When should I think about having an LPA?

The thing with a Lasting Power of Attorney (LPA) is that often when you need it, it’s already too late to register it.

You’ll see some sites (including the government’s Gov.uk information portal) refer separately to ‘making’ and ‘registering’ an LPA, but basically unless it’s registered, it’s worthless.

The important point is, you need to register your LPA when you are still legally capable of making such a decision in your own right – even though an LPA can be designed to give somebody else such decision-making powers.

As such, you might want to consider registering an LPA if:

  • You have a diagnosed degenerative cognitive condition or a history of such in your family.
  • You have strong opinions about how you would want to live following a brain injury or stroke.
  • You are approaching old age and want to name an individual to look after your finances.

In short, an LPA gives control of your money, your assets or your decisions to a named representative, who can then act on your behalf (and usually in your best interests).

As soon as it’s been written and registered, it can be invoked, or you can set certain circumstances in which it will come into effect.

You can also revoke an LPA later if you are still mentally capable, so until it is brought into effect, it shouldn’t feel like you’ve handed over your decision-making powers for life.

Ultimately an LPA means somebody you trust will be able to handle your money, property, and decisions about your health, medical treatment, welfare and so on, if you are not mentally capable to do so yourself.

So if you have a large estate and don’t want any doubt over who can sell it off on your behalf; your children don’t get on with each other and you don’t want them sharing the responsibility; or you simply want to decide who’s in charge of what happens to you in your twilight years; an LPA is the legally binding document that can make sure your views are expressed in writing, and respected under the laws of the land.

By R A Wilkinsons

Business Sale and purchase

Why should I use a Solicitor to Write a Will?

First of all, let’s be clear about this – legally speaking, you do not need to use a solicitor in order to write a Will.

As a document, it is simply an expression of your wishes for what will happen to your estate after you die, and as long as you meet the basic requirements of having it witnessed and so on, there’s nothing to stop you from writing whatever you want (within the limits of the law).

However, there are several very clear advantages to using a solicitor to write a Will, ranging from the wording of the document itself, to the circumstances in which it is written and witnessed, to ensure that there are no problems in following its instructions once you are gone.

For example, it might not be possible to write a Will in such a way that it would impoverish a dependant or vulnerable individual, who would otherwise have some claim to the estate – so you need to know if what you want to say is even allowed.

There are tax implications, and a solicitor can help you to make use of the (perfectly legal and ethical) exemptions from inheritance tax, such as if your estate passes to a surviving spouse, or you leave a charitable legacy.

If you own property outside of the UK, or you own a farm; or if your total estate is valued in excess of £1 million, then any of these are good reasons to approach a solicitor for advice too.

Finally, if your Will is not witnessed correctly, it might not even be legal, and you could still be declared intestate after your death.

You need two witnesses, neither of whom are beneficiaries of the will, and neither of whom are members of your own family, or spouses of beneficiaries.

This leaves you in the awkward position of finding two people you trust, but being unable to leave those people anything in your Will; it’s often easier, if only in emotional terms, to let your solicitor deal with these legal technicalities instead.

If you have any questions about your Will or you would like one of our experienced solicitors to write one for you, call us on 0845 034 4525.

By Pricketts Solicitors

Three parent baby

Man Wins Back Maintenance Payments for IVF Baby that Wasn’t His

A man has been left ‘distressed and humiliated’ by the discovery that his five-year-old son, born through IVF treatment, was not actually his – and has subsequently been awarded £40,000 in compensation from his former wife.

The couple, referred to only as X and Y in the High Court, married in 2002, and in 2004 travelled to Spain to undergo IVF treatment, at which time he provided a sperm sample to the hospital there.

Before doing so, the couple had drawn up an agreement that he would not have the ‘normal’ financial responsibility for any child conceived, which had caused considerable upset between them.

Within a few months, the woman returned to the same clinic, this time with an ex-boyfriend, who also provided a sperm sample.

