Richard Johnson writes a regular column with advice about inheritance planning in The Cockermouth Post.

Here are some of his recent articles:

Budget Day 2012 (February 2012)

Budget Day is Wednesday 21 March 2012. Inheritance Planning could well be affected; the Chancellor is so short of money he will be desperate to raise funds from any source. The Inheritance Tax personal threshold is already frozen at £325k until April 2015. So what else might he do?

People who have worked hard and saved are easy targets. The rule concerning making gifts, or spending money on behalf of your children, such as paying off a mortgage or buying them a car or paying educational fees, is currently that the person making the gift must live seven years from the date of the transaction for that gift to be exempt from their Inheritance Tax calculation.

There are two easy ways the Government could massively increase its takings from those who have worked and saved. At midnight on 21 March 2012 ‘the seven year rule’ could become ‘the ten year rule’ and the 40% Inheritance Tax rate could become 50%. Many within ‘the establishment’ think at least one change is a strong possibility and some are not ruling out both changing.

On an equally happy note, Golden Charter has just announced that their Guaranteed Funeral Plans are all going up by £300 each on 1 April 2012; equivalent to a 10% increase. Clearly, it is worth acting now if you would like to spare your family having to pay your funeral bill.

Budget Day changes are unlikely to be retrospective, but they will take effect immediately. I’ll happily come and chat to you about Inheritance Planning if you ring me.

It Pays to be Informed (January 2012)

“Knowledge is all important.” When it comes to planning how to maximise the inheritance we pass on to our families ‘knowledge equates to the actual inheritance of property and money’.

I aim to raise awareness that informed forward planning generally reaps large dividends, particularly where it prevents the loss of the bulk of an estate unnecessarily. When the grown up children ring me, often in something of a panic a few weeks before large monthly bills are about to drain their parent’s estate, I sadly have to usually inform them it is ‘too late’. Only when a person is fully ‘compus mentus’ can inheritance planning be undertaken. Where the aim is to fully protect a property this must be done well in advance of any signs of mental deterioration.

I don’t charge to give talks or to come and meet people privately in their homes within Cumbria because most people do then ask me to prepare them the legal documents that will fulfil their wishes. I work to strict confidentiality criteria (similar to a doctor) and all documentation is covered by £3m of Professional Indemnity Insurance for its lifetime.

A Golden Charter.... (December 2011)

If you have seen the TV advert of the golden coloured leaf floating down and landing by a telephone you will be tuned in to what follows....Yes, in addition to providing a comprehensive Inheritance Planning and Protection service I have recently become a ‘Golden Charter’ Representative. I’ll admit that in the month before Christmas that doesn’t sound the most exciting of announcements. If you still have no idea what I am talking about, well, Golden Charter is the UK’s largest Independent Funeral Plan provider.

It is a logical extension to the services I provide. I encourage people to be organised about their assets. “Please create an ‘Asset Record’ so that your Executors stand at least a sporting chance of finding them” is a frequent thing I say to clients. It is also sensible to have got that last journey properly organised and paid for before it happens. You get it at today’s prices even if you don’t make the journey for forty years, so it is actually a good financial investment and it saves your family from having to find the money themselves at the time to pay for it.

There are several Funeral Plan schemes to choose from. All payments are held in an Independent Trust that ensures a 100% guarantee of fund availability when required. We all hope that the day we need such things is a long way off, but just as having a Will in place protects against the problems associated with intestacy, a Funeral Plan guarantees that on the last day things are done properly, professionally and with the minimum of fuss for your family.

Our Home and Assets (November 2011)

If, by planning ahead, we are guaranteeing that property, financial assets or other possessions will actually one day belong to the people we would like them to reach, that seems quite sensible to me. How can we ‘guarantee’ this? By making use of long established means that are surprisingly straightforward and have been used by people for generations to keep assets ‘in the family’. Now they are available and affordable to everyone. I specialise in helping anyone who would like to know more about how such protection of assets works.

