Salus 2021 Edition

SALUS – WEALTH AND FAMILY PROTECTION private client FROM GELDARDS 2021

Salus was one of the first Roman goddesses, the goddess of safety and wellbeing (welfare, health and prosperity) of both individuals and the state. Salus Magazine is brought to you by the Private Client team at Geldards to help you protect your wealth and family. LAURA ALLISS +44 (0)29 2039 1842 [email protected] FIONA APTHORPE +44 (0)1332 254 124 [email protected] JACLYN BARNES +44 (0)115 983 3667 [email protected] JANE COWLEY +44 (0)115 983 3747 [email protected] CLAIRE DEAN +44 (0)1332 378 311 [email protected] GAYNOR DICKENS +44 (0)29 2038 6524 [email protected] ANNE GEORGE +44 (0)29 2038 6538 [email protected] CLAIRE JOHNSON +44 (0)29 2039 1728 [email protected] REBECCA STOJAK +44 (0)1332 378 378 [email protected] ERICA THOMSON +44 (0)115 983 3745 [email protected] DAVID WILLIAMS +44 (0)115 983 3757 [email protected]

FOREWORD Welcome to the 2021 edition of Geldards legal and lifestyle magazine, Salus. As we enter the New Year, it is tradition for many of us to reflect on the past year and think about what we want to achieve in the coming year. It is fair to say that the past year has been one we will never forget both professionally and personally. As a business we have faced and overcome many challenges relatively successfully and I am confident we will continue to do so this year. Personally, if 2020 has taught us anything it is that managing our own affairs and planning for the future for both ourselves and our loved ones is the one thing that is in our control and best interest. In this latest edition we look at some of the recent opportunities and changes that need to be considered when planning for your future including how to protect your will from challenge, why passing homes to children is not always the best option and things to consider when remarrying. As always, our aim is to find ways to deliver sometimes complex, but important matters in a more informal, easy to digest manner and advise you of some areas of important legal planning you may not have considered but will assist in protecting you and your loved ones. I hope you find this edition helpful and wish you and your family the best for 2021. David Williams Chairman Geldards

CONTENTS P6/9 P10/12 FAMILY MEDIATION THERE IS MORE TO GIFTS THAN JUST GIVING P20/25 P26/31 WEDDING BELLS THINKING OF PUTTING THE SECOND TIME AROUND FAMILY HOME IN THE NAMES OF THE CHILDREN......? 4

P13 P14/15 P16/19 WHEN BUSINESS DIGITALISATION: A BANKING DREAMING OF - GETS PERSONAL REVOLUTION HORSE OWNERSHIP P32/35 P36/39 P40/41 COMMUNITY FOUNDATIONS & IS YOUR WILL SAFE FROM AT A GLANCE - PHILANTHROPY CHALLENGE? CIVIL PARTNERSHIPS 5

FAMILY MEDIATION: HELPING BOTH HUSBAND AND WIFE ON THEIR TERMS

Claire Dean Geldards I am often asked: The two roles are very different. A can I help both solicitor acts for one party against parties to a divorce? the other and advises. A mediator The answer is yes - will meet with both parties to a not as a solicitor, relationship to help resolve their but as a mediator. differences together. The mediation process could not be more different to that offered by solicitors and the Courts. Also, the cost of mediation is in the region of only a quarter of that of solicitors’ fees. A Court case can cost anything north of £20,000 each. The cost of mediation is significantly less than litigation and the costs are usually split between the parties. The purpose of this article is to outline a few of those critical differences between the process of mediation and the more traditional route of seeking legal advice. 7

Firstly, the mediation process is a The process of mediation whilst voluntary process. You are not forced being different to the Court process into the process and if it is not for you is however, recognised and valued there is no obligation to attend. by the Courts. Our current Court system is struggling to cope with Secondly, the process is designed demand. There are lengthy delays and to be progressive, allowing both proceedings in Court are extremely parties to self regulate the outcome costly. Judges may not specialise of their relationship in terms of the in the area of law before them. relationship itself and decisions Outcomes cannot be guaranteed and to be made concerning children Judges often do not devote the time to and finances. The parties to the a case that it deserves. By comparison, mediation decide what it is important mediation is much cheaper, it is to discuss and set their own agendas. speedy and outcomes are checked and Discussions take place at their own achieved with the client’s input and pace and each session lasts for a agreement. period of time that they consider suitable to put forward their opinions. Most importantly a mediation is child Let’s face, it clients plan their own and family focused. It builds in time marriage, why can’t they plan their for close examination of families own divorce. and the impacts of separation on all family members. It is a valued means Mediation is designed to be a ‘safe’ of minimising upset, trauma and process in which both parties are disruption to those family members. treated equally and in a fair and balanced manner. The mediator Without doubt, relationship is unbiased and equal handed. breakdowns are traumatic and it Discussions progress in a constructive is often difficult for individuals to forum allowing each party the chance know what their options are. The of retaining a degree of civility and consequences of the breakdown of respect to each other in the future. a relationship can be lifelong. In my experience most people want to The parties to a mediation are settle their differences fairly and encouraged to feel confident in cost effectively. Family mediation discussing matters of concern. is an alternative method of dispute This is engrained in the mediation resolution that is family specific and process and indeed the negotiations bespoke and allows parties to develop are themselves ‘without prejudice’ and discuss realistic and practical and cannot be used in any Court settlement options in a non-hostile proceedings. environment. 8

Mediation is designed to be a ‘safe’ process in which both parties are treated equally and in a fair and balanced manner. 9

