Do I need to change my Enduring Powers of Attorney to Lasting Powers of Attorney?

Do I need to change my Enduring Powers of Attorney to Lasting Powers of Attorney?

We have been helping our clients for over 21 years, which includes a time when Enduring Powers of Attorney (EPAs) were the only tool we had to assist should we lose our mental capacity. We wrote many EPAs pre-2007, which is when the law changed, but the vast majority of our clients have now chosen to update their EPAs to LPAs (Lasting Powers of Attorney). However, we have clients out there who still have Enduring Powers of Attorney and there are many people (not our clients) who are under the illusion that their EPAs are sufficient. So, for those people who still have EPAs, here are a few pointers as to why you might wish to consider updating them now:

    • Your EPA cannot be registered on the Government register until you have lost your mental capacity. But, your EPA cannot be used by your attorneys until it has been registered. It is currently taking six months to register any power of attorney so this means there will be a 6-month delay in your attorneys being able to assist you should you lose your capacity.  LPAs, on the other hand, can be registered straightaway so they are ready to be used as and when required.
    • In addition, there is an extra, compulsory, safeguarding procedure that forms part of the EPA registration process. As much time may have passed between when you set up your EPAs and when you need to use them, it is necessary that your attorneys notify a prescriptive, and potentially lengthy, list of relatives before they may apply to register your EPAs. This can involve writing to remoter relatives with whom you are no longer in touch. Either way, this is a time-consuming process but one that does not have to be followed when you register LPAs. In any event, were you to opt to draw up new LPAs, we would register these for you at the time as part of the service we offer to our clients.
    • Your EPA is restricted to your financial affairs only. However, you are also able to set up an LPA for Health & Welfare matters which enables your chosen attorneys to make critical decisions for you such as your care package, whether you get cared for at home, whether you need to go into care and, if so, which care home. It also enables them to speak with the medics and the social workers concerning matters such as medication but, more importantly, life-sustaining treatment decisions. Many people assume that their spouse and close family will automatically have the authority to manage these areas of their lives but they don’t. Of course, they will be involved but the ultimate decisions can only be taken by third parties such as medics and social services if you don’t have a Health and Welfare LPA in place.
    • You may only have named your spouse as your attorney on your EPA and this may no longer be appropriate. You may wish to nominate others who can work with or independently from a spouse or partner.
    • You may only have listed one of your children as an attorney as the others were too young to act but now you may wish to include more family members or friends to act on your behalf.  This is of course possible with an LPA.

This is certainly not an exhaustive list of reasons to take out LPAs so if you would like to discuss this topic with us further then please contact us on 0191 406 0747 or office@hamiltonlegacy.co.uk.

Do I need Business Lasting Powers of Attorney?

Do I need Business Lasting Powers of Attorney?

Before I answer that, I feel we should ask a different question and that is “do I need a Lasting Power of Attorney at all?”

That one is simple to answer and that is “YES OF COURSE!”.  

Mental incapacity is so often just thought of as dementia and Alzheimer’s disease, but of course it can be relevant to any age through strokes, car accidents, sporting accidents, household accidents, operations that go wrong – to name a few.

Everyone who has assets needs a Property and Finance Lasting Power of Attorney (LPA).  If you were to lose your mental capacity then any asset in your sole name is now locked, as you are the only person who is allowed access to it.  Even joint assets could be frozen as when the bank or third party finds out you are now vulnerable, they have a duty to protect that asset and hence lock it from everyone, even the other joint account holders.  

So that will include your business bank account, even though you may have other signatories.  Hence, how will your staff be paid, or your services or suppliers?  How long would your business last?

So, you have established that you require a Property and Finance LPA which can be used for the business, but do you need a specific business LPA?  This depends on who you wish to run your business on your behalf.  If the attorneys you have named on your personal Property and Finance LPA are the same people that you want to manage your business, then the one document can facilitate this.

However, if you wish to name someone knowledgeable within the business on the LPA but do not wish them to have access to your personal affairs, or you may have a personal attorney who you do not wish to be involved in the business, then you will require two documents; a business LPA, restricted just to the business and a personal LPA restricted to all assets except the business assets.  You may have attorneys that are named on both documents.

As always, this is a specialised area and so appropriate professional advice is highly recommended.  If you require a conversation about your own circumstances, then please call us at Hamilton Legacy on 0191 406 0747, or
email us at office@hamiltonlegacy.co.uk, we would be delighted to talk this through with you.

Planning for your business after your death

Planning for your business after your death

I hear people using the term “Business Will” on a frequent basis, inferring there is a separate document for your business at your death.  However, a Business Will is a Will that recognises the existence of the business in the assets of the deceased and plans accordingly.

