans from the trustees. When the surviving partner dies, the property held under the trust does not form part of their estate, and the surviving partner’s beneficiaries save the IHT that would have been payable on its value. By contrast, if the joint proprietors hold the property as beneficial joint tenants and make no discretionary trust arrangements in their wills, after the second death the whole estate will pass to the survivor’s heirs, subject to IHT. The liability to IHT will normally be reduced only by the survivor’s individual exemption, and if the family home forms the bulk of the estate it may have to be sold to meet the IHT liability.

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Two distinctly different sides of a point of view are being heard in the High Court, presently. The sons of the deceased father claim one story and the sisters of the same father claim an entirely different point of view. While both stories sound plausible, it is down to a judge to decide who is telling the truth.

LSUK viewpoint:

Some facts are clear: George Key died in 2008. His wife, Esme had died aged 85 in 2006. While in the so called ‘grieving period’ George signed a new will just days after his wife died. They had been married for 65 years, a feat of achievement in itself.

Sisters viewpoint:

Miss Key, 65, who lives near Norwich, and her sister, Mrs Boykin, 56, who is based in the U.S., said it was ‘perfectly logical’ for him to leave his daughters £300,000 each because he had already left land worth an equivalent amount to his sons.

A solicitor, Michael Cagde, had acted for the deceased for many years by the time the last will was drawn up by. He has given evidence that Mr Key had the necessary capacity to make the will and knew and approved of its contents, the court was told.

The girls claim that their father was bothered mostly, after the death of his wife, with who was going to look after him.

Brother’s viewpoint:
Richard, 67, and John, 64.

The sisters used alcohol and sleeping tablets to get the father into a position of not being able to understand what was happening and then getting him to sign the updated will.

Their father was on a route to possibly suffering from Alzheimer’s. He had wanted them to inherit the farm in Norfolk, as they had worked in the family business since they were 15. The 2001 Will says that the brothers would inherit most of the £1.2million estate, with the sisters getting £15,000 each.
Of course if Mr Key did know what he was doing his will of 2006 would be valid while if he didn’t know what he was doing then the 2001 will would stand.

The closeness of the new Will being signed after the death of his wife shouldn’t necessarily influence the outcome. It’s perfectly feasible for someone to want to update their will after the death of a major party to the estate.

For the sake of clarity we at LSUK must point out that we were not involved in the making of these wills, the family are not our clients, but our professional people always attend signing and witnessing of the Will, so we would have known the client’s condition at that stage.

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If this was a screenplay, producers would tell you it’s a silly idea, quite ridiculous and impractical. Unfortunately, reality can be quite different.

The Conservative political party insists that pensioners could now be forced to join a ‘pay as you die’ council tax scheme.

Tory officials have made claims that the plans amounted to a death tax, giving pensioners the option to defer council tax bills until after they have died.

Currently a deferment scheme is being piloted in Northern Ireland. In theory this could be extended to England, Scotland and Wales.

The idea is that all people can make the choice to stop paying their local council tax rates. The outstanding bill, plus interest of course, can be collected when the property is sold or they die, whichever happens first.

The opposition party say that if this plan is introduced it could become the second inheritance tax plan. They also make clear in their press release that they regard this as a savage raid on the savings of the elderly. They maintain that pension funds were savaged first, secondly social care and recently people’s homes. They claim that the vulnerable at risk will be pressurised into signing away the equity in their homes to stave off the taxman.

Common sense can see the good in this idea especially whilst pensioners have lost so much value in their pension funds, but on the other hand if councils cannot take in enough council tax money now while they are desperately short, they’ll have to increase the rates to the people that are actually paying at the moment and then live in the hope that they will be able to receive the council tax payments in years to come, which may be decades in some circumstances.

Prime Minister Gordon Brown has been attacked for these plans. However, it wouldn’t make common sense for him to extend these plans before the general election in April or May of 2010 and even better he should make no mention of it in his party’s manifesto if he believes he has any chance of winning the next election.

The calculator at the Conservative party estimates a 20-year deferment on the average home in England would create a £73,000 bill on top of inheritance tax and possible new charges for personal care.

It would take a brave and foolish man to incorporate such a scheme, but there is no doubt that we in society take now and pay later. If we are able not to pay council tax now, many may feel it better to leave the problem to somebody else at a later stage.

How will you write this bill into your will?

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Lionel Jeffries, the actor and film director, has died at the age of 83 after a long illness. He died at his nursing home in Dorset. He leaves behind his wife Eileen Mary Walsh and their three children.

There can’t be many of us who haven’t seen both Chitty Chitty Bang Bang and the Railway Children, two of the greatest movies for both children and their parents/guardians. Many generations to come will be watching these films for years and years.

He was born in the East End of London in 1926 and served with the British forces in Burma during the second world war before starting his acting training at RADA, then working both on stage and screen from the 1950s.

In Chitty Chitty Bang Bang his role was to play grandpa Potts, as Dick Van Dyke’s father. It didn’t seem to matter at the time that Jeffries was six months younger.

He wrote the screenplay and was the director of the Railway children based on E Nesbit’s book. The film co-starred Jenny Agutter and Sally Thomsett.