THERE IS MORE TO GIFTS THAN JUST GIVING There can be many reasons The laws on gifting can be complex; how For capital gains tax purposes, if you for gifting including wanting they can be made simpler for both the give away an asset that has appreciated to help somebody who is in government and the taxpayer has been in value during your period of financial difficulty or seeking reported upon numerous times by the ownership then a capital gain has been to reduce the value of your Office of Tax Simplification. made. The value of the gain needs to estate in order to mitigate be determined and the recipient of the inheritance tax exposure Many recommendations for the asset needs to be considered. It for your heirs. Whatever simplification have been made and the may be necessary to report this gain the motivation, the tax government are considering the to HM Revenue and Customs under consequences of making the proposals. This article examines the Self-Assessment system and pay gift need to be understood. the current rules but these may well capital gains tax. At this time there are change in the near future. The key four different rates of capital gains tax: message, therefore, is to keep any gift 10%, 18%, 20%, and 28% and there planning under review with the are many potential reliefs that could benefit of professional advice. be available. It is advisable to take professional advice upon your specific Currently, when making gifts two circumstances. Further, you may want main taxes must be considered: to take advice as to whether or not you inheritance tax and capital gains tax. wish to make a claim to “hold-over” the Depending upon the asset that you are gain -in other words, to pass the asset planning to give away, there may be with the gain to the new owner so that other taxes that need to be considered. the new owner will pay the capital gains tax when they dispose of the asset. 10

Jaclyn Barnes Geldards For inheritance tax, gifts of any amount to a • Gifts made to individuals who are marrying. UK domiciled spouse or civil partner, or, to a Each parent can give a child £5,000 on UK registered charity or political party are the occasion of the child’s marriage and a exempt. In addition, the following exemptions grandparent can give a grandchild £2,500 on are available. marriage. • Small gifts of £250 per annum (this can • Gifts made for family maintenance. Lifetime be given to any number of individuals, but gifts made to a spouse or civil partner, to a not to the same recipient as the annual child or to a dependent relative for support exemption). and maintenance are exempt from IHT. • Gifts covered by the annual exemption of • Gifts made as regular payments out of £3,000 per tax year. This exemption can be income rather than out of capital. In very carried forward for one year only. In any tax general terms, to qualify as a gifts out of year therefore, a husband and a wife could income the gifts must be part of the normal each give away £6,000, if neither has used expenditure of the donor, paid out of income the exemption in the previous year. and leave the donor with sufficient income to maintain their usual standard of living. 11

Whatever the Changes to the way some of these for the personal representatives motivation for giving, exemptions work is under discussion, and the recipients of lifetime gifts if the importance of particularly the exemption in certain inaccurate reports are made to HM accurate record circumstances for gifts made out Revenue and Customs. keeping cannot be of income as it is felt this is often overstated. misunderstood and difficult to If you are an attorney making gifts evidence. Other suggested changes on behalf of the donor, there is include shortening the ‘7 year rule’ heightened need to keep records. to 5 years. Staying informed about In these circumstances the ability available exemptions can help you to make gifts is very restricted and take advantage of them and can save advice should be taken to ensure that significant inheritance tax. you do not act outside of your powers. Whatever the motivation for giving, At Geldards, our Private Client team the importance of accurate record has a wealth of experience in dealing keeping cannot be overstated. The with all aspects of gifting. We can Personal Representatives of your work with you and your other key estate will have to report and make advisors to ensure that whatever your declarations to HM Revenue and motivation, your gifts are compliant Customs as to your lifetime giving and part of a well-considered strategy when dealing with your estate. There in line with your overall estate can be civil and criminal penalties planning and succession goals. 12

WHEN BUSINESS GETS PERSONAL Erica Thomson Geldards Geldards Private Juggling business and family Providing financial security for a Client Partner, Erica commitments is never easy, nor is business owner’s family, as well Thomson, discusses finding the time to plan for the future. as ensuring the continuity of a the importance of However, planning is essential to business can be equally as important. harmonisation. assist in avoiding the storing up of Reviewing the company articles of unnecessary tax bills, preventing association and any shareholder family friction and ensuring the agreement in conjunction with a Will, ongoing success of a business. will help to ensure a business is not disrupted unduly in the event of an It is vital that personal planning unexpected death. It allows business dealing with an unexpected death owners to direct who should take over works in harmony with provisions the running of a business, as well as made in company documents. Many who should benefit from its value. business owners would ideally want to Some businesses may be concerned to be in a position to buy out the interest ensure a family member or particular of a deceased shareholder in order to person should inherit shares and/or get on with running the business. The have a say in the running of a business. deceased family can then be provided For other businesses, it may be for from the sale proceeds. essential that surviving shareholders are able to purchase shares to prevent Making sure an appropriate Will is family becoming involved. Either in place which works in conjunction way, the legal documentation must with shareholder provisions and clearly state what is to happen and company articles of association can give a practical mechanism to enable assist in protecting the future running shares to be purchased if appropriate. of a business, secure the value of The use of insurance and cross option shareholders interests and mitigate agreements may facilitate this. inheritance tax. Working with other professionals, Valuable relief from Inheritance such as accountants and financial Tax (Business Relief) may attach to advisers who are closely connected business assets and the importance to a business is essential in providing of having an appropriately drafted a clear and joined up approach to a Will to capture and ring fence such business owners personal planning. assets cannot be over emphasised. At Geldards, our Private Client team This can ensure financial provision work closely with other professionals, for a spouse, partner or wider family as well as our Corporate team, to member and secure significant ensure business owners have peace of Inheritance Tax savings. A simple Will mind knowing their personal as well is unlikely to achieve this. as business affairs are protected. 13

DIGITALISATION: A BANKING REVOLUTION

Digitalisation – Indeed for many, phones have deem it suitable for the task at hand; offering access, developed from what might now be in the knowledge that a telephone efficiency and seen as the rather one-dimensional conversation or a face-to-face meeting speed – it seems, is function of placing and receiving calls, with their local bank manager are at everywhere. to not far short of a one-stop shop for all times equally available to them. everything and anything we might Digitalisation enables us to improve need to get us through our daily lives. our service offering to customers Banking is no exception. because it allows us to offer them a greater choice on how they would The move to digital has proved prefer to interact with us. a momentous change in the way customers interact with their banks, Phil Trueman, Individual Banking with easily-downloadable, often Manager, Handelsbanken Derby, says: highly-sophisticated, apps allowing “Whilst developing the digital tools them to do anything – from checking our customers need in order to be their bank statement to applying for a able to manage their finances online mortgage – at the click of a button. enhances the services we offer for our The move to digital has proved a momentous change in the way customers interact with their banks The flexibility that digitalisation customers we believe being available, in banking offers customers is over the phone and in person is vital. important. It provides customers with options, allowing them to perform “We are committed to a banking model the everyday, transactional elements that is based on long-term, face-to- of their banking whenever and face relationships with our customers. wherever suits them; and allowing This enables us to understand each them to access information and make customer’s specific needs and to offer decisions quickly and swiftly. them the tailored solutions to meet these. It would be hard to argue that digitalisation hasn’t made a marked “Our UK-wide branch network ensures improvement on the service banks are that, whilst we are there for our able to provide their customers. customers digitally, we are also “on the ground” and available in person, At Handelsbanken however, we see it should a customer want to speak to as just that – an improvement, another their bank manager directly. door open and another route available for our customers to interact with us. “In our mind, having the option to speak face to face with a real person For us, our digital offering is simply who you know and who knows you, another communication channel our remains key – especially when it customers can opt to use, should they comes to making financial decisions.” 15

