Category Archives: Lasting Power of Attorney

You’ve been named as an Executor: what does this mean?

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You’ve been named as an Executor: what does this mean?

If you’ve been named as an Executor in someone’s Will, you are responsible for handling that person’s affairs when they die. You will be required to carry out the instructions in their Will and take care of all the legal and financial affairs that need to be handled after death.

This means dealing with all their assets (such as property, shares and personal possessions),

paying debts, paying any Inheritance Tax and Income Tax and transferring the inheritance to the

beneficiaries (those who are inheriting from the estate). The process of dealing with the affairs of someone who has died is estate administration.

 

How do you know if you’re an Executor?

When someone creates a Will, they will typically inform their Executor(s) that they have chosen them. However, there are no legal requirements for the creator of a Will to inform the Executor(s). This means that although many people are aware that they will be taking on the role of Executor in advance, there is a chance that you could find out after the person has died. When the Will is retrieved, it may be discovered that you have been nominated for the role.

Understanding the role of an Executor

The role of an Executor is not one to be taken lightly as you are financially and legally responsible for administering the estate of the person who has died. This means that an Executor can be held accountable for any mistakes, such as distributing the inheritance incorrectly or paying the wrong amount of Inheritance Tax. The role of an Executor is an unpaid role but you may be able to claim for reasonably incurred expenses. Any expenses should be paid from the estate before distributing funds to the beneficiaries.

An Executor may also be referred to as a Personal Representative, which is the collective term for Executors and Administrators. An Administrator is an equivalent role to an Executor when someone dies without a Will.

You might not be the only Executor as up to four people can be named as Executor in a Will. It’s advisable to name two Executors in a Will as one may be unable to act when the time comes. If there are multiple Executors named in the Will and more than one of you are willing to act, you can share the responsibility and handle the estate administration together. Additionally, you have the right to instruct professionals to help. This could be just to help in a specific specialist area (i.e. selling a property or obtaining the Grant of Probate) or you can pass the responsibility to a professional estate administration provider who can take care of everything.

What to do when someone dies  

The Benefits of Appointing a Professional Executor

 

Local Authorities, Homeowners and Inheritance Tax

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32% jump in number of local authorities where homebuyers are automatically hit with inheritance tax

Recent analysis has shown that despite rising inheritance tax thresholds over the past 20 years, rapid house price growth has led to a significant increase in the number of homeowners affected by inheritance tax. Currently, 36% of local authorities in the UK now see homebuyers automatically liable to pay inheritance tax based on the value of their property alone, compared to just 4% two decades ago.

Sir Keir Starmer is set to present his government’s first Autumn Budget on October 30th, warning that it will be ‘painful’ for many. This has sparked expectations of new taxes and potential increases, with inheritance tax reforms widely anticipated.

Yopa’s analysis of HMRC data highlights a noticeable rise in inheritance tax receipts. Two decades ago, during the 2004-2005 financial year, HMRC collected £2.9 billion annually from inheritance tax. Steve Anderson, Yopa’s National Franchise Director, commented:

“Over the past 20 years, escalating house prices have not only increased the government’s revenue from stamp duty land tax but also from inheritance tax, which has consistently risen alongside property values.

With the upcoming Autumn Budget predicted to be tough on UK taxpayers, it’s possible that the inheritance tax burden could increase further. So far, the only official mention of inheritance tax from the Labour manifesto concerns closing offshore trusts to prevent tax avoidance, which suggests the average homeowner may not be significantly impacted.

However, any changes in inheritance tax law would likely require substantial revisions, and it remains unclear what the final outcome will be.

Nevertheless, as house prices continue to stabilize, many more homeowners could fall within inheritance tax thresholds even without any legislative changes.”

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What is the difference between a right to occupy trust and a lifetime interest in property trust

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The terms “Right to Occupy Trust” and “Lifetime Interest in Property Trust” refer to specific legal arrangements often used in estate planning, particularly regarding the use of property. While they may seem similar, they have distinct features and implications:

Right to Occupy Trust

Purpose: A Right to Occupy Trust is designed to give a specific individual the right to live in a property for a set period of time, often until a certain event occurs (e.g., until they die, remarry, or a specified date is reached).Legal Status: The individual has a “right to occupy” but does not own the property. They cannot sell or otherwise dispose of it.Ownership: The ownership of the property remains with the trust, and the trustees control the property according to the terms of the trust.End of Occupancy: When the right to occupy ends, the property usually passes to the ultimate beneficiaries specified in the trust.Flexibility: The terms can be flexible, allowing the trustees to sell the property and purchase a new one if necessary, while still maintaining the right to occupy for the individual.

