Asset Protection and Care Costs
I am increasingly being asked by clients for help in safeguarding assets from being used to pay for long term care, so they can be passed on to family after their deaths. I am finding that reviewing and rewriting Wills is providing a solution for some clients. If you are a couple, I have a type of Will which allows each of you to leave your assets (such as your share of the house and any savings or investments) in trust to be used by your spouse, but they would not actually own the assets. Therefore, if one of you dies and the survivor enters long term care, the deceased’s assets could not be taken into account for long term care costs. In addition, the Local Authority cannot accuse you of deliberately depriving yourself of assets, as you can leave your estate to whomever you choose and are not obliged to leave it to your spouse. Unfortunately, this option is not available to single people, however, in some cases it may be appropriate to consider transferring assets into a lifetime trust and I can discuss this and other options with you.
Contact Us
Suzie Falconer of Walker Laird is an associate solicitor who is able to help with the above and many more legal matters. Suzie is available for out-of-hours or home appointments.
Call Suzie on 0141 847 4946 or email Suzie at suzie.falconer@walkerlaird.co.uk
Not your traditional Mother’s Day gift
While the traditional gifts of cards and flowers make for a special Mothers Day, this day is also a great opportunity, when with family, to discuss the important topic of future planning.
Whether it’s discussing financial advice, asset protection or executries, it is important to discuss these issues with elderly family members while they are still capable of doing so.
Asset Protection
One way in which you may look to protect your assets is through Asset Protection, which is something you may look to set up while you are still capable of doing so, as it allows you more individual control.
For those concerned about their assets being used to fund any form of care they may need in the future, Asset Protection may be the preferred option.
Setting up Asset Protection in the form of a Family Protection Trust would allow you control over the management of your assets, should you go into care. Organising this at an early stage will allow for sufficient planning, in terms of protecting your main assets, such as your home.
Related blog post - Putting Your Trust In Asset Protection
Financial Advice
For many elderly relatives, a large majority of their assets may be monetary and it is therefore important to seek advice if you are unsure of the best way to handle your finances.
Walker Laird are able to offer our clients the opportunity to meet with an independent financial advisor at either our Paisley or Renfrew office, who will conduct a free review of your financial affairs. A home visit can also be arranged at no extra cost.
It is important to ensure you are obtaining fully independent advice on matters such as pension drawdown and investments. Only an independent financial adviser can offer this service.
Executries
It is equally important to make the decision of who will manage elderly family members' assets after they pass away.
Appointing an executor needn’t be a long and drawn out process; however, the role is of great significance and and careful consideration should be placed on who you appoint, after all, they will be responsible for ensuring the wishes expressed in your Will are carried out the way you wish.
Our Executry department will attend to the formalities of obtaining Confirmation, in gathering the Estate, dealing with all tax matters and distributing the Estate in accordance with the Will of the deceased or in accordance with the Law of Intestate succession in Scotland, if the deceased did not leave a Will. Walker Laird also has experience in the administration of Trusts.
Here at Walker Laird, we believe Future Planning is very important and we are happy to offer a free of charge future planning review, to discuss the best choices for yourself and your assets.
If you would like to explore your options, please call 0141 887 5271, we will be happy to arrange a suitable time to have a chat.
Australian Court decides a text is a Will
The widow of a man who took his life applied to the courts in Australia to be appointed to administer his estate. His brothers contested the case on the basis that an unsent text found on his phone was sufficient to constitute his Will. The case went all the way to the Supreme Court in Queensland.
The text read:
“Dave Nic you and Jack keep all that I have house and superannuation, put my ashes in the back garden with Trish Julie will take her stuff only she’s ok gone back to her ex AGAIN I’m beaten. A bit of cash behind TV and a bit in the bank Cash card pin 3636
MRN190162Q
10/10/2016
My will”
Despite Mrs Nicholl, his widow arguing that her late husband had died intestate and, as such, she was entitled to be appointed, the Supreme Court ruled against her. The Court decided that the text was sufficiently clear to indicate the deceased’s intentions and despite not being sent or signed, could be considered his Will.
The legal interpretation in Scotland
The rules in Australia regarding Wills were relaxed some years ago. This can’t happen in Scotland as there aren’t any provisions that would allow for a digital Will. However, the Law Commission in England is conducting a consultation into Wills and how these might be constituted and this will take into account current technology. You can view that Consultation here.