I think the most common area of enquiry relates to residential property which is frequently the single most valuable asset people have. To be able to totally protect your home for your intended beneficiaries you need to own it (with or without a mortgage); it needs to be worth less than £325k if you are the sole owner or £650k if there are joint owners. You need to be in reasonable health (i.e. not giving indications that you are likely to need residential care in the next year or so). If you ‘pass’ these criteria it is probable the total value of your home can be protected.

I aim to provide an exemplary service to everyone and my legal team at Collective Legal Solutions do likewise. From our expert technical Company Solicitor, our Chartered Tax Adviser, our four Directors and all our administrative staff we regard ‘Professional Excellence as Standard’. I am delighted to have been an Associate of Collective Legal Solutions for over four years and I endeavour to provide to the people of Cumbria the sort of expert service that we would all wish for from any profession.

Inheritance Planning and Protection (October 2011)

Looking to create the means of protecting the assets of your family? Collective Legal Solutions specialise in helping people create legal documents from the comfort of their own home. All documents are professionally written, competitively priced and covered by £3m of insurance for your peace of mind.

Collective Legal Solution’s representative Richard Johnson is based in Cumbria. He travels widely in the north-west region and is contactable via his website, by email or by phone. Daytime and evening appointments can be made. Richard specialises in advising people on how to guarantee that assets such as houses and savings do actually reach their intended beneficiaries. The legal team of Collective Legal Solutions create the appropriate documents and undertake all other associated work.

Richard Johnson and the Collective Legal Solutions team will provide you and your family with an all inclusive professional service. We pride ourselves on our friendly approach and on the quality of our service. We will listen to your wishes and act accordingly.

Safe as Houses... (September 2011)

‘My Mum can no longer look after herself and I have heard you can save the house’. Unfortunately a move into Trust at this stage would be seen as ‘deliberate depravation of assets’. However, I am pleased to say that in 2011 so far some ten of my client’s houses have been successfully moved ‘Into Trust’.

This means the houses are ‘outside of the estate’ for all relevant purposes (except for Inheritance Tax, but you have to be worth more than £650k for married people or widowed people and £325k for single people for this to be relevant). A house ‘held in Trust’ has its own legal identity and the nominated beneficiaries will inherit it ‘come what may’. The Trustees can be the people living in the house and can also be the beneficiaries of the Trust; no outside interests need be involved.

My specialist Legal and Tax Advisory team at Collective Legal Solutions undertake all the necessary legal, tax and registration work and lifetime peace of mind can then be enjoyed by both the person or people putting the house into Trust and by the eventual beneficiaries of that Trust. Furthermore, if these beneficiaries so chose, they can continue to hold the house in Trust for their lifetimes and those of their children, often creating significant financial advantages relating to their own estates.

Thus, the old phrase ‘Safe as Houses’ isn’t defunct. It just requires a little Estate Planning to achieve. If you would like to know more then I’ll come and explain it in a clear and straightforward way.

Dying with Dignity (August 2011)

There can be few people who look forward to dying but I am pleased to say it is a subject that people have become more open about and are now discussing with their families. Young people are receiving much better instruction on the subject through the teaching of Philosophy and Ethics and the older generation are happier to discuss their wishes with their children and even their grandchildren.

Should senility, degenerative illness or an accident lead us to a point where we cannot communicate clearly then to have in place an ‘Advance Decision’ can be very helpful to your family and ensure that your wishes in such a condition are clear. This document, (previously known as a ‘Living Will’ or an ‘Advance Directive’) is something that I help people prepare. It requires careful thought and wording and each one can be individually tailored to personal wishes. In essence it leaves very clear instructions if you are unable to communicate clearly for your Doctor and Welfare Attorneys relating to the course of treatment you would like them to follow.

Safeguarding Family Happiness (July 2011)

We want to live our lives to the full and enjoy the opportunities that we create for ourselves by the way in which we live. We are remarkably dependant for our happiness on our families, friends and neighbours. Our security in terms of self esteem and having the confidence to step out into life is undoubtedly related to the support that we have. This will often go back more than one generation. The forethought and planning of grandparents can have a profound influence on the lives of their grandchildren.

