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Kainat Jones

Making a Power of Attorney in Dementia Action Week

Making a Power of Attorney in Dementia Action Week

Dementia Action Week runs 16 – 22 May and is a national event that sees the public coming together to take action to improve the lives of people living with dementia.

When a person receives a dementia diagnosis, this doesn’t automatically mean they cannot make important decisions. However, as their symptoms worsen, they may no longer be able to make decisions about their finances, health or care. We refer to this as losing mental capacity. If you are concerned about losing mental capacity, you may wish to take steps now to protect yourself.

In this article, we look at how someone you trust can make decisions on your behalf or how you can help a loved one living with dementia protect their rights for a time when they lose mental capacity.

Mental capacity – explained
In short, mental capacity means that the person can understand, remember, and use information to make important decisions about their life. Mental capacity can be difficult to ascertain; some people are perfectly able to make daily decisions such as what to eat and what to wear but struggle with financial or health decisions.

Only a healthcare professional can determine whether a person has lost mental capacity. The assessment is not solely based on the person making a strange decision or a single mistake or misremembering a few details but later remembering the correct information.

The Mental Capacity Act 2005 protects and empowers people who may have lost mental capacity to make decisions about their care and treatment. The Act also states that where a decision must be made on behalf of a person who has lost capacity, this decision must be made in their best interests. There is a checklist to help decision makers decide.

Dementia and making a Power of Attorney
A Lasting Power of Attorney (LPA) is a legal document that allows someone you trust to make decisions on your behalf when you are no longer able to do so for yourself. This person is called your attorney. Your attorney can be a family member, a close friend or you could even appoint a professional, for example a solicitor, to be your attorney. You can appoint more than one attorney and even replacement attorneys.

To set up a Power of Attorney, you must have the mental capacity to do so, so it is important to do this as soon as possible if you have received a dementia diagnosis.

Do you need a Power of Attorney if you are married?
It is essential to understand that no one has the power to make decisions on your behalf if you have not set up an LPA. Your spouse or civil partner cannot automatically deal with bank accounts or pensions or even make decisions about your care if you lose mental capacity. As a result, even if you are married or in a civil partnership, setting up an LPA is essential.

If you are interested in making a Power of Attorney in Dementia Action Week and would like a free initial consultation with one of our specialist Wills & Probate team, simply click on the “Speak to our Experts” button, call 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Sarah Gill

New Year, New Will?

Why it might be a good time to write a will.

The new year is always an excellent time to write or to review your will. In this article, we take a look at some of the things you should consider.

Have you made a will? 
Recent research by Royal London determined that 54% of UK adults do not have a will. This includes 59% of parents who either do not have a will or have one that does not accurately reflect their wishes. If you have not made a will, you have no control over what happens to your assets after you pass away. If you have children, own property, have savings or investments, or run a business, making a will is particularly important.

Does your will still accurately reflect your wishes?
If your circumstances have changed this year, you should update your will to reflect those changes. Perhaps you have changed career, moved home, got married or divorced, or welcomed a new baby to the family. In any of these circumstances, you should update your will to ensure it is reflective of your current situation.

Do you need to change your beneficiaries or executors?
Many people need to change the people that are named in their will for a variety of reasons. Perhaps you have outlived executors or beneficiaries named on your will, or maybe the relationship has deteriorated. In this case, you would need to replace them in your will to avoid complications in the event of your death.

Have your business interests changed?
If your business interests have changed significantly, now might be a good time to review both your will and your succession plan for your business.

Do you wish to take advantage of Inheritance Tax planning?
It is always advisable to review your will and estate regularly in line with current tax legislation, reliefs and opportunities to save on Inheritance Tax. Reviewing your affairs can be a great way to start the year. It allows you to understand where you are financially, and to effectively make plans for the future, knowing that your will is up to date.

If you would like a free initial consultation to discuss your will with one of our team contact us on 01244 356 789 or email info@cullimoredutton.co.uk.

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Alex Boden

Gifting and inheritance tax: Explained

With Chrismas only a few short weeks away, the giving and receiving of gifts will be high on everyone’s agenda. As part of your inheritance tax planning, you may consider gifting money or property to family or friends, but what should you be aware of?

In this article, we give a brief overview of gifting and inheritance tax, including who you can gift to, how much you can gift, and what it means if you continue to benefit from the gift.

Giving away money or property to avoid inheritance tax 
One of the easiest ways to mitigate your inheritance tax liability is to gift money (or property) to friends, family, or charity while you are still living. There are some gifts you can give in your lifetime which will not incur tax after your death, including gifts to your spouse or civil partner. If you make a gift seven years before your death, it will usually be excluded from the value of your estate for inheritance tax purposes. Gifting can be a complex area, so you should speak to a solicitor about gifts as part of your estate planning process.