DREAMING OF HORSE OWNERSHIP Each edition we take a look at more luxurious purchases you can make. We all spend a lot of time contemplating how to invest, protect and earn our money, but sometimes we all deserve to be a little self-indulgent. For this edition we talk to top international eventers, Jonty Evans and Lucinda Fredericks, about interesting ways people are investing in their passion for horses. 16

Three-day eventing is Joining a syndicate, owning a horse, S:How did you come to crowd fund Art? or helping to crowd fund a horse, is an J:As a rider I not only ride and compete one of the only high- exciting way to be involved in horse my own horses but also horses owned ownership (without the mucking out by other people. Art was one such risk Olympic sports at 6am on a wet December morning). horse that was owned by other people. The horses can compete at any level I started to ride Art in 2011 and where men and women of eventing, from a young horse we quickly started to move up the learning the ropes at BE80 to a more rankings. Art and I competed at the compete on an equal experienced horse competing at an Rio Olympics for Ireland where we International 5* competition. Often came ninth; At Rio there were only footing. the owners are invited to watch their three combinations jumping double horse compete (with the coveted clears; Art and I were one of them. It is seen as one of the ultimate “owners” badge and the Event Horse equestrian challenges, where the Owners Association hospitality) and After our success Art became a very horse and rider must work in unison, get regular updates on how their valuable horse and in 2017 Art’s like two halves of one whole, to tackle training is going together with their owners confirmed that he would be three separate phases: Dressage which horse’s progress in competitions. put up for sale as they wanted to ‘cash is often described as horses dancing in’ on our success at the Olympics. with their riders in harmony where We talk to top international eventers, Unfortunately, with other horses and the bystander often can’t even see Jonty Evans and Lucinda Fredericks financial commitments I just couldn’t the rider’s aids; Cross country where about their experiences of other afford the £500,000 that was being the horse and rider’s endurance and people owning the horses they ride. asked for Art. Art is the Torvill to my jumping capability are tested against Dean, we are part of a whole, he has the clock over approximately 4 Jonty was a member of the Irish always been more than ‘just’ a horse miles of varied terrain; and the Show Eventing team and crowd funded to me – I needed to find a way to keep Jumping phase where the horse and his Olympic horse, Cooley Rorkes him. rider must navigate over a compact Drift (better known as “Art”). On 3 course of brightly coloured jumps June 2018 while Jonty and Art were I clearly remember the day when with lightweight poles that are easily competing at the CIC4* Tattersalls we first thought of the possibility knocked off. After the scores are International Horse Trials in Ireland of crowd funding, I was sat at the added up, the horse and rider with the Jonty had a fall and was in a coma for kitchen table talking about what we lowest scores win. six weeks. Jonty is continuing his could do to keep Art. I had exhausted recovery and together with Art every other avenue but couldn’t let You may think that if you don’t ride, returned to the public eye at Belton him go up the drive in a box to a new or know people who ride, you can’t International Horse Trials in 2019, home without trying everything and “actively” be involved in three-day where they took part in a dressage anything – that is how the crowd eventing, other than going to watch an demonstration. Art was one of the funding came about. It was always event such as Badminton or Chatsworth first top horses to be crowd funded. (and still is) very important that I - wrong! With people owning horses for was totally honest about the crowd top riders to event, syndicates enabling S:How did you get into riding? funding process and Art’s abilities. individuals to own a share of often very J: My mother was horsey, I always I wanted people to be fully aware of expensive horses (frequently worth loved horses, it was a way of life and what they were giving their hard- hundreds of thousands of pounds) inevitable that I would also ride. I earned money to. People could and crowd funding becoming more wanted to know how to ride and do it donate what ever they felt they prevalent the opportunities to be well – it was a quest to be the best I were able to give. actively involved in three-day eventing could be and still is. is becoming more accessible. 17

I set up the crowd funding website is up to on the Facebook page - where world’s biggest 5* Events (Burghley, and £63,000 was raised in the first 24 we are going to be and when / where Badminton and Kentucky). Lucinda’s hours! The last £60,000 was raised in we would be competing so people can horse, Headley Britannia, was the last 24 hours. I had set a deadline come and watch us in action and come the first mare in 53 years to win of 10 August as Art and I were due and say “hello”. I love the support that Badminton and the only mare to to go to the European Eventing we receive; the people who have put have won Badminton, Burghley and Championships in Poland as part of in money are part of our journey and Kentucky. the Irish team but couldn’t go if Art’s mine and Art’s story. ownership had not been fully resolved. S:How did you first get into riding? I only reached the target by 9 August! Details on Jonty Evans and Art can be L:As a little girl I always loved horses I was very fortunate to have two very found on his Facebook page: and pestered my parents to let me large donations for Art also. en-gb.facebook.com/jontyeventing have riding lessons. I would ‘beg steal and borrow’ horses and ponies to ride. S:How can the crowd funders be Lucinda Fredericks is an Olympic involved in your and Art’s journey? Silver medal winning eventer who By the time I was 12 I was already J:Art really is the ‘people’s horse’, I is a former team GB and Australian riding seriously. I knew that I wanted keep everyone updated on what Art member. She has won 3 of the to be an eventer and work with horses.