I have listened to many life stories and anecdotal accounts and I have noticed that opportunities in life and ‘good luck’ often seem to come to those who step out with a degree of vision and forward planning, whereas those who are continuously caught on the back foot seem to miss out. Sometimes ‘Last Minute Harry’s’ get away with it, but mostly they don’t. By ‘failing to plan for their families’ they are actually ‘planning for their families to fail’. This may seem harsh, but without the security that forward planning brings families as ‘secure entities’ are undoubtedly much weaker.

‘Forward planning’ can relate to day to day events or the longer term. Both are important for family security and happiness. Children and grandchildren understand this. My role is to help people with the longer term planning. There is a lot that can be done to achieve the security families so need and I aim to make it as straightforward as possible. If, to that forward planning question that a child or grandchild may quite innocently ask, you would like to be able to honestly answer ‘Yes’.... then give me a ring on 01900 828641 or 07745 225 491.

Trusts : Why use them? (June 2011)

Trusts are very effective in ensuring that what you want to achieve as an outcome does actually happen. Trusts have legal identities of their own which means that assets can be held outside of personal estates and so they are not vulnerable to loss in the way that personal assets are. Trusts have longevity, typically 125 years if that is required.

Trusts can be created during a lifetime (such as putting a whole house into Trust to protect it) or after someone has died through their Will directing that a Trust is to be created and assets placed into it. Many of the Wills I create for married or partnered couples who own their own homes will protect the first deceased’s assets from being lost during the remainder of the lifetime of their spouse or partner. Typically it is the children of the first deceased who will be the beneficiaries of the Trust on ‘second death’. At the discretion of the Trustees, assets held in Trust are still available to be made use of by the surviving spouse or partner.

I am an Associate of Collective Legal Solutions (their representative in Cumbria) and at our Head Office in Sheffield are a highly qualified team of people who create the legal documents that incorporate within them the Trusts. We will provide ongoing expert guidance and help if required, including assistance with Probate. We aim to provide a high quality local service at ‘not silly prices’ whilst benefitting from having the advice of some of the best legal minds in the North of England to hand. We work to ensure your family actually does inherit!

Property or Asset Transfers (May 2011)

Does it make sense to transfer our home or other investment assets to our children as a way of trying to mitigate Inheritance Tax or the loss of an estate to Care Fees? It is a common question from people in retirement.

Well, with a twinkle in my eye, I often suggest they should learn to SKI (Spend Kids Inheritance) or emigrate to New Zealand where they don’t have Inheritance Tax or Capital Gains Tax. But, I find our senior generation find it quite hard to spend money on themselves (wartime childhoods & rationing) and the climate in NZ is no better than here and it is a long way from the grandchildren!

Typically, strategies to avoid Inheritance Tax that involve a property transfer are very likely to fall foul of other forms of taxation such as Pre Owned Asset Tax rules, Gifts with Reservation of Benefit rules and have Capital Gains Tax implications for the recipient. In addition, there can be serious other implications if the recipient divorces, goes bankrupt or is sued. It can get very complicated very quickly! Fortunately, I have access to a Chartered Tax Adviser who can advise accordingly and give clear unbiased advice.

Generally people decide that small scale gifting of investment assets and the making use of Trusts is the safest way to proceed. Trusts can be very effective in protecting assets and have the added bonus that whatever is eventually left in a Trust can only reach the original nominated beneficiaries, or their offspring.

Ring me if you would like to know more about how to protect the assets you have. It is what I do for people.

Safeguarding Family Assets (April 2011)

Recently a couple commented they had enjoyed our appointment and that they were surprised how quickly nearly three hours had passed. Over coffee we had discussed their longer term aspirations concerning what they would like their children to be able to inherit and explored a number of estate planning solutions to different issues.

They said they really wanted their home to definitely be able to be kept in the family for their children, grandchildren and great grandchildren to enjoy as a family holiday home. To guarantee this we agreed to place it into a Property Trust right away with themselves and the children as the Trustees. This takes it out of their estate for most purposes and reduces any professional Probate fees on their estate by about the same as it costs to put it into Trust now.

They also have saving and investment assets. They wanted these to remain available to the surviving spouse but also not to be lost to any potential Care Fees that spouse may incur. Again, by use of a Trust we have been able to bring this about.