In late 2005 a son was born, and six months later X and Y separated, with X subsequently sharing parental responsibilities and paying a total of around £80,000 in maintenance charges.

But in 2011, Y revealed that X was not the child’s father – he had been conceived using her ex-boyfriend’s sperm, a claim that was verified using a DNA test.

She said: “The only reason I took [my ex to Spain] was because my ex-husband gave me that document to sign.”

Her defence in court hinged on the claim that her former spouse had never ‘necessarily’ been certain that he was the boy’s father.

But the High Court awarded £40,000 back to X who, due to a separate court case, is now banned from seeing the child until the age of 18.

He told BBC Radio 4′s PM programme: “I don’t regret any of the time I spent with my child at all. I don’t regret that ever, but when someone actually comes along years later and spoils everything that way, you’re revisiting all those experiences thinking, that wasn’t right was it, and not for him either.”

By Pricketts Solicitors 

Court Fee Hike Opposes Principles of Magna Carta

The legal profession as a whole has spoken out against recent increases in court fees that have taken the cost of starting action, in some cases, to more than seven times its previous level.

Plans to raise civil court fees came into effect on Monday March 9th, far sooner than had been expected, after the House of Lords approved the government’s proposal to do so.

Under the new regime, applications to start court proceedings relating to specified and unspecified money claims will be charged as a percentage of the claimed sum where it is over £10,000.

In all cases, the fee is now 5% of the total value of the claim, with an upper limit of £10,000, and it is worth noting that the 10% discount on Secure Data Transfer and Money Claims Online claims still applies.

Claims received before Friday March 6th will still be charged at the old rate, unless the relevant documentation was incorrectly completed – or simply incomplete – in which case they must be resubmitted and the new fee paid.

“The Law Society, with other legal professional bodies, has criticised the fee increases and has sent a pre-action protocol letter to the Ministry of Justice,” the Law Society said in a simple expression of the profession’s opinion of the change.

In terms of a percentage increase, the biggest impact is on claims around the £190,000 mark, as these are the highest before the £10,000 cap comes into effect.

As such, for a £190,000 claim, the fee has increased from £1,315 to £9,500 – a massive 622% increase that has made headlines and attracted widespread criticism.

Bizarrely, for even higher claims, the fee is fixed at £10,000, meaning the percentage increase is 576% at £200,000 and drops further to ‘just’ 481% at £250,000.

On June 15th 2015, the UK celebrates the 800th anniversary of the signing of the Magna Carta, the closest thing to a printed constitution the country has ever had.

Just three of its original clauses remain in English law, including the freedom of the Church of England and the ‘ancient liberties’ of the City of London; the third reads:

“No Freeman shall be taken or imprisoned, or be disseised of his Freehold, or Liberties, or free Customs, or be outlawed, or exiled, or any other wise destroyed; nor will We not pass upon him, nor condemn him, but by lawful judgment of his Peers, or by the Law of the land.

“We will sell to no man, we will not deny or defer to any man either Justice or Right.”

In this anniversary year of this hugely significant historical document, the question has to be asked: how can a £10,000 court fee not be thought of as selling justice?

By H Pipes & Co

Legal

Important Update on ATED for Property Investors

Property investors who purchase dwellings via a company, a ‘collective investment vehicle’ or through a partnership with a corporate entity should be aware of the changing rules on ATED.

The threshold for the Annual Tax for Enveloped Dwellings category has been falling in recent years – from £2 million to £1 million and, from 2016, is likely to drop further to just £500,000.

If you own a dwelling via a commercial entity, it falls within this valuation range, and it is not being used for charitable purposes, you could face a tax charge on it.

The valuation must have been over £2 million on April 1st 2012; or £1 million from April 1st 2015; or if the property was acquired after these dates, the respective threshold still applies until the scheduled drop to £500,000 in 2016.

For the period from April 1st 2014 to March 31st 2015, the chargeable amounts range from £15,400 for properties over £2 million, to £143,750 for those valued at more than £20 million.

