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Law Firm Darlington

No3. ‘Law Firm for Life’

The third of our black and white monthly images, entitled ‘Lawyers for Life’, of course has to have a festive feel given it is released in December and so what better image to feature than a Christmas tree covered in snow. During the festive period, households across the country bring in real trees and put them at the heart of their homes, central to the celebrations, until after the festivities are over in when they are often discarded.

Similarly, instructing a law firm can be an isolated, short term event. You may never require the services of a solicitor or may only ever need to use a solicitor when you purchase a home, largely a short term experience of 6 to 8 weeks, similar to the enjoyment of the Christmas tree.

Depending on life events, people may also require solicitors to help personally on other occasions such as following a personal injury or car accident, getting divorced or leaving a long term partner, dealing with a bereavement or to assist with Court disputes. Unless you have used a solicitor before, you do not tend to think of yourself as having a solicitor, in the same way as you have a Doctor for example, where you automatically register with a local surgery just in case you need future medical assistance. For most individuals, a law firm is a transactional relationship.

At Clark Willis however, we believe in being a Law Firm for Life, in being there for our customers and their families when life events mean that they require a solicitor and to help them plan for the future.  We invest in this ethos in four main ways:

  1. Ensuring we have a core of personal legal services to ensure we can meet an individual’s legal requirements throughout their lifetime. Some of our core services include buying or selling Property, Will writing and estate planning, Divorce and Childcare, Personal Injury, Dispute Resolution and then finally assisting in sorting our matters through Probate when a person passes away. This cradle to grave mentality means we can genuinely be a ‘Law Firm for Life.’
  2. Focus on delivering excellent customer service levels to ensure that our client’s experience of a law firm is positive. We are rated 4.7/5 for customer satisfaction and seek feedback off every client we serve to constantly seek new ways to improve our customer journey with us. Instructing solicitors can be daunting and often at emotional times, where aspects as basic as being able to speak to your solicitor on the phone, being made to feel at ease and emotionally supported can make a real difference to the experience and challenge the traditional reputation of solicitors appearing aloof.
  3. Rewarding loyalty. Existing clients receive discounts on our standard rates for future work and those people utilising our residential conveyancing service or family team services also qualify for discounts on writing our updating Wills to reflect their new circumstances. We also offer complimentary storage of key documents as standard.
  4. We view the ‘Law Firm for Life’ ethos as equally applicable internally where we invest in future talent, recruit to retain and provide a positive working environment for our team. Many of the current team have trained with us and we have even had several team members who have left to explore life outside of firm and who have returned back to the fold. The longest serving employee has been with us for over 40 years. We believe this internal ethos flows through positively into our service.

So whether it is externally for our clients, or internally for our team, we genuinely wish to be a Law Firm for Life.

‘Law Firm For Life’ is the latest in a series of monthly monochrome images to be featured over a 12 month period on our social media channels to highlight some of the key elements of our service so be sure to follow us on Facebook, Twitter, Instagram and LinkedIn to see the series as they are released.

For more information on our firm please see www.clarkwillis.com

For those of you reading this who live in Darlington and who are enjoying a real tree this Christmas, why not consider using the Christmas tree collection service raising vital funds for St Teresa’s Hospice in the New Year. For more information and to pre book a collection visit https://www.darlingtonhospice.org.uk/event/christmas-tree-collection-service/

We take this opportunity to wish all of our customers and contacts an enjoyable festive period and good wishes for the New Year.

Solicitors for the Elderly – What does it mean?

Some of our literature refers to the fact that our Wills, LPAs, Tax & Trust team includes members of Solicitors for the Elderly (SFE) but for those of you who are perhaps not involved in the legal or financial world the organisation name itself, and more importantly the reasons for choosing SFE members for legal advice, may be largely unknown. Being part of a select group of law firms in Darlington with SFE members (only Clark Willis, Latimer Hinks and Hewitts) we think it is vitally important to explain why, for legal issues involving those in advancing years, a SFE member should be a preferable choice.

Who are Solicitors for the Elderly?

SFE was founded in 1996 and set out to be a specialist group to help, support and make a difference to older people. It has now grown into a national organisation of over 1500 lawyers all committed to its founding principles. It is a not for profit organisation to meet the needs of its members, so that they can provide good quality legal advice to older and vulnerable clients, their families and carers.

