Here is the latest edition of our Newsletter which we hope you will find both interesting and informative. If you would like to receive future editions by post or email, please complete the simple subscription form.
Please click here for a pdf of the Newsletter GENERIC NEWSLETTER FOR WEB 2016
Please note that the article in the newsletter concerning Inheritance Tax was written before the Budget in July 2015 and is no longer up to date. Please contact us for more information.
The benefits of a local law firm
With today’s technology, replying to advertisements on TV, national press or a pop up on a web page couldn’t be simpler. Buying a product is one thing but is it always such a good idea to use people you do not know and will never meet for more complex services?
Talk about the problem
For example, if you were ill, would you want to discuss your condition with someone maybe hundreds of miles away by email, or would you want to see a local doctor?
Similarly with legal advice, the benefits of using local experts can far outweigh the initial convenience of the internet and can be just as cost effective.
Meet the experts
With Thomas Dunton you will have the advantage of face-to-face meetings where you can ask questions, get immediate replies and ask for clarity where necessary.
You can either call in to our local office or telephone, knowing you will be able to speak to the person handling your case and not a call centre.
Treated as a person
In all legal matters where you need reassurance, professional advice and a resolution that is right for you, a call to your local lawyer should be your first step; you will be treated as a person and not a file number.
We value the relationship we have with our clients and your needs are always our first priority.
Our continued growth has been built upon the referrals and recommendations of the many satisfied clients who have appreciated the high level of personal service and value which we provide, combined with funding options that meet their needs and constraints.
When to give (and not to give) to your children
The following article was written prior to the Budget in July 2015 and is no longer up to date.
Please contact us for further information.
Inheritance tax planning through the nil-rate band
It is safe to say that Inheritance Tax is one of the most unpopular taxes around. Along with a genuine concern that hard-earned assets will not pass to the next generation, goes a sense that those in the know have managed to avoid the tax. This article looks at one of the ways in which the Inheritance Tax bill can be reduced by careful use of the nil-rate band.
Under the law, each individual has a maximum amount that they can pass on when they die without charge to tax. This is known as the “nil-rate band” and currently stands at £325,000.
If one half of a married couple leaves their estate to the other, no Inheritance Tax is payable. As with many other taxes, transfers between spouses are exempt from Inheritance Tax. This means that the nil-rate band is not needed when the first spouse dies and, since 2007, this unused nil-rate band has become transferrable. Put simply, when the second spouse dies, both nil-rate bands can be added together, doubling the amount the couple can leave free of tax to their beneficiaries.
My husband’s got enough!
Fred and Mary Richfellow each have an estate of £800,000. As Fred is already comfortably off, Mary wants to leave her estate to her son Sam when she dies. Unsurprisingly, Sam thinks this is a great idea, but is it as good a deal for Sam as it seems?
If Mary leaves her estate to Sam, he will receive £325,000 without charge to tax. He will pay tax at 40% on the remaining £475,000, leaving him with a tax bill of £190,000.
If Mary can overcome her reluctance to further enrich her pecunious husband, she may be well advised to leave the lot to Fred. This will avoid tax completely in the short term, thanks to the spouse exemption.
What will be the tax position when Fred dies?
Fred plans to leave both his and Mary’s money to Sam. If the nil-rate band has not increased in the meantime, Sam’s eventual tax bill for his mother’s money will be the same.
There is, however, a fighting chance that the nil-rate band will increase in the future — possibly, to as much as £1,000,000 before Fred dies. This would be a huge benefit for Sam. On Fred’s death, his estate would be able to claim a double nil-rate band, and crucially, this will be at the rates in force at the date of Fred’s death. So Fred’s estate could benefit from a nil-rate band of £2,000,000, more than covering Fred and Mary’s combined estates of £1,600,000. They would have managed to pass down their entire wealth to Sam without a charge to tax… a total saving of £190,000.
But Sam needs to buy a house
Mary is won over by this argument in theory. However, she knows that Sam needs the money a lot sooner. Is there anything she can do to gain these benefits and help Sam at the same time?
If Mary is in good health and likely to survive another seven years, she can make an immediate gift to Sam of the part of her estate she is not likely to need. Once the seven years are up, there will be no charge to tax on the gift and Mary will have achieved her aim.
If this is not appropriate (perhaps Mary might want to keep the money in case she needs care), there is another option. If Mary trusts Fred, she can make a request in her will that Fred makes Sam a gift of £800,000 after her death. Fred will not be obliged to do so, but he will know that this was what Mary wanted. If Fred complies, it will not change the fact that Mary’s money will pass to Fred (under her Will) and her nil-rate band will be available for transfer. However, Fred will then make a gift of the whole amount to Sam, free of any immediate charge to Inheritance Tax.
Timely tax advice can lead to significant savings
If Fred survives for seven years after the gift, it will escape a charge to Inheritance Tax under the rules relating to lifetime gifts. If he does not, the gift will be taxed on his death, but his estate will take the double benefit from any increase in the nil-rate band in the meantime.