The question of a potential decline in mental capacity was discussed. We have ensured that decision making concerning financial and welfare matters will stay within the family and does not default to a Government appointed Deputy.

Partnered? (March 2011)

The modern concept of two people living as partners needs careful consideration from an Estate Planning viewpoint. As yet, the Law does not recognise ‘partnership’. Sometimes people who have suffered bereavement or divorce gradually move into a partnership relationship with another person where effectively they become reliant on each other. Putting in place appropriate estate new planning arrangements is very important.

An example : two bereaved people in their seventies, both with children. They both own houses but don’t have much spare cash. One sells their house and moves in with the other and over the years they gradually spend the cash generated. The one who owns the house dies. The surviving partner finds themselves homeless, with no cash and with nothing to one day pass onto their children. This is clearly not a desirable or equitable outcome.

This can be quite easily avoided. With appropriate Estate Planning the surviving partner could legally have the right to continue to live in the property their partner owned and on their death the assets can be equitably split between the children of both partners. A much better outcome for all concerned. It does not cost silly money to put in place such arrangements and it gives huge peace of mind to everybody.

Professional Excellence As Standard (February 2011)

I am part of one of the leading Estate Planning Companies in Britain ‘Collective Legal Solutions’ whose Head Office is in Sheffield. Within the Company there is extensive expertise on hand to advise on and create documents for even the most complicated of personal or commercial circumstances.

We specialise in providing solutions for people who have concerns about Care Fees, Inheritance Tax, Capital Gains Tax and the Administration of Probate. We are able to provide solutions for clients because we directly employ specialists within the Company.

We have two Chartered Tax Advisers covering personal and commercial tax issues. We have a Solicitor whose technical expertise is widely sought after across the North of England and a considerable number of people with Law degrees and Society of Trust and Estate Practitioner qualifications. We also employ other specialist Solicitors to work on specific cases such as where we are putting a whole house into Trust and undertaking a First Registration with the Land Registry.

All this expertise enables Collective Legal Solutions to provide a first class service to clients. I undertake a detailed and careful assessment of every client’s personal circumstances and listen carefully to what they would like to achieve.

We are very competitive on price and I aim to bring to the people of Cumbria a really professional service. I cover the whole of Cumbria and in the last six years have provided some 800 clients with the Estate Planning Solutions they have been looking for. In addition to my own ‘wills-in-cumbria’ website the company website is www.collectivelegalsolutions.co.uk

Clearing the Last Hurdle (January 2011)

Hurdles are obstacles that trip up the unwary. Life inevitably throws a few at us all; some pop up quite unexpectedly, others can be anticipated and steered around. In a steeplechase race, the runners know that to have a chance of actually winning they must clear the last hurdle.

Most people spend their lives being careful, trying to anticipate potentially difficult circumstances so that they are not caught unaware. Financial prudence undoubtedly gives security and comfort to people and it is a perfectly natural desire to wish to create and preserve assets that we can pass on to our families.

Unfortunately, many people just fail to anticipate the last hurdle. For some, even giving it a moment’s thought is too much and some actually believe that ignoring it is the way to make it go away. Meanwhile, other people are engaging the help of an Estate Planning Specialist to ensure the last hurdle does not strip them of the inheritance they had planned to go to their family.

Christmas is Family Time (December 2010)

“We have been meaning to do this for years, thank you so much for getting it all sorted.” Many times this year people have said something on these lines to me at the completion of our meetings. The sense of relief in people’s voices is palpable, as if a heavy weight had been lifted from their shoulders. They know they can simply get on and enjoy the rest of their lives secure in the knowledge they have done their part in safeguarding their assets for their loved ones.

Christmas can conjure emotions of many kinds, but it is a time when we are reminded about how profoundly important ‘family’ is. This word has many meanings but at the heart of them is a sense of identity, a reminder to each of us of who we are and of our responsibilities in life. Each of us is part of a rich jigsaw, each contributes to the well being of others and they in turn contribute to our well being.

What we say and do defines each of us. However, of the two, ‘actions speak louder than words’. In providing for the well being of other people this is generally true. If we really want to achieve something we know that talking about it is a necessary preliminary, but that this, if not followed by action, has no outcome.

