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Category: Estates, Administration and Planning

Do I have to sell my home to pay for care?

Posted on by Sophie Soraf
The Government’s proposed reforms to health and social care will still leave many people having to pay large amounts in care home fees. However, these costs can often be reduced or even avoided altogether with appropriate planning. This article looks at the rules in England; the rules in different parts of the UK may be different.

The government has announced proposals to change the rules around how much people have to contribute towards care costs and at what stage, funded by a proposed new Health and Social Care Levy.

What are the proposed changes to health and social care funding?

If you need local authority care, the means testing rules are applied to decide how much you must pay towards the care; currently the rules are as follows:

  • if your capital is above £23,250 (the “upper limit”) you have to pay the care fees in full
  • you do not have to make a capital contribution to care costs where your capital is less than £14,250 (the “lower limit”) – although you may still have to contribute from your income
  • between £14,250 and £23,250 you have to make a partial capital contribution (as well as an income contribution, where appropriate)
  • there is no cap on the maximum care costs you may have to pay over the course of your lifetime.

Under the new proposals:

  • the lower and upper limits will be increased to £20,000 and £100,000 respectively from October 2023. This means that anyone with capital of less than £100,000 may receive some support towards their care costs (albeit limited) and those with capital of less than £20,000 will not have to make a capital contribution (although may still have to make a contribution from their income)
  • a lifetime cap of £86,000 on care costs will be introduced from October 2023. This means that you should not have to contribute more than that amount towards your care costs (although the cap isn’t being backdated).

However, it’s important to note that the cap only applies to the cost of actual care and not to other costs such as accommodation, energy, food or water. These costs, particularly the costs of accommodation, can often far outweigh the costs of care, so many people will still face the prospect of very large care bills which will erode their families’ inheritance.

Will I lose my home if I need to pay for care?

The value of your home is included in the assessment of what capital you possess, for means testing in many circumstances. For example, it will be included in the assessment where you no longer occupy your home (e.g. if you are moving into residential care permanently) and none of the other exemptions applies. This may lead to your home having to be sold to fund care fees.

It may be possible to avoid selling your home during your lifetime by entering into a deferred payment arrangement (broadly whereby the fees are repaid from sale of the home after your death). However, interest and fees apply and such arrangements will still reduce your families’ inheritance.

Example where home inherited absolutely

John and Betty jointly own their home, worth £300,000, free of mortgage. They have owned it equally as joint tenants (see below) since acquiring it. The home is their only major asset. No-one else occupies it apart from them.

On John’s death in November 2023, his share in the home passes to Betty as the surviving joint tenant. Unfortunately, Betty’s health declines rapidly after John’s death and she has to move into permanent residential care 12 months later.

The entire value of the home will be included in the means assessment for Betty. Her capital will be above the £100,000 threshold, meaning that she will be liable to pay the fees in full without any local authority funding. The amount she has to pay for care will be capped at £86,000, however her other costs (e.g. accommodation, energy and food) will not be capped.

Can I avoid paying care home fees by making a lifetime gift?

Some people might consider giving their home away during their lifetime to try to get it outside the scope of the means testing rules. There are rules aimed at preventing people from doing this known as the “deprivation of assets” rules. Where these rules apply, the local authority can include the value of the gifted asset when they carry out the means assessment. The “deprivation of assets” rules are complex and specialist legal advice should always be taken on whether or not they will apply.

Those considering gifting their home must also consider the possible significant impact of the gift on their future financial security and independence. With careful drafting of the document, a trust can address some of these concerns. However, the deprivation of assets rules can still apply.

The tax consequences of a gift (whether outright or to trust) must also be carefully considered. Such a gift can in some circumstances trigger immediate tax charges and/or increase your future tax exposure and/or that of your estate. You should always take professional advice before deciding to give away your home or a share in it, both as to whether the gift will achieve the intended objectives and what the legal and tax consequences will be.

Can I use my Will to protect my home from being sold to pay care home fees?

For married couples who do not wish to give away their home, one alternative is to leave the share in the home of the first spouse to die, to an appropriately worded trust under their Wills. While this won’t offer full protection, it will, in many circumstances, significantly reduce (and sometimes eliminate) the exposure to means assessment. Meanwhile, provided the trust is worded appropriately, the survivor can continue to occupy the property for the remainder of their life.

For the trust to work, the couple will need to hold the property as “tenants in common”, rather than as “joint tenants”. Where joint owners hold a property as joint tenants this means that the share in the property of the first to die automatically passes to the survivor. If they hold the property as tenants in common, each joint owner’s share passes under their respective Wills. Where a property is owned as joint tenants, it’s simple for a legal specialist to convert this to a tenancy in common, but you need to get it organised before the first death.

Example where share of home left to appropriate Will trust

The facts are the same as in the previous example above, except that John and Betty convert their ownership of the property, so they hold it as “tenants in common” in equal shares and John leaves his half share in the home to a trust under his Will. Under the terms of the trust, Betty has the right to occupy the home rent free for the rest of her life and John’s half share passes to their children after Betty’s death.

When Betty goes into care, her assets for means assessment purposes will include her own share of the home, but not the share held in John’s Will trust (because that doesn’t belong to her). Hence the share in the Will trust will be protected for the children. Also, the value of Betty’s share of the home for means assessment, is likely to be significantly lower than 50% of the total property value, because it’s the market value of the share that is assessed. The market value of a half share is likely to be much lower than 50% of the whole value, because a half share on its own will be much less marketable.

The Will trust approach also avoids many of the potential downsides of a lifetime trust. The deprivation of assets rules will not generally apply assuming (as will often be the case) that there has been no reduction in the value of anyone’s estate. The trust can be worded in such a way that the inheritance tax and capital gains tax consequences will be broadly similar to those that would apply if the property had been left outright. However, careful drafting and implementation is needed, or the tax consequences could be different. Before the death of the first spouse to die, the trust has no effect, so you can deal with the property as you wish.

One relevant consideration is that, by using a Will trust, the survivor will not be entitled to the capital of the share of the first to die. This will deter people who want absolute control over the home after the first death. Ways to mitigate this include:

  • the trust can include powers to advance capital at the discretion of the trustees if desired
  • the survivor can be appointed as one of the trustees so that they are involved in decisions while they have capacity
  • the terms of the trust can also give the survivor the right to require the trustees to join in the sale and purchase of a replacement property if they wish to move.

Please be aware that the Will trust route will not provide protection if both spouses have to go into care during their joint lifetimes (because the trust does not apply until first death). However, if only one spouse has to go into care during their joint lifetimes, the home would not generally be taken into account for means assessment, provided the other spouse is still living there.

Can I use a Deed of Variation to protect my home from care home fees?

You may have heard that beneficiaries of a Will can vary the terms of the Will (or the destination of a property inherited as surviving joint tenant) within two years of death, by making a Deed of Variation. However, Deeds of Variation can be subject to the “deprivation of assets” rules. So, if you decide to change your Wills, it’s better to do so during your joint lifetimes rather than relying on Deeds of Variation.

Tees sweeps two awards

Posted on by Sarah O'Sullivan
Tees celebrates double success at Cambridgeshire Law Society Excellence Awards

Tees, the local law firm with offices in Cambridge, Bishop’s Stortford, Royston, Saffron Walden, Brentwood, and Chelmsford, celebrated a double success by winning both the Excellence in Technology and Innovation Award and the Residential Property Team of the Year Award at the Cambridgeshire Law Society Excellence Awards. The awards ceremony was held on Zoom on Friday, 23rd April 2021.

Tees also received a Highly Commended award for Injury Litigation Team of the Year, and Private Client Associate Chris Claxton-Shirley was also Highly Commended as a Rising Star.

Celebrating legal excellence

The Excellence Awards celebrate the legal community of Cambridge across various categories, with winners chosen based on criteria such as excellent client service, technical capabilities, and response to the challenges posed by Covid-19.