The chance of Sam paying the full £190,000 tax bill on Mary’s money has therefore been greatly reduced.
For more information on Wills and Lasting Powers of Attorney, please visit our website www.thomasdunton.co.uk
Helping your children to buy their first home
Many young people are struggling to find the necessary capital for a deposit to get their foot on the property ladder.
There is pressure from some in government to make it easier for parents and/or grandparents to release money from pensions so that the “bank of Mum and Dad” is more readily available.
If you are thinking of providing financial support to your children, we have given some guidance below to some of the questions that we are regularly asked.
I want to pay part of my child’s deposit. Do I make a gift or a loan?
Firstly you need to decide whether you will need the money back at any time. If the answer to this question is “yes” then the money must be loaned.
If you decide to make a gift of the deposit you need to be aware that, once paid, you have no right to reclaim the money whatever your or your child’s financial circumstances.
My child is buying the property with another person. How do I protect the investment?
If you are making a loan to your child this can be protected by a Charge being registered at the Land Registry.
If your child is raising a mortgage to finance the purchase, they will need to obtain consent for you to have a second Charge. Whilst some lenders may object initially, it is worth persevering as a Charge is the best way to secure your money.
If you are making a gift, you need to decide and document whether the gift is just to your child or to them and their partner. If the gift is to your child then you need to ensure they protect their interest by entering into a Deed of Trust and/or a Co-habitation Agreement.
Are there any taxation issues I should consider?
If you gift money to your child, provided you survive for seven years, the gift will be a potentially exempt transfer (PET) for Inheritance Tax purposes. If your child lives in the property as their principal/main residence, any gain will be exempt from Capital Gains Tax (CGT).
Gifting money to your child to invest in a property can therefore be a very efficient method of tax planning.
If you make a loan to your child any interest payable will be part of your income for tax purposes. In addition, if the loan is for a percentage share of the property, any increase in value over your annual exemption (currently £11,000) will be chargeable to CGT.
Will I need to see my own Solicitor?
The answer to this question is almost certainly yes – particularly if the money advanced is a loan. Whilst this will increase costs, if you wish to protect your and your child’s investment, it is important to ensure the nature of the transaction and the intentions of all parties are properly considered and protected.
Security for your family
Lasting Powers of Attorney
A Will only becomes effective on your death but what would happen if, through illness or accident, you were unable to make decisions or do things for yourself?
Who would look after your affairs?
Without a Lasting Power of Attorney no one would be able to access your financial accounts, pay your bills, maintain your home or arrange your personal welfare. A costly application would have to be made to Court and detailed financial accounts filed each year.
What is a Lasting Power of Attorney?
A Lasting Power of Attorney (LPA) can be drawn up which gives your Attorney the power to do anything that you, yourself, can lawfully do with your estate whilst you are living.
This Power is usually delayed until you give permission or until certain circumstances occur, for example, should you become mentally and/or physically incapacitated.
Who can be my Attorney?
Any person, or persons, of your choice whom you trust to make decisions for you and who will act in your best interests. They must be over the age of 18 and have the full mental capacity to understand the use and effect of an LPA.
What happens if you do not have an LPA?
In the event that you are unable to manage your affairs personally, it will be necessary to make an application on your behalf to the Court of Protection where a Deputy, usually a member of your family, will be appointed by the Court to manage your affairs.
They will be required to provide detailed financial accounts to the Court each year.
This may be time consuming and costly and may also cause inconvenience and distress to you and your family.
Do I really need a Will?
Yes, because it will enable you to:
• Say exactly who will benefit from your estate.
• Consider and provide financial care and guardianship for your children or future children and other dependants.
• Avoid the complications of intestacy (where you die without having made a Will);
A Will should be updated to reflect any change in your circumstances, including:
• If you have recently married or plan to;
• If you now have children or dependants;
• If you have bought a property in joint names;
• If you are contemplating divorce proceedings;
• If anyone mentioned in your Will has died;
• Changes in your financial circumstances, such as an inheritance;
• Changes in the law relating to Inheritance Tax.
If you do not have a Will
A Grant of Letters of Administration has to be obtained and your estate distributed in accordance with the Law of Intestacy.
• If you have no relatives your whole estate could go to the Crown.
• Your spouse may not automatically inherit all your estate and vice versa.
• Relatives whom you do not wish to, may receive a share of your estate and friends will not be considered.
• If you are in a long term relationship but unmarried, your partner will receive nothing.
Are you considering a Clinical Negligence claim?
Do you have a claim?
The law only enables you to claim compensation if “on the balance of probability” your medical treatment was carried out negligently and this caused your injury.
Claims must be made within three years from when you first realised you had suffered an injury.
In the case of children under 18, they can make a claim at any time up to their 21st birthday.
Negligence and Causation
For a successful claim you need to prove both Negligence and Causation.
• Negligence: that the medical attention you received fell below acceptable standards.
• Causation: that the negligence itself resulted in an injury to you.