Too often I see business owners assuming that it is the right thing to do just to let the business fall into their estate at death, “just pass to the wife/ husband”.  This usually means they have not had the appropriate discussions nor the correct advice for them and their circumstances.  This could end in disaster for their business, their widow and their family. Also, why wouldn’t you protect your life’s work?

The ramifications of poor planning for your business in a Will is too detailed to cover fully in this blog but here are a few tasters.

If your business a sole tradership

Do you have business continuity clauses in your Will?  If you don’t, then your business assets will require a Grant of Probate, along with the rest of your personal assets.  This means those assets are frozen until a grant is produced and this can take many months.  Would your business survive being frozen for that length of time?

Without continuity clauses, a sole tradership can only be sold or wound down and cannot continue to trade.

Contracts of employment cease at your death, can your business run without staff?

If your business is a partnership

If nothing is pre-stated, your partnership ends at your death as one of the partners is now no longer acting. Action now needs to be formulated as to how the “new” business carries on.

If your business is a Limited Company

If there are no directors as you were the sole director, your estate now needs a grant of probate, and your executors will have to appoint a new director to run the business in the meantime.  Do your executors realise this and understand their responsibility

However, the missed opportunities of not having those bespoke discussions about the business you have worked so hard for many years are

    • What happens to the business at your death – 
      • is it sold
      • Can you be replaced with putting another manager in 
      • MBO?
      • Continuity plan
    • Do you have certain members of the family in the business and not others, for example, has your daughter worked in the business and been involved in running it but your son hasn’t? So, do they benefit equally from the business or not and does the other child get compensated?
    • Business Property Relief – does the business qualify?  Is it trading or investment?  Does it comply with the wholly or mainly rule?
    • How much cash is in the business?  How much can be seen as working capital?
    • Do we need to utilise the business for inheritance tax planning?
    • If your spouse inherits the business, what if they remarry/ go into care?
    • Does your spouse need an income?
    • Will the business value affect your residence nil rate band at first and/ or second death?

ALL businesses need a disaster plan, but this is often thought to have to do with natural events, or supply issues, or even cyber-attacks for example. However, your death could constitute a disaster for your business and all related to it, your staff, the stakeholders and your family members.  Therefore, it is vital to incorporate this in assessing risks for the business.

Don’t assume you don’t need to plan for your business at your death.  Have an informed discussion and plan accordingly. Act now before your life’s work is wasted.

As always, we would be delighted to talk this through with you so do email us on office@hamiltonlegacy.co.uk or call the office on 0191 406 0747.

Administering an Estate

Administering an Estate

No one wants to think about death. Not their own death, nor especially that of a beloved family member or friend. We help our clients to prepare themselves both practically and mentally, and in some cases emotionally, for that inevitable moment. It can be a huge relief for some to know that their affairs are in order. For others, it is very trying and difficult making all the necessary decisions.

When a loved one sadly passes, there is a huge amount of work to be done. This, despite the fact that you are often barely functioning because of their loss. One of our team recently lost her mother and she is keen to share her practical thoughts and experiences with our readers. She found there is little straight-forward guidance available generally and of course most of us are administering an estate for the first time.

Make an Appointment with the local Registry Office

The initial hurdle to overcome is making an appointment to register the death at the deceased’s local Registry Office. (I am sorry – I’m going to refer to the person who has died as the ‘deceased’ for the purpose of clarity but I do recognise that no term is ideal.) You will need a ‘Medical Certificate of Cause of Death’ from the doctor in order to be able to do this. You will also be asked for various pieces of information and copies of documents but you will be advised exactly what is required.

‘Tell Us Once’ service

Do use their ‘Tell Us Once’ service as this undoubtedly saves you time and, more importantly, heartache. On your behalf, the Registry will contact HMRC (tax office), Passport Office, DWP (benefits), DVLA (driving licence) and the local council (possibly care fees). Again, various documents will be requested from you; do try to find them all. It may be that your loved one was due a tax rebate.

Arrange the Funeral and/or Memorial Service

The only other urgent task is to arrange the funeral. You may already know the deceased’s wishes or they may be detailed in their Will. (I hope they wrote one.) The deceased may hold a pre-paid funeral plan which may also detail their wishes but will certainly cover the basic costs. Opt for the earliest date you can for the funeral; you will not be able to move on until it has taken place. You may wish to think about placing an announcement in a local and/or national newspaper regarding the death and the date of the funeral. Once all this is done, you might want to take a breather as there is still much to be done, even if the estate is relatively simple. 