Prominent attendees included Stephanie Boyce, President of the Law Society of England and Wales; The Rt Hon Lucy Frazer QC MP, Solicitor General; and Elizabeth Rimmer, CEO of LawWorks, which served as the Charity Partner. The awards ceremony was sponsored by Rathbones Investment Management. The Judging Panel was chaired by Ian Mather and included representatives from Rathbones Investment Management, AstraZeneca, Handelsbanken, Barclays Corporate, and FRP Advisory.

Excellence in technology and innovation award

Clare Pilsworth, Family Partner and newly appointed Head of Tees’ Cambridge office, accepted the Excellence in Technology and Innovation Award.

She said:

“Tees has been investing heavily in technology long before the pandemic hit, and we have continued that investment throughout the past year. Winning this award is a testament to the decisions we’ve made as a firm to be at the forefront of innovation and technology in the region. It also reflects the hard work of our IT team in implementation, integration, and training, enabling our solicitors to provide a seamless client experience.”

Residential property team of the year award

Julia Turner, Senior Associate and Head of the Cambridge Residential Conveyancing Team, expressed her gratitude upon receiving the Residential Property Team of the Year Award.

She said:

“This award means so much to the team. We have worked through unprecedented times, delivering a high quality of service. Our demand has grown substantially, and our success is thanks to the consistent hard work of our team.”

Highly commended injury litigation team

The Legal 500 Tier 1 Injury Litigation Team, led by Partner Janine Collier, was Highly Commended for their outstanding work. Tees provides a wide range of services, including personal injury, medical negligence, and inquest representation, securing settlements from modest to multi-million-pound amounts.

Janine said:

“A personal, tailored client experience is at the heart of our service. Each Tees lawyer has fewer cases than other injury practitioners so that they can truly understand the client’s needs and help them to a better future.”

Rising star recognition

Chris Claxton-Shirley received a Highly Commended in the Rising Star category. He shared his pride in his contributions to the firm and the community.

He said:

“I am proud of the contribution I make to Tees, our local community, and the wider profession. I am excited about what the future holds.”

Reflections from the group managing director

Ashton Hunt, Group Managing Director of Tees, expressed his pride in the firm’s achievements:

“Tees has made significant investments in technology over the past eight to ten years, enabling us to successfully navigate the pandemic while continuing to deliver excellent service for our clients. Continuing to invest in the best technology to support our people remains part of our core strategy, and I am truly delighted that the firm’s efforts have been recognised in this way.”

Advice to young farmers on taking over the family farm

Posted on by Sophie Soraf
If you’re a young farmer who is in line to inherit your family’s business, taking the farm successfully forward into the next generation can feel overwhelming.

In this guide, we provide you with an overview of the many ways you can prepare yourself to run the family business, embrace new methods of working and protect the farm both legally and financially.

Open up conversations about succession

While talking about money and inheritance can be uncomfortable, it’s important to open up these conversations early on so that everybody’s expectations and positions are clear. Succession planning is important for any family business, but broaching the idea within farming families can be particularly difficult, with the current business owner often reluctant to relinquish control to a successor.

According to a study, less than a fifth of farmers plan to ever fully retire, while only half of those with children have identified a successor. Indeed the UK Government recognises this as a problem, to the extent that it has set up a new scheme to pay older farmers to retire, enabling the younger generation to enter, bringing with them new farming methods and breathing new life into the business.

Even if the current owner of your family’s business has no plans to retire, it’s still important to plan for the unexpected and to ensure that the legal and financial framework has been put in place to enable you to take over the business in the event of their death.

If your parents are unwilling to enter into these types of conversations with you, our rural legal specialists can help you facilitate positive discussions by explaining the benefits of succession planning and assisting with essential aspects of estate planning such as drafting Wills, providing Inheritance Tax (IHT) advice, introducing the possibility of making lifetime gifts and placing life insurance benefits in trust.

Key succession planning questions

If you’re unsure of where to start, here are some good questions you can use to open up productive conversations around succession and the future of the family business.

  • What are your parents’ future plans? Do they plan to retire? If so, can you work with them and take on more responsibility so they are able to slow down in their later years? If not, is there another way for the two generations to satisfactorily work together in the long term?
  • Who will live where? Does the farm have a number of properties which can accommodate the family?  If so, try to have an open discussion with all family members about preferences for the future.
  • What training and skills development do you need to undertake in order to prepare for succession? Your parents may be nervous to hand over the farm if they do not believe you yet possess the skills to take the farm forward successfully.
  • It’s likely your parents will not want to split up the farm, so if you are in line to inherit, what provision will need to be made for your siblings, if you have any?
  • How will your family’s land and business assets be passed down with the minimum Inheritance Tax liability?
  • What role do you, your parents and your siblings want to play, now and in the future? Do your siblings want to be involved in the farm or are they happy for you to take it over? It’s important to nail the details down now to avoid conflict later down the line.

Draw up a partnership agreement

If the farm owner is not ready to retire, but you are still looking to take a more active role in the business in order to develop your knowledge and skills, you may wish to consider a Partnership Agreement.

Having a partnership agreement in place allows clarity regarding the ownership of business assets and enables families to clearly define the roles each partner will play in the day-to-day management of the farming business.  Holding assets within the partnership can sometimes also be a useful tax planning tool.

Our expertise is in helping farming families draft comprehensive partnership agreements, and to advise on any issues that may arise in the duration of the partnership (for example, helping to handle disputes, or managing change within the partnership, e.g. if one of the partners leaves the partnership or dies).

Consider diversifying

Whether they want to or not, many farming businesses are having to diversify and find new and sustainable sources of income to ensure the farm’s survival in the modern era. According to Defra, 66% of farms across the UK have already diversified in some form to provide farming families with the additional income they need and support the rural economy.

This may take the form of using unused outbuildings to set up farm shops or professional services spaces, hosting tourism accommodation, or setting aside land for recreational uses, such as horse riding or golf courses.

Funding a new venture is often expensive, which can prove a barrier to successful diversification. In addition to commercial loans and private finance, you may be able to access funding from initiatives such as the Rural Development Programme for England, which provides money for diversifications that will have a positive impact on the environment.

At Tees, we regularly advise farming families on a wide range of diversification projects, ensuring they meet any new legal and regulatory requirements to which they may become subject in the course of their new venture – for example, planning permission, or the acquisition of special licenses or certificates.

Get familiar with new post-Brexit funding

The EU system of grants and subsidies to British farmers is being phased out from this year and replaced with a new series of Environmental Land Management schemes that reward farming businesses for the provision of ‘public goods’, i.e. implementing more sustainable farming methods or working to restore habitats and the environment.

Understanding the types of initiatives rewarded by the new system will help you guide the business in the right direction and enable you and your family to more effectively plan for the future.

They include (but are by no means limited to):

  • Natural flood management measures
  • Restoring habitats and environments
  • Forest and woodland creation
  • Opening up public access to the countryside
  • Improving soil health
  • Improving air and water quality.

More information about the post-Brexit Environmental Land Management schemes can be found here. The gov.uk website also gives an overview of other grants and payments currently available to agricultural businesses.

Take specialist advice

For many young farmers, the thought of taking over the family farm is exciting, but overwhelming. But you don’t have to do it alone. Our agriculture and estates specialists offer legal and financial services across a broad spectrum of specialisms, including Wills, Trusts, Tax & Probate, Corporate, Commercial Property and Wealth Management.

We have been helping farming families successfully transfer their business from generation to generation for over a century. For advice on planning for your future, don’t hesitate to get in touch.

One farming family, over 30 years of trusted legal and financial advice

Posted on by Sarah O'Sullivan
For over three decades, Tees has provided expert legal services to multiple generations of the Miller* family, a prominent agricultural family with extensive farming, land and property interests located across several English counties.

Our senior partner and specialist in rural succession and estate planning, Catherine Mowat, has worked closely with the Millers for many years, helping them capitalise on opportunities for efficient estate planning and take advantage of valuable Inheritance Tax reliefs.

Alongside Catherine’s team, our Commercial Property, Residential Property, Commercial and Wealth Management teams have worked together collaboratively in order to help the Miller family effectively manage their business and property interests.