Lifetime Interest in Property Trust

Purpose: A Lifetime Interest in Property Trust, also known as a Life Interest Trust, provides an individual (the life tenant) with the right to benefit from the property during their lifetime. This benefit can include the right to live in the property or receive rental income from it.Legal Status: The life tenant has a lifetime interest, meaning they can use the property or enjoy its income for the duration of their life.Ownership: Like the Right to Occupy Trust, the property is owned by the trust, with the life tenant having no ownership rights over the capital (i.e., the property itself).End of Interest: Upon the death of the life tenant, the property typically passes to the remaindermen (the beneficiaries who are entitled to the property after the life tenant’s death).Income Rights: The life tenant may also have the right to receive income generated by the property, such as rental income, depending on the terms of the trust.

Key Differences:

Duration and Flexibility:

Right to Occupy Trust: The right to occupy may end before the life tenant’s death, depending on the terms of the trust.Lifetime Interest in Property Trust: The life tenant’s interest typically lasts for their lifetime and only ends upon their death.

Scope of Rights:

Right to Occupy Trust: The right is usually limited to occupying the property, without entitlement to income from it.Lifetime Interest in Property Trust: The life tenant may also be entitled to income generated by the property.

End of Rights:

Right to Occupy Trust: The right to occupy may cease upon certain conditions like remarriage.Lifetime Interest in Property Trust: The life interest typically ends only upon the death of the life tenant.

Use of Property:

Right to Occupy Trust: The trustees may be required to provide alternative accommodation if the original property is sold.Lifetime Interest in Property Trust: The life tenant has a broader right to benefit from the property, including potential rental income.

The Benefits of Appointing a Professional Executor

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The Benefits of Appointing a Professional Executor

When taking on the role of an Executor, many individuals underestimate the complexities and responsibilities involved in managing an estate. This lack of awareness can lead to significant financial and emotional challenges, as demonstrated in the following case study.

An Executor sought assistance from Kings Court Trust (KCT) in handling his sister’s estate, which had been left largely unattended since her passing three years earlier. Apart from contacting a few utility companies, no significant progress had been made. The estate, valued at over £1 million, also included the entirety of her late husband’s estate, which she had inherited three years prior to her own death. This made her estate eligible for the unused Nil Rate Band (NRB) relief. However, the Transferable Nil Rate Band (TNRB) must be claimed within two years of the individual’s death—a fact the non-professional Executor was unaware of. As a result, the estate incurred a much higher Inheritance Tax (IHT) liability than necessary.

This estate highlights the knowledge which is needed when administering an estate:

Executors often lack the specialised knowledge and do not realise the impact their actions are having on the overall value of the estate

The risks associated with being an Executor, particularly when navigating deadlines with HMRC

An Executor can be held liable for a mistake which has caused the estate to experience a loss

Without professional guidance, these duties can become overwhelming and error-prone.

Benefits of a Professional Executor

Engaging a professional Executor can greatly reduce these risks. Experts like Kings Court Trust have the knowledge and experience to manage estate administration efficiently and accurately, ensuring compliance with legal obligations and optimizing financial outcomes. They are skilled in claiming allowances such as the Transferable Nil Rate Band (TNRB), which helps minimize tax liabilities and protect the estate’s value.

In addition, professional Executors can ease the emotional burden on grieving families. Managing a loved one’s estate is a challenging task, made even more difficult by the emotional toll of the loss. By delegating these responsibilities to a professional, families can focus on their healing rather than navigating the complexities of estate administration.

In conclusion, appointing a professional Executor is a sensible decision. It ensures the Estate is managed efficiently, legal requirements are met, and financial advantages are maximised, thereby protecting the estate’s value and easing the family’s burden during a difficult time.

Kings Court Trust our preferred partner is a probate and estate administration provider that offers award-winning solutions to support every family.

Whether you need a hand obtaining the Grant of Representation, completing the complicated tax and legal work, or anything in between, you’re in safe hands with our team of specialists.

If you have any questions about the estate administration process, including applying for the Grant of Representation, call our Client Services Team on  0800 368 9770 or fill in the form below.

Forthcoming changes to the death certification and registration process

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When a person dies, one of the first steps for their representative is to obtain a death certificate. The cause of death will either be investigated by a coroner or certified by a medical practitioner. Although medical examiners, who operate independently from coroners and medical practitioners, have increasingly reviewed causes of death, this practice has not been mandatory

However, starting on 9 September 2024, new reforms will require an independent review by either a coroner or medical examiner for all deaths in England and Wales, without exception.