If you would like to read the Australian Supreme Court judgement, please click here.
We continually remind our clients that it pays to be organised and to prepare for the inevitable so if you haven’t yet done so – contact us today and make your Will.
Planning for long-term care
As many of our clients grow older, they begin to focus on how their estate will be dealt with after their death. They tell us that they want to leave as much as they can to their family and are worried what might happen to their assets if they find themselves in long-term care.
Because of this, we help our clients to focus on their options. One of the key elements of forward planning is the creation of a Will. How this is structured can have a significant effect on how your assets are assessed and how your estate is dealt with.
Having discussed options with us, many of our clients have decided they would like us to prepare a Trust Will so we thought we would explain what it is and how it works.
Trust Will
As the name suggests, a Trust Will sets out your intentions as you would find in any normal Will but also contains some trust provisions.
Perhaps the best way of explaining how this works is to give you an example.
Let’s say that a couple own their own home in their joint names, have some savings of their own and other savings jointly with their spouse or partner. In normal circumstances, when, say, the husband dies, his half share in the house, a half share of any joint accounts and the whole of his own savings, insurance policies and other assets he alone owned would make up his estate. If he hadn’t made a Will then, most of the time, his interest in the house would be transferred to his wife along with any money or other assets (there are, of course, Legal Rights of Children which we have discussed in an earlier article. You can view that by clicking here). If the husband had a “simple” Will, it would usually provide that all his assets transfer to his wife on death and then, on her death, to any children.
Either of these scenarios can cause a problem going forward because that means the wife now owns even more assets that have to be distributed on her death. Importantly, the value of her assets is taken into consideration if she should need any long-term care.
If we consider the provisions of a Trust Will, using the same example, here is what would happen.
If the husband were to die first, then his half share in the house would be held in liferent for the benefit of his wife. She would have the right to continue to live in the house or any replacement house but would only own her own half share in the house. The half share of the house owned by her late husband would be held by the Trustees appointed under her late husband’s Will.
To continue with this example, if the wife was subsequently to go into long-term care, then the Local Authority cannot force the sale of the house and so long as the Trustees do not sell the house while the wife is in care then the value of the wife’s one half share of the house would be fairly nominal. This would avoid the house having to be sold and used to pay for the wife’s long-term care costs.
The husband’s moveable estate (i.e. savings and investments in his name or his half of any joint investments) would again be held in liferent for the wife so she would receive interest from her late husband’s savings and investments. There would also be provision for the Trustees to advance to the wife money from the liferented estate should that be necessary. If however funds remain in the Trust, then those funds could not be taken into account when calculating the wife’s capital in respect of any financial assessment that may be carried out to determine how much of her capital is at risk to contribute to the cost of long-term care.
On the subsequent death of the wife, the estates of the husband and wife would be fully wound up and the assets distributed in accordance with the terms of their respective Wills.
One attraction of a Trust Will is that there is no transfer of assets during lifetime and that means the control of the assets remains with the husband and wife – and, importantly, the local authority cannot accuse the couple of deliberate lifetime deprivation of assets for the purpose of avoiding care costs.
There are, of course, alternative options available ranging from transferring your property to your children (with all the attendant risks), putting all your assets into a discretionary trust, taking out a lifetime mortgage to realise some of the capital locked up in your property or even taking out an insurance policy to meet your care costs.
We have a specialist team here at Walker Laird dealing with all of your long-term planning issues.
Call Ronnie McGinlay, Suzie Falconer at our Paisley office on 0141 887 5271 or Ross McGinlay at our Renfrew office on 0141 886 5678 or click here to email us.
Separating cohabiting couples – beware the 1 year rule
A recently decided case in the Court of Session
emphasised the need for separating cohabiting couples to take legal advice if one party intends to make a claim for a capital sum against one the other. A key aspect of this case was the failure by the Pursuer to apply to the Court for an order against the Defender to make payment of a capital sum within 1 year of the date their cohabitation came to an end.
The facts of this case are that a Mr Courtney started a relationship with a Ms Campbell in 2009. In May 2010 Ms Campbell bought a property in Glenrothes in her own name for £195,000. It was claimed the intention was that she and Mr Courtney would live together in that property. On 14 May 2010, Mr Courtney paid £50,000 to Ms Campbell and he paid her another £50,000 on 28 February 2011. During the course of their living together, renovations were carried out to the property and Mr Courtney made further payments to Ms Campbell. Their relationship came to an end in May 2013 and Mr Courtney moved out.