Passing assets on to the next generation

Catherine has worked extensively with the Millers over a number of years to put in place comprehensive arrangements that will enable more senior family members to pass on their assets effectively to future generations, whilst minimising the Inheritance Tax (IHT) payable on their estate.

The family were advised to make substantial lifetime gifts to their children and grandchildren, enabling assets to be passed on to younger generations in a controlled way.

  • How does Inheritance Tax (IHT) work?

IHT is a tax on the capital value of assets (including money, property and possessions) either when somebody has died or on some gifts made during lifetime.  On death, it is generally payable at a rate of 40% on all assets over the value of £325,000, although there are exemptions and reliefs that can be used to lessen the amount due. Another way of reducing the IHT payable on your estate is to make lifetime gifts.  If you make gifts more than seven years before you die, there will usually be no IHT due on these gifts on your death.  If tax does arise, only gifts given less than three years before you die attract the full 40% IHT rate, making lifetime gifts an excellent opportunity for passing on assets to minimise tax.

These lifetime gifts also caused the estate value belonging to the children to rise, increasing their IHT liability. Here, our Wealth team stepped in to help set up suitable life insurance arrangements, written in trust to minimise the impact of a significant tax bill.

  • Why should I write my life insurance policy in trust?

Writing your life insurance in trust is a way to avoid paying IHT on the eventual payout. When you place an asset into a trust, you essentially give up ownership of that asset to the trust and appoint trustees to oversee it (this can be a solicitor, like Catherine, or somebody else). As the assets (in this case, the life insurance policy) don’t officially belong to you, they aren’t classed as being part of your estate and are therefore not subject to IHT.

Catherine has also worked with the Millers to draft essential estate planning documents such as Wills and Powers of Attorney, and acts as a trustee for the various trusts within which the family’s business and property assets are held. Her many years spent advising this family have enabled her to build a strong relationship with the Millers, bound by mutual trust and respect.

Taking advantage of Inheritance Tax (IHT) relief

Over the years, our Wills, Trusts and Probate team has worked closely with the Millers to ensure their entitlement to valuable IHT reliefs. For example, Catherine’s advice has enabled the family to take full advantage of Agricultural Property Relief (APR) on their eligible assets.

  • What is Agricultural Property Relief (APR)?

APR allows farming families to pass on agricultural property at a reduced or 0% rate of IHT, either during a person’s lifetime or in their Will. To apply for APR, the land or property must have been owned for at least seven years, or occupied for two years and must be used for growing crops or rearing animals, or take the form of farm buildings, cottages or houses. It does not apply to farm equipment or machinery, derelict buildings, harvested crops or livestock. APR can be due at 100% or 50%, depending on the circumstances.

Catherine also regularly reviews the balance of the Millers’ business activities to ensure that no entitlement to Business Relief (BR) is lost, by using the ‘Balfour’ test.

  • What is Business Relief (BR)?

BR allows business owners to pass on certain business assets at a reduced or 0% rate of IHT, either while they are still alive or via their Will. The owner must have owned the assets for at least two years before they died for them to be eligible. BR is due at 100% for:

  • A business, or interest in one
  • Shares in an unlisted company

It is due at 50% for:

  • Shares controlling over 50% of the voting rights in a listed company
  • Land, buildings or machinery owned by the deceased and used in a business in which they were a partner or controlled
  • Land, buildings or machinery used in the business and held in a trust the business has the right to benefit from

To be eligible for BR, a business must also be classed as a predominantly trading business. However, many farms are becoming increasingly diversified, with activities such as cottage rentals and holiday lets shifting the balance from trading to investment.

Catherine used the Balfour test to assess the Millers’ farming business and used the results to advise the family on achieving the best balance between trading versus investment activities within the farming partnership for BR purposes.

Strategic land and property solutions

Our Commercial Property team regularly steps in to assist the Miller family in matters relating to the lease or sale of land and properties, which include a range of sites with commercially let units, and other strategic deals such as granting options. Rural specialists within our Commercial Property team will negotiate and facilitate these various land transactions.

An example of the type of planning advice we offer might be in relation to land owned by a family trust on which planning permission has been obtained for development. In this situation our Corporate team would step in to advise on the incorporation of a ‘freezer’ company.

The team would also prepare bespoke articles of association, ‘freezing’ the value of certain interests in the company in order to cap ownership. This ensures that the growth and value of the land will be passed on to the next generation tax-efficiently and limit their IHT liability.

  • What is a ‘freezer’ company?

Also known as a family investment company (FIC), a ‘freezer’ company is essentially a private limited company whose shareholders are all family members. Commercial solicitors can help the family prepare bespoke articles of association that set out the rights and interests each party holds within the company. For example, the parents can set themselves up as voting shareholders – thus maintaining control over the company – but ‘freeze’ the value of their interests in the company to cap their ownership.

Meanwhile, the children can be non-voting shareholders but own the majority of the shares, allowing the growth and value to pass on tax-efficiently to the next generation. This makes ‘freezer’ companies an ideal vehicle for intergenerational wealth management, allowing assets to be passed on during your lifetime whilst still retaining control of them. If you live for more than seven years after setting up the company, no IHT will be due (according to the rules of lifetime gifting).

A full- service firm rural families can depend on

For over a century, Tees has been a trusted partner to farming families like the Millers, helping them pass the family business from generation to generation. In this time, our agricultural specialists have developed a unique understanding of the challenges facing the rural community.

From tailored business advice to passing your land and assets tax-efficiently to the next generation, our specialist agricultural lawyers can help you navigate the complex relationship between business, land and family interests.

*Please note that the family’s name has been changed for anonymity. 

Keeping gifts of money in the family

Posted on by Sophie Soraf
Increasing numbers of parents are helping their children onto the property ladder. Money will often come from your own hard-earned savings or from a family inheritance so you will understandably want to make sure that your financial investment stays within the family.

This article looks at options to assist your child’s property purchase and ways of reducing the risk of that assistance leaving the family.

What should I do when providing money to my child for a house purchase?

It is sensible to agree and document whether the money is intended as a gift or loan, or whether you are taking a share in the property. There is risk of complication if your child is buying jointly with their partner, for instance in the event of a future relationship breakdown. However, even if your child is buying alone, future complications can still arise. For example, if they later cohabit with a partner and the partner acquires an interest in the property or if there is a future dispute between you and your child.

Both you and your child should also consider making a Will or reviewing existing Wills and consider the basis on which the property will be held to ensure that the property interest and any rights you have and your estate more generally will pass appropriately.

How can I help my child financially when buying a house?

There are various ways in which you can help your child onto the property ladder, for example:

Making an outright gift

This means giving the money to your child without retaining any rights to repayment or any interest in the property. Where Inheritance Tax is a concern, it is advisable to document the gift by a Deed of Gift as evidence that the money has been given.

Gifting to a child may necessitate a change to your Will. For example, if you have other children you may wish to give more of the remaining estate to the other children to balance out the lifetime gift given to their sibling. Or you may wish to ensure that the gift is not deducted from your child’s inheritance if that is the intention.  Failure to consider and properly document the impact of the gift on your Will can lead to a result which is not in accordance with your wishes as well as the risk of future uncertainty and bad feeling within the family.

Lending funds to your child

Instead of gifting money to your child you may wish to lend funds. This gives you some protection as you will have the ability to get your money back if needed, for example if there is a relationship breakdown or if your financial circumstances change. It is advisable to enter into a loan agreement to avoid future disputes as to whether the money was a loan or a gift. Legal advice should be sought to make sure the loan complies with legal requirements.  

Acting as guarantor on a mortgage or as a joint mortgage

Some lenders may grant a mortgage where a parent acts as guarantor for their child. Acting as a guarantor means agreeing to be legally responsible to the mortgage provider for repayment of the loan if the borrowers can’t pay. Alternatively, you could be joined as a party to the mortgage, meaning you would be jointly and severally liable for it together with the other borrowers. It would be sensible to enter into an agreement with the other borrowers giving you the right to reclaim from them any monies you pay to the lender (although this will not protect you if they are insolvent). In some circumstances you may be able to take a charge over the property as further protection.