The following regulations set out the detail of how the reformed process will work.

In England:

The Medical Certificate of Cause of Death Regulations 2024The Medical Examiners (England) Regulations 2024The National Medical Examiner (Additional Functions) Regulations 2024

In Wales: The Medical Examiners (Wales) Regulations 2024

There is also government guidance accompanying the regulations, which explains the legal requirements in each area.

Summary of key changes

Introduction of statutory medical examiner role: The role of the medical examiner, a senior medical practitioner providing independent scrutiny of causes of death, is now placed on a statutory footing.

Medical examiners will review the cause of death proposed by the attending practitioner, who can complete a Medical Certificate of Cause of Death (MCCD) based on their knowledge and belief.

This simplifies the previous rules, which had required a referral to a coroner if the attending practitioner had not seen the patient within 28 days before the death or had not seen the patient in person after death.

New Medical Certificate of Cause of Death (MCCD): A revised MCCD will replace the existing certificate and will include details of the medical examiner and additional information regarding the person who has died. This will assist with local and national mortality data.Exceptional circumstances: If an attending practitioner is unavailable, the death will be referred to the senior coroner.

Should the senior coroner decide not to investigate, it will be possible for them to refer to a medical examiner to certify the death.

The coroner’s investigation process: The process remains largely unchanged. Referrals to the coroner will be made by the attending practitioner or the medical examiner, instead of the registrar.Registration of death: Once the cause of death is confirmed by the attending practitioner and the medical examiner, and the declarations of certification and scrutiny have been completed, the MCCD is sent to the registrar. This is the point at which it will be possible for the representative of the deceased (who will be notified) to arrange the registration of the death through the registry office.

 

New categories of informants: The deceased’s partner or representative will be formally allowed to register the death, expanding the categories of informants.Changes for cremation processes: The scrutiny previously conducted by a medical referee before a cremation will be transferred to the medical examiner, eliminating the need for an additional review by a medical referee.

Impact of the changes

It is an important and welcome change that all causes of death will be scrutinised by a medical examiner or coroner. The following matters may also impact on those involved in services for the deceased and their representatives.

Increased timescales for registering a death: It may take longer for deaths to be certified and registered due to the need for a medical examiner to complete an MCCD and for this to be sent to the registrar. This may be the case particularly in the initial months from September 2024, whilst the process beds in.Notification of deceased’s representative: The deceased’s representative will be contacted to confirm the MCCD has been sent to the registrar and that they can now register the death.Changes to death certificates: New death certificates will include some different information, such as the new categories of informant (deceased’s partner, and deceased’s representative).Greater efficiency in coroner cases: Over time, the involvement of medical examiners should streamline cases requiring coroner intervention.Improved mortality data quality: Enhanced scrutiny and additional data collection will benefit national statistics.

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What to do when someone dies

Isle of Man advances towards assisted dying legislation

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The Isle of Man has progressed towards potentially becoming the first part of the British Isles to legalise assisted dying, following the completion of a key legislative phase, as reported by The Irish News.

The Assisted Dying Bill, after seven days of debate spread over three months, has now passed its clauses stage. A third reading of the Bill is anticipated later this year.

The Isle of Man’s new assisted dying Bill includes several key provisions and recently accepted amendments.

 

Key Provisions

Eligibility: The Bill applies to adults who:Have lived on the Isle of Man for at least five years.Have a terminal illness with a life expectancy of less than 12 months.Have a clear intention to end their life.

Legal and Professional Safeguards

Medical Protections: Legal and workplace protections for medical professionals involved in assisted dying have been established.Opt-In System: An opt-in system for doctors willing to participate in assisted dying was approved, following a request from the British Medical Association (BMA).

Rejected Proposals

Service Separation: A proposal to separate the assisted dying service from the island’s public health service, Manx Care, was rejected.Referendum: A proposal to hold a referendum before implementing the law was also rejected.

Dr. Alex Allinson, the Member of the House of Keys (MHK) behind the Bill, welcomed the amendments, noting that they reinforce the legislation’s safeguards. He acknowledged the rigorous debate and mentioned that while opposition remains, most members are now satisfied with the amendments, paving the way for the Bill’s third reading.

Dr. Allinson highlighted that the Isle of Man could be the first in the British Isles to have such legislation receive royal assent. He emphasized the need for a lengthy implementation period, involving collaboration with organizations like the General Medical Council (GMC) and the BMA to ensure the Bill is effectively operationalized.