Christmas can provide an opportunity for families to meet and talk. It is a time for us to rejoice in the event it beholds and to show our love for our families and those around us. It is a time for those of us who know we have responsibilities but have, as yet, to act on them, to make a promise to ourselves to do so. It is my job to quietly provide the means by which everyone can achieve this.

Why Trusts are so Useful (October 2010)

Trusts are a highly effective means of ensuring that assets such as property and financial investments do actually reach the intended beneficiaries. We live in a society where there are many means by which assets can be lost from a family...divorce, care fees, bankruptcy, being sued, a surviving partner remarrying or making a new Will, plus of course, through Capital Gains or Inheritance Tax.

This is where Trusts are so useful. They can be encompassed within a Will or exist outside of one and there are many different types of Trusts to address particular issues. Trusted people, strangely enough called Trustees, are appointed to ‘look after’ the assets placed into Trust. They can usually be beneficiaries of the Trust themselves. Trustees will normally allow a surviving spouse or partner to make full use of the assets in Trust.

We create Trusts to protect assets. Once assets, such as a house or money, are in Trust with nominated beneficiaries they are out of the estate of the person who placed them into the Trust and therefore ‘ring fenced’ for those beneficiaries. It is as simple as that.

Many people are worried about Care Fees taking away the inheritance they would like their children to have. Use of Trusts can guarantee assets do reach the children. The variety of Trusts is huge, Disabled Children Trusts, Business Trusts, even a Trust to ensure the kids don’t squander the inheritance they receive called a ‘Family Wealth Protection Trust’ ! Ah, now there is an idea...

What is for sure is that people who ask for help and advice will be more successful in safeguarding their assets than those who just think ‘It’ll be alright on the night’ because we all know it won’t !

Lifetime Property Trusts - Have Taken Off ! (September 2010)

I am currently seeing a surge of people who are wishing to FULLY protect their home from its loss to Care Fees, a remarriage situation or any other threat to it actually reaching their children intact. As my Legal Team at Collective Legal Solutions are STEP exam qualified (Society of Trust and Estate Practitioners) and we employ a Chartered Tax Adviser I am able to offer this top-end service to the people of Cumbria. It is a huge relief for people who fear that their beneficiaries (usually their children) could otherwise inherit very little. It is important it is put in place well before there are any indications of long term illness or of the homeowner needing Care. I will happily come and provide full details to anyone requesting an appointment.

I am now in my sixth year of providing fully comprehensive Estate Planning services. I aim to provide everyone with an exemplary service providing a full range of bespoke services each tailored to suit the individual circumstances of the people I meet. Where people need time to make important decisions, they have just that. I find people greatly appreciate the careful and considered way in which I approach things and I am grateful to the many people who have passed on their appreciation by telling their family and friends about how I work.

I have lived in Cockermouth for the last 21 years and it is wonderful to see this little town getting back on its feet following ‘the flood’. I congratulate the many builders who are restoring Main Street to ‘better than it was’ and I urge us all to make use of the services local people are providing; it is the only way by which our town will prosper.

The Government wants You to do Nothing (July 2010)

‘Estate Planning’ doesn’t sound the most exciting of subjects, but for those who do not do any they can guarantee that when their time comes, as it does to all of us, ‘their name will be mud’. The Coalition Government’s Emergency Budget on 22nd June is unsurprisingly designed to maximise the amount of tax it can squeeze out of us, both when we are alive but also when we ‘have passed on to greater things’. In the latter case the Government sees us as easy targets, especially those of us who have done nothing to protect our assets.

The freezing of higher rate thresholds for Income Tax until 2013/14, the increase in Capital Gains Tax to 28% for higher rate tax payers with no allowance for the effects of inflation and the freezing of the Inheritance Tax threshold for the duration of this parliament are all designed to ensure that an ever increasing amount of people’s income, assets and estate will go to the Government.

So what can we do ? We can plan ahead and make use of Trusts. These have the potential to reduce the loss of an estate by unnecessary means, primarily caused by people thinking ‘it will be alright on the night’. That is what the Government wants you to think because that is the way it maximises its revenue from unsuspecting people.