These options avoid having to provide funds upfront to your child, however they could leave you financially exposed if the other borrowers cannot, or do not, meet their future loan repayment obligations. They can also affect your own ability to borrow in the future.

Buying jointly with your child

This involves you taking a share in the property, typically in proportion to the share of the purchase proceeds you provided to your child. On the one hand, this enables you to receive any future uplift in property price on that share which you can then dispose of as you wish in your Will (or enjoy during your lifetime). However, there are Capital Gains Tax and Stamp Duty Land Tax ramifications, on which advice should be sought.

A Declaration of Trust should be completed to record the shares of each purchaser.

What happens if my child is buying a property with their partner?

It is becoming more common for young couples and/or cohabitees to jointly buy a property together. It is therefore important to consider the risk of some or all of the amount provided to your child being lost in the event of death or if there is a future relationship breakdown (particularly where the provision is made by way of gift).

Where two people own property jointly, they can opt to hold it as “joint tenants” or as “tenants in common”. If they opt to hold as joint tenants, the share in the property of a deceased joint tenant would automatically pass to the surviving joint tenant. This has the advantage of simplicity where the co-owners want to leave their shares to each other, however it would mean that the share of the deceased co-owner could not be left to their own family. Furthermore, the co-owners cannot have unequal shares in the property, so a co-owner making an extra contribution to the purchase price could not take a larger share.

Where property is held by the co-owners as ‘tenants in common’, this enables the joint owners to hold different percentage shares in the property and for the share of each joint owner to be left to their intended beneficiaries if they die via their Will.  The co-owners can enter into a declaration of trust setting out their respective shares. They should both consider who they would want to inherit their share and make Wills accordingly.

How can a declaration of trust help protect each co-owner’s property share?

A declaration of trust sets out the interests each co-owner has in the proceeds of sale of the property. This is especially important where one co-owner is contributing significantly more to the purchase price and/or mortgage repayments than the other, for example, with the benefit of a parental gift. The declaration of trust can give one co-owner a larger share of the future proceeds of sale, e.g. to reflect their additional contribution to the purchase price.

It is very important that the parties agree and properly document their respective interests in the property when it is purchased to reduce the risk of future uncertainty and disputes.

A declaration of trust can also set out other points the co-owners may wish to agree in relation to the property, for example what should happen if one of the co-owners wants to  sell the property or buy out the other co-owner.

What other issues do I need to consider when helping my child buy a property?

  • Tax – the different options for assisting your child will have varying tax repercussions for both you and your child, which should be considered in advance
  • Wills – both you and your child should consider the impact of the arrangements on your Wills.
  • Your financial position – you should consider the impact of the proposed assistance on your own financial situation; for example, whether you can afford to help and whether you might need the funds back in the future. This will impact your decision as to whether to help and the option chosen. You should consider taking appropriate financial advice.
  • Family issues – if your child goes through a divorce or separation, their assets (including the property share you have helped them with) could potentially be reduced by the family courts. There are options to protect against this, for example cohabitation agreements, prenuptial and post nuptial agreements.

We’re here to help

If you are involved in your child’s property purchase, our expert advisers are here to help you navigate the legal and tax implications. We will liaise with our Residential Property Team to fully understand your requirements and ensure the careful preparation of a Declaration of Trust to accurately reflect the ownership of the property, so that both your and your child’s financial interests are fully protected.

Appointing a guardian for your children in your Will

Posted on by Sophie Soraf
As parents, who would you entrust the care of your children to, were the unthinkable to happen?

This question is not one many of us are comfortable considering as it is likely to stir up a lot of emotion and sometimes, conflict between parents who may have differing views.

However, if you have parental responsibility it’s vitally important that you make plans for the care of your children in your Will in the event that both of you were to pass away. Not only is this in the best interests of your children, but it will also allow you to feel as confident as possible that you have made the best possible arrangements for your children’s future and security.

What is a legal guardian?

A legal guardian is someone who has the legal authority to take care of your children should anything happen to you. Guardians are responsible for taking all parental decisions and can also be made responsible for managing your children’s property and inheritance (although responsibility for managing property and inheritances can instead be given to others).

What powers does a guardian have?

A guardian, whether appointed under a Will or by the Court, has parental responsibility for the child or children within his or her custody. Upon appointment, the guardian has all the rights, duties, powers, responsibilities and authority that a parent of a child holds in relation to that child.

In practical terms this means that the guardian can make decisions about where your children live, who lives with them, any decisions relating to their education or health and is entrusted with protecting, maintaining and disciplining them.

Therefore, it is very important to choose a guardian who you feel is best equipped to make these important decisions for your children.

Who should I choose as a guardian?

It is impossible to make generalisations about the relative or friend best suited to act as a guardian for your children. We all live in different circumstances and contexts so the choice of a guardian will likely be highly personal. However, some key considerations are likely to include:

  • The age of your children – as your children get older the caring responsibilities will change, so your initial choice of guardian(s) may be a decision you wish to re-evaluate at some point in the future
  • The age of the guardians – for most people, their first choice of guardian is the child’s grandparents. It is worth considering how old they are before making this decision.
  • How many children you have and if the guardian(s) you choose would be willing to take care of them all – the more children you have the greater the financial implications
  • How many children they have – if you choose a sibling or friends as guardians, do they already have their own children? If so, they may not be in a position to take responsibility for your children as well
  • Attitudes and beliefs – do those you wish to appoint share the same beliefs or religion as you? Will they bring up your children to have the same values as you would?
  • Financial situation – are your chosen guardians financially stable? Would they be willing or able to reduce their working hours to take care of your children?
  • Where they live – if they live far away from you, will this mean that your children would need to move to a new school, away from family and friends and what impact could this have on them?

There is unlikely to be a perfect scenario. Ultimately the most important thing is that by appointing a legal guardian in your Will, you have peace of mind having made the decision as to who will look after your children in the event that you are no longer there.

If you would like to appoint a legal guardian, talk to us today.

Do I have the right to appoint a guardian for my child?

You must have what is legally referred to as ‘parental responsibility’ in order to be able to appoint a guardian over a child under 18 years of age.

Parental responsibility means all the legal rights, duties, powers, responsibilities and authority which a parent has for a child by law.

A mother automatically has parental responsibility for her child from birth. A father will attain parental responsibility by either being married to the child’s mother at the time of the child’s birth, or by being named on the birth certificate.

If a father satisfies neither of these, but he would like to gain parental responsibility for his child, then he will either need to agree with the child’s mother for them both to sign a Parental Responsibility Agreement or he will need to apply to the Court for a Parental Responsibility Order.  Other ways a father may obtain parental responsibility for his child include being named in a Child Arrangements Order as a person with whom his child will live or marrying the child’s mother after the child is born.

In the case of same-sex female parents, the woman who carried the child is treated as the child’s mother and automatically has parental responsibility for the child from birth.  The second female parent will automatically have parental responsibility if she is a same-sex spouse or civil partner of the child’s mother at the time of the fertility treatment and consented to the treatment.  Otherwise, she would acquire parental responsibility in the same way as an unmarried father.

In the case of same-sex male parents who have a child born to them through surrogacy, they may acquire parental responsibility in a slightly different way.

If one of the male parents is a ‘biological’ father of the child and is named on the child’s birth certificate, he will automatically acquire parental responsibility in the same way as any other unmarried father.

If any parents, same-sex or heterosexual, use a surrogate, the process is more complicated.  For legal purposes, the surrogate mother who gives birth to the child is the child’s mother and automatically has parental responsibility for them.  The intended parents need to obtain a parental order from the court, which will give them both parental responsibility and bring the surrogate mother’s parental responsibility to an end.  Certain criteria must be met, which are complex and under these circumstances it is particularly important to seek specialist legal advice.

Step-parents may think they automatically gain parental responsibility for their step-child when they marry that child’s mother or father, but in fact, both biological parents would have to give their consent for the step parent to enter into a Parental Responsibility Agreement, obtain a Parental Responsibility Order through the Court, or be named in a child arrangements order as a person with whom the child will live.

