Cost in Probate Cases: A case update

This article takes a closer look at two recently decided cases - Shovelar v Lane and Perrins v Holland - in which the Court of Appeal held that the parties were not entitled to rely on the Probate Rules so as to justify from a departure of the usual cost rules.

© Tara Lyons - 3 Pump Court

The Personal Representative in Probate Claims

The position of the personal representative is a difficult and dangerous one – dangerous in that getting it wrong involves an adverse costs order, sometimes personally against the PR (see Shovelar v Lane [2011] 4 All ER 669).

© Richard Dew - Ten Old Square

New UK Residence Rules

The UK Government recently announced plans to introduce a new tax residence test. A consultation paper was published, and the initial aim was to bring these new rules into effect from 6 April 2012. However, this has recently been postponed so the new rules are now due to come in from 6 April 2013. This is a summary of the current proposals.

© Jo Summers - PWT Advice LLP

Election of Claim

Hot off the press is the recent decision in the case of Pinnock v. Rochester (2011)(transcript yet to be approved) where Sales J confirmed that a Claimant may make a claim for financial provision under Inheritance (Provisions for Family & Dependents) Act 1975 (the Act) and also launch a separate claim to challenge the validity of the Will.

© Andrew Grime - 3 Pump Court Chambers

Home Loan Schemes - An update

After a year’s delay, HMRC has finally updated its guidance on home loan schemes.  HMRC’s position is now that the Ramsay principle applies so that such arrangements are and always have been entirely ineffective for the purposes of IHT mitigation.  This article reviews and assesses the merits of HMRC’s new position, as well as considering what taxpayers who have such arrangements in place should do now.

© Toby Boutle - Ten Old Square

The settlement of estates in France

With more than 400,000 British nationals owning a property in France either as a main residence or a holiday home, English practitioners are more and more confronted with cross border estates.  An understanding of the French procedure and the role of the notaire is essential.

© Marie Slavov - Blake Lapthorn

Estate planning for UK residents who hold assets in France or intend to move to France

When dealing with inheritance planning in England one automatically thinks of making a will but in France, we soon realise that drafting a Will is only one of the options available.  The statutory rules of succession, which apply to the Will, may indeed not allow clients to bequeath their assets as they wish.

© Marie Slavov - Blake Lapthorn

Murder Most Foul

Murder and its consequences is a topic that usually fascinates the press (witness the Amanda Knox story). Yet this is one story that has so far missed even the legal press. Perhaps it is the title, or its dry content, but so far little attention has been paid to “The Forfeiture Rule and The Law of Succession Act 2011”, which received Royal Assent on the 12th July 2011.

© Richard Dew - Ten Old Square

The position of Donor & Deputy in relation to Litigation - D v R [2010] EWHC 2405 (CoP)

Capacity to Litigate

The very sad case of D v R [2010] EWHC 2405 gave the opportunity for Mr Justice Henderson to provide a helpful analysis of the capacity to litigate. The relevant statutory and procedural matters for the basis of this article.

© Caroline Hartley - 3 Pump Court Chambers

Buying in France – The optimum structure of ownership

Careful planning is essential when buying a property in France or any other country whose legal system is based on Roman Law. This is because the law often insists that your property passes on your death to particular relatives, regardless of what your Will says. There are different methods available to couples or individuals wishing to purchase together. Their inheritance wishes and the French inheritance tax rules will influence how they should hold the property.

© Marie Slavov - Blake Lapthorn

Shari’a succession laws (Part 3 of 3)

In the first two articles, we looked at the basics of Shari’a succession laws and the ‘freely disposable third’.

The remainder of the estate (a minimum of 2/3rd) is divided between the Shari’a heirs. As with many civil law jurisdictions, Shari’a law has a system of pre-determined heirship. Strict rules apply to the residuary estate. This article examines those rules.

© Jo Summers - PWT Advice LLP

Doing your best: applying the ‘best interests’ test under the MCA 2005

Since October 2007, the Court of Protection has had to determine whether to authorise the making of a statutory Will or a lifetime gift on behalf of persons lacking capacity on the basis of the ‘best interests’ test under the Mental Capacity Act 2005 (“MCA 2005”). As the test enters its fifth year, have the Courts finally determined how it should be applied?

© Naomi Winston - Ten Old Square

Rectification of Wills

Section 20 of the Administration of Justice Act (‘AJA’) 1982 provides a mechanism for the court to rectify a Will where due to a clerical error or a failure to understand the testator’s instructions the Will fails to carry out the testator’s intentions.