Why use a Solicitors for the Elderly member?

SFE is a national association of independent lawyers who specialise in older client law. As specialists, SFE members are also trained in older client care so that they are able to take into account any difficulties both mental and physical which can affect older and vulnerable clients and are aware of the health and social problems that people may face.

SFE members will provide independent advice, which is in the best interests of older or vulnerable clients, respecting their dignity and understand their need for a holistic approach to problem solving. All advice given is confidential. They will endeavour to follow a plain English policy ie they will always communicate in easy, understandable language and will explain any necessary legal terminology. Their wealth of experience and training will help to put people at their ease when dealing with complex, life changing issues.

Our solicitors who are members of SFE:

  • Are specialists in advising older and vulnerable clients on legal matters
  • Are fully qualified solicitors, barristers and chartered legal executives who have all undertaken additional specialist training in older client law
  • Have spent a substantial amount of their time working with older and vulnerable clients
  • Have gained the Older Client Care in Practice Award which is accredited by SJF (Skills for Justice) a government body which shows that they have the required additional skills to be able to advise and support older and vulnerable people
  • Follow a strict code of practice
  • Are committed to providing affordable, good quality legal advice
  • Are regulated by their professional bodies such as the Solicitors Regulation Authority
  • Keep their knowledge and skills up to date by undertaking regular training

What sort of legal matters do members deal with?

Solicitors who are members of SFE , including ourselves, undertake the following types of work:

  • Wills, Estate planning, tax planning, trusts and probate
  • Mental Capacity issues: Powers of attorney, Deputyships, Court of Protection
  • Advanced Directives (often known as Living Wills)
  • Care funding including asset preservation
  • Deprivation of Liberty safeguards
  • Abuse issues

How can we help?

You can be confident in speaking to our solicitors that you, or your elderly relatives, are receiving experienced advice. Often this involves working alongside your financial adviser to ensure that the relevant expertise is brought into play where necessary and a holistic approach is taken.

Our initial appointments are complimentary and our clear, fixed pricing for any legal matters you may then choose to instruct us in, means you can have peace of mind that accessing the right advice will not cost you earth and tackle the myth that taking advice from solicitors is expensive. If we can help you, your elderly relatives or someone you are perhaps a carer for, either get your affairs in order or deal with pressing issues, such as financial abuse or moving into residential care, then contact your local Clark Willis office (Darlington or Catterick Garrison)  and ask for one of our trusted team.

For more information on SFE, please visit their website.

Expert solicitors

No2 “No Magic”

The second of our black and white monthly images, entitled ‘No Magic’, represents the training and development of our legal team behind the scenes, as well as solicitors in general, to reflect why choosing the right law firm for your legal matters needs more thought than just plumping for a name.  Not all legal providers are made equally (some are not even solicitors) and your choice can have a direct impact on your matter.

It is not down to magic that our solicitors are experts in their own field and the right choice for your legal need but rather a dedication to learning, training and developing to make them not only competent lawyers but specialists in their respective fields.

Experts in their Fields

In addition to the training requirements to become a solicitor, 4 years of higher education and 2 years in practice, we encourage our solicitors to undertake additional training and qualifications to make them specialists in their respective areas of practice and respected amongst their peers.

Our Wills, Probate, Tax & Trusts team include members of the Society of Trust and Estate Practitioners (STEP) and Solicitors for the Elderly so they have vast experience and knowledge in Wills, tax planning matters and later life planning.

Our Family & Divorce team include members of Resolution Specialists, Collaborative Family Lawyers and trained mediators so they can take a holistic approach to separation and childcare issues.

Our residential property team have been awarded the Conveyancing Quality Scheme to reflect the quality of their work on property sales, purchases and mortgaging whilst our Dispute Resolution team includes mental health accredited panel members.

The firm as a whole has also been awarded the Lexcel award by the Law Society as a quality mark for practice management and client care.

As the law itself constantly evolves all of our legal team go through  annual training to remain at the forefront of their specialist legal areas.

A full list of our firm and individual accreditation’s can be found on our website.

Experience when it Counts

As a firm we have been assisting the people of County Durham, the Tees Valley and North Yorkshire with their legal matters for nearly 50 years.

Individual Solicitor’s experience is often referred to as post qualification experience (PQE,) in other words the number of years undertaking the job following the completion of the 6 years education and training set out above.