Lifetime Property Trusts: Total House Protection (June 2010)

Lifetime Property Trusts are an exciting development as they enable the TOTAL VALUE of your house to be absolutely guaranteed to reach the beneficiaries of your estate. Whether you are single, married, partnered or widowed we can ensure that your children or other intended beneficiaries will receive the full value of your property, irrespective of whether anyone requires residential care. Your house is ‘ring fenced’ in Trust. This is truly good news. It also means that your house won’t ever be one of those 70,000 a year in the UK that are sold to fund ‘Care Fees’.

Many people have existing Property and Asset Protection Trust Wills that are highly effective at protecting half the value of a property. As people revise these they are increasingly upgrading to the full protection a Lifetime Property Trust provides. It can also protect cash assets and provides full flexibility for people to move house and have the next house similarly protected.

There are a number of other potential benefits to a Lifetime Property Trust. It reduces professional Probate fees because the property isn’t in the estate. If the beneficiaries continue to hold the property in trust it prevents the loss of the property in any divorce proceedings they may become involved in or if they were ever declared bankrupt the house cannot be seized by creditors.

If you would like to know more or simply can’t believe what you are reading, give me a ring for a personal discussion about Lifetime Property Trusts. I also provide a comprehensive Will Writing and Estate Administration Service.

70,000 Homes ‘Lost’ to Care Fees : Why ? (May 2010)

70,000 is the average number of homes a year in the UK that are sold to pay someone’s Care Fees. Why ? The main reason is that people do not plan ahead or believe that ‘it will never happen to me’. These homes are compulsory purchased by Local Authorities because the person needing the Care still owns their own home in their own name. If you are concerned that you or your parents may face the loss of the bulk of the family estate to Care Fees then you need to act. If you leave doing anything until it becomes evident someone is likely to need Care then you are too late because ‘deliberate deprivation’ rules apply and the Local Authority will go to Court to get the money back.

What can you do ? Talk to me for a start. In addition to my own experience in helping people through this issue Collective Legal Solutions (of whom I am an Associate) employ a Chartered Tax Adviser who will oversee all cases where there are potential tax issues, perhaps relating to Capital Gains Tax or Inheritance Tax.

In my experience, concern that your home is far from guaranteed to pass to your intended beneficiaries does focus people’s minds. You do actually have to be proactive. Having the appropriate Wills in place plays its part but a Will only becomes effective once someone has died. To fully protect the house there has to be a ‘Lifetime’ solution. If you would like to know more, make an appointment for me to come and talk to you.

Sponsoring Our Young People - the Cockermouth Himalaya World Challenge 2011 (May 2010)

Once in a while something comes along that really grabs your attention. Something where you think ‘Wow, that is such a great undertaking’. Through my work, helping people prepare their Wills, I have learnt that when people are gifting to people or charities their main hope is that their donation will really make a difference. Helping young people, the less fortunate, those with medical conditions and those in remote places are common themes.

A year from now, in July 2011, some fifty young people from Cockermouth are going to attempt to do all of these things. With minimal organisational help from adults they are going out to a remote area of the Himalayas to try to fulfil an extraordinary challenge. They will be hiking through seriously difficult terrain, to over 5,000 metres in height (that is about 18,000 feet) and embarking on helping the local communities in the areas they visit. They will truly be ambassadors of this little town. This is real character forming stuff. I suspect for many of them it will be a ‘once in a lifetime’ opportunity. They have got to get themselves into top physical condition and have real mental strength, self determination and self belief.

To be really effective and make a lasting difference they need to have the means to do so. The ‘Community Project’ aspect of the trip is central to the whole experience. Where they are going a sum of £500 will buy an easily maintained Water Pump, several miles of water piping, redecorate a village school and fund essential medical instruments for a village clinic. Our young people want to be able to do these kinds of things. They are working really hard at trying to raise money, Saturday jobs, baking cakes, baby sitting, cooking meals, doing the ironing....but it is hard for them to raise the sorts of sums they need. It would be ‘a good thing to do’ if those of us with greater earning potential or with some ‘put away’ funds could give them a little helping hand to make their endeavour a real success.