Two recent cases illustrate circumstances in which the court has been willing to exercise this power, and circumstances in which it has not:

© Corinne Iten - 3 Pump Court

SDLT & Bare trusts

As I explained in my earlier piece for LawSkills, (SDLT and Trustees: A Reminder which appeared on the website in August) the SDLT legislation distinguishes between bare trusts and settlements (which are defined as trusts which are not bare trusts). The rules for bare trusts are outlined below.

© Ann Humphrey - Ann L Humphrey, Solicitors & Tax Specialists

The French tax reforms of 29 July 2011 & 24 August 2011

A major tax reform has been adopted by the French parliament on 29 July 2011 which affects non-French residents in several ways. Further austerity measures have just been decided by the government on 24 August 2011 most notably concerning the French Capital Gains tax applicable to owners of second homes.

© Marie Slavov - Blake Lapthorn

SDLT and Trustees: A Reminder

SDLT can be overlooked in trust situations. For example, an SDLT charge may arise where an appointment of land is made from an estate and a beneficiary pays money because their entitlement is less than the value of the property they are to receive.

The SDLT legislation distinguishes between bare trusts and settlements (which are defined as trusts which are not bare trusts). Bare trusts are not covered in this article.

© Ann Humphrey - Ann L Humphrey, Solicitors & Tax Specialists

A tale of everyday farming folk & estoppel

An interesting case on the power of estoppel and its effect on an estate where other family members were pursuing family provision claims is the case of Suggitt v Suggitt [2011] EWHC 903 (Ch).

© Miranda Allardice - 3 Pump Court Chambers

French Letting Income

Under the French income tax rules, furnished lettings and unfurnished lettings are treated differently. Needless to say, holiday lets fall within the first category.

© Marie Slavov - Blake Lapthorn

Shari'a successions laws (Part 2 of 3)

In the last article, we looked at the basics of Shari’a succession laws. After payment of burial expenses and debts, up to one third of the net estate is allocated to legacies. This is known as the ‘freely disposable third’.

This means the Shari’a testator can distribute up to one-third of his net estate to charity or to individuals who are not heirs under the Shari’a rules of succession (see next article). Certain rules apply to this ‘freely disposable third’.

© Jo Summers - PWT Advice LLP

CATTLE V EVANS [2011] EWHC 945 (Ch)

There are relatively few reported ‘modest estate’ cases where the Court has had to decide a claim by a cohabitee of the deceased under the I(PFD)A 1975. Cattle v Evans, whilst only a first instance decision, provides a good working example of the Court’s likely approach in such a situation.

© Leslie Samuels QC - 3 Pump Court Chambers

Shari’a succession laws (Part 1 of 3)

The English practitioner needs to determine the law of the client’s domicile for succession purposes. An English Will may not be valid, to the extent it conflicts with the laws of the testator’s domicile. English succession laws may only apply in relation to English ‘real’ estate (immoveable property). For all other assets, including English situated ‘moveables’ (bank accounts, shares, the house contents), the laws of domicile may govern the succession.

© Jo Summers - PWT Advice LLP

Family Provision on Death – important decision on claims by adult children

When can a parent who has fallen out with his adult child cut the child out and leave his estate to charity?

© Giles Harrap - 3 Pump Court Chambers

Pensions – All Change Again!

Want to know how to make a pensions lawyer laugh (yes it is possible!)? Just say the words ‘Pension Simplification’. Pensions have felt like a political football since Finance Act 2004 introduced massive pension changes and the concept of A-day. The new coalition Government is making yet further changes to how we save for, and take funds from, our pensions.

© Jo Summers - PWT Advice LLP

Pitt v Holt; Futter v Futter [2011] EWCA Civ 197

1. In a remarkably detailed judgment Lloyd LJ has returned to first principles, examining both the source of the so called principle in Re Hastings Bass and its rationale. He has then found both that the principle never truly existed and that it lacks a sufficient policy rationale. In doing so he has overruled a long series of first instance decisions (including his own in Sieff v Fox [2005] 1 WLR 3811).

© Richard Dew - Ten Old Square

Are Employee Benefit Trusts dead?

Her Majesty’s Revenue & Customs (‘HMRC’) just don’t like employee benefit trusts (‘EBTs’). UK companies usually set up their EBTs offshore, to benefit employees, former employees plus their families and dependents. Whilst this may sound laudable, HMRC see EBTs as a tax-avoidance ‘dodge’. HMRC tried to make them less attractive, particularly by restricting corporation tax relief on company funds going into EBTs, but still they flourished.