I was 100% dedicated and passionate embryos transferred to surrogate the horses, then an annual fee which about the sport. The rest is history! mares – the first two (of 7) produced goes towards the horses upkeep and my stallion, Britannia’s Mail, and my eventing fees. S:How did you come to offer some of mare, Little Britannia. They were your horses to people to invest in as offered as part of the “Britannia People who invest in the Britannia part of a syndicate? Legacy Syndicate” from about 6 Legacy Syndicate get regular updates, L:Over the years I have always ridden months old as they were the only two depending on the time of year and horses owned by other people. The foals ever born the year both parents when the horses are competing. syndicate came about as people were competing at the Olympics and it Syndicate members feel more like wanted an affordable way to be was a unique opportunity for people to part of the family and are encouraged actively involved with eventing, be part of something so special. to come to watch the horses compete. without the cost of owning all of the horse. S:How does the syndicate work? Details on the Britannia Legacy L:The Britannia Legacy Syndicate is Syndicate can be found at: After I had won Badminton with unique as people invest in both of the www.lucindafredericks.com/ my Olympic Silver medal winning syndicate horses, not just one. There brits-legacy-syndicate. mare, Headley Britannia, I had some is an upfront cost to buy a % share in Led by nationally renowned expert Rebecca Rebecca Stojak Stojak, the Geldards equine team advises everyone Geldards from equine related companies, breeders, dealers, livery owners, professional riders / trainers to individuals on all aspects of equine law including contentious disputes and non-contentious areas such as contracts. If you are a horse owner considering having someone ride your horse, or starting a syndicate / crowd funding your horse; alternatively, if you are considering buying into a syndicate, give Rebecca a call or email her to discuss how we can help you with your query.

WEDDING BELLS SECOND TIME AROUND 20

Wedding season is no longer the Gaynor Dickens preserve of the younger generation. Geldards Older couples in England and Wales are getting married in greater numbers than ever. 21

There has been a sharp rise in recent In Harmony wedding (when it’s called a post-nup years in later life brides and grooms agreement) so there is no argument tying the knot, with 46% more over Being a little bit older does have its that one party has been pressurised the age of 65 doing so (but also an compensations; perhaps you don’t into signing the agreement for fear of increase in later life divorces)! have to worry so much about money the wedding being called off. now and many couples getting So, if you are busy planning the together in later life agree on a All of this is not very romantic I hear perfect wedding, perhaps weighing up what’s mine is mine and what’s your you say, but far more practical than whether to get married on the beach is yours approach. A very useful way the stress, heartache and expense that in Hawaii (as you can afford to this of reflecting this is in a prenuptial could come from trying to sort out time around) or inviting your best agreement. If your first marriage a division of assets in the event of a friends and no one else (because you ended in divorce you may know how separation when your financial affairs can), a review of personal planning difficult it can be if things go wrong. may have become more intertwined ahead of the big day should also A prenuptial agreement can help and therefore more complicated to feature high up on the to do list. iron out potential issues by putting unravel. everything down in writing so you Are your grown-up children really both know where you stand, and Like any important insurance policy delighted for you or, are they just a the children can be reassured their pre and post-nups do need to be teeny bit worried that your newly inheritance won’t be lost were you reviewed regularly (in the same way loved-up self will leave all their ever to split. you would a Will) but are an extremely inheritance to your new partner? useful tool providing real peace of So, what is a pre-nup? Basically, it’s a mind for couples embarking on new Whose house are you going to live in? contract signed by you both before you relationships second time around. You can’t bear the wallpaper chosen get married which sets out what you by his ex-wife but for some reason he want to happen if the marriage breaks Mixing It Up seems to love it. You might even decide down. Provided you both have proper that keeping separate homes will legal advice, have fully disclosed Even if each of you is financially suit you best. The joy of embarking your finances to your partner and the independent this time around on a new chapter, with all your life agreement is fair the court should and keen to keep your finances experiences, good and bad behind you, uphold it. separate, most couples will inevitably should be that you know what you accumulate some shared assets as want and needn’t conform to anyone At this stage in life both of you may they go forward together. You may else’s expectations. have already inherited or be expecting well decide to pool resources in terms to inherit something from your of a home to share and perhaps at At this stage in life, along with parents. You are likely to want to make some stage re-arrange your savings clocking up experience and insight sure you can pass this on in turn to your and income streams to maximise tax into what works for you, you are likely own offspring (a concern your parents efficiency between you. to have accumulated more money, may well share)! A pre-nup (or post- pension savings and other assets. nup if you have already tied the knot) If you are moving money and assets Along with the challenge extended is an ideal way to address this natural around in this way, it’s sensible to take families may inevitably pose, joining concern around inherited wealth. some legal and financial planning forces with a new life partner and advice, not least to make sure you harmonising your two worlds can be a But please don’t ask your lawyer to don’t unintentionally trigger an little more complicated than first time prepare one 2 days before the wedding unwelcome tax charge. There is a tax around, even if you feel as madly in (a pre-nup made in haste is unlikely trap, for example, if one of you is being love as you did when you were 21! to be upheld)! If you have run out added to the mortgage in exchange for of time, better to do one after the a share in the property which could 22



You may well take the view that you are going to have a jolly good go at ‘spending the kids’ inheritance’ as you embark on this exciting new chapter of your life (and why not)! result in you being liable for stamp Where There’s A Will…… from a legal and financial perspective duty (or land transaction tax in Wales). and a lot of ill will amongst the You may well take the view that you extended family)! Whilst planning ahead is a good are going to have a jolly good go at idea, generally speaking, any actual ‘spending the kids’ inheritance’ as you It is an important message that for rearrangement of your money and embark on this exciting new chapter asset protection and optimum tax assets between you may be best done of your life (and why not)! efficiency very simple ‘mirror image after the wedding to take advantage of Wills’ are unlikely to be suitable for tax exemptions and other advantages Having said that, for the most part those embarking on a second marriage: which apply between married couples people don’t wish to positively (in relation to inheritance tax and disinherit their children. It’s a sobering • It’s likely to be appropriate for capital gains tax, for example). thought then that a high number you and your spouse to make at of estate disputes involve children least some provision for each It is important that the way in disinherited by a step parent, often other in your Wills. Indeed, a which you co-own any shared assets through accident rather than design. surviving spouse can bring a is appropriately documented, for claim on the estate under the example, you may intend to co-own It’s vital, therefore, that you review Inheritance (Provision for Family your house as ‘tenants in common’ your Will planning in the context of & Dependants) Act 1975 if there so that you each have a distinct your new circumstances. You may is not reasonable provision made share which you can pass on to your be content to maintain the Wills you for him or her on the death of intended beneficiaries after the already have in place in favour of your the first spouse (with what is lifetime of you both (rather than the own children. However, unless the ‘reasonable’ depending on all the property automatically belonging to existing Wills were made expressly circumstances at that time). Far the survivor of you). contemplating your new marriage, better to make positive provision they will be automatically revoked by making a new Will and keeping Your lawyer can help you draw up on your wedding day. This could leave it under review than to leave your some simple documents to reflect the you both without any Wills at all (with loved ones with an expensive and understanding between you. potentially very messy consequences drawn out legal dispute to resolve. 24