There are further complications in this case. Mr Courtney died and the action was raised by his executors. The basis of the action was for unjustified enrichment rather than a straightforward claim for a capital sum because the one-year time limit was missed. In her defence, Ms Campbell claimed that Mr Courtney knew that the house was in her name alone and that he was simply sharing the house rather than cohabiting with her. Ms Campbell had a son and Mr Courtney’s executors claimed that it was the son who asked him to leave.
Leaving aside the above complications, the Judge had to consider the terms of Section 28 of the Family Law (Scotland) Act 2006. This provides that if one party to the cohabiting relationship wishes to make a claim for a capital sum or other payment after the relationship has ended, then that claim must be made within a period of 1 year from the date of the cohabitation coming to an end.
Mr Courtney’s representatives stated there were special circumstances that had prevented him from seeking legal advice in the situation. They claimed he hadn’t sought advice because Ms Campbell’s son was ill (and later died) and by the time he did seek advice in August 2014, more than a year had passed since the separation. This meant that Mr Courtney had lost the opportunity to make a claim for a capital sum in terms of Section 28.
In his judgement, Lord Beckett stated he was satisfied that Mr Courtney and Ms Campbell were cohabitants. He then went on to say that the time limit of one year was intended to discourage stale claims and that by failing to raise the action within that one-year period, Mr Courtney’s representatives could no longer seek a capital sum on the basis of Clause 28. This was fatal to the remainder of the pursuer’s case and Lord Beckett dismissed the action.
Anyone who has been in a cohabiting relationship that has ended and who wishes to make a claim for a capital sum must raise the action within a period of one year from the date the cohabitation comes to an end.
Get In Touch
If you find yourself in such a position and wish some advice, please call us on 0141 887 5721 or click here to email us.
Note: the case in point is Igoe and Macari v Campbell [2016] CSOH 136. You can view the Judgement in this case by clicking here.
Children have Legal Rights too
Scots law says you can’t disinherit your children. This isn’t quite as simple as is seems and there are a number of “ifs” “ands” and “buts” you need to think about when dealing with a child’s entitlement to inherit a part of their parent’s estate. The law in Scotland sets out how the rights of spouses, civil partners and children to share in the estate of their parents are protected.
Legal Rights in Scotland are an automatic entitlement enjoyed by the surviving spouse or civil partner AND any children (including adopted and illegitimate children). This can come as something of a surprise to those making a Will!
This article considers the rights of the children.
This area of the law can be fairly compled and this article will give you a brief overview of the position. For a more detailed discussion, please contact us and arrange an appointment.
Children's Legal Rights
Children enjoy Legal Rights to the estate of their parent whether their parent leaves a Will or not. There is no need for the child to apply to the court to secure these rights. Legal Rights apply to the moveable estate (cash, shares, cars, jewellery etc.) of the parent only – not to what is known as heritable property (generally land and buildings).
There are also two scenarios that apply. The first is when the parent dies leaving no Will and the second is where the parent has made a Will.
Where there is no Will
Where the parent dies without leaving a Will, before Legal Rights can be considered, any spouse or civil partner is entitled to what are called Prior Rights. Prior Rights dictate that the surviving spouse is entitled to:
- the family home (up to a certain value – currently £473,000)
- the furniture in that home (up to a certain value – currently £29,000), and
- a cash sum of money (again, up to a certain value – currently £50,000 if there are children, £89,000 of there are no children).
If the value of the estate is within the current limits for Prior Rights, then the entire estate will be exhausted by these and there will be nothing left for Legal Rights.
If there is moveable estate left after the Prior rights have been exhausted, it will be divided as follows:
- The spouse or civil partner is entitled to receive one third of the remaining estate,
- Any child or children are entitled to receive one third of the remaining estate divided equally amongst them
After satisfaction of the Legal Rights, in is example, any child or children are entitled to the remainder of the estate irrespective if it is made up of heritable or moveable property.
You should also be aware that if a child has died before their parent and that child had children, those children are entitled to their parent’s share in their grandparents estate equally between or amongst them.
If there is no spouse or civil partner, then the entire estate goes to any child or children equally amongst them.
Where there is a Will
It is, perhaps, helpful to take a step back to when the Will is prepared to understand the application of Legal Rights when there is a Will.