Who can I give gifts to and how will this impact the inheritance tax position of my estate?
Gifts to your spouse or civil partner are usually tax-free, however, this does not apply to unmarried partners or cohabitants. If you wish to leave gifts to an unmarried partner or cohabitant, other family members or friends, you should seek estate planning advice to determine the most tax-efficient way to do this.

Annual Exempt Allowance
Each individual is allowed to give away up to £3,000 in any one tax year. You can carry forward your exemption amount for up to one year. So, for example, if you do not use any of your allowance in 2021, you can gift up to £6,000 in 2022.

Small gifts 
You can give small gifts of up to £250 per person, such as for birthdays or Christmas presents, unless another exemption has been used for the same person.

Wedding gifts 
There is also an exemption for wedding gifts, with how much you can gift dependent on your relation to the couple getting married. If you are a parent, you can gift up to £5,000, if you are a grandparent or great-grandparent you can gift up to £2,500, and for everyone else, the exemption threshold is £1,000.

Potentially Exempt Transfers
Outright gifts that exceed any of the above allowances are known as potentially exempt transfers. If you die within 7 years of making the gift, the gift will be brought back into your estate for inheritance tax purposes. This will reduce, or use up, your nil rate band allowance (the nil rate band is the amount each individual can leave without incurring inheritance tax).

Retained benefit 
You must be aware of the consequences of making a gift which you will still benefit from during your lifetime. The most common example is where a parent gifts their home to their child but continues to live in the property rent-free until they die. When this is the case, the property will still form part of the estate in the event of death, regardless of whether seven years have passed since the date of the initial gift.

If you would like a free initial consultation with one of our specialist Wills, Trusts & Estates team, contact us on 01244 356 789 or email info@cullimoredutton.co.uk.

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Alex Boden

Should you make your Powers of Attorney online?

It is possible to make a Power of Attorney online, but whether you should is a different matter.

The process of making a Power of Attorney seems straightforward, but for those who are unfamiliar with the process, there are many potential pitfalls which could result in your application being rejected or your wishes not being carried out correctly.

In this article, we look at some of the reasons why it may be preferable to instruct a solicitor to advise you and to prepare your Power of Attorney rather than attempting to prepare your own online.

How do I make a valid Power of Attorney? 
Strict formalities must be followed for a Power of Attorney to be valid. For example there is a strict order as to who signs the document and if not followed, your Power of Attorney will be rejected by the Office of the Public Guardian. To be valid, and to be able to use the Power of Attorney, it must be registered with the Office of the Public Guardian.

Why use a solicitor to set up a Power of Attorney? 
When you instruct a solicitor to set up your Power of Attorney, your solicitor will be able to guide you through the two different types of Lasting Power of Attorney, explaining how and when each one can be used and by whom. Your solicitor will be able to tailor their advice to your individual circumstances, which can be invaluable when preparing important documents such as these.

Your solicitor can explain who can be appointed to act as your attorney(s) and can explain what duties and obligations they will have as your attorney(s).

A Power of Attorney can operate in a number of different ways and your solicitor will explain the various options to you. Can attorneys make decisions alone, or must they make decisions jointly with others? Would you rather stipulate which decisions are to be made together and which they can make separately? Would you want your Attorneys under your Property and Financial Affairs Lasting Power of Attorney to be able to use the document as soon as registered, with your consent? Or only once you have lost capacity? These are just some of the questions that may arise during discussions with your solicitor that may otherwise be overlooked should you attempt to set up a Power of Attorney yourself.

Your solicitor can explain what would happen with your Power of Attorney documents should one of your attorneys predecease you or be otherwise unable to act (for example, if your attorney loses capacity).

Your solicitor will analyse your assets and liabilities to identify whether you need a separate power of attorney to cover any business interests.

You may also wish to set out your wishes for how your affairs should be managed; your solicitor will help you to express any wishes you have clearly. They can also advise on how these should be set out to ensure that all eventualities are covered, and your wishes can be carried out as you intended.

Your solicitor will explain the effects of a Power of Attorney to you clearly to ensure that you understand the effect of the document and the power you will be giving to your attorney(s), which can prevent the validity of the Power of Attorney from being challenged at a later date.

If you instruct a solicitor to prepare your Power of Attorney, you can be confident that it will be set up correctly and tailored to meet your individual needs and circumstances. In addition to this, your solicitor can also advise you on any additional steps you may wish to take, such as revising your will or inheritance tax planning.

If you would like a free initial consultation with one of our specialist Wills, Trusts & Estates team, contact us on 01244 356 789 or email info@cullimoredutton.co.uk.

How an AIP will help you secure your dream move

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Adele Bebbington Plant

Leaving gifts to charity in your will

The International Day of Charity takes place annually on 5 September, but did you know that one of the best ways to support a charity is to leave them a gift in your will?