• A very positive reason for Making provision for the survivor You should make sure your lawyer and reviewing and updating your Will of you in your Will may mean your financial adviser talk to each other planning is to take advantage of children having to wait longer for so that you can benefit from joined the exemption from inheritance their inheritance or perhaps you up advice in this context and make tax and related allowances which would prefer to leave your assets to properly informed decisions. apply between spouses. your spouse outright to keep things simple. Perhaps it may be appropriate Looking Ahead With careful planning and expert and tax efficient in that case to advice it should be possible to pass some or all the benefit of your Whether you are planning your big structure your Wills including pension on to your children instead day and contemplating a harmonious trust arrangements designed (making sure you have an appropriate future together or have already taken to provide for the survivor expression of wish in place addressed the plunge and are enjoying your new of you, protect and advance to the pension trustees). horizons, it pays to spend some time capital for the benefit of your focusing on your legal and financial respective children, and defer any Or it may be feasible and you may wish planning. It’s one of the most positive inheritance tax until after the to consider diverting pension death things you can do for each other (and lifetime of you both, with scope benefits into a trust from which both those others close to you). to significantly reduce the tax your spouse, and in due course your bill your respective children and children, may benefit at the discretion Guided by expert advice, it needn’t be other beneficiaries will pay after of trustees chosen by you (instead of difficult or complicated to identify the lifetime of you both. your spouse inheriting your pension and do what’s right for you, providing outright and the fund potentially you with real peace of mind in the Thinking In The Round passing on only to his or her children process and leaving you free to focus after the lifetime of you both). on less weighty matters! It’s is also important to think and plan holistically, for example, to consider Specialist advice is key in this context your pension, which will usually pass because of the complexity of pensions outside of any Will you make. and related tax rules. 25

THINKING OF Claire Johnson PUTTING THE Geldards FAMILY HOME IN THE NAMES OF THE CHILDREN……? It’s a question we are asked Whatever the reason, our home tends quite regularly: should we be to be our most significant asset both putting the house in the name in monetary terms and the security it of the children or perhaps into represents. Any steps which affect it a trust of some sort? need careful consideration. Most people know or have heard about In fact, there are significant risks someone else doing this, perhaps in around giving the family home the hope of preventing the value of away, whether to your nearest and the house being eaten up in paying for dearest, or into some form of trust care in later life, or with the idea that arrangement for you and the family. giving the property away may save There are also plenty of misconcep- inheritance tax. tions about what may or may not be achieved in the process. They may have seen adverts or been approached by companies actively In this article, we look at some of the selling trust arrangements over the key issues you need to consider if you family home as a way of protecting may be contemplating transferring their assets. the house to other family members or into trust and seek to dispel some of the myths and misconceptions. 26



Making An Outright Gift Of Your It’s worth noting that different Most family House To The Children Whilst You inheritance tax rules apply if you relationships have Are Living share ownership of your home with their ups and downs. a child of yours who also lives there Giving away your Your house will be vulnerable to the with you and will continue to do so. home could change circumstances and choices of others the family dynamic. Broadly speaking, provided you retain Your home will be at risk to claims on a share of the property for yourself it by others, for example, if one of your and your child continues to live in children goes through a divorce, or the property ongoing, you share the gets into debt or predeceases you. outgoings proportionately, or you You may feel confident that this is continue to meet all the outgoings unlikely to be an issue within your regardless of the size of the share family. You may be content that your of the property you have kept for children will always look after you. yourself, the reservation of benefit However, in any family, circumstances rules should not apply. can change unexpectedly in ways which may be beyond your children’s It is also possible to avoid the control. reservation of benefit trap if you pay a full market rent to remain living Your sense of security in your home in the property you have given away. may be affected Such rental arrangements between you and your children are likely to be Most family relationships have their closely scrutinised by HMRC when it ups and downs. Giving away your home comes to working out any inheritance could change the family dynamic. tax due after your lifetime. It will be In principle, your children could put important that your heirs are able your house up for sale or take out a to show that a full market rent was mortgage on it. If they consider it being paid by you (in line with what would be best for you to move into would have been expected between a care home in later life, you might an unconnected landlord and tenant). feel pressed to do this perhaps sooner In the meantime, they will need to than you might otherwise have declare and pay income tax on the contemplated. If you fall out with rent they are receiving from you. family members who own your home They will also pay capital gains tax this could leave you feeling insecure. when the property is eventually sold if the house has gone up in value since You may trust your children you transferred it to them (because unreservedly, but they could be main residence relief will not apply to influenced or put under pressure by a property they own but do not live in). others such as by their spouse, partner or their own children. There are certain other scenarios, including some ‘granny annex’ You won’t necessarily make any arrangements between parent and Inheritance Tax savings child, where the person who has made a gift but continues to benefit If you give away your house but from what they have given away may continue to live in it this will generally be caught by an income tax charge be viewed as a ‘gift with reservation of known as ‘pre-owned’ asset tax. benefit’. Essentially, this means that HMRC will treat the property as if it The tax rules are complicated and still belongs to you when calculating expert advice on the overall tax the inheritance tax bill on your death. implications is key! 28