At Clark Willis, our longest serving solicitor and Partner, Peter Furness, specialising in Dispute resolution and Courts Martial work, has over 30 years PQE and our four Partners average 18 years PQE to lead our 28 strong team.

Whilst qualifications grant exposure to the relevant legislation and practice, it is experience that is the practical application of the law to assist individuals. The greater the number of years of practice, the more varied exposure to the real world application of the law and the greater ability to apply it to your matter, meaning increased knowledge and often swifter results.

Alternative Legal Providers

The is perhaps a little confusion by members of the public over solicitors, consultants, executives, Will writers, estate planners  and even the words lawyer and solicitor. Unless you a dealing with a law firm or solicitor regulated by the Solicitors Regulation Authority then you are not dealing with a solicitor with known training levels, experience and fully backed by insurance.

If you approach someone to write you a Will for example you would assume that there is a minimum training requirement for any person in England writing a Will, after all it is a document of significant magnitude. Many people are shocked that they could become a Will writer themselves within the same day with very little or no qualification behind them let alone any experience.

Whilst for simple affairs they may well be capable of writing a Will, just as a person can write their own Will without any help, it is perhaps best described in comparison to your doctor versus attending an alternative medicine provider. Your local GP has minimum training levels, can look at your entire circumstances instead of an issue in isolation and has access to the NHS behind them, to provide peace of mind and appropriate treatment. With alternative legal providers, especially Will writing, errors only become apparent after a death when they can’t be easily rectified, if they can be rectified at all.

Martin Lewis, the Money Saving Expert includes in his Will writing advice:

Here we want to start with a WARNING – unlike many areas of financial services, will-writing is NOT a regulated market.

This means there are a number of different ways to get a will, but the protections you have if something goes wrong can vary hugely, depending on who writes it.

Confusingly, while will-writing itself is unregulated, because solicitors ARE regulated professionals, if you use them you ARE covered by a range of potentially valuable protections.

With other (non-lawyer) will-writing services, you do NOT have the same safeguards, and with a DIY will essentially you are on your own.

 

No Magic

There really therefore isn’t any magic involved in dealing with our clients legal matters and our advice is purely based on training, experience and the knowledge and application of the law in a straight forward, clear way. So if you are in need of legal services in County Durham, the Tees Valley and North Yorkshire, then contact our trusted solicitors for peace of mind that what you are being advised is not hocus pocus.

‘No Magic’ is the series of a serious of monthly monochrome images to be featured over the next 12 months across our social media channels to highlight some of the key elements of our service so be sure to follow us on Facebook, Twitter, Instagram and LinkedIn to see the series as they are released.

For more information on our firm please see www.clarkwillis.com

Pre nuptial agreements

Civil Partnership or Marriage?

The Civil Partnerships, Marriages and Deaths (Registration etc.) Act 2019 requires the Government to make provisions by the end of the year to make couples of the opposite sex eligible to form civil partnerships. The result being that there is more choice available to couples wishing to make a commitment to one another, irrespective of their sex/gender/sexual orientation.

Despite same sex couples being able to marry or covert civil partnerships to marriage, civil partnerships remain a popular option. The number of civil partnerships registered has risen for the third consecutive year despite the fact that same-sex marriage could take place in England and Wales from the 29th of March 2014. For those of you that like to delve deeper into the statistics, the Office for National Statistics demonstrate that a civil partnership is most attractive to men and to older couples.

So what is a civil partnership and how does it differ to a marriage?

Differences between Marriage and Civil Partnerships:

In relation to the ceremony a marriage is formed when a couple exchange a prescribed form of words, whereas a civil partnership is when the second civil partner signs the relevant document, with no words required to be spoken. A marriage is often taken in the form of a religious or even a civil ceremony, however a civil partnership is entirely a civil process. There is no requirement for a ceremony to take place. Marriages are registered on paper, in a hard copy register, but the details of civil partnerships are recorded in an electronic register. Marriage certificates include the names of only the fathers of the parties whereas civil partnership certificates include the name of both parents of the parties. There are grounds of annulment available if married that are not so if you enter into a civil partnership e.g. if at the time of the marriage the respondent was suffering from a venereal disease in a communicable form.