Should the Bill receive royal assent next year, campaigners believe assisted dying could be available to eligible Isle of Man residents by 2027. Similar legislation is under consideration in Scotland and Jersey.

Additionally, new Prime Minister Sir Keir Starmer has pledged to allow a vote on legalizing assisted dying in the UK.

 
 

Discussing Dementia Fears – Study

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A third of those who have noticed symptoms of dementia in themselves or a loved one are waiting over a month to discuss the matter, according to a new survey.

Marking Dementia Action Week 2023, the Alzheimer’s Society’s survey found just 15% of those with concerns over symptoms brought the issue up straight away. What’s more, 11% still haven’t raised their worries after spotting the first symptom.

The Alzheimer’s Society says this delay is having a knock-on impact on how soon people are able to get help as 23% waited over six months before they spoke to a medical professional.

According to the survey, confusing dementia symptoms with normal ageing was the top reason people stayed silent (64%).

This was followed by not wanting to worry their loved one (33%), and fears of how their relationships might change (16%).

Worryingly, the survey of more than 1,100 people, showed there is still a fear of stigma – 44% said they were scared people would speak down to them or their loved one after they were diagnosed, or treat them like a child.

All of this reinforces the importance of the ongoing campaign ran by the Society: “It’s not called getting old, it’s called getting ill.”

This encourages people who are worried about their memory, or the memory of someone close to them, to seek support in getting a diagnosis, using a “symptoms checklist”, which is available through the Society’s online hub.

“We can’t continue to avoid the ‘d’ word – we need to face dementia head on,” said Kate Lee, CEO of Alzheimer’s Society, adding:

“The focus of Dementia Action Week is to inform everyone to know there is support out there if [they are] confused about symptoms, or don’t know how to have that first tricky conversation.”

In the UK, one person develops dementia every three minutes – that means that by 2040, 1.6m people will be living with the condition.

Resident doctor on ITV’s Lorraine and Good Morning Britain, Dr Amir Khan, said:

“A third of us will go on to develop dementia in our lifetimes – we need to change the idea that getting dementia is inevitable as we age – it’s not called getting old – it’s called getting ill

If you or a loved one is in the early stages of dementia arranging to give someone a lasting power of attorney to look after your financial and or health and welfare is a viable option worth considering



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What is a Nil Rate Band Discretionary Trust?

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When writing your Will, you may include a Trust for certain portions of your estate, such as cash gifts or property. Alternatively, you may be acting as an Executor or Trustee for a Will that includes a Trust.

One type of Trust is a Nil Rate Band Discretionary Trust (NRBDT). This blog will answer frequently asked questions about this type of Trust, Nil Rate Bands, and Discretionary Trusts in general.

What is a Nil Rate Band Discretionary Trust?

A Discretionary Trust is one where the Trustees named in the Will have power over how the allocated inheritance is spent. The details of their involvement will be laid out in the Trust document; in the case of a Will Trust, the Will becomes this document. Many people don’t understand that the Will is the Trust document and go looking for other documentation.

Depending on the wishes expressed in the Will, Trustees may be able to decide:

What gets paid out (e.g. whether the total amount will be paid in full or in instalments)Which beneficiary receives the inheritance – if, for example, ten beneficiaries are named in the Trust, the Trustee(s) may only choose to pay some of these, or they may pay all of them equally. It’s completely at their discretionHow frequently payments are madeWhether there are any conditions as to how the money will be spent

This means that if there is a change in circumstances or financial concerns, the Trustee can protect the deceased’s assets. Most commonly, Discretionary Trusts are created to provide for a future need, such as someone who may need more financial help than other beneficiaries, or for a beneficiary who is not capable of dealing with their finances independently.

Can a Trustee remove a beneficiary from a Discretionary Trust?

Beneficiaries are chosen by the Settlor (the person who placed the assets into the Trust) and upon their death. There is no need for the Trustee to remove any beneficiaries, as they have the power to decide whether or not they will be paid. In addition, the Trustee can choose to delay the pay-out until a time they feel is appropriate.

What rights do beneficiaries have under a Discretionary Trust?

The Trustee(s) must act in the best interests of all the beneficiaries. However, as they have the right to decide how much and when income gets paid out, they also have the right to bypass beneficiaries if they feel they are not able to inherit responsibly. A Letter of Wishes can be placed with the Will and Trust document to express how the Trust should be dealt with. It’s worth considering that a Letter of Wishes is not legally binding; however, your Will and Trust document are.

Beneficiaries can request information from Trustees regarding why they have made a decision or when a decision will be made. However, Trustees may refuse to answer. Trustees need to ensure they have acted in the best interests of the Trust and beneficiaries.