29

What happens if you need long term It is worth reflecting on what type of a form of trust to secure your right care care you would want should the need to remain living in the property for ever arise. You might conclude you the rest of your life (instead of your If you give your house to your children would prefer to keep your main capital ability to do so being vulnerable to the at a time when you are fit and well, asset at your disposal to have a wide a circumstances and choices of others). and a need for care is not in prospect, choice as possible of high-quality care From a capital gains tax perspective, the Local Authority may agree that the options including private care at home if your continued occupation of the value of the property is not an asset of for as long as possible (rather than property is as a beneficiary of a trust, yours when it comes to assessing your being reliant on local authority care or principal private residence relief means to pay for care you later go on on your children being able to support should be available to your trustees to need. you financially at the relevant time). when the property is one day sold (if it has risen in value since you made the However, if there is insufficient For those with significant private gift to the trust). disconnect in terms of timing or intent pension pots or other substantial between the gift and the need for care, savings out of which care home However, using a trust rather than making an outright gift is not usually If you give your house to your children effective to remove the value of the when you are fit and well, the Local property from inheritance tax in your Authority may agree that the value of the estate (because the reservation of property is not an asset of yours. benefit rules will generally still apply). Also, the powers of the Local Authority to challenge gifts which they consider to be a ‘deliberate deprivation’ of capital apply to lifetime gifts into trust in just the same way as in relation to outright gifts. the Local Authority may say the gift fees would need to be funded by There are other tax implications of a amounts to ‘deliberate deprivation them in any event, concerns around property being transferred into and of capital’. In that case you may be safeguarding the family home in the held in trust. Broadly speaking, if assessed as if you still own it. The context of long-term care may be your home is worth more than your Local Authority may refuse financial something of a red herring. available nil rate band, a gift into trust support or may even act to have the could trigger a tax charge at the time gift set-aside. There is no ‘7-year’ Putting Your Home In Trust of the gift and subsequent tax charges rule in this context or any other calculated at 10-year intervals. specific cut off point. Whether there If, for whatever reason, you are has been a deliberate deprivation of intent on passing the family home on Making a gift of your home into a capital is a question of fact in all the sooner rather than later, despite the trust arrangement from which you circumstances of each case. potential pitfalls, you should consider may benefit will usually mean you 30

will no longer have absolute control rules should not be in issue because alternative of incorporating trust over the capital value represented by the surviving spouse in need of care planning in their Wills to protect at your home but will instead be reliant has given nothing away, it is their least half the capital if the survivor of on your chosen trustees to agree to deceased spouse or partner who has them needs care. release capital to you if needed. done so under the terms of the first Will to take effect. Those intent on making a lifetime Trusts and the related tax gift of their property should considerations can be complicated. With this approach you are not giving consider some form of lifetime trust You should seek expert advice from up any control over the capital value arrangement to give them greater a regulated professional who will represented by your home whilst security. discuss the pros and cons and options you are both living. It is designed to for tailoring any trust arrangements protect and preserve the first spouse’s Whatever your situation, having the with you, so that you are able to make share of the family home in the event benefit of impartial advice from a properly informed choices. of a surviving spouse or partner regulated professional can help you needing care. to understand all the implications Planning In Your Wills To Safeguard allowing you to make well informed Your Share Of The House Moreover, there is an argument that choices. half a property is not, on its own, a Many couples own their home as joint marketable proposition and that This article is intended to provide tenants or otherwise have simple the half share of the property which some broad guidance to key points Wills under which the family home belongs to the surviving spouse or and is no substitute for specific will pass outright to the survivor of partner has a much-reduced value for advice based on your individual them in the first instance. the purposes of assessing his or her circumstances. means to self- fund care. This means An alternative is to have Wills drawn that the protective effect may in fact up to include straightforward ‘life extend to more than half the value of interest trust arrangements’ which the property. take effect on first death and also change the way you own the property Conclusion from joint tenants to tenants in common. This can ensure the survivor If you are considering a lifetime of you is able to remain living in the transfer of your home to your children property (or any substitute property) (or anyone else), it is important to for the rest of his or her life whilst examine whether the gift will actually protecting the share passing under achieve your objectives, whatever they the trust will should the survivor of may be, and all the potential benefits you remarry or need care. and risks involved. The deliberate deprivation of capital Couples may wish to consider the 31

INSIDE TRACK WHAT YOU NEED TO KNOW: COMMUNITY FOUNDATIONS & PHILANTHROPY Mention philanthropy When thinking about what of opportunities to tailor their and the likes of Bill philanthropy and philanthropists look philanthropy in ways which suit and and Melinda Gates like, we tend to think of super wealthy fulfil them. immediately spring to individuals, high profile causes and mind but there is a great private charitable foundations. Even for the very wealthy, setting deal of philanthropy up a charitable foundation is costly, going on quietly and In fact, the Greek origin of the word time consuming and quite possibly closer to home. philanthropy translates as “what it is a daunting prospect (and not to be human” on the part of the person necessarily encouraged by the charity David Williams giving and on the part of those who commission if the causes you plan Geldards benefit. And so, in fact, we are all to support are well catered for by philanthropists at heart! existing charitable organisations). Yet, we know from experience that, When we talk to our clients about for many people, the idea of being strategies for passing on their wealth able to do something very direct and in their lifetime and beyond, providing personal and to invest in communities for those closest to them is, naturally, close to them or close to their heart is the priority. Many would also like to really appealing. do something philanthropic in the wider sense of the word. However, For these reasons, the work of they are often unsure where or Community Foundations which when to start and perhaps unaware often goes on discreetly and unsung 32

comes as a revelation for many. These About Community Foundations Foundations work in a bespoke way to support individuals in achieving their Originally established in communities wherever they philanthropic objectives by matching the US in 1914, Community live across Britain. They them with the needs of communities Foundations have become address the widest possible and allowing them to have as much or as established across the world range of issues and intervene little direct involvement as they want. with over 1700 in existence in the hardest to reach including a network of 46 communities by directing Community foundations are usually organisations covering the donors to fund causes that endowment-based charities, with whole of the United Kingdom they are not only passionate a mission to support their local providing an unparalleled about but that will make the communities in perpetuity. They reach into local communities. most difference. specialise in supporting community Each Community Foundation groups with small grants, usually around has an in depth understanding Every year, Community £5,000, which make a huge difference. of their local area, what the Foundations provides grants priority needs are and how totalling over £98 million to These local charities and community best to address these issues. support a wide range of local groups are often forgotten and projects on a range of issues, underfunded in comparison to the Community Foundations such as poverty alleviation; more well-known charity brands, but enable local people to give emergency crisis response; can be critically important for local right to the heart of their and youth engagement. communities. 33