Many charities in the UK rely on donations left behind by their supporters, and any gift you leave could make a vital difference to the work of the organisation.

There are many benefits to leaving money to a charity for your estate too, including tax relief.

In this article, we look at some of the most common questions people have about leaving money to charity in their will.

How can I leave money to charity in my will?
Generally speaking, there are two ways to leave money to charity in your will.

The first option is to very simply, specify any charities you wish to benefit from your will. Alternatively, you can leave money or property in a trust and leave it up to your trustees to decide.

Where you choose to name a specific charity, it is always best to include the charity number. Many charities have quite similar names, or the name of the charity may change, and you want to be sure your gift goes to where it was intended.

If you choose to let the trustees decide where your money goes, you may wish to leave instructions to help guide them.

What can I leave to charity in my will? 
You have several options for what to leave a charity in your will, and you may wish to consider what might benefit them the most. Your gift may be:

● A cash amount

● A specific property or asset

● Your residuary estate or a share in your residuary estate (your residuary estate is what is left after other specified gifts, costs, and tax).

Is it possible for family members to object to a gift left to charity in my will?
Certain people can make a claim against your estate if your will fails to provide for them. On this basis, a family member can contest any charitable gift in order to obtain the financial provision they are entitled to under the Inheritance Act, which provides that you must make reasonable provision in your will for any dependants that you have.

Alternatively, it is possible for a family member to contest the will on the grounds that you were under undue influence or not of sound mind when you made the gift.

As part of our will drafting service, we would discuss the provisions of your will with you and advise the best way of proceeding to reduce any risk of a potential claim.

Do I need to pay tax on charitable gifts in my will? 
Any gift left to a UK charity is free of inheritance tax liability. However, if you wish to make a gift to a charity outside the UK, the situation is more complex. Not only are charitable gifts tax-free but leaving gifts to charity in your will could mitigate your tax liability overall. When you leave at least 10% of your estate to charity, the inheritance tax liability of the rest of your estate falls to 36%.

If you would like a free initial consultation with one of our specialist team to discuss leaving a gift to charity in your will, contact us on 01244 356 789 or email info@cullimoredutton.co.uk 

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues. 

Alex Boden

Five reasons you should use a solicitor to write your will

If you are thinking about writing a will, you may have considered doing it yourself. However, there are significant benefits to using a solicitor along with many pitfalls which can be avoided.

In this article, we look at five reasons to use a solicitor such as ourselves to write your will.

As solicitors we know what to ask?
The benefits of instructing us begin at the outset, it is not just the drafting of the will which is important. Writing a will is part of estate planning, and while it is a crucial part, there are many practical and legal matters you may also wish to get in order. We will consider all of the property and interests that make up your estate, ensuring that nothing is forgotten about. We will work with you to create a comprehensive will that accurately reflects your estate and your wishes. Did you know that in your will you can appoint guardians for your minor children?

Your will, will be properly drafted
A will is a formal legal document and, as a result, must meet certain legal requirements. While you may have read and understood what these legal requirements are, can you be confident that you will be able to meet them? If your will is not properly drafted, even the smallest error may render it invalid or leave it open to challenge. An invalid will would result in your estate being distributed in accordance with the rules of intestacy, which may not accurately reflect your wishes. This could result with people you would not wish to benefit receiving monies from your estate. You can save your loved ones difficulty later on and put your mind at ease by instructing us to draft your will properly.

As solicitors we can word the document correctly
Drafting a will is complicated. It requires careful wording and understanding to ensure that your wishes are reflected accurately. Many will disputes arise out of unclear wording, but by instructing Cullimore Dutton you can ensure that your directions are expressed clearly and not left open to interpretation.

As solicitors we understand how to draft a will for complex finances or family structures
If you have complicated finances, or you have even a slightly complex family structure, we would advise you to use a solicitor to draft your will. Drafting a will to account for stepchildren for example, can be complicated. If you prepare a DIY will, you could end up unintentionally leaving those closest to you with no inheritance. Did you know that if you are not married or in a civil partnership, your partner would not inherit from your estate unless you have a will which provides for them?

Inheritance tax planning and Powers of Attorney
As discussed above, writing a will is about more than just setting out where your property will go. With our specialist skills and knowledge you can also plan to mitigate your inheritance tax liability, allowing you to leave more behind for your loved ones. Similarly, when making a will, many people choose to make Lasting Powers of Attorney too. Lasting Powers of Attorney give you peace of mind that, should anything happen to you and you become incapable of managing your own affairs, you know your chosen attorneys will take care of your affairs as you wish.

If you would like a free initial consultation with one of our specialist Wills, Trusts & Estates team please call 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Alex Boden

Probate: What happens to debt after someone dies?

Many people believe that when a person dies, the debt dies with them, but that is simply not the case.