When does the appointment of a guardian take effect?

The appointment of a guardian under a Will takes effect on the death of the last surviving parent with parental responsibility. For example, Anna and Bill are married and both have parental responsibility for their child, Cameron. In Bill and Anna’s Wills, they both appoint Anna’s sister, Dianne, as the guardian for Cameron. Should Anna pass away before Cameron reaches the age of 18, Dianne does not become the guardian for Cameron, as Bill remains the surviving parent with parental responsibility. Should Bill also pass away before Cameron reaches the age of 18, then Dianne’s appointment becomes effective.

The above example is straight-forward, however things can become more complex should two parents with parental responsibility appoint different guardians in their Wills – perhaps because they have separated.

Consider the same example, but that Anna appoints Dianne as the guardian for Cameron in her Will and Bill appoints his brother, Edward, as the guardian for Cameron in his Will. Should Anna and Bill pass away before Cameron reaches 18, whether simultaneously or otherwise, then both guardianship appointments become effective: Dianne and Edward are both guardians of Cameron and must now co-ordinate their efforts – possibly something Anna and Bill had not intended and perhaps not in Cameron’s best interests.

As an alternative to the above, you may wish to appoint a guardian in your Will subject to certain conditions. You could stipulate various conditions such as:

  • The guardian you name may be appointed whilst they live in a certain region, perhaps where the child is settled
  • The couple you appoint may only act as guardians whilst that couple is together
  • The child’s grandparent should only be the guardian up to a certain age, at which point another individual would become the appointee.

It is impossible to account for all circumstances, but specific concerns or wishes should be drafted clearly and effectively.

How should the child’s finances be managed?

Child Poverty Action Group estimated in 2018 that the cost to raise a child from birth to 18 years for a couple family is estimated at around £75,000, rising to £100,000 for a lone-parent family.  Clearly, there are substantial costs involved in raising a child and you may, therefore, wish to give consideration as to how the guardians of your children would manage financially. At the same time, you will be concerned to ensure that your children’s assets, including any inheritance they receive from you and their other parent and any trust funds, are managed appropriately for their benefit.

Many children are left with significant assets of their own after the death of their parents, for example:

  • They may have inherited significant assets under the Wills of their parents,
  • The parents may have created trust funds for them (including any life insurance policies placed under trust).

Their grandparents may wish to make provision for them during their lifetimes or by Will. Whilst the children are young, it may be necessary for the income or capital of some of these funds to be used for their benefit (e.g. towards the costs of their upbringing). The ability to do this will depend on the terms under which the assets are held (e.g. the wording of the Will or trust document).

It is also relevant to consider who will be making decisions about management of the child’s finances. Assets left to a child under a Will would generally be managed by trustees appointed under the Will while the child is under 18 (often, but not necessarily, the executors of the Will). Assets left under a trust will be managed by the trustees. It is important to give careful consideration to who should manage the funds. Some people are happy to appoint the guardians so that they can manage the child’s finances as well as looking after them. However, it should also be kept in mind that the guardians may have a conflict of interest as they could benefit indirectly from use of the funds. Therefore, some parents prefer to appoint other trusted friends, family members or professionals to manage the funds (either alone or alongside the guardians).

Another important consideration is at what age children should be able to make financial decisions themselves. Where assets are left to them outright, they are generally able to access them at age 18. Some parents will be concerned that this may be too young, in which case it is possible to specify a different age in the Will or to use ongoing trusts. There are, however, some tax issues that may be relevant to this decision, depending on the circumstances.

For all of the above reasons, it is important for parents with significant assets to take appropriate legal advice to ensure that the documentation under which the child’s assets are held is worded appropriately. It is also sensible for them to leave the executors/trustees a letter detailing how they would wish them to exercise their powers and discretions.

What to do when someone dies

Posted on by Sophie Soraf
When someone dies, there are lots of practical issues to be dealt with, at what will inevitably be a very difficult time for the person’s family and friends.  Here we outline the main things that will need to be done during those difficult early days.

Family and friends can usually deal with most of the practical things that need doing immediately after a death. Solicitors normally get involved a little later. If there is no family member or friend to deal with the practical matters, then a solicitor can help with some or all of these things.

Security and insurance for property

If the person who has died lived alone, someone should go to their home on the day of the death to do urgent things which cannot wait. The more common steps that may need to be taken are as follows:

  • Security: take the security precautions that you would take when leaving your own home empty for a while, such as locking all doors and windows, stopping deliveries of papers and milk and moving valuable items, so that passers-by cannot easily see them.
  • Pets: if the person had a pet, make temporary arrangements for it to be looked after by family or friends or through an animal rescue charity.
  • Guns: if you know that the person had a gun licence and kept firearms at the property, report the death to the police so that they can make arrangements for the guns to be kept safely.
  • Insurance: look for papers relating to the insurance of the property and its contents. Ring the insurers, tell them about the death and make sure that there is adequate home and contents cover in place. Keep a note of your conversation with the insurers with the paperwork. If you can’t find insurance documents, the insurance company name will often be found in a recent bank statement.

Everything that is in the home of the person who has died should remain there where possible. This makes it easy to arrange for all the person’s property to be valued where necessary for inheritance tax purposes.

If there are very valuable items and you believe they are not adequately insured or secure, consider moving them to a more secure place, but consult the personal representatives or close relatives of the person who has died or the person’s solicitors before you do this.

Registering the death

When someone dies, a doctor issues a medical certificate which states the cause of death. The death needs to be recorded formally on the register for births, deaths and marriages.  A death must be registered within five days after the date of the death.

The death must be registered at the register office for births, deaths, marriages and civil partnerships for the district where the person died. If you do not know where this is, contact the local authority or visit here. A relative should, if possible, register the death but the registrar allows certain non-relatives to register if no relative is available. The registrar will be able to provide information on who can act. Ring the register office first to find out if it has an appointment system.

The following papers contain information needed for registering the death:

  • birth certificate
  • marriage or civil partnership certificate
  • death certificate of former wife, husband or civil partner
  • state pension or allowance book
  • passport

Even if you cannot find these papers, you can register the death if you have all the necessary information. Whoever registers the death should also take to the register office the medical certificate from the doctor and the following information:

  • date of death
  • place of death
  • full name of the person who has died
  • any former names
  • occupation
  • last address
  • name, date of birth and occupation of the person’s spouse (including a same-sex spouse for marriages on or after 13 March 2014) or civil partner (whether living or dead); and
  • information about any state benefits the person was receiving.

If you do not know all the details about the person who has died that you need for the registrar, you should be able to find them in his or her birth certificate, marriage or civil partnership certificate and state pension or allowance book.

The registrar issues an official copy of the register, called a certified copy death certificate, after the person registering the death signs the register. You can obtain any number of certified copy death certificates. You do have to pay for them; the price varies from one local authority to another. You can claim back the cost from the estate in due course.

You need several copy certificates to send out when giving notice of the death to banks, insurance companies and so on. You will also need a copy for the person’s pension provider, and it is sensible to get one or two spare copies while you are at the register office as it is less convenient to order additional copies later.

The registrar also issues a certificate for burial or cremation. Give this to the funeral director who is making the funeral arrangements.

What if the death is reported to the coroner?

Unexpected deaths are reported to the coroner, sometimes by the police but usually by the doctor who was called when the person died.

When a death is reported to the coroner, the coroner usually arranges for a post-mortem. This normally establishes the cause of death. If the death is from natural causes, it can be registered, and the funeral can go ahead.

There is only an inquest if the cause of death is in doubt, even after the post-mortem, or the post-mortem shows that death was not from natural causes. Even if there is to be an inquest, the coroner usually allows the funeral to be held after the post-mortem.

Arrangements for payment of ongoing bills

Bank accounts and other assets in the sole name of the person who has died are usually “frozen” from the death until the personal representatives obtain a grant of probate or letters of administration.