Each Community Foundation has “Every donor is different and we an in depth understanding of their can be flexible and agile to this. We local area, what the priority needs can support donors who want to be are and how best to address these hands-on, to fully understand the issues. They are able to direct donors communities they are supporting and to fund causes that they are not only then to see the difference they are passionate about but that will make making. We also support donors who the most difference. are happy to trust us and our expertise in grant-making.’’ Community Foundations are the only way for local people to give right to the When it comes to legacy in the more heart of their communities wherever literal sense, a recent Cabinet Office they live across Britain. They address study found that people were three the widest possible range of issues times more likely to leave gifts in their and intervene in the hardest to reach Will to causes they felt passionately communities. about if their solicitor reminded them that this was something they might Community Foundations support local wish to consider. It’s a real shame projects on a range of issues, such as to think of all those philanthropic poverty alleviation; emergency crisis intentions simply not captured. response; and youth engagement. Moreover, many people are unaware The network of accredited Community that, if they are considering giving a Foundations gives grants totalling sizeable amount to charity after their over £98.3 million annually, making lifetime there is scope to structure them one of the UK’s largest grant- their Wills with the benefit of expert giving organisations. advice to take advantage of a reduced rate of inheritance tax leaving their Richard Williams, chief executive of non-charitable beneficiaries better off Community Foundation Wales, said: “We too (“a win-win”)! recognise the importance of community groups in local communities, where If you are thinking of making every day they make a real difference to philanthropy a part of your estate the lives of people. planning strategy it’s well worth seeking advice from professionals “Community foundations are able who specialise in this area. They can to work closely and personally with help you structure your giving to best our donors, sharing our expertise effect so you and the causes you want on charitable giving and what to support get the most out of your communities need, so that clients giving. know with confidence that their gifts are being put to best use and making the biggest difference. 34

For more details about your local community foundations, contact: Community Foundation Wales Richard Williams, Chief Executive 02920 356696 [email protected] Derbyshire Community Foundation Rachael Grime, Chief Executive 01773 525861 [email protected] Nottinghamshire Community Foundation Nina Dauban, Chief Executive 01623 620 202 [email protected] Other areas of the UK Find your nearest community foundation: www.ukcommunityfoundations.org/ our-network 35

IS YOUR WILL Laura Alliss SAFE FROM Geldards CHALLENGE? Press reports spilling out the Many people assume they have an What is clear from the twists and turns details of ordinary families at absolute right to leave their money and of the caselaw in this area is that the war over the estate of a loved property as they see fit when they die. success or failure of any claim under the one appear with increasing In fact, the law provides a framework Inheritance Act will turn on the specific regularity. It’s no longer all under the Inheritance (Provision for facts of the case. The Court will take into about celebrity names and Families and Dependants) Act 1975 account all of the relevant facts and then the mega rich, those caught where certain categories of people make a value judgment as to whether up in these disputes are often disappointed by the provision made for reasonable financial provision has been ordinary families. them or lack of it can bring a claim for provided and if not, what provision reasonable financial provision. should be made. The categories of people who can bring a Those thinking about making a claim claim under the Inheritance Act include on an estate or, indeed, those who stand children of the deceased (and those to lose out if a successful claim is made, treated on a similar footing), spouses, should seek expert legal advice as former spouses (who have not re- soon as possible. This will help them to married), long term co-habiting partners understand the strengths, weaknesses and other individuals who were being of any claim, the time limits involved and “maintained” by the deceased. the options for resolving the dispute as speedily and cost efficiently as possible. 36

SOME CASES HITTING THE HEADLINES... Long running Daughter’s claim Daughter expected battle over on father’s estate to live within her mother’s will rejected means Heather Ilott was estranged from In contrast, in October 2016, Danielle In the 2019 case of Wellesley v her mother Melita Jackson for 26 Ames’ claim to a share of her father’s Wellesley, Ms Wellesley who had been years after leaving home at the age estate worth in the region of £1m, estranged from her family for some of 17 in 1978 to live with the man she which had been left to Danielle’s step 30 years was left a sum of £20,000 in went on to marry. She was reliant mother Elaine, was roundly rejected her father’s Will. The large part of his on state benefits with a net annual by the court. Danielle who was not estate was left to his son and there income of around £20,000. In her Will, working claimed that she and her was also provision for his latest wife her mother left the majority of her family struggled financially and had and step-children. Ms Wellesley’s half a million pound estate to three an expectation that her father would claimed that her family had treated charities and made no provision for provide for her in his will. The judge her badly and been at fault in causing Heather. The battle over the Will rejected these claims and decided their estrangement. It was argued spanned 10 years going all the way to that Elaine’s financial needs far on her behalf that her ADHD left the Supreme Court. The sum awarded outweighed those of Danielle and her unable to work and reliant on to Heather when the case first came that Elaine would need the whole benefits and that as a matter of public to court was increased threefold on of her husband’s estate to meet her policy she should have more from appeal but eventually, in 2017, the reasonable needs. The Judge also her father’s estate instead of being Supreme Court reinstated the original pointed out that her father had supported from the public purse. The award. The outcome was that Heather already given her a financial helping court decided that her own behaviour received the still sizeable sum of hand to start her own business when and attitude made her the author of £50,000 contrary to her mother’s she was younger and that she had the family estrangement. It was held wishes and was decided on the basis made a ‘lifestyle choice’ not to work that she appeared able to live within that her income (including benefits) after having children. her means taking into account the was insufficient to meet her modest benefits she received, and that her everyday expenses of living ADHD was not ultimately a barrier to her working. Lady Hale commented “The law has not, or not yet, recognised a public interest in expecting or obliging parents to support their adult children so as to save public money” whilst another judge pointed out that, unlike some continental countries, we do not have a system of forced heirship and that “the starting point is testamentary freedom”. 37