© Jo Summers - PWT Advice LLP

The commencement of the Perpetuities and Accumulations Act 2009 in relation to Wills

Perpetuities and Accumulations Act 2009 (PAA 2009) came into effect on 6 April 2010 (Perpetuities and Accumulations Act 2009 (Commencement) Order 2010, SI 2010/37). Where it applies, the perpetuity period is 125 years (s 5), and there is no limit apart from the perpetuity period on the period for which income can be accumulated (s 13) unless it is a charitable trust (s 14).

© Richard Wallington - Ten Old Square

When do Offshore Trustees pay UK Capital Gains Tax? (Updated article)

Introduction

Offshore trustees usually take the view that they are outside the scope of UK capital gains tax (‘CGT’). Whilst this is correct, this does not mean that non-resident trustees can ignore CGT completely. This article contains a brief summary of the CGT issues non-resident trustees should bear in mind.

© Jo Summers - PWT Advice LLP

D v R (Deputy of S) and S [2010] EWHC 2405 (COP)

The recent decision of Henderson J sitting in the Court of Protection provides a useful judicial insight into Section 1(4) Mental Capacity Act 2005, the ‘basic human right’ to have the freedom to act in a manner, for example, which is unwise, capricious or designed to spite relations. Henderson J adopting the approach and ‘best interests’ test set out by Lewison J in Re P (Statutory Will) [2009] EWHC 163 Ch expanding it to give comment upon the terms of Section 1(4).

© Julia Beer - Ten Old Square

Contested Will: who proves what?

I was recently involved in a case where the issues of testamentary capacity and undue influence were raised by the beneficiary of an earlier Will whose gifts were substantially changed by a later Will. This case may come to court, so I shall not comment on the details of the case at all other than to outline the dispute.

© Evan Price - Ten Old Square

Elements of the KEY decision

The case of Key v Key [2010] EWHC 408 contains important guidance by Briggs J on 2 issues:

(a) The development of medicine and Banks v Goodfellow

(b) The application of the golden if tactless rule

The testator was a farmer aged 90. He had transferred the farm land to his two sons years ago, and retained the farmhouse and buildings.

© Miranda Allardice - 3 Pump Court

Construing a Will in the Probate Court

The growing shift from a “literalist” to an “intentionalist” approach to Will construction is illustrated by decisions such as Blech v Blech [2002] WTLR 483 and Thomas v Kent [2007] WTLR 177. These follow the well-known speech of Lord Hoffman in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 776-777 and his further comments made in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 concerning the application of common sense in the interpretation of documents.

© Michael Waterworth - Ten Old Square

The litigous erosion of freedom of testamentary expression continues ....

.... with the third successful mutual Wills case in just under a century....

Mr. Jonathan Gaunt QC sitting as a deputy Judge of the Chancery Division decided the matter of Charles v Fraser [2010] EWHC 2154 (Ch) on the 11th August 2010 in favour of the Claimants following their challenge to the last Will of surviving younger sister based on the doctrine of mutual Wills.

© Amy Berry - Pump Court Chambers

A Tale of Two Cities

As we all head off on our holidays the thoughts of many lawyers turn to the legal systems of other countries. Those heading to France, or many other civil law countries, will (of course) know that their concepts of administration of estates are very far removed from our own. The most striking example is that when a person dies those entitled are immediately entitled, with no interim period to administer the estate, discharge the debts and so on, at least not as we common lawyers would understand it.

© Richard Dew - Ten Old Square

Non-Dom dies domiciled in England for 1975 Act claim

In Holliday v Musa [2010] WTLR 839 the Court of Appeal upheld the decision of a trial judge that a man who was born in Cyprus, left for England in 1958 and signed a DOM 1 Form stating to the Inland Revenue that he considered he was domiciled in North Cyprus in  1997, died domiciled in England in 2006 so enabling a claim against his estate to be brought under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”) by his cohabitant.

© Giles Harrap - 3 Pump Court Chambers

Cohabitants and the IPFD

When is a Claimant living “in the same household” as and “as the husband or wife” (or civil partner) of the deceased for the purposes of the Inheritance (Provision for Family and Dependants) Act 1975?

