Category Archives: Probate

In a case where an estate is otherwise taxable (having taken into account relevant personal, spousal or other available allowances) the value of any specific gifts made out to charities in a Will are also not included as part of the taxable estate of a deceased. This is the case even where the gift may have been made during the seven years prior to death.

If Mr H had a remaining taxable estate of £110,000 at the date of his death, but he left a gift in his Will of £50,000 to Charity A, Mr H’s taxable estate will only be £60,000 since the gift to charity is wholly exempt from their taxable estate.

In addition, where the above gift makes up 10% or more of the net estate, then tax will only be paid at the rate of 36% on all of the remaining taxable estate, rather than at the normal 40% Inheritance Tax rate.

After many years as the head of Private Client here at Harland & Co., Stephen Morgan has decided to retire from practice as a solicitor.  Stephen will be pursuing his hobbies of photography and motor racing (but not at the same time!)

Everyone at Harland & Co will be sad to see him go as he has been a tremendous help to both staff and clients. We all wish him a very happy and relaxing retirement.

Any existing or former client of Stephen with any enquiries should contact either Kevin Grant or Elizabeth Dunn within the private client team on 01904 655 555.

We are pleased to confirm that Elizabeth Dunn has joined us within the Private Client Department at Harland & Co.

Elizabeth is a qualified solicitor dealing with all private client matters including the preparation of Wills and Lasting Powers of Attorney. Elizabeth will also assist clients with administration of deceased estates.

Welcome aboard Elizabeth!

On 1 January 2022 the Inheritance Tax (Delivery of Accounts)(Excepted Estates)(Amendment) Regulations 2020 come into force.

This regulation confirms that administrators for a person domiciled in the UK with an excepted estate, who dies on or after 1 January 2022, no longer needs to complete the IHT 205 or IHT 217 (where applicable).

However, the process to understanding whether an IHT 205 form  would have been appropriate or where the longer IHT 400 form should be completed instead, still requires an applicant to understand and answer the questions set out in what was the IHT 205.

In short, we wonder whether withdrawing this form from circulation will assist persons making an application without the assistance of a solicitor.

Not least because the applicant will still have to state the net value and the gross value of the estate for probate purposes and understand which exemptions will apply to the figures – something that completion of the IHT 205 and IHT 217 helped to do.

By Dorothy Appleby

At the beginning of this year I found myself reading article after article following the UK Government’s Office for Tax Simplification report about the failings of our convoluted inheritance tax system. They had proposed monumental, sweeping reforms including scrapping the nil rate band system altogether, along with all the extensive exemptions and replacing this with one flat rate tax for every single estate. There was also talk about removing the potentially exempt transfer (PET) system for lifetime gifts and therefore making every lifetime gift of capital immediately taxable at the same flat rate.

Left and right advisors were discreetly warning clients to expedite any plans they had for large lifetime gifts and stealing themselves for what was potentially a complete overhaul of the system we have all become so accustomed to. But then nothing. The April budget came and went and Rishi Sunak barely wobbled the boat, let alone rocking it or flipping it on its head, a huge anti-climax. Yes, the Chancellor froze the tax allowances until 2026, but as the existing nil rate band has been frozen since 2009 this barely warranted a paragraph in the newsletter. So, what now?

Last month I read another article from the Organisation for Economic Cooperation and Development (OECD), a company that provides advice and guidance to 36 countries across the world. The message was another resounding call to “raise inheritance tax!” to address wealth inequality and increase revenue. It is my feeling that changes are afoot.

While I would be hesitant to advise my clients to rush and take advantage of the existing system, I would perhaps encourage them to be aware of the shift in feeling and what this might mean for them. If clients are intending to make lifetime gifts of capital or income, a deposit for their child’s house for example, then maybe they should approach us for a conversation. It’s always better to be safe than sorry.

Since 1st October 2007, it has been possible for clients to create Powers of Attorney (LPAs) to allow their appointed attorney to manage their future health & welfare needs, at a time when the client is no longer able to make those decisions for themselves.

This type of LPA only becomes valid once registered with the Office of the Public Guardian and can only be used if the person making the LPA (“the Donor”) has already lost mental capacity (This is different to a Power of Attorney for Property & Financial matters where there is a choice to allow the LPA to be effective as soon as it is registered.)

An LPA for Health & Welfare can be beneficial, for example, in deciding:

• where you should live
• your day-to-day care (for example, diet and dress)
• who you should have contact with
• whether to give or refuse consent to medical treatment
• to take decisions about end of life treatment

The client will select one or more persons, usually trusted family members or friends, to make decisions about their future care.

It is important that the LPA document has been approved and registered by the Office of the Public Guardian before the donor loses mental capacity.

An LPA is a powerful document and before signing it you should consider speaking to:

• any other people you are considering appointing as your attorney
• your GP, in case you have medical conditions that have influenced the creation of the LPA that may need discussing
• other relevant healthcare professionals

Where someone has already lost mental capacity without having first registered an LPA, it is not possible to register and LPA. However, in that situation, someone may make an application to the Court of Protection for a Deputyship Order in respect of someone they wish to assist with their care needs. This procedure is far more onerous and costly and comes with greater restrictions on the actions of the deputy, who will be under the authority and supervision of the court. Hence why it is important to set up LPAs before there are any issues about the capacity of the client to do so.

If you are considering making an LPA, or believe that you need to make an application to the Court of Protection for someone who has lost capacity, without having made and LPA, please contact our Private Client Department to discuss.

Despite Government restrictions following the Covid-19 outbreak we are still open for business and continue to progress with existing matters and take new instructions.  Naturally we have had to change the way we work and to protect both our clients’ and our own health our office is shut to visitors.  However, whilst traditional face to face meetings are suspended for the time being, so far as possible, it remains business as usual and we continue to conduct business by phone, email and post.

In these uncertain times we find many of our client’s thoughts turning to the making and updating of Wills.  If this is something that concerns you, rest assured we are still preparing Wills.  Instructions can be taken either over the telephone, by email or letter. Draft and signature copies of Wills can be sent for approval via email, for printing at home, or by post.

One of the main issues facing solicitors acting in connection with the execution of Wills during the Covid-19 is the signing of the Wills themselves. In order to be valid, certain rules must be followed:

A Will must be signed by the testator and witnessed by two independent individuals.  Despite the restrictions of social distancing, there are ways that they can be signed whilst still protecting everyone’s safety.  So, if you do not yet have a Will, or one that reflects your current needs, the present emergency need not prevent you making one.

Please ring Stephen Morgan, Dorothy Appleby or Kevin Grant on 01904 655 555 for more advice on the requirements.