He may not be remembered for directing Wombling Free, the Womble movie.

Way back in 1971 he received the Red book from Eamonn Andrews, when he appeared on This is Your Life.

In more recent years he appeared on television playing parts in Inspector Morse and the popular Lovejoy.

He’s one of those faces you know you’ve seen in many movies over the years, you always appreciated his good humour and his ability to bring a smile to your face.

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This question often comes into focus when clients ask our consultants about the people and the funds that may, one day, be administered by a person on behalf of another.

Firstly, to refresh memory - what is a power of attorney (applies to Scotland only)?

A power of attorney is an authority given by an individual (known as the Granter) to another person(s) (known as the Attorney/s) to deal with aspects of the Granter’s affairs. This could relate to financial/property matters and/ or personal welfare.

Powers relating to the Granter’s financial /property affairs are known as “continuing powers” and may be given with the intention of taking effect immediately and continuing upon the Granter’s incapacity or beginning on the incapacity of the Granter. Welfare powers cannot be exercised until such time as the Granter has lost the capacity to make these decisions.

Our first advice is always:

• select people who will be able to look after your finances if you aren’t well enough to do so yourself
• choose people you trust
• pick people who look long term capable of ensuring your wishes are carried out
• be prepared to always review and update your power of attorney before it’s too late.

The Office of the Public Guardian (Scotland) OPG issues a number of statistics that reflect upon the process of powers of attorney going through their administrative center.

For example, from April 09 to March 2010 (obviously the year isn’t complete yet!) they show us how many applications have passed their desks:

• They have received 29,012
• They registered 28, 154
• 25, 933 were registered in line with their target of processing 100% of correctly completed Powers of Attorney within 12 working days of receipt at the office, so they achieved 92%.
• They rejected 3,429 which accounts for 10.9% of those received. Most of those mistakes are down to simple errors, often the document not being signed correctly in front of correct witnesses.

Most of these errors, if not all, can be avoided by using a professional consultant who will ensure the document is:

• Correct
• Completed
• Signed and witnessed properly

Of the first 28,154 in this working year, 1018 were Welfare POAs, 2,085 were continuing POAs while the greater majority, sensibly, were both Welfare and continuing POAs; 25,051.

Interesting facts surround the previous year’s POAs.

Clients are often worried that someone may abuse the use of a POA. In the year 2008-09 the OPG investigated just 155 POAs. That tends to look a small amount that people complained about over the course of a full year. Of course, they don’t tell us how many complaints were upheld and how many were disregarded.

The key to these facts is:

Ensure your POA is complete

• Up to date
• Registered and
• Accepted by the OPG.

To ensure the above, use a professional to help you at this very worrying time. Make sure you get it completed correctly.

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News from The Office of the Public Guardian (Scotland) 18 February 2010:

The majority of fees payable to the Public Guardian will increase on 1st April 2010. Customers are advised that from 1st April 2010, the fee for registering a power of attorney will increase from £65 to £70.

An extra fiver for peace of mind isn’t too much to worry about.

Most of the twenty different types of fees charged by the OPG are going up by five pounds, except a search of the registers, which remains the same, at £15.

Who we the OPG (Scotland)?

Here’s what they have to say about themselves:

The Office of the Public Guardian (OPG) which is part of the Scottish Court Service was established in April 2001 following the passing of the Adults with Incapacity (Scotland) Act by the Scottish Parliament. We are responsible for supervising the actions of those appointed in terms of the Act to manage the property and financial affairs of adults who lack the capacity to carry out these functions for themselves. We also provide a wide range of advice and guidance.

The Office of the Public Guardian (Scotland) operational budget for 2007/2008 is £2,153,920. This total figure incorporates both staff costs £1,913,124 (such as salaries, pensions etc) and non-staff costs £240,796 (telephones, postage, printing, etc).

The Office of the Public Guardian
Hadrian House
Callendar Business Park
Callendar Road
Falkirk
FK1 1XR
Tel: 01324 678300

Email: opg@scotcourts.gov.uk

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From various news sources around the world:

Hong Kong police have arrested a feng shui master after the High Court dismissed as fraudulent his claim to the estate of eccentric property tycoon Nina Wang.

In this week’s ruling against Mr Chan in the latest “Battle of the Wills” the judge devoted one-third of his 300-odd pages of his decision to analysing the signatures on the will in Mr Chan’s possession.

He found Ms Wang’s signature and those of witnesses to be a “highly skilled simulations”. Examination of that 2006 will showed that Ms Wang’s signature had been written across a crease after the crease had been made.

Tony Chan, a 50-year-old former bartender, was taken into custody after investigators searched his $US30 million ($34.6 million) home in the city’s upmarket Peak district.

“The police arrested a 50-year-old man surnamed Chan,” a police spokeswoman said.

“He is expected to be related to a forgery case,” she said, adding that files and a computer were also seized. “The case is still under investigation.”

Chan had argued unsuccessfully that he was the legitimate heir to Wang’s vast fortune on the basis of a will he produced which he said bore her signature.