Plan now to avoid families falling out There has been a sharp spike in Will disputes and claims on estates by disappointed beneficiaries in recent years with a reported 60% increase in court cases in the last year alone. This is only the tip of the iceberg, as we know that many more cases are settled out of court after months or even years of expensive legal wrangling. What can be done to ensure the provision you wish to make for those you want to benefit from your estate is as robust as possible from challenge? 1 Make a 2 3Stop it being Beware of 4 A bit on Will thrown out the mirror the side Make a Will. This sounds Make sure your Will isn’t Simple mirror Wills are A side letter separate to obvious but 2 out of 3 thrown out on a technicality: not usually appropriate your Will may be useful to don’t. The way in which an a) Seek professional help to in a second relationship explain your reasons for estate is divided up under make sure the wording is clear scenario. Children from choosing one beneficiary the intestacy rules won’t and unambiguous and that a previous relationship over another, but necessarily reflect family the document is signed in line being disinherited by a step professional input is vital circumstances, particularly with strict legal formalities; parent is a common cause to make sure what you say for those co-habiting, those b) Avoid beneficiaries being of dispute. Wills including will actually help fend off a who are separated but not involved in the process of you trust arrangements can claim rather than provide yet divorced or those who making a Will, to fend off any protect the inheritance ammunition for it. want to exclude a particular argument that you may have of the children on second family member. been unduly influenced; death whilst providing for c) A solicitor can assess and the surviving partner or record that a person making spouse in the meantime. a Will understands what they are doing and isn’t being influenced by anyone else, otherwise, a Will made by someone in later life or who has health issues is particu- larly vulnerable to challenge by a disappointed beneficiary. 38

5 Make 6 Trouble 7 Talk it provisions abroad over Making some measured Different rules apply to Think about discussing your Moreover, with the benefit provision for a person property overseas. Some plans for passing on money of specialist legal advice who may otherwise have a countries including France and property when you die it is usually possible to claim on your estate may be have ‘forced heirship’ with those affected. This structure your Will and better than leaving those rules meaning you cannot is particularly relevant if provision from outside you do wish to benefit disinherit your children or treating all your children of your estate (from your with an expensive, drawn other nearest relatives. You equally in strict monetary pension or life insurance out and distressing legal will need separate advice terms is difficult or not held in trust, for example), dispute to deal with. A from a local lawyer and appropriate. This might be to achieve a ‘fair’ outcome tactic sometimes used is possibly a separate Will the case, for example, if one overall in these situations. to include a legacy in your to deal with the overseas of them has health issues or Will for someone you might property. In some countries if there is a family business otherwise want to exclude it may be possible to make which some but not all of on condition they do not an election for the law of the children are involved challenge the Will. This England & Wales to apply in. Managing expectations won’t prevent them from giving you greater freedom may help to ward off family making a challenge but may to pass the property on as disharmony in future. make them think twice. you wish. 39

AT A GLANCE CIVIL PARTNERSHIPS What is a civil partnership and how does it differ from same sex or opposite sex marriage? 40

AT A GLANCE 1 A civil partnership is a form of civil union giving same-sex, and now opposite sex, couples effectively the same rights and responsibilities as married couples. It can end only on death, dissolution (a formal legal process akin to divorce) or annulment. 2 Civil partners have the same property rights as married couples, the same exemptions on inheritance tax, the same social security and pension benefits and will be treated as next of kin. In addition, civil partners are able to acquire parental responsibilities as a step-parent and may also apply for child arrangement orders in respect of relevant children. 3 Same-sex marriage was legalised in 2014 and the law was also changed to allow those in civil partnerships to convert their partnership into a marriage. Civil partnerships remained as an alternative but only to same sex couples. However, from December 2019 opposite sex couples in England and Wales have been able to enter into civil partnerships, but the new opposite sex civil partnerships cannot be converted into marriages. 4 On dissolution either partner may apply to the Court, which can then make a wide range of financial orders designed to achieve a fair result recognising the length of the relationship/civil partnership, the couple’s financial resources and needs and the needs of any children of the relationship. The court may make maintenance and lump sum orders, orders for sale or transfer of property and pension sharing orders. 5 Statistics suggest that Government estimates of the numbers of people entering civil partnerships were less than a fifth of the actual amount. It remains to be seen how popular civil partnerships will be with couples as an alternative to traditional marriage. Note : References to the law is to that applicable in England and Wales. 41

S

This briefing note is intended solely as an overview of the law in England and Wales. It was last updated on 3rd February 2021. No responsibility can be accepted for the complete-ness or private client accuracy of this briefing note and professional advice should be taken in relation on to any specific matter. Geldards LLP is a limited liability partnership registered in England and Wales (OC313172) and is authorised and regulated by the Solicitors Regulation Authority. A list of Geldards LLP members is available for inspection at our registered office at 4 Capital Quarter, Tyndall Street, Cardiff CF10 4BZ. We use the word ‘Partner’ to refer to a member of the LLP or an employee of an equivalent standing and qualification. At Geldards LLP we recognise the benefit of working closely with other professional advisors such as accountants, investment managers and financial advisors to ensure a joined-up approach to our clients’ legal, tax and financial planning. The other advisors included in this publication are not being actively promoted by Geldards LLP. The opinions, beliefs and viewpoints expressed by the other advisors do not necessarily reflect the opinions, beliefs and viewpoints of Geldards LLP and Geldards shall not be held liable for any statements made or content written by third parties.

OFFICES S Cardiff private client 4 Capital Quarter Tyndall Street Cardiff CF10 4BZ Tel: +44 (0)29 2023 8239 Derby Number One Pride Place Pride Park Derby DE24 8QR Tel: +44 (0)1332 331 631 London 80 Coleman Street London EC2R 5BJ Tel: +44 (0)20 7620 0888 Nottingham The Arc Enterprise Way Nottingham NG2 1EN Tel: +44 (0)115 983 3650 GENERAL geldards.com +44 (0)844 736 0006* @geldards *Please note that the cost of calling our 0844 numbers will include a “service” charge of 6p per minute and an “access” charge from your phone company. Geldards will not receive any payment from the call charges.