In Lindop v Agus, Bass & Hedley [2010] 1 FLR 631; [2009] EWHC 1795 HHJ Behrens, sitting as a deputy judge of the Chancery Division, conducted a timely, comprehensive review of recent authority on this point which is increasingly in issue where relationships develop and change in quality in the years before the death of the deceased.

© Mark Dubbery - 3 Pump Court Chambers

Passing on the benefit: proving that one charity is the same as another

In the recent decision of Nicholas Strauss QC (sitting as a deputy judge of the High Court) in TWM Trust Corporation Ltd v Attorney General and others [2010] All ER (D) 139 (May), the executors of an estate asked the Court to determine whether a gift from a residuary estate to a named charity that appeared to have ceased to exist could be passed to an alternative organisation or if it should go to unknown intestate beneficiaries.

© Naomi Winston - Ten Old Square

When do Offshore Trustees pay UK Income Tax?

Introduction

Offshore trustees are often surprised to learn that they can be liable to UK income tax. This is the case whether the non-resident trust is a family/personal settlement or an offshore pension (only UK registered pensions are exempt from income tax). This article contains a brief summary of the income tax issues non-resident trustees should bear in mind.

© Jo Summers - PWT Advice Ltd

Removing Personal Representatives

The recent decision of Newey J in Re Kershaw, Kershaw v. Micklethwaite [2010] EWHC 506 (Ch) contains important guidance concerning the principles upon which the Court should exercise its jurisdiction to remove personal representatives.

© Toby Boutle - Ten Old Square

Courts draw the line in claims by adult children under IPFD Act 1975

In H v M, The Blue Cross and others [2010] WTLR 193 a High Court Judge overturned the decision of a District Judge to order provision under the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”) in a case where an adult child could demonstrate only need, available resources in the estate and that the Defendant beneficiaries, being charities, were owed no relevant obligation.

© Giles Harrap - 3 Pump Court Chambers

Tracing the Missing Beneficiary - Heir Locators & Contingency Fees

Background

The need to locate a missing beneficiary is a problem which frequently faces those involved in administration of estates, whether the deceased left a valid will or died intestate.

© Georgia Bedworth - Ten Old Square

How should non-residents own UK property?

If you are advising non-resident clients on buying a property here, you need to know what UK tax issues can arise. Many clients are surprised to hear they may have to pay UK tax, even if they do not live in the UK. This article is intended to give a brief overview of the different potential tax charges facing non-resident owners of UK property.

© Jo Summers - PWT Advice Ltd

Costs in Contentious & Non-contentious Probate & IPFD Act 1975 - Part 2

Following on from Part 1 (published in December 2009), Part 2 lists more precedents and principles to help recover the maximum amount of costs.

© Amy Berry - 3 Pump Court Chambers

The New Remittance Rules (Part 2)

Much comment has been made on the changes to the remittance rules introduced in Finance Act 2008. The £30,000 remittance basis charge probably grabbed most of the headlines. However the changes to what constitutes a remittance may actually be more important for most clients who are taxed on the remittance basis.

© Jo Summers - PWT Advice Ltd

Costs in Contentious & Non-contentious Probate & IPFD Act 1975 - Part 1

1.   The Civil Procedure Rules (CPR) set out the practice and procedure to be followed in the Courts [CPR 2.1]. Non-contentious and common form probate proceedings are exceptions to this general rule as the CPRs are not binding in this area [CPR 2.1(2) & White Book vol 2: 12.8]. Section 127 of the Supreme Court Act 1981 is the enabling Act for non-contentious proceedings and the Non-Contentious Probate Rules 1987 (SI 1987/2024) were made in exercise of this power.

© Amy Berry - 3 Pump Court Chambers

The New Remittance Rules (Part 1)

Certain individuals, mainly those who are resident but not domiciled in the UK, are entitled to pay tax on the remittance basis. This article looks at the recent changes to the remittance basis of taxation introduced in Finance Act 2008.

© Jo Summers - PWT Advice Ltd

Provision under the Inheritance Act for Spouses - Update

A deceased’s spouse is in a unique position under the Inheritance (Provision for Family and Dependants) Act 1975 (‘the Act’) being entitled to the higher level of provision under s 1(2) namely, “such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance”.

© Leslie Samuels - 3 Pump Court Chambers

Drafting Clauses into Lasting Powers of Attorney

Practitioners are often faced with clients wishing to add that ‘particular something’ making their LPA special. Special is fine, provided it works and you don’t find yourself in court having to explain your drafting. The little case law that has emerged, by way of drafting guidance, shows a need for sensitivity of clients needs with an understanding of the completion notes.