And they’re growing – at 50% more than the headline rate of inflation for properties over £2 million – with the introduction of a £7,000 band for £1 million properties, and a planned £3,500 charge on £500,000 dwellings from 2016.

It’s important to be aware of this charge, the falling minimum chargeable threshold and the growth in the charges above the rate of inflation.

To minimise your exposure, you can take advantage of certain exemptions – for example charitable status – as well as tax relief, although it’s also worth remembering that the changing ATED rules are an attempt to tackle tax avoidance in the first place.

Unless you are totally exempt from the tax due to charitable status, you should file a return in order to claim reliefs to reduce or eliminate your bill completely.

Like stamp duty, ATED is calculated using a banding system; so if you are close to the next cut-off point, it may be worth avoiding any renovation work that could add to the value of your dwelling, and incur tens of thousands of pounds of additional tax exposure as a result.

By Marsh Brown & Co

Photo Credit: Jeff Belmonte via Compfight cc

Richard III’s Prenuptial Agreement

All eyes were on Leicester this weekend for the arrival of Richard III’s mortal remains, which were brought back to the city with somewhat more sense of ceremony than probably surrounded his original burial in what is now one of the city’s car parks.

But there is another ceremony – one that occurred while Richard was still alive – that is of particular interest to modern-day solicitors, and particularly to those who draw up prenuptial agreements.

On July 12th 1472, Richard was married to Anne Neville, the younger daughter of the Earl of Warwick, after a decisive victory by the Yorkists over the Lancastrians at Tewkesbury.

Anne had been married previously in 1470, but her husband, Edward of Westminster – only son of Henry VI – died at Tewkesbury on May 4th 1471.

However, not everybody was happy about her remarrying – in particular Richard’s brother George, who was already married to Anne’s older sister Isabel.

With the Earl of Warwick also killed in battle, at Barnet on April 14th 1471, the earldom was up for grabs, along with a substantial land inheritance that was currently owned by Anne Beauchamp, who was still alive at the time.

It’s a complicated picture, but one that closely mirrors many modern-day marriages where a sizeable inheritance is concerned, and George was not opposed to the wedding in principle; he is quoted as saying: “He may well have my Lady his sister-in-law, but they shall part no livelihood.”

Prenuptial agreements exist for exactly this type of situation, and although it was over 500 years ago, ultimately that’s the option Richard went for.

The prenup stated: “The marriage of the Duke of Gloucester with Anne before-named was to take place, and he was to have such and so much of the earl’s lands as should be agreed upon between them through the mediation of arbitrators; while all the rest were to remain in the possession of the Duke of Clarence.”

In essence, Richard renounced his right to the earldoms of Warwick and Salisbury, along with most of Warwick’s land, and Papal dispensation for his marriage to Anne was granted on April 22nd 1472.

Anne Neville died 13 years later, on March 16th 1485, and was buried in an unmarked grave to the right of Westminster Abbey’s High Altar.

Interestingly, the day she died, there was a solar eclipse – taken by some to be a bad omen for Richard – and it’s a strange coincidence that the UK’s first eclipse of the 21st century should take place so close to the former king’s reinterment ceremony.

By R A Wilkinsons & Co

Deeds Of Variation: On Their Way Out?

The Chancellor has announced that Deeds of Variation are going to be reviewed, following the publicity surrounding the decision of the Milliband family to enter into a Deed of Variation in the past.  Whilst this was an opportunity to poke fun at the Leader of the Opposition, Deeds of Variation are widely used planning tools for a wide range of circumstances.

A Deed of Variation is an agreement to change who inherits all or part of an estate.  They can also apply in the huge number of cases where someone has died without making a Will, or where there has been a mistake in a Will (perhaps it had not been updated for a marriage, birth or death, or where an adopted child had not been included).  When somebody dies without a will, for example, a deed of variation may ensure a widow or widower can stay in their home.