Gathering Finances

Once you can face it, you need to establish where the deceased held their ‘sole’ funds. (Joint funds will automatically pass to the other named account holder(s) according to the Laws of Survivorship.) This could include banks, building societies, Premium Bonds, financial advisors (ISAs/Bonds) etc. Register the death with each organisation and request a final valuation statement to be sent to you. (Do ask for a number of copies of the death certificate when you register the death. Whilst all organisations will return original copies to you, these certificates are like gold dust.) Do the same with all pension companies, including the DWP, if you didn’t use the ‘Tell Us Once’ service.

Your heart will be broken many times over the next few weeks as these organisations blandly respond to ‘The Late ________’ or the ‘Pers Reps (personal representatives) of _________’. It is shockingly impersonal. Do however retain all the documents received for your records. 

Probate?

You may need to go through Probate, you may not. Probate is the Latin word meaning ‘to prove’ so probate is the process of ‘proving’ the deceased’s death, who their personal representatives are, whether or not there is a Will, the assets etc. Each financial institution has its own rules and investment levels at which Probate needs to be done. Check with every financial institution where the deceased held ‘sole’ funds. Unfortunately, even if only one institution requires Probate, you will have to go through the process. Probate will also be required if the deceased held their property as Tenants in Common with a spouse or partner or individually. (You can check this via the Land Registry.)

Do go to the government website (https://www.gov.uk) and search under ‘Probate’. This site contains lots of really useful information, probably too much! From here, you can download all the necessary forms:

  • PA1 – complete by hand to apply for probate
  • PA2 – explains ‘How to obtain probate without using a solicitor’
  • PA3 – details probate fees (£215 at the time of writing)
  • PA4 – gives addresses of local Probate offices.

Tax forms for Inheritance Tax

You will also need to complete a tax form for inheritance tax purposes, even if there is nothing to pay. Complete form IHT205 if no tax is owing; complete IHT400 if inheritance tax is owing. If you struggle with either form, call one of the contact numbers or seek professional advice.

‘Swear an Oath’ at the Probate Office

Having sent off the necessary documents, you will need to arrange an appointment to ‘Swear an Oath’. Only one of the Executors needs to do this if you prefer.

Trusts

If there are any Trusts in the Will then these must be implemented within two years of the death. They cannot simply be ignored and need to be set up even if they are immediately closed again. A solicitor will be able to help you with this aspect of the estate administration but a fee will be payable for this service.

Distribute the Estate

Once you have all the final fund valuations, draw up an income and expenditure statement of the estate i.e. all the in and out payments. This should include any debts owed by the deceased. All debts must be settled prior to making any payments to beneficiaries. Circulate the income and expenditure statement as appropriate and distribute the estate.

Contact the Office of the Public Guardian

Lastly, (as if you haven’t already tackled enough bureaucracy), you should cancel any Enduring or Lasting Powers of Attorney held by the deceased. These are ‘lifetime’ documents and they cease to be of use once the Donor (the person who drew them up) has died. Send the original documents (there may be one for Finance and a separate one for Health) along with a copy of the death certificate and a covering letter to the Office of the Public Guardian to get them cancelled. They should not merely be destroyed.

Administering an estate is not pleasant but there is a certain satisfaction, and of course, relief, in seeing your loved one’s final wishes carried out as they wanted them to be. Alternatively, if it is a complicated Estate or you are lacking time, you could consult with an Estate Administration service.

Single sex couples

Single sex couples

In our 20 years of helping clients, we have written many Wills for single sex couples. I have been asked to write blogs and other articles regarding planning for single sex couples many times and each time I have struggled.  So, I decided that as part of the article I would explain why I stumble each time.

The reason is there is no difference and hence no article to write. The fundamental advice remains the same whether you are a single sex couple or a heterosexual couple.  You need a Will.

Whether you are single sex or heterosexual, if you are a couple and you want to provide for each other at first death, if you are not married or civil partnered, there is no protection for your partner.  The Inheritance (Provision for Family and Dependants) Act ’75 (see our other blog) does not make any provision for or any recognition of a partner.  Yes, if you are a dependant, which a partner could be construed as, you have a claim but a much inferior claim to those of a spouse or civil partner.  Your partner may end up with nothing.

My advice to that couple, whether heterosexual or single sex, will be that they each need to have an appropriately drafted Will.

In the very early days of Family Wills, prior to the introduction of Civil Partnership, the tax planning we could offer using a Will was quite limited.  However, since 2005 (for Civil Partnership), the advice for single sex couples regarding Inheritance Tax remains exactly the same as for a heterosexual couple – get a well-crafted Will each that has the appropriate planning within it and/or get married or civil partnered.  Not everyone wants to hear that advice, but when I can quantify how much Inheritance tax they will save, they often consider the option very carefully.

So, every aspect written in our website that mentions couples is not exclusive to heterosexual or single sex couples because it really doesn’t matter – it is relevant to both.