If the person who has died paid household bills, then the other members of the household may be worried about how to manage between the death and the grant. There are various ways of dealing with this problem, for example:

  • if a member of the household had a joint account with the person who has died, that account can be used to pay bills
  • it may be possible to borrow from a family member or from the bank
  • if the person who has died had life insurance or was a member of a pension scheme, a lump sum may be payable soon after the death.

It’s a good idea to obtain professional advice on the different options as there may be relevant tax or financial circumstances which need to be considered.

Dealing with state pension and benefits arrangements

The registrar will give you a form (form BD8) to complete. This is used to tell the Department of Work and Pensions (DWP) Bereavement Service of the death so that it can deal with the state pensions and benefits arrangements of the person who has died.

The personal representatives or family can complete this form or ask a solicitor to complete it and send it to the DWP. Alternatively, you can call the DWP Bereavement Service or search the government website.

A number of local councils offer the DWP’s “Tell us once” service which is a way of letting a number of government departments know that someone has died, by just making one contact. If this is available in your area, the registrar will either use the service for you or give you a unique service reference number so that you can use the service over the telephone or online. The service can be used to contact the government departments that deal with the deceased person’s benefits, state pension, tax, passport and driving licence.

Locating any Will

It’s best to find the latest Will of the person who has died (or at least a copy) as soon as possible after the death because:

  • they may have said in the Will what kind of funeral they wanted
  • the administration of the estate goes more smoothly if the executors (the person or people appointed in the Will as the personal representatives of the estate) are involved from the start.

People who get solicitors to make their wills for them often keep a copy of the will with their important papers. The original is usually kept by the solicitors’ firm: the address and phone number of the firm is often on the cover of the copy will. It’s important that a thorough search is made to check whether the deceased left a will and to make sure that the most up to date Will is located.

If you cannot find a Will (or a copy) in the home of the person who has died, ask the person’s bank and their solicitors if they know where it is. There are also certain searches and advertisements which can be made for a Will – a solicitor can advise on  these.

If the person who has died left a Will which does not appoint you as an executor, but you know the people who are appointed executors, make sure they know about the death. You and the executors can then decide who is to register the death, if this has not already been done, and who is to arrange the funeral.

If you have registered the death and obtained copy death certificates but you are not an executor, hand the copy certificates over to the executors or to their solicitors. If you are not going to deal with the DWP, hand over the form relating to social security benefits too. If the executors are arranging the funeral, give them the certificate for burial or cremation.

If, because you cannot find a Will, you do not know who the personal representatives are, you can still arrange and hold the funeral.

Only the executors appointed in a will are entitled to see the will before probate is granted. If you are not an executor, the solicitors of the person who has died or the person’s bank, if it has the will, cannot allow you to see it or send you a copy of it, unless the executors agree. However, they can tell you who the executors are. They can also let you know what the will, or a note kept with it, says about the kind of funeral the person wanted.

Arranging the funeral and organ donation

It’s desirable to find the following documents before the funeral but the funeral can go ahead even if you do not find them:

  • the most recent will of the person who has died, or a copy of it
  • any note saying what kind of funeral the person wanted
  • papers relating to life insurance or pension arrangements.

Many people leave notes saying what kind of funeral they would like, or they express their wishes in their wills. You are not legally obliged to follow the wishes of a person who has died but usually relatives and friends prefer to do so. It can be distressing to discover after the funeral that it was not arranged as the person wished, so look as soon as possible for a note and for the will.

If you know that the person who has died wanted to leave his or her body for medical research, look for the relevant consent form. The form may be stored with the person’s important papers or with the will. The form will have details of the relevant research institution: contact it and follow the procedure it recommends.

It may also be relevant to consider whether the person who has died made any decision regarding giving or refusing consent to organ donation, either by recording a decision on the NHS Organ Donor Register or by speaking to friends and family. In England the law relating to organ donation changed on 20 May 2020 to a new “opt out” system, whereby consent to organ donation can be assumed in some circumstances. Further information about the new system can be found here.

When you have confirmed that the body is to be buried or cremated rather than given for medical research (if this is the case), give the certificate for burial or cremation to the funeral director. The funeral director will discuss the arrangements with you and guide you through the process leading up to the funeral and the burial or cremation.

By taking on the responsibility for arranging the funeral, you are also taking on the responsibility of paying for it. You will eventually be able to reimburse yourself from the estate of the person who has died, if there is enough money in the estate to cover the funeral expenses.

You, or other family members, may be willing to pay the funeral expenses, on the basis that you will claim repayment from the estate later. However, there are other ways of paying for the funeral:

  • look through the papers of the person who has died for anything relating to a pre-paid funeral plan. If you find that the person subscribed to a plan, contact the provider and follow the procedure it recommends.
  • a bank where the person who has died had an account, may be prepared to release money from the account. The bank “freezes” an account when it learns about the account-holder’s death, making no further payments out. However, it may make an exception for funeral expenses. Contact the bank to ask whether it will release money to pay for the funeral.
  • look through the papers of the person who has died for anything relating to life insurance or pensions and contact the providers. If the person had a job at the time of the death, contact the employer’s HR department. Lump sum payments can often be made from life insurance policies and pension schemes very soon after a death. However, you should take professional advice before using lump sums of this type to pay funeral expenses as there may be a more tax-efficient way to use the money.
  • If you are arranging a funeral for a partner or close relative and you are on a low income, you may qualify for help in paying for it. You may have to repay some or all of it from the estate of the person who has died. For more information, see https://www.gov.uk/after-a-death/overview.
  • In some instances, the funeral provider may be willing to wait until probate has issued for settlement of the invoice.

People to notify

Anyone else with whom the person who died had a business connection should be notified of their death as soon as possible. Some of the more common persons to be notified are listed below.

  • Anyone with whom they had a business connection
  • Banks and building societies
  • Private or local authority landlord
  • Employer
  • Private pension providers
  • DVLA
  • Passport Office
  • Royal Mail: it may be appropriate to arrange for the deceased’s mail to be redirected to another address.

Utility companies and other service providers. For example:

  • utility companies supplying gas, electricity and water.
  • broadband, phone and satellite TV providers.
  • the TV licensing authority.
  • the local council tax authority.
  • suppliers of other regular services, such as gardening and cleaning.

Administering the estate

What is estate administration?

Very broadly, administering an estate involves collecting in all the assets of the deceased, settling any liabilities, attending to all tax, accounting and reporting matters and distributing any net estate to the correct beneficiaries.

Who administers the estate?

If the deceased left a valid Will then it will generally appoint executors who are entitled to administer the estate. If there is no Will or no executors appointed (or the executors are unwilling or unable to act) then the law specifies who can administer the estate (“administrators”).

The executors or administrators dealing with the estate are known as the “personal representatives”. It will be important to check that the Will located is the most up to date Will of the deceased and a solicitor can advise on how to do this.

Is a grant of probate/letters of administration required?

A grant of probate or letters of administration is a document confirming who has formal authority to administer the estate of the deceased (known as the “personal representatives”). In many cases a grant will be required, however a grant is not always necessary where the estate is very straightforward. A solicitor will be able to advise you whether a grant is needed and who is entitled to apply.

The benefits of using a solicitor

The personal representatives need to decide whether to ask a solicitor to help them deal with the estate. For very straightforward estates of modest value, the personal representatives may feel comfortable dealing with the estate without legal advice. However, they do need to be aware that even a simple estate is time consuming and that personal representatives can be personally liable to various parties e.g. estate beneficiaries, creditors or HMRC, if they distribute the estate incorrectly, do not settle all liabilities, or do not comply with all requirements. Also, if there is an inheritance tax liability, this can sometimes be reduced, or even eliminated, with appropriate planning. Hence the personal representatives will often wish to instruct a solicitor to ensure that the estate is dealt with appropriately and for their own protection.

If the personal representatives decide to instruct solicitors to advise them in relation to the estate, they should arrange a meeting as soon as possible to take matters forward.

If the person who has died seems not to have left a Will, then one or more of the person’s closest relatives (wife, husband or civil partner, father or mother, brother or sister, son or daughter) should contact a solicitor for advice on making further searches for the Will and explain what to do if the person did not leave a Will.