Whilst some may perceive that Deeds of Variation are a way of avoiding tax, they are hugely valuable in helping families deal with estates.  In more cases than not, the driving factor behind a Deed of Variation is to safeguard the interests of the family members, not to reduce inheritance tax.  But if it is to reduce inheritance tax, then they can still only do whatever the deceased would have been able to do in their lifetime anyway, so arguably where is the loss?

What is a Deed of Variation?

A Deed of Variation is a way of legally changing the distribution of an estate, whether that would have passed under the terms of a Will or intestacy.  Where this is made within 2 years of the date of death, it is treated as if it were always in place for inheritance tax purposes.  It is because a Deed of Variation can change the inheritance tax position that it can be viewed as tax avoidance.  In practice, some families may actually pay more inheritance tax in order to secure the estate distribution agreed, or the Deed of Variation may be tax neutral.

For the time being, these remain available and those wishing to amend an estate distribution would be well advised to consider entering into a Deed of Variation.

For more information or if you would like to talk to one of our advisors please call – 0116 266 5394.

By Leanne Hathaway –  EHL Tax

Photo Credit: The Bull Pen www.bullpenpictures.com via Compfight cc

Any ‘Blurred Lines’ In Copyright Law?

This week the pop sensations Pharrell Williams and Robin Thicke have been in the limelight for the wrong reasons. Their 2013 pop hit ‘Blurred Lines’, which has had over 370 million views on YouTube.com, has cost the pair $7.3million in compensation for infringing copyright for the 1977 Marvn Gaye track ‘Got to Give it Up’.

In addition to the $7.3million which was ordered to be paid to the family of Gaye, a detailed public disclosure of their professional practices and personal financial positions was also ordered.

As primary artists of the track, Williams and Thicke received approximately $5million each, with guest artist T.I. receiving approximately $700 thousand for his contribution. In addition to this, Williams received approximately $4million in publishing royalties for the track and over $850 thousand for his production credit.

In August 2013, the claim process was initiated in the US District Court after a Declaration of Non-infringement was sought by Williams and Thicke in relation to the song; an attempt to pre-empt any copyright claim being brought against them. The family of Gaye responded to the application with the present infringement claim, and in October 2014, it was found that Gaye’s copyrights only extend as far as the written sheet music, and not the actual sound recording (which was not registered for copyright protection). On this basis, the Californian jury did not have the benefit of hearing the similarities, but only the written sheet music compositions.

The jury were faced with making the decisions over, firstly, the rights and ownership of the compositional elements of the sheet music to Gaye’s track, and secondly, to consider any similarities or differences between the composition of the two tracks. To assist with this, a ‘musicologist’ (a person specialising in the scientific study of music composition) provided his opinion on the similarities of the signature phrase, hook, keyboard-bass interplay, lyrics and themes.

It was found unanimously by the jury of eight that copyright had been infringed in respect of the musical composition, from their analysis of the sheet music and the expert opinion. It is, however, unlikely to be the last we hear from this claim, as Gaye’s family have indicated they seek to obtain an injunction in relation to ‘Blurred Lines’ to halt its sale and distribution. In addition, Nona Gaye has revealed that she believes Williams’ 2013 track ‘Happy’ sounds similar to Gaye’s 1965 track, ‘Ain’t that Peculiar’, however, legal action is not currently being considered.

Under the law of England and Wales, copyright would have automatically subsisted in the recording and a claim could be brought by Gaye’s family for the composition and the recording. The songs could have then been played for the jury to analyse the aural similarities.

Whilst it is rare for copyright matters to be settled at trial (more commonly settled out of court) the $7million damages ordered by the court have been critised for ‘setting a horrible precedent’. It is thought that such a damaging result as this may ‘affect the creativity of young musicians’ who could fear the consequences of taking inspiration from existing musical compositions.