A special account has been set up in the Cockermouth branch of the Cumberland Building Society called ‘Cockermouth Himalaya World Challenge 2011’. For the next year anyone in Cockermouth and the surrounding villages who makes a Will through my business ‘Wills-in-Cumbria’ will have 25% of the income I earn from that donated to this fund. They will be directly contributing to the fund as well as preparing for their family a piece of legal documentation that all adults should have.

This account is open for anyone to contribute to, young or old. The staff at The Cumberland will happily draw up a list of sponsors or you can gift anonymously if you wish. A presentation to the young people involved, to which all sponsors will be invited, of the total sum raised is planned for June 2011.

This Himalaya trip will hugely influence the young people from Cockermouth who partake in it. I wish to encourage them and.....Well, when I was their age someone sponsored me to be part of an amazing sea and land based experience called ‘Operation Drake’. Now it is time to pass on that gift to the next generation, to some remarkable young people here in Cockermouth. I hope you also feel you can in a small way contribute to making their experience a life defining moment for each of them. It was for me.

Protection from Inheritance Tax (April 2010)

The announcement in last month’s Budget that the Inheritance Tax threshold is to be held at £325k for single and partnered people and £650k for married or civil partnered couples for at least the next four years merits some discussion on how to avoid 40% of our estates above that limit disappearing into the vaults of The Treasury. A change of Government is unlikely to reverse this.

The problem many people face is that the bulk of their assets are actually capital assets in the form of property or they are tied into their businesses. They are uncomfortable about other people owning their house (what happens if they divorce or go bankrupt?) and people want to retain a reasonable cushion of cash into old age.

How do you and I protect our assets both whilst we are alive and after we have gone? The rich and famous all seem to manage it with country estates passing from one generation to another. If being a ‘Non Dom’ in Belize isn’t on the cards, then we need to do some ‘Estate Planning’ here at home. Traditional style Wills are ineffective in protecting from Inheritance Tax unless you give the whole of your estate above the threshold to charity.

The answer lies in the use of a Trust or Trusts. A Trust has a legal identity of its own and is managed by Trustees, who can be the beneficiaries of the Trust. I specialise in helping people place assets into Trust, either property during their lifetime or all assets on ‘first death’. These Trusts can also be effective in protecting an estate from disappearing in Care Fees. If you would like to know more about how this works then ring me for a free initial consultation at your convenience.

My Job as an Estate Planner (March 2010)

The job title ‘Estate Planning Specialist’ sounds rather grand and I have been asked if I plan out country estates for a living. Well, no, I don’t. My job is to help people through the process of planning how to ensure that the assets they have spent their lives building up do actually reach their intended beneficiaries intact once they themselves ‘pass on to greater things’.

This requires a detailed evaluation of the assets of people so we can assess what the potential ‘threats’ to the estate may be. The common ones are Care Fees, Capital Gains Tax, Inheritance Tax, divorces and ‘grown up’ children who squander assets. With careful analysis it is often possible to elect to put assets into a Trust, either during your lifetime or on death as a way of protecting them. There are many different types of trusts that can be used and giving advice on this is a key part of the job. [Furthermore, in relation to Inheritance Tax many business assets will qualify for Business Property Relief and many working farms qualify for Agricultural Relief. This means they are exempt from Inheritance Tax.] Detailed and careful notes need to be prepared for Executors to assist them and we will often include a professional trustee to shoulder the legal responsibilities and advise people accordingly.

I will always make a thorough evaluation of the assets and wishes of every client before making recommendations. Once all is clear and agreed I will oversee the production of all necessary documents and the signing and witnessing of them. It is an interesting and varied job. I have now helped 700 or so people in this area through this process and a consultation is free. Are the documents expensive? No, typically to protect assets with legally watertight documents costs a few hundred pounds, or the same as a few days in a care home. A full breakdown of cost is provided before we proceed, with no hidden extras. To be pro-active brings ‘peace of mind’ for all concerned.