Marriage, is a historic institution that is recognised around the world as being legally binding. A civil partnership conversely is not legally recognised in some other countries, which can cause difficulties if you are emigrating or require marriage rights while abroad. You will also find the same restrictions on same sex marriage in various countries – with some placing it at a similar level to a civil partnership, while others do not recognise it at all.

Civil Partnerships give couples the choice to formalise their relationship and celebrate with both friends and family without getting married. Many people see civil partnerships as being more modern, therefore expresses more equality within the relationship, rather than the institutionalised, patriarchy that is deep-rooted within marriage.

From a legal viewpoint, these two unions share very similar characteristics but there can be subtle differences following a separation in so far as process and rights.

Whether you are entering into a same-sex, opposite-sex marriage or a civil partnership, you may wish to consider a prenuptial agreement or pre-civil partnership agreements. The solicitors in our friendly family team here at Clark Willis are happy to discuss with you your options and the best way to financially protect yourself.

From our offices in Darlington and Catterick Garrison we offer a range of personal legal services including Family, Property Sales & Purchases, Wills, Lasting Powers of Attorney, Probate & Trusts, Dispute Resolution and Personal Injury across County Durham, the Tees Valley and North Yorkshire. Visit www.clarkwillis.com or contact your local office for more information.

 

No.1 “The Zebra”

Why We Are Seeing Stripes

Those of you reading this who follow us across our social media channels or who we have met recently at the Darlington Business Expo will not have failed to notice we have gone all dotty over stripes with the introduction of a Zebra combined with the phrase ‘Clear Legal Advice.’

Whilst a Zebra is instantly recognisable in its own right with its iconic stripes and is certainly eye catching across an Exposition hall, the choice of a Zebra to launch a series of black and white images over the coming months runs a little deeper than enabling us to be easy to spot.

Colour

Black and white have long been the colour scheme of Clark Willis Law Firm. Our heritage of providing legal services to the people of Darlington goes back nearly 50 years and so it was natural that the colours chosen by the firm during that early period reflected the colour scheme associated with the town itself and the football club.  As a firm we are proud to be headquartered in the heart of Darlington town centre and wear our colours to display this.

Clarity

‘Black and White’ is traditionally associated with clarity and an issue being easy to understand. The legal world, legislation and terminology can often be confusing  and daunting to those who wish to have matters clearly explained. One of our core values as a firm is that law should be made simple and we explain options clearly, in plain English to ensure our clients fully understand their position and enabling them to make informed choices.

Family

Zebras are family oriented animals and live in family groups of between 5 – 20 individuals. As a firm we enjoy a family team mentality across our 27 members of staff, many of whom have been with us for a significant period of time – the longest working with us for 40 years! Many of the current team have trained with us and we have even had several team members who have left to explore life outside of our herd and who have returned back to the fold. We believe this internal team ethos flows through positively into our service to clients as it enables us to work together across legal disciplines, to work more productively and efficiently and most importantly to focus on delivering an excellent service to our clients to uphold the firms reputation. You may have seen ‘Let Our Family Look After Yours’ included in our literature for this reason.

Resolution

Zebras are surprisingly courageous animals who will stand their ground and are not afraid to confront predators if required. The preferred choice however, is to avoid confrontation and the Zebras dazzling pattern structure and quick pace means that confrontation is normally a last resort. As one of the only firms in the area that can undertake mediation services, with two trained mediators in our ranks, we certainly believe in settling disagreements without confrontation where possible, but if required to do so we also have the legal expertise and experience to adopt a more robust position. This may be a simple pre action warning shot to a debtor for credit control or a more dogged pursuit of the right outcome on personal injury matter to achieve the best result for our clients.

‘No1. The Zebra’ is the first of a series of monthly monochrome images to be featured over the next 12 months across our social media channels to highlight some of the key elements of our service so be sure to follow us on Facebook, Twitter, Instagram and LinkedIn to see the series as they are released.

Trust Advice Darlington

Trustees – Managing trust money correctly.

One of a trustees main roles is to manage a trust fund correctly for the beneficiaries. This will often involve making decisions and investing money held by the trust correctly. Whilst this sounds easy, this is often one area that trustees find themselves in error, especially when family or friends are acting as trustees and can lead to personal liability for not achieving a reasonably return, failing to take advice and the potential for family disputes. Where a professional is appointed as a trustee they are expected to exercise an even higher standard of care and skill.