© Craig Ward - Lawtalks

Tackling insolvent estates

As the recession bites more and more estates will be insolvent. Insolvent estates present significant risks for the probate practitioner. However, if the risks are understood and managed there is no reason that there should not also be significant opportunities.

© Richard Dew - 10 Old Square

Abuse and mentally incapable adults

Section 44 of the Mental Capacity Act 2005 (MCA) provides specific legislation for protecting mentally incapable adults against ill treatment and wilful neglect.

- Criminal offences apply to anyone who has the care of a person who lacks mental capacity.
- This could be Attorneys, Deputies or Carers.
- Prosecutions result in a fine and/or a sentence of imprisonment of up to five years.

© Craig Ward

Where are we on domicile?

Domicile status is crucial in determining a client’s liability to UK taxation. Although UK tax legislation looks at location of assets and residence, domicile can be the determining factor, particularly for inheritance tax. However it may not be easy to decide if your client is domiciled in the UK.

For something that is so important, most clients are surprised to learn that there is no statutory definition of domicile. There are also indications that HM Revenue & Customs (‘HMRC’) may be more willing to challenge what clients say about their domicile.

© Jo Summers - PWT Advice Ltd

Transferable nil rate band vs Nil rate band discretionary trust

There is now a balance to be struck in deciding whether to include a nil rate band discretionary trust in a Will or to rely instead in the transferable nil rate band. There are still advantages to a nil rate band discretionary trust which are considered briefly below.

© Eason Rajah - Ten Old Square

Revised Lasting Powers of Attorney (LPA) Forms

Forms come and go, surviving changes and revisions. The Enduring Powers of Attorney (EPA) forms first seen in March 1986, underwent 3 changes during their lifetime, including a Welsh version in March 2000. With the introduction of the new LPA forms on 1st October 2009, these would have out-survived the first EPA form revision by 2 months. The new LPA forms are shorter, they contain completion notes, and are overall colourful.

© Craig Ward - Writer Speaker Mediator

Where are we on tax residence?

UK residence status is crucial in determining a client’s liability to UK taxation. Although UK tax legislation also looks at domicile and location of assets, residence is the primary basis for many UK taxes.

For something that is so important, most clients are surprised to learn that there is no single statutory definition of residence. What is worse, the recent HMRC guidance may actually have made matters less clear.

© Jo Summers - PWT Advice Ltd

Claims under the IPFD Act 1975 - Provision for Adult Step-Children

As our society develops increasingly complex webs of family relationships, and the idea of a “normal” family unit becomes more and more unusual, it is important to see how flexible the now 34 year old Act is to meet the needs of the 21st century applicant. This article tries to draw together some of the thinking which applies to claims by adult stepchildren.

© Annie Ward - 3 Pump Court Chambers

Family Partnerships

© Jo Summers - PWT Advice Ltd

Re P - Statutory Wills

Many people believe they act in someone's best interests; section 4 Mental Capacity Act 2005 (MCA), effective from October 2007, now brings this principle into law. With this new arrival, the probate world has also changed following the case of Re P [2009] EWHC 163 (Ch); [2009] WLR (D) 41. Here the interesting principles established over 25 years ago by Re D(J) [1982] Ch 237 have been swept away.

© Craig Ward - Writer Speaker Mediator

Inheritance by Proprietary Estoppel

The impact of the decision of the House of Lords in Thorner v Major and others [2009] UKHL 18, [2009] 1 WLR 776

Key issue: will a nod and a wink suffice?

Answer: Yes, in the right context

© Giles Harrap - 3 Pump Court Chambers

Current issues in trusts and probate

Ten Old Square is delighted to have been asked to provide regular contributions to this excellent web site. Over the forthcoming months we will be posting articles on a range of topics, including lasting powers of attorney, costs in contentious probate, insolvent estates and sham trusts. In our first article, Richard Dew, asks what are the current issues facing the trusts and probate practitioner.

© Richard Dew - Ten Old Square

Why mediate inheritance disputes?

Inheritance disputes are tailor made for mediation. I say this from experience and observation. All the 30 or so inheritance mediations I have conducted as mediator have settled. This is a settlement rate higher than normal. And not because of any brilliance of mine! These disputes settle because they are especially suited for mediation. Why?

© Stephen Fielding - 3 Pump Court Chambers