Grant of Probate : Why you need it… (February 2010)

If someone has died leaving assets of more than £5,000 the Executors of the Will must first apply for Probate to be granted before making any distribution. I am currently helping several people through this process. It involves compiling a detailed list of the value of all the assets that the deceased had, including that of property. Perhaps the greatest assistance anyone can give their Executors is to keep an up to date record of their assets and keep it ‘where it will be found easily’. A common occurrence is that Executors don’t discover assets and the financial institutions that hold them are not obliged to tell them, even if they suspect the person is deceased.

Probate is required so that HMRC can establish if the deceased owed them any money in the form of unpaid Income Tax, Capital Gains Tax or Inheritance Tax. If they do, this must be paid personally by the Executors before the Grant of Probate is made. This little ‘Parthian Shot’ to the Executors can be a real shock to people. Much better to keep on top of tax issues….

The Probate paperwork and the Will are sent to The Courts in Carlisle and then the Executors are asked to an interview there to verify what they wrote is true. Once any tax has been paid by the Executors the Grant of Probate is made allowing them to distribute the estate. Many people now have Wills that create a Trust so as to ‘ring fence’ assets against their loss in their partner’s Care Fees. I can help with this and normally the Executors become the Trustees of that Trust.

Where everything is in order and there is a valid Will the whole Probate process can be achieved in a month or so without significant expense. If there is no Will, it is likely to take six months or more and be an expensive and divisive nightmare for the family. Enough said.

New Year Advice from Richard Johnson (January 2010)

We all know a little bit of forward planning can go a long way, but it is very important that this planning is carefully done. I offer a free Wills review service and I continue to be shocked by the number of unintentional deductions and well known pitfalls that people allow to be written into their Wills.

I visited a couple recently where he had a Will and she did not. He proudly told me that his Will had been written for free by his Union and it ‘got round the Care Fees issue’. Knowing there was no such thing as a ‘free lunch’ I offered to read it. The Union’s solicitors had appointed themselves as his Executors/Trustees with no contract of payment in place (bye-bye to a significant amount of his estate) and his estate was to pass directly to their children in an attempt to prevent its loss in his wife’s potential Care Fees.

‘Oh dear !’. Local Authorities have long since successfully challenged in court such arrangements. He also had not considered that if any of his children went bankrupt or divorced then his wife would lose the house because it was part of the children’s assets.

Thus, if you have solicitors or banks appointed as executors/trustees without an agreed contract for payment then you need to change this or accept the consequences in terms of what your intended beneficiaries actually get. Much the best solution to the Care Fees issue is to use a Property or Asset Protection Trust Will that establishes a legally recognized Trust on death with your spouse/partner and the children as the beneficiaries. This will legally protect those assets.

I offer a confidential appointment in your own home at a time to suit you. I live in Cockermouth and I am part of ‘Collective Legal Solutions’ with £3m of professional indemnity insurance.

Planning your affairs has never been more important….. (November 2009)

In times of economic hardship we should all consider taking stock, thinking about the future and planning and protecting what we have worked hard for. We’re all aware of the collapse of high street banks, the crash of major high street names like Woolworths and the farce that is MP’s expenses. If nothing else, the times we live in demonstrate why planning ahead and protecting your assets and loved ones has never been more important.

I talk daily to people who are rightly concerned about intestacy situations (where someone dies leaving no Will). Sometimes it is the grown up children who ring me up when they realize their parents aren’t immortal and either don’t have Wills or they have ones that don’t prevent an estate disappearing in Care Fees. Most people are aware that the law gives married couples and civil partners some limited protection, very few people realize this does NOT extend to co-habiting or partnered people. The modern trend in this direction has opened up a real ‘time-bomb’ of future distress for these people if they do not have Wills in place. Any children or other blood relation of a deceased partner will inherit, not the partner, even if you have been together for 20 years. If you are co-habiting there is no legal contract between you and your partner, in the event of mishap only a legally valid Will gives you inheritance security.

I am here to help. At Wills-in-Cumbria I pride myself on quality of service, fair pricing and my ability to make estate planning and protection of assets as straight forward as possible. It is my view everyone with any assets, married or not, should have a Will in place, if you haven’t I will gladly help you achieve this ‘peace of mind’.

E-mail: richard@wills-in-cumbria.co.uk        Tel: 01900 828641        Mob: 07745 225491

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