Investment Choice

The general financial principles are contained in the Trustee Act 2000 (s3) and may also feature in the trust instrument itself, to give the trustees power to put trust assets into any investment which they would be able to invest in if they owned the funds themselves. This is obviously a wide ranging power however, there is further guidance as to how the trustees exercise this function.

– Trustees must consider the suitability of proposed investments for the trust.

– The investment strategy should be diversified if appropriate to spread risk.

– Where trustees do not feel they are suitably experienced to take qualified financial advice to ensure the trustees are complying with their obligations.

 

Dependent on the nature of the trust other factors may need to be considered in the appropriateness of any investment, for example an Income in Possession trust (IIP) to produce income for a beneficiary for life before being distributed to remaining beneficiaries must way the balance between producing the income for those currently entitled against preserving or increasing the capital for those ultimately interested following the termination of the life interest.

Often something as simple as this can be overlooked and recently the writer has been involved in assisting a trust where a capital sum of approximately £10,000 was placed onto a trust in the 1980’s for the benefit of a surviving widow were only consideration was given to generating income for that surviving widow and not any subsequent capital growth.  In the 1980’s £10,000 had a significantly greater value then £10,000 in 2018 and had the fund been invested to both generate income and increase the capital then the trust fund wild have been substantially more, all beneficiaries would have been happy and more importantly the trustees would have acted correctly.

Beneficiaries age or tax position may also be relevant to investment choice of trustees and should be considered. If only £1,000 is held for a child until they reach 18 and they are currently 16 then a low risk choice would be sensible but if £25,000 is held for a 2 year old so there are 16 years to manage the fund, a longer term approach to grow capital would be more sensible. Income tax and reporting requirements to HMRC will be covered in a speedster blog but as a note of caution where trust funds are to be held for minor beneficiaries then trustees may consider a investment strategy to mitigate the need for income tax accountable to HM Revenue & Customs.

Investment Review

Following initial investment choices by trustees regular reviews should be undertaken and if necessary amendments made to ensure that trustees continue to discharge their professional duties and responsibilities.  Where financial advisors are utilised by trustees in relation to investments, this obligation is often met by the financial advisors submitting regular investment reports to the trustees.

With the uncertainty over Brexit and market reaction it is perhaps an ideal time for trustees to consider the investment strategy of their trust funds and as always document any decisions made to confirm that trustees have considered the investment.

Failure to Manage Correctly

Where trustees do not manage a trust fund correctly they can be held to have breached their position and be held accountable for loss. Where a loss has been incurred but the trustees have acted in accordance with their duties, for example if the stock market fell, trustees will not normally be liable if they have acted appropriately.

Often it is inaction of trustees rather than a incorrect informed choice that can lead to a question of negligence and in the pre-trustee act case of Nestle v National Westminster Bank PLC (1994) the beneficiaries argued that the trustees had exercised their investment powers too restrictively and that if the trust had been properly invested, it would have been worth a significantly greater value (over £1 million) Whilst the Court accepted the beneficiaries’ arguments they dismissed the claim because the trustees could not be held as following a investment strategy which no reasonably confident trustee would have done in the same circumstances.

Had they not taken any action at all in considering investments the outcome would have been significantly different with the trustees facing liability for the loss.

How We Can Help?

Our private client solicitors include members of the Society of Trusts and Estates Practitioners, the internationally recognised body of leading professionals in the areas of estate planning and trusts, and are available to provide advice on trust establishment, administration and winding up a trust to ensure trustees are complying with their obligations and reporting matters to HMRC correctly.

We can assist with ad hoc advice to trustees or undertaken a full administration service. We can also act as a trustee should you require a professional trustee to be involved in the trust administration.

Should you consider that you may need advice in relation to your role as trustee then contact our trust team at our Darlington office on 01325 281111 or visit www.clarkwillis.com or call into your nearest office.

Divorce law Darlington

Pensions and Divorce by Tanya Bloomfield, Family Solicitor and Mediator

Getting divorced can be an emotional, worrying and difficult time, however, for most couples sorting out the finances can be the most daunting part. In particular, pensions are not always straightforward and the options for dealing with them can be tricky depending on the circumstances of you and your family.

Do you need to consider pensions as part of a divorce?