Similarly, it is a widely held belief that family members are personally responsible for paying debts, but this is not always true.

In this article, we take a look at what happens to a person’s debts after they pass away.

When someone you love has passed away, the last thing you might be thinking about is debt. However, there are many misconceptions about debt and inheritance, and it is essential to understand your position.

What happens when there are debts on an estate?
If a person passes away with debt, debts will typically be paid out of their estate. The estate is made up of all of the person’s assets, including their home, cash, business interests, investments and any other property they may own. It is the role of the executor or administrator to find out what debts have been left behind and work out whether there are enough assets in the estate to cover the debts due. It is important to go through the deceased’s paperwork in detail in order to identify any debts owed and what type of debt it is. It is also important to find out whether there are any guarantors for any of the debts as the guarantor(s) may remain liable for the loan if it is not to be paid from estate monies.

When there is not enough money from available assets to cover all the debt, creditors will be paid out in a certain order until all of the money is gone.

What is the order of priority for debts on an estate? 
Before the executor pays off any debts from the estate, they are permitted to cover costs of the funeral and costs involved in administering the estate. Once they have a grant of probate, they can then begin the process of paying off the debts. Debts must be paid before any money is distributed to the beneficiaries due to inherit either by the terms of the Will or under the rules of intestacy. If there are assets such as a car or valuables, the executor may sell these to pay off debts on an estate. The order in which debts must be paid is as follows:

• Secured debts (for example, mortgage repayments)

• Priority debts (such as income tax and council tax)

• Unsecured debts (such as credit cards and utility bills)

Where there is not enough money to cover all of the debts, this hierarchy ensures the most important are paid off first.

What happens if a debt is held in joint names?
Where a debt is held in joint names, such as a mortgage, the surviving party who is named on the lending documentation will take on liability for the full outstanding amount.

Can debt pass to a spouse or civil partner?
If the deceased borrowed in their name only, the debt will not pass to a spouse, civil partner or any other person, unless they have provided a guarantee on the loan.

If you would like a free initial consultation with one of our specialist Probate team, contact us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Phil Appleby

Inheritance tax threshold frozen until 2026 – but why is IHT planning still important?

If you intend to leave savings, property or other assets to family or friends after you die, you need to consider inheritance tax (IHT).

It could cost your heirs up to 40% of their inheritance. By planning ahead, you can minimise IHT and ensure as much of your estate as possible reaches your loved ones.

Understanding the tax-free allowance  
The tax-free inheritance allowance, known as the nil-rate band, allows your beneficiaries to inherit up to £325,000 of your estate without incurring tax. On anything above this threshold, the standard 40% inheritance tax rate applies.

If you are leaving property to certain family members, the residence nil-rate band may also apply. This is an additional tax-free allowance that you can use if you pass on a property that you have lived in to your direct descendants, for instance, your child or grandchild. Currently, the residence nil-rate band stands at £175,000.

Inheritance tax threshold frozen until 2026
Whilst the nil-rate band has remained the same since 2010/11, the main residence nil-rate band usually rises each year with inflation. The next increase was due this April, however, it was announced in the 2021 budget that the IHT thresholds would be frozen until 2026. A five-year freeze is significant in IHT planning, and it is advisable to review your situation in light of this announcement.

Planning for IHT 
Most of us want the wealth we have accumulated over our lifetime to be put to good use by those we leave it to. Sadly, when end-of-life financial plans are not put in place, a large portion of assets can be diverted away from the intended recipients. However, with careful preparation, you can ensure as much as possible of your estate reaches your loved ones. As IHT planning can be complex, it is best to seek professional advice.

There are many steps you can take when IHT planning, including:

Pool your allowance with your spouse or civil partner
Spouses and civil partners usually inherit tax-free from their partner. Additionally, they can often make use of the nil-rate allowances their partner was entitled to.

If your spouse or civil partner left their entire estate to you, you could apply both your own and your partner’s tax-free allowances when you pass on your estate. Doing so effectively doubles the amount you can leave your heirs without incurring any tax. If your partner uses a proportion of their nil-rate band to leave assets to others, then you will only be able to apply the percentage of the allowance they did not use.

Make a gift to loved ones 
Gifting money or other assets before you die can reduce how much inheritance tax will be due on your estate. However, this must be done carefully as the timing of any gift is crucial. If it is made seven or more years before your death, the recipient will not usually have to pay any IHT on it. If you die within seven years of making the gift, IHT may be incurred. It will depend on the type and value of the gift.

Leave money to charity
To encourage charitable donations, assets left to a qualifying charitable body are exempt from IHT. Moreover, if you leave at least 10% of the value of your estate that surpasses the nil-rate bands to charity, you can reduce the IHT rate due on the remainder from 40% to 36%.

For more information about Inheritance tax planning, contact a member of our expert Wills, Trusts & Estates team on on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.