It is not enough to prove negligence, you must also prove that you suffered an injury as a result.
Examples of Clinical Negligence
• Failing to diagnose your condition or making the wrong diagnosis.
• Making a mistake during a procedure or operation.
• Providing the wrong drug.
• Failing to warn about possible risks or side effects.
Initial action to take
Upon making a formal complaint, you should receive an apology, an explanation and assurances that the problem has been addressed and other patients are not at risk
If there has been negligence, compensation may be due to you and legal action may be required.
Instructing a Solicitor
Legal action can be costly, lengthy and very stressful. Your specialist solicitor will assess the strength of your case and possible value of the damages.
They will need the positive opinion of an independent medical expert. If a supportive report cannot be obtained, then your case will not succeed.
• Details of any injury sustained, the treatment received and your current condition.
• All expenditure resulting from injury, including all prescriptions, travel costs to hospital etc.
• Any loss of earnings and any state benefits received.
• People caring for you and the number of hours they help.
• Any activities or work you are unable to do as a result of the injury.
Funding your claim
There are various options open to you.
• Private funding: you fund the claim yourself.
• Legal Aid: now only available for birth related negligence.
• No win, no fee: also known as a Conditional Fee Agreement
• Legal Insurance: found in many home and car Insurance policies
• Trade Union: members may receive legal services
For full details of funding options and more information on Personal Injuries, please visit our dedicated website at www.injuryadvice lawyer.co.uk
For a free interview where we can assess your claim, please call Freephone 0800 146340 or email firstname.lastname@example.org
Free talks at Orpington Library
We are now into our fourth year of providing free talks on useful legal topics. There are many everyday issues that people would like advice on but are sometimes reluctant to visit a solicitor and we hope that these talks can provide some guidance. Please visit our website for details.
No such thing as a ‘common law marriage’
An increasing number of couples are now choosing to live together without marrying. Contrary to popular belief, legally there is no such thing as a ‘common law marriage’.
Couples who have chosen to live together, rather than marry, often do not realise that, if they separate, they have fewer rights than married couples even where children are involved.
Therefore it is advisable for couples already cohabiting or planning to cohabit to take steps to safeguard their position.
What happens when it all goes wrong?
Currently, unmarried couples who separate do not have an automatic entitlement to each other’s property. It comes as a shock to many who, on separating, find out how little they are protected by law.
If the house in which you live together belongs to your partner, you do not automatically have the right to continue to live there or to claim a share of the value of the property after separation, regardless of how long you have been together.
If the cohabiting couple have children, an application can be made under the Children Act 1989 for the house to be sold only when the children have grown up or for a lump sum to buy an alternative property to live in with the children. Often this lump sum has to be given back when the children are adult.
Get independent legal advice
It is important when entering into any agreement that you and your partner do so freely and voluntarily, that both of you have the benefit of independent legal advice and that full disclosure has been made of all relevant financial and other circumstances.
A Cohabitation Agreement
A Cohabitation Agreement can provide the best way of trying to ensure a secure future if things go wrong or if your partner dies or becomes seriously ill. It will set out agreements for how to proceed if the relationship ends, which can avoid problems and legal costs if you do split up.
Sounds a bit unromantic?
Possibly it may sound a bit unromantic but by being realistic at the outset it could save you both a lot of emotional and financial problems in the future.
For more information please contact us on 01689 822554 or email email@example.com
If you are contemplating divorce
If you are contemplating Separation or Divorce, it makes sense at the very least to have an initial meeting with a Family Law Solicitor who will be able to advise you on your particular circumstances and the legal options available and best suited to your situation.
Everyone’s case is different and it will be in your best interests to secure Legal advice that’s tailored to you personally. By using a solicitor, they will be able to explain any potential legal complexities that might arise on your case and help you to identify the key issues relevant in deciding the appropriate financial and other orders between you and your former partner. Failing to get proper advice at the outset could seriously prejudice your position.
For most people seeking a Divorce, the issues which cause most concern are the finances and how they will be split, where each will live and the arrangements for the children. With the benefit of an initial consultation with a Family Law Solicitor, not only will you be armed with the right information but hopefully you will also feel more confident in discussing these issues together with your former partner. It will be much easier for the two of you to try and negotiate a fair settlement (either just between the two of you or with a Mediator or through solicitors) if you both know your legal entitlements.
Cuts in Legal Aid have tempted some divorcing couples to represent themselves in Court or use Divorce Websites without any understanding of the process. The Law Society warns that cut price options are not always the best and can end up costing a lot more and adding to what is already a stressful time. An online managed Divorce is certainly not suitable in cases where there is imbalance of power between the parties, or if one or both of them are being difficult or withholding information.
At Thomas Dunton, we recommend that you get legal advice as soon as possible. We offer an initial one hour fixed fee appointment at £150, plus VAT. All your options are discussed and you can find out where you stand legally.
For more information and advice, please visit our website www.thomasduntonsolicitors.co.uk or contact us on 01689 822554 or e-mail: firstname.lastname@example.org