The short answer is generally yes. When considering the resolution of finances on divorce the assets of the marriage are all considered. The starting point is to ask both parties to provide voluntary disclosure. This really means obtaining evidence to show how much all the assets are worth. Pensions form part of this process and we will generally request that you try and obtain a ‘transfer value’.

What is a transfer value and how is it used?

A transfer value is a calculation of how much the pension pot is worth on the date it is valued. You might get an annual statement every year which will give you an indication of how much the pension will pay out when you start drawing on it, but for divorce purposes we need to know how much the pension is worth as a whole. Most people will now have a pension in light of the auto-enrolment provisions, even though these new pensions tend to have quite a low value at the moment.

Will I lose my pension as part of a divorce?

Not always, but it will depend on a number of different factors. We will look at pensions with you as part of the divorce process and discuss all the different options available when looking at all the assets involved in your case.

We offer specialist legal advice on pensions and all of your other assets on separation and divorce. If you would like to discuss your case with us, please contact a member of our family team on 01325 281111.

Cash Is King – Debt Recovery for Business following Bathstore Going Down The Drain by Karl Medd

Why Keeping Your Debtors in Check is Vital for Your Business

 

When the specialist retailer Bathstore collapsed last month, 500 shopfloor and head office jobs were put at risk together with up to 300 bathroom fitters, suppliers and small businesses  paying a price. An article in the Guardian on The collapse of Bathstore makes a clear point, as do the case studies set out within it, that these are challenging times for businesses in all sectors. It does feel like there have been so many stories within the media regarding the precarious finances of some of the UK’s biggest businesses including Debenhams and Arcadia Group to name but two.

The difficulties of big business and the wider economy can also have a significant trickle down effect upon small and medium sized businesses, which are referred to in business jargon as “SMEs”. The article lays bare the effect that the failure of large business can have upon SMEs. One large contract or transaction can make, or break, an SME.

For the sake of impartiality, we have so far not mentioned Brexit, but this is clearly a matter of ongoing financial concern for business.

It is not just the financial fortunes of Big Business which can impact upon SMEs, as small and medium sized businesses very often work and trade with each other and therefore the livelihoods of all of employees are likely dependent upon receipt of payment, or contractual provision of goods and services, promptly.

Cash flow is extremely important for SMEs. In fact even law firms are not immune to the financial pressures of cash flow and bad debt. There is a well rehearsed adage in business and accounting circles which sums up the position neatly: “Turnover is vanity, Profit is sanity, but Cash is king.”

Reality can be extremely harsh if your business is struggling to recover bad debts which are impacting upon the financial health of your business.

At Clark Willis Law Firm, our Civil Litigation team are experienced in pursuing recovery of trade or commercial debts on behalf of individuals and SMEs and we act for some well-known business in the town to assist with their debt recovery. We can also provide practical advice and information as to your legal position should your debtor become insolvent, be it liquidation, Administration or a Voluntary Arrangement. So before outstanding invoices start having a detrimental impact on your business call our team on 01325 281111 to discuss ways we can help you.

Life Interest Will Trusts – Protecting Property & Assets by Alex Spurr, Solicitor

Life Interest Trusts In Wills – Why You Might Need One To Protect Your Property & Assets

What is a Life Interest Trust?

Life Interest Trusts, sometimes called Asset Protection Trusts, are the familiar term given to a legal arrangement called an Interest In Possession Trust. They are termed Life Interest Trusts because they give a particular person (the life tenant) the legal right to benefit from the assets being held under the trust. If this is a residential property, this would include a right to reside in the property, or if it is liquid assets, such as cash or investments, the right to receive the income.  This right normally lasts throughout the beneficiary’s lifetime, hence the name life tenant, although sometimes the right might end earlier, for example if the beneficiary required full time residential care or on remarriage.

A Life Interest Trust can hold money, but the arrangement is most often used over a residential property by spouses, civil partners or cohabiting partners.

The Will would specify what happens to the trust property when the life tenant dies (or stops having a benefit if an earlier event occurs) for example passing down to children or other nominated persons.

Normally, the trust allows the assets of the trust to be altered so that if the life tenant wished to move for example, the trust could dispose of property A and acquire, or part acquire, property B to enable the trust to adapt to life events and circumstances.

If the trust held other financial assets, a property sold and the trust held funds not used entirely in the purchase of a new property, then the life tenant would normally be entitled to the income generated by these funds although the trust could be drafted to enable the trustees to pay out capital sums to the life tenant or ultimate benefactors.