What is the Nil Rate Band?

The Nil Rate Band (NRB) is the amount you can pass on to beneficiaries of your estate without being charged any Inheritance Tax. Currently, this threshold is set at £325,000 until 2028. There is also a Residence Nil Rate Band (RNRB), which is presently £175,000.

As of 2007, the NRB can be transferred between spouses and civil partners after the first death. This is referred to as the Transferable Nil Rate Band (TNRB). For example, at the current NRB allowance, if the first partner passes away and only uses £100,000 of their NRB, the remaining £225,000 will be added to the surviving partner’s threshold. They can then leave Inheritance Tax-free gifts to their beneficiaries totalling the combined amount of their NRB and remaining TNRB.

The amounts used and amounts outstanding are worked out in percentages, rather than figures, as the NRB is liable to change. However, it has not been changed since 2009 and is set to remain the same until 2028.

What is a Nil Rate Band Discretionary Trust?

Prior to 2007, NRBDTs were often used by married or civilly partnered couples to ensure that the surviving partner could receive the deceased’s NRB allowance and avoid a hefty Inheritance Tax bill.

However, now that the NRB can be transferred to the surviving spouse or civil partner, couples may not deem it necessary to include a NRBDT. Other reasons for creating a NRBDT can include:

Reducing Inheritance Tax for a surviving life tenant in a shared property – if the property value is above their own NRB allowance, the amount from the NRBDT can be used to reduce/pay off the difference.Leaving other Inheritance Tax-free gifts – when estate planning, it’s important to consider the taxes that your loved ones will be left with. Placing any leftover NRB allowance into a NRBDT allows for beneficiaries to receive this amount without paying an excessive amount of Inheritance Tax.Providing for particular beneficiaries – for example, a NRBDT could be used to protect assets that will go to children from a previous relationship in the event that the surviving spouse remarries. The Trustee can ensure that these assets are distributed correctly.

Essentially, including a NRBDT means that any unused NRB can be held outside of the individual’s estate and therefore will not be included for Inheritance Tax purposes.

Is it better to leave inheritance in a Trust?

Using a Trust to distribute your inheritance can help to reduce the Inheritance Tax of the assets (e.g. cash, possessions, and property) that are placed into the Trust. Therefore, the full amount of your estate can be maximised for your beneficiaries.

Another advantage is that it provides for underage or vulnerable beneficiaries that cannot deal with valuable assets on their own. Naming Trustees can help give you peace of mind when estate planning and provide for your loved ones upon your death.

One potential negative that is worth considering is that it could cause stress and disagreements amongst your beneficiaries, as the Trustee may make decisions that they are unhappy about. However, by being careful with who you appoint and leaving clear wording in your Trust document/Letter of Wishes, this can be avoided.

Additionally, if a Discretionary Trust is set up, this may result in you not being able to claim any RNRB, as HMRC states that this type of Trust does not meet the RNRB criteria.

Abbey Broadway is available to offer free, impartial, and practical advice on all elements of estate administration upon a death – this includes explaining the Trust wording to the Trustees and discussing the processes involved in plain English.

If you need help with probate, administering an estate, or understanding Trusts, contact us by filling in the form below or call our Client Services Team on 0800 368 9770.

What to do when someone dies

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What to do when someone dies

8 steps to take following someone’s death

When someone close to you dies, it can be difficult working out what to do and in what order. The process can be broken into eight stages:

Getting a medical certificate – this is required to register the death. If the person died in hospital, a Doctor will issue the certificate. If the death occurred at home, a GP should undertake the task.

Registering the death – a relative, hospital representative, or the person arranging the funeral can do this at a register office local to where the deceased died.

What to do when a Coroner is involved – when a death is reported to a Coroner, investigations must be completed before papers are issued. A Coroner may issue an interim death certificate if an inquest is held. The funeral should not be booked until this is complete, but ceremony planning can commence.

Dealing with the Will – if a Will was left, the funeral should be planned in accordance with any wishes detailed. It’s best to conduct a Will search to check if there is a Will, as this will affect how the estate is administered.

Locating important papers – other documents to search for include pension paperwork, insurance policies, and financial institution account details.

Arranging the funeral – arrangements can be handed over to a professional Funeral Director, who will be able to offer guidance.

Probate – whilst this is not always required, it may be necessary to obtain a Grant of Probate before proceeding with estate administration.

Estate administration – the process of dealing with a person’s legal/tax affairs, assets, property, liabilities, and distributing inheritance.

If you need guidance on dealing with a bereavement, please contact us.