The granter of the Will should always remember when preparing the Will that:
- if you have no children –
your spouse or civil partner is entitled to one half of your moveable estate, or,
- if you have children but your spouse or civil partner has predeceased you –
your children are entitled to one half of your moveable estate, or
- if you do have children –
your spouse or civil partner is entitled to one third of your moveable estate and your child or children is or are entitled to one third of your moveable estate.
Remember that this relates to the automatic rights to your moveable estate and not your heritable estate.
However, when one of the above categories of beneficiary makes a claim for Legal Rights, they forego any provision made for them in the Will – they cannot seek to have both benefits.
There is a very helpful article on the Scottish Government Web site on Rights of Succession (but please ignore the figures quoted because these are now out of date!).
We hope this article has given you an understanding into the complexity some of the things solicitors need to take into account when advising clients on preparing their Wills or in winding up an Estate in an Executry Case. This is a very brief overview of the law as it currently stands.
Contact our experienced Private Client Solicitors
For specific guidance on your own situation, we will be pleased to provide help and advice. Call us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).
How having a Power of Attorney solved a multitude of problems
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The importance of making a Will
I know what happens when you die…I’m not a clairvoyant and haven’t had a near death experience, but I actually do, honest...
Ok, to be more precise, I know what happens to your assets when you die. Yawn, not very interesting you think. Well you can bet it will be extremely interesting to those you leave behind if they’re suddenly wondering who gets the house, car, jewellery and that vase which you thought might be Ming (or is it just mingin’) and intended to take to the Antiques Roadshow, “yes, it’s been in the family for generation so we’d never sell it… oh really, it’s worth that much… and where is the nearest auction house?”
The first question to be asked is, did you make a Will? This fundamentally changes how the administration (i.e. gathering in and paying out) of your estate (i.e. anything you own at the date of your death) will be dealt with. Obviously you are no longer there to answer the question yourself, so if you have made a Will, please make sure your family know which solicitor holds it or have a copy easily located amongst your papers. On that note, your family will really thank you for having your financial papers in order. It is not unknown for bin bags full of old statements, letters and bills to be presented to solicitors when they ask for information on the deceased’ finances. Always keep in mind “the less work for the lawyers, the less fees they can charge”.
So, if there is a Will, the administration of the estate will be dealt with in accordance with the instructions in the Will (with a couple of provisos noted below). The ‘executors’ appointed in the Will wind up the estate, with or without the help of solicitors depending on what is involved. So when selecting your executors, think about who would be willing and able to act, who is logistically close enough to give instructions and sign documentation, who is unlikely to die before you and make sure there is an additional or replacement executor named in the Will, just in case. The executors will then distribute your assets as per your instruction. Simple!
Back to the provisos referred to above. You may have heard that you cannot disinherit your children in under Scots Law. It’s true to an extent. Regardless of what you say in your Will, your children they are entitled to claim their ‘legal rights’ from your estate. This means they can claim a share of your ‘moveable’ estate (i.e. anything that isn’t land or buildings). It is a controversial point, in that, there are some who think you should have absolute freedom to leave your estate to whoever you choose. But that’s the way it is for now - no matter how uncaring or undeserving or ungrateful the little blighters are!
Second proviso: do you own a house? Is it in joint names? Is there a survivorship destination in the title? Do you know? Do you care? Well you should! If you have a title which is ‘joint and survivor’ with someone else, then, on first death, the deceased’s share of the house automatically passes to the survivor. Again this happens regardless of what your Will says. So check your titles, or even better get a solicitor to do it for you so you can discuss the benefits or drawbacks of having a ‘survivorship’ for your own circumstances.
So that’s what happens if you’ve made a Will, but what if you haven’t? The distribution of your assets is determined by statute – i.e. the government has decided. Generally spouses and children will inherit first, then parents, siblings and gradually more distant relatives depending on what family you leave behind. “Well that all sounds fine” you say, “I would want them to have it anyway”. But do you really want your spouse to inherit the house and only some of the money, with the rest being blown by your 17 year old son on a motor bike, holiday in Ibiza and extensive trainer collection? Also, if you haven’t made a Will then you haven’t appointed executors, so someone (usually the closest relative) will have to apply to court to be appointed as executor. This means more work for the lawyers (and more legal fees) and more stress, expense and delay in winding up the estate.