Television footage showed Chan inside a blue police van, his face obscured by a curtain across the window as a crush of photographers struggled to get a picture.

His lawyer declined to comment on the arrest.

After the court ruling , Chan insisted that his claim to Wang’s estimated $US13 billion was valid and said he would appeal.

The high-profile case gripped the city and generated blanket media coverage, with Chan frequently cast as a charlatan who duped Wang by promising to find her kidnapped husband Teddy with feng shui rituals.

Teddy Wang disappeared in 1990 and his body was never found. He was declared dead in 1999, kicking off a heated legal battle between Wang and her father-in-law for control of her husband’s Chinachem Group. She eventually won the case just two years before her own death in 2007.

The pig-tailed billionaire, famous for her thrifty lifestyle and outlandish dress, was credited with growing Chinachem into one of Hong Kong’s biggest property developers.

Wang, once Asia’s richest woman, died of cancer at the age of 69, triggering a bitter feud between Chan and her charity, both claiming they were entitled to her fortune.

Earlier, police said they would study the court ruling, which described Chan as a liar who manufactured a forged will to inherit the fortune.

Judge Johnson Lam - who said Wang’s signature on the 2006 will leaving her estate to Chan was a “highly skilled simulation” - handed the entire estate to a charitable foundation run by Wang’s siblings.
“As far as her estate was concerned, she placed a higher regard on her charitable objectives than [Chan],” Judge Lam wrote in his 300-page ruling.

The trial heard that Chan held a slew of odd-jobs before embarking on a career advising clients on how to channel feng shui, an ancient Chinese system that claims to harness natural and spiritual energies.

The judge agreed that Chan and Wang had been lovers, but said Wang would not have viewed him as the right person to run her sprawling empire, which includes the Teddy and Nina office towers in Hong Kong’s New Territories.

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1. You’re too young if you haven’t reached your sixties.
Unless, of course, you have some assets that you’d like to leave to specific people including your partner/spouse/children and you consider that you ‘could’ die before reaching 60. It does happen.

2. I’ve nothing left to leave someone.
Unless, of course, you might just gain some assets over the years to come. You might win the lottery. A relation might leave you a legacy. You might join a company that runs a pension scheme.

3. I don’t own a property.
Unless, of course, you own other assets like your house contents, your vehicle, you’re part of a pension scheme, you have life assurance.

4. I don’t know when I’ll die.
Unless, of course, you prefer not to plan for the possibility by writing your will and then keeping it up to date so that when the inevitable does happen, your estate planning will be up to date.

5. I can’t think who to name as executors.
Unless, of course, you consider naming professional executors for this quite difficult task. It might be that your family would be quite pleased to carry out this work for you.

6. The government won’t get my money.
Unless, of course, you don’t plan properly using wills for trust clauses, inheritance tax planning and general good financial planning.

7. My children won’t need guardians.
Unless, of course, you both die and you’d like social services to decide where your children should live, with whom and how they should live, especially if family could have looked after them.

8. We’re not even married.
Unless, of course, you prefer to see your assets go to your partner’s family so that you have to sell your home and move into something smaller because you didn’t plan properly.

9. Our disabled child won’t be able to cope.
Unless, of course, you’d prefer the local authority to take decisions upon your child’s lifestyle and financial planning, using your own money instead of the state’s money for their day to day care.

10. Our family won’t argue over our money and property.
Unless, of course, the evil greed of money separates family as they all want a larger share than they deserve, even your long lost cousins who never actually spoke to you.

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Stanley Lucas has just celebrated his 110th birthday which makes him the oldest man in Europe. He received his seventh birthday card from HRH Queen Elizabeth II.

Living in Bude, Cornwall, England, he says that he received his first card from The Queen when he was 100 and then a card every year since he reached 105. He doesn’t say why he didn’t get one for 101 to 104!

Born on January 15th 1900, he served in both world wars. He ran the family farm until 1948 and later served as vice chairman of the Bude Town Council.

Obviously he’s seen many changes over the years like getting his first telephone in 1938 and his first car a few years later when there were no driving tests; you just picked up your car and drove home.

He married Ivy, in 1926 and they stayed together until she passed away in 1963, a full 27 years ago. That’s longer than most people are married, but is a fact of life that many have seen over the years.
We hope his will is up to date because there is a good chance that he may have written his original will a long time ago.

For the most part, he will have seen many changes over the years. Queen Victoria was busy when he was born. He lived before television was even a real idea and radio was just a glint in someone’s imagination. He saw the start of the motor car and lived through many wars, those most of us have read about in history books.

During his time the need for a Last testament and Will has increased as circumstances and finances in the UK have changed dramatically.

As a lofe long supporter of Plymouth Argyle Football Club, he won’t have seen too many changes despite them joining the football league just before his 20th birthday. Nevertheless, they have spent the past five years in the second tier, the best period of their history and their home ground is part of England’s 2018 World Cup bid, so perhaps there’s time yet for his local home to shine, making Stanley 118 when the matches might be played locally.

He was lucky enough to live with his daughter until just two years ago. It’s not many daughter’s of her age that still have their father around.

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