Three new female partners tip the balance at Tees

Posted on by Sarah O'Sullivan
Three new female partners have swelled the senior ranks at Tees Law, a Top 200 law firm with offices in Bishop’s Stortford, Brentwood, Cambridge, Chelmsford, Royston, and Saffron Walden. Letty Glaister, Eleanor Burroughs, and Kay Piper’s promotions to the partnership mean that female lawyers now comprise the majority of the firm’s partners. In a profession where women typically occupy less than a third of partnership roles, Tees is leading the way in supporting female lawyers to access senior positions and progress in their careers.
Commitment to diversity and equality

Tees’ head of HR, Amy O’Brien, commented: “Tees encourages and values diversity and is committed to equality for its entire staff. Fifty-three percent of partners at Tees are women, and having such a balanced split works really well for us. Each partner, be they male or female, brings different strengths and qualities to the team and contributes to driving the company forward. These principles of equality of opportunity and non-discrimination also extend to the manner in which our employees interact with our clients, our business partners, and our visitors.”

Kay Piper’s vision for commercial property

Kay Piper is head of Tees’ commercial property department in the Bishop’s Stortford office. Speaking of her appointment, Kay says: “I am looking forward to increasing the team’s presence and connections within the community, reaching out to build local awareness of Tees’ expertise in commercial property matters. I am also very keen to further develop a collaborative team within Tees, ensuring that we work together to deliver a joined-up service for our clients. Whilst the entire Tees team is currently working from home, we’re still working hard to keep connected with our clients and to each other. We’re actually finding that we’re communicating more than ever.”

Letty Glaister’s rural community focus

Letty Glaister, who heads up the Royston office, hopes to further strengthen her relationships within the rural community and cement Tees as the law firm of choice for farming clients throughout Hertfordshire and Essex. “It’s really important that our clients trust us implicitly, and that can only be achieved by making a real effort to strengthen our links with the surrounding community, especially during these difficult times when many rural families are feeling concerned and isolated due to social distancing measures,” she says. “Particularly in the rural world, maintaining close relationships is vital as we are dealing with farms that have been in families for generations, meaning that emotions can run high for all concerned.”

Eleanor Burroughs’ commitment to Saffron Walden

Eleanor Burroughs, who has been working at Tees’ Saffron Walden office for 11 years, heads up its residential property department. In addition to her partnership promotion, she has also been promoted to head of the Saffron Walden office, effective from April. Going forward as a partner, Eleanor says she is “looking forward to maintaining the close links we have worked so hard to build up with the local community, and to building the Tees brand.”

A message from the group managing director

Ashton Hunt, group managing director at Tees, is delighted by the three new partners’ success: “At Tees, we have always been assiduous in ensuring our female solicitors are supported in progression to senior roles. Letty, Eleanor, and Kay have all consistently demonstrated their excellence in their fields and commitment to our firm during their time here. Whilst leading their teams remotely during these challenging times, they continue to deliver a consistently excellent service to their clients. Their promotion to partner is thoroughly well deserved.”

 

Dealing with your digital assets upon death

Posted on by Sophie Soraf
Like it or not, we live in a digital age where technology has changed the way in which we store our data and even our memories. Even if we are not aware of it, most of us will have digital assets of one kind or another. This begs the question as to how such assets are dealt with when we die. Can they be inherited and transferred to the beneficiaries in our Wills? Can our online accounts be accessed by our loved ones? Or are they lost forever?

What are digital assets?

In simple terms a ‘digital asset’ is something intangible but that has a value, be it a financial or sentimental one. Examples include but are not limited to:

  • Data
  • Software
  • E-mails
  • Designs
  • Patents
  • Online accounts
  • Digital photographs
  • Web addresses
  • Digital money known as cryptocurrency

Do we own our digital assets?

It might surprise you to learn that we do not always own what we perceive to be our digital assets. Often, our online accounts, for example, are used under the terms of a licence agreement, which we enter into by accepting the provider’s terms and conditions.  Here’s an example: iTunes accounts – we do not own the music that we “purchase”, but rather we just have the right to listen to it under the terms of the licence agreement. A licence is usually non-transferable and will be specific to the individual licensee. This has implications after death, as the person might have wanted to pass on the content of their accounts, but the executors may find that they are unable to.

Generally if held under a licence, the licence agreement will determine what will happen to the account upon death. For example, social media accounts such as Facebook or Instagram can be “memorialised” where friends and family can continue to share memories about us after we pass away. Other providers, such as Twitter, close accounts upon death and provide our families with an archive of all our public posts.

Beyond our social media profiles, accounts such as those with Dropbox are automatically deleted after a period of inactivity. This is also often the case with email providers, although some allow access to authorised people after the account’s closure, where others allow the account to be transferred. It is not difficult to see therefore how confusion, uncertainty and logistical problems can arise.  After all, the digital world is a relative newcomer and every day new inventions and systems are adding to the complexity.

To overcome these problems, you may simply opt to share your passwords so as to give access to digital content to someone you choose. However, notwithstanding issues of confidentiality during your lifetime, you should be wary of doing this because this could be in breach of your agreement under the provider’s terms of business.

How do our loved ones find out about our digital assets?

Given that our digital assets by definition have no physical presence, it can be extremely difficult to trace them when we pass away. However, it’s important that our executors are able to find details, particularly where the assets have a financial value, such as our PayPal accounts, intellectual property such as royalties or digital cryptocurrencies (e.g. Bitcoin). In some circumstances these assets can be highly valuable and should be declared by our executors, particularly as an inheritance tax liability may arise and  penalties may otherwise become payable.

Our recommendation is at the very least to keep an inventory of all of your digital assets and details as to how they can be accessed, whilst still keeping your passwords private. This might involve the use of an online password manager, for example. We’ve created a useful digital assets inventory for you to use – you can download the PDF here.

Including your digital assets in a Will

You should also consider who you would like to inherit your digital assets where this is possible. You can include a clause in your Will giving your executors discretion to deal with these items, or you can include specific gifts depending on the asset in question. You should also consider your choice of executors as it is often advisable to have separate executors dealing with your digital assets, as opposed to all other assets.

There is clearly some need for legal reform in relation to digital assets and succession. There is no joined-up thinking as to how different types of digital assets are treated on death, as a result of a lack of relevant legislation. In the meantime it is important to be aware of the problems that can arise if you have not planned properly.

Wills and succession solicitors and advice

Tees has specialist succession planning solicitors who can help you:

  • If you have digital assets and need to write or make amendments to your Will
  • If you are an executor dealing with an estate involving digital assets
  • If you have received an inheritance of a digital asset in a Will and need advice on how this can be dealt with
  • If you are related to someone who has passed away without a Will in place where the deceased had digital assets

Five reasons to make a Lasting Power of Attorney

Posted on by Sophie Soraf
The world is becoming ever increasingly aware of the problems that many of us and our loved ones will face due to mental incapacity.

One way in which you can protect your assets and give your loved ones the authority they need to look after you and your assets in such circumstances, is to prepare Lasting Powers of Attorney.

There are many reasons why Lasting Powers of Attorney are crucial documents to have in place but here are our top five:

You can choose who you wish to act on your behalf

You are therefore in control of this important appointment to enable you to appoint the appropriate person/people you trust.

If you do not make a Lasting Power of Attorney then an application is made to Court for a Deputy to be appointed. You will have no choice in the appointment of the Deputy.

You can make a Lasting Power of Attorney for Property & Financial Affairs or a Lasting Power of Attorney for Health & Welfare, or both

You can decide which of these documents are appropriate for you and your circumstances.

Previously, under the old system of Enduring Powers of Attorney, you could only ever appoint an attorney to act in respect of your Property & Financial Affairs.

A Lasting Power of Attorney is valid as soon as it is completed and can be used once it is registered with the Court

(please note however, that the Lasting Power of Attorney for Health & Welfare can only be used once you lack capacity).

If you have a General Power of Attorney, these are only valid until you lose mental capacity when it will cease to be valid- just when you need it the most!