Why Might I Want One in My Will?

The main reason is to preserve whatever is in the trust, such as a share in the family home or financial assets. As the life tenant does not physically own the trust assets they cannot be included in their own financial affairs. This can be important post retirement for safeguarding assets from long term residential care costs and throughout life to safeguard assets for the bloodline, to ensure your children inherit. If you consider multiple marriages are now common place and an ageing population means care costs are a increased risk, you may appreciate that building in levels of security for your financial affairs can have long term benefit.

Example One – Care Fees

Alan and Rita are retired and live in a 3 bedroom detached property valued at £250,000 and have £20,000 each in the bank. Alan dies and leaves his property share and money in the bank to Rita. Rita later requires care and all of the property and cash in the bank can be used to fund that care. Rita is self-funding and when she passes away, is left with the bottom threshold of £14,250 which passes between their 2 children.

If Alan and Rita had included a Life Interest Trust in their respective Wills over the property only, in the above scenario, after Alan died, Rita would own her half of the house outright and have the benefit of Alan’s whilst she was alive, meaning she had security, but Alan’s Will specifies that ultimately his 50% of the property passes to the children after Rita’s death. When Rita went into care this time, only her 50% of the property and the savings could be used to fund her care, meaning the children would inherit the £14,250 from Rita’s assets on her death and 50% of the home that was subject to the Life Interest Trust, being an extra £125,000.

Example 2 – Young Family

Neil and Sue are in their 30s with three children under 10. Sue has a fatal accident and Neil inherits her estate. After a few years of being a single parent, Neil meets Helen, another single parent with one child, and several years later they cohabit and ultimately marry. Neil then dies at 76 leaving Helen as his surviving widow. Helen inherits everything and then makes a Will leaving her entire estate to her child and nothing to Neil’s three children. Neil’s original three children are disinherited.

If Neil and Sue had included a Life Interest Trust in their respective Wills over the property, in the above scenario, after Sue’s death, half of the matrimonial home would always have been protected for her three children rather than them being disinherited.

Who are the Trustees?

The executors, or possibly alternative specified trustees by you in the Will, have the job of safeguarding the trust assets and must always act in the best interests of all the beneficiaries.  Care must be taken when choosing who should act in this role.  The surviving partner can be a trustee, but should not be the only one, and perhaps a adult child or sibling should act together with them.  Unless the Will provides otherwise, the trustees will have to act unanimously, so that a surviving partner cannot override the terms of the trust or act in their own best interest.

If there is a property share involved, the trustees would usually go on the title deeds together with the surviving partner and a restriction placed on the title deeds to make reference to the trust.

Inheritance Tax (IHT) Issues?

The life tenant is treated as if he or she owned the trust property for the purposes of Inheritance Tax (IHT) and so will attract the usual spouse exemption if established under a spouses Will. On the death of the surviving spouse they may also have the ability to use the unused element of the predeceasing spouses tax free level, and unused extra residential property allowance, which will not have been decreased by establishing the trust.

If cohabiting partners include Life Interest Trusts then no similar spouse exemption is available although the level of IHT, if payable, will be no different by including this arrangement. There can be circumstances, if each cohabiting partner has their own children that the arrangement can cause the full or partial loss of the additional residential property allowance dependant on circumstances.

The primary position is Inheritance tax (IHT) is payable at 40% on a person’s assets over £325,000 on death and certain gifts made during their lifetime. There are also additional residential property allowances, transferable allowances between spouses and a range of exemptions and reliefs before IHT becomes payable.

On the life tenant’s death, subject to any exemptions or reliefs which then apply, IHT will be payable on the combined value of the trust assets and the life tenant’s own estate.  The trustees will be responsible for paying the proportion of the IHT payable in relation to the trust assets and the executors of the life tenants other estate, on the estate other than the trust.

Other Taxation Issues?

The trust may also be liable for Income tax and Capital Gains tax.

If the trust only includes a share in a residential property then no income tax is likely to arise or capital gains tax issues if the equivalent of an individuals main residence relief is available. For most Life Interest Trust this is the outcome.

Where the trust holds other assets then the taxation position may change. If the trust holds income producing assets, trustees will be liable for tax at the normal rates for income or dividend income.  Where any income is mandated to the life tenant, for example interest credited straight to their bank account so the trustees do not touch the income, then the life tenant would simply reflect this on their own tax returns as their own income.