Finally, a note to all you co-habiting couples out there; you may see yourselves as married in every way but legally – but when it comes to succession it’s the legal bit that counts. If you haven’t made a Will, your co-habiting partner is not entitled to inherit your estate in the same way as a spouse. However, they can make an application to Court for a share of your estate. The share awarded, if any, is entirely at the discretion of the judge, who will consider aspects such as; how long have you been together, do you have children together, do you have shares assets. But, do you really want your partner to have to go through the time, expense (happy days of the lawyers again) and anxiety of quantifying your relationship in monetary terms and justifying it in court?
So, in summary, my advice is MAKE A WILL! It’s not that expensive, won’t take too long and you’ll be saving your loved ones a lot of time, stress and money.
Suzie Falconer, Associate Solicitor
Contact Us
For further information contact Suzie Falconer at Walker Laird on 0141 847 4946 or suzie.falconer@walkerlaird.co.uk.
It May Not Be A Princely Sum, But It Should Go To The People Of Your Choosing…
Amongst the many news stories last month there was one in particular which certainly saddened many people around the world - the passing of musical legend, Prince.
He was a musician who considered every aspect of his work and was particularly meticulous in terms of distribution and while the news of his passing certainly shocked the world, what is also surprising is that Prince had no Will, or at least no known Will, this brings an uncertainty as to who will inherit his estate.
As is protocol in the state of Minnesota, his siblings should divide his assets equally, but with such a large estate with so much to share and uncertainty about future royalty income, the process may be somewhat more complicated.
Similarly in Scotland, if you do not make a Will your estate will be handled in accordance with the law of succession, further demonstration of the importance about making these decisions now.
With a fortune estimated to be worth hundreds of millions, Prince’s siblings attended the first hearing this past Monday, but with no Will to refer to, this initial meeting lasted less than 15 minutes. With the search for any existing Will continuing and an executor yet to be appointed, there is a strong possibility that this process could take years to complete.
As a musician, Prince built an impressive portfolio and career and his current assets are estimated to be in excess of $150 million, with his siblings, who are the main beneficiaries set to potentially inherit a small fortune each. Furthermore, future royalty earnings from his music and image rights also have to be taken into account when deciding who gets what. However, the absence of a Will, will certainly delay the division of his assets.
In Prince’s case, the court now needs to appoint an executor whose job is all the more difficult in the absence of a verified Will, it would have been much simpler had Prince appointed someone he trusted to look after the division of the estate.
Your Assets
Appointing an executor needn’t be a long and drawn out process; however, the role is of great significance and and careful consideration should be placed on who you appoint, after all, they will be responsible for ensuring the wishes expressed in your Will are carried out the way you wish.
The musician’s assets include property, studios and musical royalties and while this particular situation may be somewhat more complex than most, making a Will is certainly very important, not only to public figures, but to anybody with any assets – no matter how small.
Contact Walker Laird today and we can help you with our Will Writing service at either our Paisley office, or our Renfrew office.
Paisley: 0141 887 5271
Renfrew: 0141 886 5678
Putting Your Trust In Asset Protection
We’re sure that as you look forward, your wish is for your assets to be passed to your children, grandchildren, or other loved ones, but many of our clients often worry about how these assets will be managed should they require full time or residential care.
We recently discussed granting Power of Attorney and the possibility of someone else managing your finances, property and personal welfare, should you not be able to do so. This is particularly useful for those who experience significant life changes, leaving them somewhat incapacitated.
Another way in which you may look to protect your assets is through Asset Protection, which is something you may look to set up while you are still capable of doing so, as it allows you more individual control.
For those concerned about their assets being used to fund any form of care they may need in the future, Asset Protection may be the preferred option.
Setting up Asset Protection in the form of an Family Protection Trust, would allow you control over the management of your assets, should you go into care. Organising this at an early stage will allow for sufficient planning, in terms of protecting your main assets, such as your home.
Placing these assets within a trust protects your family’s inheritance from unscrupulous creditors, unforeseen circumstantial changes, or any liabilities that may arise, which in today’s economy are somewhat likely. It also allows you to decide if and when these assets should be transferred from the trust to certain beneficiaries.
While you are in control of this Trust, you must also appoint at least one other Trustee, who is therefore also responsible for any assets being held within it.
Here at Walker Laird we believe Future Planning is very important and we are happy to offer a free of charge future planning review, to discuss the best choices for yourself and your assets.
Get In Touch
If you would like to explore your options, please call 0141 887 5271, we will be happy to arrange a suitable time to have a chat.