YouTube Clips:

Robin Thicke & Pharrell Williams – Blurred Lines ft. T.I. – https://www.youtube.com/watch?v=yyDUC1LUXSU

Marvin Gaye – Got to Give It Up – https://www.youtube.com/watch?v=kdnyrnLXFhg

Pharrell Williams – Happy – https://www.youtube.com/watch?v=y6Sxv-sUYtM

Marvin Gaye – Ain’t That Peculiar – https://www.youtube.com/watch?v=bCvsikXZ9wk

By Josh Clarke

Financial

Budget Impacts On SMEs

Annual Tax Return

In a headline change announced yesterday, plans are afoot to remove the need for many UK taxpayers to have to submit full Tax Returns. However, this may not be quite as generous as it seems…

Instead the Tax Return is to be replaced with a digital tax account. The Chancellor called the new system a “revolutionary simplification” of the tax return system.

HMRC will automatically collate the tax affairs of millions of UK taxpayers from employers, banks and investment firms into a single digital tax account, which can be checked at any time online. However, taxpayers will still need to check their tax affairs, and for those who are receiving income outside these bands, tax returns will remain in place. Landlords will therefore continue to file tax returns.

The Chancellor said about the new system: “Businesses will feel like they are paying a simple, single business tax – and again, for most, the information needed will be automatically received.”

Further details will be announced later in the year as to how the additional reporting will be implemented.

Business Rates

The Chancellor promised a review of the business rates system. The current system has “not kept pace with the needs of a modern economy” and needs “far-reaching reform” according to the Chancellor.

Business rates are calculated according to the rental value of the property. The problem is that the “rental value” is based on the rental value in 2008, before the economic crash. With Business Rates being up to 49% of this figure, it is making the local high street a very expensive location, driving businesses out of town. It is no coincidence that Charity Shops (which don’t pay Business Rates) are taking up so many of these units.

Changes to the system are likely to help high street shops that are struggling to compete against their online rivals.
The review is expected to examine whether the smallest businesses should be removed from the system altogether, or whether the rates should be revised.

It is already possible to appeal against Business Rates if the valuations applied are incorrect.

Corporation Tax

  • The main rate of corporation tax reduces to 20% on 1st April 2015. This is down from 28% at the start of the Coalition Government.
  • Class 2 national insurance contributions will be abolished from the next parliament, but with changes to Class 4 likely to capture the reduction, don’t spend your money just yet!
  • “Google Tax” – the so called “Google Tax” was further outlined yesterday. Companies that move their profits overseas to avoid tax will be subject to a “diverted profits tax” from April 2015. The tax aims to discourage large companies, such as Google, Starbucks, Apple and Amazon, from diverting profits out of the UK to avoid tax.

If you would like to discuss how these measures might affect your business then please contact us on 0116 266 5394 or click here to send an email.

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When Is A Lasting Power Of Attorney Necessary?

A Lasting Power of Attorney gives permission for somebody else to make your decisions for you, and is typically used if you think you will be incapacitated for any reason in the future.

For example, if you have a genetic condition or have developed a degenerative neurological disorder, an LPA can give you peace of mind that once you are no longer able to look after your own affairs, somebody you trust will have control over your finances and assets.

The big thing to remember is that, in order to make an LPA, you must be an adult (over the age of 18) and capable of making your own decisions.

Effectively that means you need to arrange your LPA while you are still fit and healthy; once your condition degenerates to the point where an LPA is needed, it is already too late to create a new one.

All you need to do is choose one or more attorneys, fill in the appropriate forms, and register them with the Office of the Public Guardian.

This costs £110 as standard, with some exemptions and reductions available, and it can take up to ten weeks for the paperwork to be processed.

Common types of LPA include:

  • Health and Welfare – giving someone control over your daily hygiene routine, medical care and the decision to place you into a care home.
  • Property and Finance – managing your bank account, collecting pension and benefits, paying bills and even selling your home.

An LPA is not binding forever – as long as you are still of sound mind, you can revoke it later, or make a new one, so it’s not something that commits you to a course of action until it is invoked, at which stage you’ll probably be glad that there is a named individual with your best interests at heart.

By H Pipes & Co