If the assets held on trust increased above the trustee annual exemption for Capital Gains tax (currently half of an individual’s allowance) then the trustees may be liable for paying CGT if no reliefs are available.

Summary

In modern society, second often third marriages are common place and healthcare advances coupled with lifestyle changes mean that life expectancy has increased causing greater demand on residential care in later stages of life. These two factors alone mean that taking simple steps like including a Life Interest Trust arrangement in a Will for a spouse, civil partner or cohabiting partner can ensure protection for your descendants but without compromising the survivor’s ability to benefit during their lifetime. Where the residential home is included in such arrangements, the taxation side of things is often a non issue.

Whatever stage of life you are at, when owning a property jointly and making a Will, or where one person owns the property in their sole name but cohabits, then we will always discuss with you protection opportunities, including Life Interest Trusts, so that you can make an informed decision on planning your affairs.

As with all legal advice, your own particular circumstances may impact on the suitability of such an arrangement and so we would recommend you contact our specialist Wills team at your local office to discuss your affairs. Call us today on 01325 281111 or 01748 830000 to arrange your no obligation, complimentary discussion.

First Time Buyer’s Guide to the Conveyancing Process by Jane Mafham-Jackson, Solicitor

We know how daunting it can be to buy your first home, but it is important that you understand the process involved so you can stay in control.

Step 1 – Offer Accepted

Once you have had your offer on a property accepted, you will be required to provide your solicitor’s details to the selling agents. For a no obligation quotation, please contact the Darlington office on 01325 281111 or the Catterick office on 01748 830000 or use our online quotation tool at www.clarkwillis.co.uk.

Step 2 – Instruct Your Solicitor

Once you have decided on your chosen firm of solicitors, they will send you some initial client care paperwork for you to complete and return. This will normally include a questionnaire, firm’s terms, information in respect of stamp duty, proof of funds and ID. You will need to complete and return all documents in order to instruct the firm. An upfront payment will also be required which will be around £250.00 for disbursements such as your searches and ID checks.

Step 3 – Contracts Received

Once the contracts and protocol documents are received from the seller’s solicitors, your searches can be requested. It will be a condition of your mortgage offer that searches are carried out on the property before funds can be requested. The searches include a local authority search (which we request direct from the relevant local authority) a water and drainage search, an environmental search and, in some circumstances, a coal search. At this stage the contract documents will be checked and any enquires will be raised with the seller’s solicitors. You will receive a report on title of the property which you are purchasing.

Step 4 – Mortgage & Survey

Once the solicitor’s offer of mortgage arrives, this will need to be checked to ensure the same is in line with the contract, we will also need to check whether there are any specific mortgage conditions within the offer. A mortgage report will be provided. The mortgage valuation is not a survey and can only be relied upon by your lender. You may wish to instruct an independent surveyor who will advise you on the different types of reports available.

Step 5 – Providing the Information

Once we have replies to the enquires raised at Step 3 and your search results, we will be in a position to provide you with all the necessary information about the property.

Step 6 – Signing Documents & Deposit

Once all enquires are satisfactorily responded to and search results are clear, the contracts will be issued to you for signature. You may attend the office or the documents can be posted or collected by you. You will be asked to sign a contract, transfer, mortgage deed, confirmation form, file plan and stamp duty form. You will also be provided with a completion statement which details all receipts and payments that need to be made on your transaction. We would require the deposit/balance funds from you in a cleared format together with confirmation of the source of the funds and up to date bank statements.

Step 7 – Exchange of Contracts

At this point you must be sure that you are happy to purchase the property. Once contracts are exchanged the completion date will become legally binding. There are penalties if you change your mind and wish to withdraw. Upon exchange of contracts a fixed date is inserted into the contract. There is no set time frame between exchange and completion. Some people wish to book removals or hand in a notice on a rental property so will require a period of time between exchange and completion.

Step 8 – Completion Day

This is the day in which the funds are sent to the seller’s solicitor and upon receipt, subject to the agreement of time, keys will be released to you. These are normally collected from the selling agents.

 

If you are ready to take the first step, contact us for a no obligation quotation on 01325 281111 (Darlington office) or 01748 830000 (Catterick office) or use our online quotation tool at www.clarkwillis.co.uk.