Once the Lasting Powers of Attorney is in place then there will be no ongoing need for your attorneys to report to the Court or pay any ongoing fees

If a deputy is appointed because you did not have a Lasting Power of Attorney then your deputy will be required to provide a report to the Court on an annual basis and there will be an annual Court fee.

The Court fee has been reduced from £110 to £82!

Take advantage of this reduction.

The most important thing in respect of Lasting Powers of Attorney is that you act early. Once you lose mental capacity then you will be unable to make Lasting Powers of Attorney. The only option is then for your loved ones to apply to the Court to have a deputy appointed.

Can HMRC really take money straight from my bank account?

Posted on by Sophie Soraf
Potentially in the future, yes… but only if you haven’t paid your tax!

In the budget the chancellor announced that HMRC were to be give powers to enable the direct recovery of debts (DRD) from a taxpayer’s bank accounts (including ISAs). Quite rightly this has caused much concern and been the subject of much debate in the media. It should be noted that the practicalities of implementing theses powers are still in the consultation stages and as yet nothing is certain.

According to this document the goal is for these powers to “modernise and strengthen HMRC’s ability to recover tax and tax credit debts from those who are refusing to pay what they owe. It will help to level the playing field between those who pay what they owe, when they owe it, and those who do not.” This sounds like an admirable goal but inevitably safeguards are needed to protect vulnerable persons and prevent HMRC abusing these far reaching powers. The treasury select committee recognised this when they noted that “Giving HMRC this power without some form of prior independent oversight – for example by a new ombudsman or tribunal, or through the courts – would be wholly unacceptable”

So who is affected?

HMRC estimate this will affect 17,000 cases each year (which is less than 0.02% of taxpayers in Self Assessment).

It will only affect those who have not paid their tax and do not engage with HMRC in respect of their tax liability, those with a “time to pay” arrangement will not be affected provided they keep to their agreement.

Under current proposals HMRC suggest the powers are only suitable for debts in excess of £1,000. The debt could be a single debt for one tax or made up of various smaller amounts covering a range of taxes (including tax credits).

What are the proposed safeguards?

HMRC will, as an absolute minimum, need to contact the taxpayer four times before any attempt to apply the DRD powers is made. This contact may be by letter or phone. They envisage that a taxpayer who previously had a good history of compliance will be contacted by HMRC around nine times before DRD is used. On the subject of communication it is important to note that HMRC typically don’t use email and would NEVER notify you of a refund via email, if you receive any email offering a tax repayment claiming to be from HMRC it is likely to be a scam.

HMRC are proposing to obtain up to date balances and a 12 month history for each of the bank accounts to ensure DRD does not inadvertently cause the taxpayer to suffer undue hardship.

HMRC will leave a minimum of £5,000 in the debtor’s account after the debt has been recovered. HMRC will put a “hold” on monies above £5,000, or any higher amount they deem reasonable after reviewing the account history, in so far as they cover any tax owed. HMRC will write to the taxpayer to inform them of the “hold” and urge the taxpayer to contact them in order to settle the tax or agree a “time to pay” arrangement where appropriate.

The “hold” placed on the monies at the bank or building society will be in force for 14 days from the date of the letter notifying the taxpayer, giving the taxpayer the opportunity to contact HMRC. If contact is made and arrangements are made to pay the tax the “hold” will be lifted or the funds transferred as part of the agreement.

HMRC state it is their preference to take funds from accounts used primarily for savings over those used to cover day-to-day expenses.

Where a “hold” is placed on a joint account HMRC propose a pro-rata proportion (i.e. 50/50) of the credit balance will be subject to DRD. The joint holder will have the right to object to HMRC on the grounds of hardship or misidentification.

So in summary

The current proposals are:

  • The tax owed must be over £1,000
  • The taxpayer must be contacted a minimum of 4 times by HMRC
  • HMRC must leave a reasonable amount in the taxpayer’s account to cover normal expenses – minimum of £5,000
  • A “hold” must be placed over the funds for 14 day before funds are taken to give the taxpayer time to object.
  • With joint accounts a joint holder should be able to object.

Again it is important to appreciate that this is all in the consultation stage at the moment and all subject to change so we will need to wait and see what happens. In the meantime a copy of the consultation can be found on the Government website.

What you need to know about Wills

Posted on by Sophie Soraf
Thinking about making or updating your Will? Our wills solicitors explain why it’s so important – and how to get started.

Why should I make a Will?

By making a Will you ensure that the people you want to benefit from your estate, do so. You can be certain of the destination of your assets, rather than relying on the rules of intestacy. It will also give you peace of mind and allow you to make provision if you have a young family to ensure that guardians are appointed.

What happens if I do not make a Will?

This depends on what dependants and relatives you have. Under current rules:

  • If you have a spouse or civil partner and children, and the estate is worth £250,000 or less your spouse will receive everything.
  • If the estate is worth more than £250,000 your spouse will receive the first £250,000 and half of the remainder (together with your personal belongings, whatever their value). The other half of the remainder will be shared equally between your children. If any of your children have predeceased you, and have children of their own, then the grandchildren will inherit in their place.
  • If you have a spouse but no children then your spouse will receive everything.
  • If you have children and no spouse your children share your estate equally between them.

If you have neither a spouse nor children the whole of your estate will pass to your closest relative in the following order of preference:

  • Parents
  • Brothers and sisters of the whole blood (you have both of the same parents)
  • Brother and sister of half blood (one parent the same)
  • Grandparents
  • Uncles and Aunts of the whole blood
  • Uncles and Aunts of half blood

If you have no relatives everything goes to the Crown

Is it expensive to make a Will?

The money spent in having a will professionally drawn up is good value when you consider the peace of mind it provides. You will receive professional and thorough advice from a solicitor who specialises in preparing Wills and who is regulated by the Solicitors Regulation Authority.
We appreciate that there are many forms that you can download from the internet or purchase but these do not always deal with more complex issues of modern day families or associated issues such as inheritance tax. In our experience many ‘homemade’ Wills are ineffective. We offer a range of pricing options to reflect our clients’ needs and circumstances and we would be happy to discuss them further over the telephone.

What are ‘Executors’?

Executors are the persons appointed to look after your estate once you have died. The role of an executor is to establish what is comprised in the estate, pay any debts and taxes due and then ensure that the provisions of the Will are carried out.

Can I change my Will?

Yes. As long as you have the capacity to make a new Will or amend it via a Codicil, which is an additional document that sits alongside your current Will then you can amend it at any time.

What happens if I marry or get divorced once I have completed my Will?

If you marry after completing your Will (and you have not made the Will in contemplation of the marriage), your Will is automatically revoked.
If you divorce, the gifts made in your Will to your former spouse will be ineffective and any appointment of the former spouse as an executor or trustee will lapse.

I have assets in more than one country – do I need a Will in each country?

A Will completed in England & Wales may be sufficient to cover assets in other countries however, we would always advise that you take specialist advice from a solicitor within the foreign country where your assets are located.
We are able to offer advice through our French law department in respect of any assets you own in France.

How long will it take to complete my Will?

Depending on your requirements and provided your instructions are clear and available when requested, we will provide you with a draft Will within seven days of receiving your initial instructions, and your Will should be completed within one month. If you have any particular needs (e.g. if you are about to go on holiday) these can usually be accommodated.

Where is my Will stored once I have completed it?

We can store the Will for you in storage free of charge and we will provide you with a copy to keep at home.
Tees is a member of Certainty, the National Will Register, and we will register your Will with Certainty once it has been signed. Only certain basic details are recorded on the register and the terms of the Will remain confidential. The Will itself remains in our strongroom for safekeeping.

If you do not want your Will to be registered with Certainty, you can opt out of this service. If you would like to opt out or if you have any queries about the service, please let us know.

When should I review my Will?

We would advise that you look at your Will every 3-5 years to consider whether any changes are required. If something significant should happen in the meantime, it is also advisable to review your Will.

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All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.

All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.

Copyright © 2025 Tees Law. All rights reserved.

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Financial services:
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0800 0131165

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All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.

All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.

Copyright © 2025 Tees Law. All rights reserved.

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