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Estate planning for life’s journey

Probate fee increase put on hold as MoJ runs out of time

Palmers Solicitors Courts and Dispute Resolution, Estate planning for life’s journey, Library
Probate fee increase put on hold as MoJ runs out of time

The Ministry of Justice (MoJ) has stated that it has run out of time to push through legislation which would have seen a massive increase in probate fees introduced in May.

Fees had been due to increase, significantly in many cases, with a fixed fee of £155 (for those applying through a solicitor)  being replaced by a sliding scale. This would have meant estates worth more than £2million would have been hit with a 9,000 per cent increase and would have attracted a fee of £20,000.

However, the controversial fee increase, which had been dubbed a ‘tax on death’ and which attracted opposition from solicitors, charities, a parliamentary committee and even Conservative MPs, has now been placed on hold, with the official explanation being that this is due to the snap General Election announcement which has halted parliamentary business.

There is no confirmation from the MoJ whether this is a temporary delay or will lead to a complete scrapping of the probate fee increase and a senior Conservative declined to say if the scheme would be brought back if the Prime Minister is re-elected.

Lee McClellan, a Partner with Palmers, who specialises in Wills, Probate and Older Client Services, said: “Shortly before the increase was due to be implemented, this hugely unpopular increase in probate fees, which many viewed as a stealth tax, appears to have fallen at the final hurdle.

“Whilst this is to be welcomed, the true reasons for the postponement are open to question and whether the fee increase will be resurrected in the next Parliament or will be permanently be kicked into the long grass is at present far from clear.

“Regardless of what happens in the future, careful estate planning remains important in ensuring that your estate passes to your chosen beneficiaries in the most appropriate and cost/tax effective way possible, so you should consider your options carefully and always seek expert legal advice before taking any action you may later regret.”

For further information about our wills and probate service, please contact us.

Landmark case amends rules of inheritance to include civil partnerships

Palmers Solicitors Business News, Estate planning for life’s journey
Landmark case amends rules of inheritance to include civil partnerships

The owners of an ancestral estate in the South of England have been granted approval to amend the rules which govern their family trust so that any future gay descendants are not unfairly disadvantaged.

The Pemberton family, who have been the owners of Trumpington Hall since the 18th century, believe that they had a “moral obligation” to change the inheritance rules.

The amendments will now mean that rights will be in place for any future member of the family in a same-sex marriage or civil partnership.

Judge David Hodge, sitting at the High Court, approved the changes to the family trust, telling the court that the Pembertons “agree the changes are in the interest of their immediate family and the wider Pemberton family and give it their approval”. The court was advised that the amendment was not prompted by specific concerns that any living heirs would be excluded.

The High Court heard from the Pemberton’s lawyers that the family had recently considered the "financial, ethical and moral issues which can arise with settlements relating to substantial family wealth" and had come up with proposed changes to the family trust.

One of those changes was the "extension of the definition of spouse" in regard to inheritance rights over the property to include "any civil partner or spouse in a same sex marriage".

Judge Hodge said the present form of the family trust was "much in the style of a 19th century dynastic family settlement" which "does not include civil partners or spouses under same sex marriages.”

"The trust is in need of a much needed overhaul," he told the court. "The proposed variation will be for the benefit of the family as a whole and therefore of benefit to each individual member."

The amendment to the family trust now allows for gay partners to have a life interest in Trumpington Hall following the deaths of their spouses. Judge Hodge said: "These classes of beneficiary will be included after the variation, although there is no beneficiary of those classes in existence at this time."

Lee McClellan, a partner and expert in estate planning and trusts, said: “It is highly unusual to change a trust in this way. Thankfully, for most of us, the worries of a centuries’ old family trust is not an issue we will ever need to lose sleep over. However, this case does highlight the fact that we should all regularly review legal estate planning documents such as Wills and Lasting Powers of Attorney to ensure that they keep pace, not only with changing personal and financial circumstances but also with changing legislation.” For further information on estate planning, please contact us.

Divorcee death wrangle leads to £54million settlement delay

Palmers Solicitors Business News, Estate planning for life’s journey, Family Law, Divorce & Children
Divorcee death wrangle leads to £54million settlement delay

A former supermodel, who was awarded a record £53 million divorce settlement at the High Court in London, is being forced to wait for the money following the death of her Saudi billionaire ex-husband.

Sheikh Walid Juffali was ordered to pay Christina Estrada the lump sum, which is the largest ‘needs’ pay-out ever awarded by an English court, no later than 4pm on Friday July 29.

However, Dr Juffali died in a Zurich clinic from lung cancer a week before the payment was due.

Miss Estrada’s solicitors returned to the High Court to inform Mrs Justice Roberts – who had earlier said she awarded the lump sum to reflect the "exorbitant standard of living" and "magical" lifestyle enjoyed by their client – that the money had not been received.

Charles Howard QC, representing Miss Estrada, added that she had no “periodical payment or interest”.

But Mrs Justice Roberts said there was no need to issue an enforcement order at this stage, as she was confident that Dr Juffali’s estate would eventually pay up.

She said: “I continue to stress that Dr Juffali engaged with this process throughout his life time and following his death… I hope we will get this sorted out without the need for further litigation."

There had been fears that Miss Estrada might be forced to sue the estate’s beneficiaries – her own daughter and two step-daughters – in order to obtain her award.

Dr Juffali’s representatives have now been informed that unless the settlement is paid, a further hearing will take place in October to determine whether an enforcement order is required.

Lee McClellan, a partner and expert in estate administration matters, said: “This case highlights a number of important issues relating to the death of an estranged spouse.

“For example, in the event that Dr Juffali had died prior to the settlement order being finalised by the Court, but after the agreement had been concluded, Miss Estrada’s law team could still have argued that the parties had reached a concluded agreement – known as a Xydhias agreement – which is not yet a court order, but which you have been bound to.”

Lee continued: “In the absence of any binding agreement, the provision made for the estranged spouse would depend upon:

  • Whether the deceased left a Will;
  • If so, whether any provision is made for the estranged spouse within the Will
  • If not, what provision might be made for the estranged spouse under the intestacy rules
  • Whether or not decree absolute had been issued – if it had, the ex-spouse would not be entitled to share in the estate under the intestacy rules and if any Will pre-dated the decree absolute then the ex-spouse would no longer receive any inheritance left to them under the terms of the Will

“If the end result is that the estranged or former spouse receives no or limited benefit then they would have the right to pursue a claim against the estate [link to https://palmerslaw.co.uk/our-services/wills-trusts-probate/claiming-against-an-estate/] under the Inheritance (Provision for Family & Dependants) Act 1975 and it would be left to the Court to decide what provision, if any, is made.

“This case underlines the importance of ensuring, wherever possible, that financial orders within divorce proceedings are implemented promptly and is also a reminder that anyone separating from their spouse or partner should ensure that they have an up to date will in place which meets their current circumstances and wishes.”

For advice on all aspects of both family law and estate administration, please contact us.

Divorcee death wrangle leads to £54million settlement delay

Palmers Solicitors Business News, Estate planning for life’s journey, Family Law, Divorce & Children
Divorcee death wrangle leads to £54million settlement delay

A former supermodel, who was awarded a record £53 million divorce settlement at the High Court in London, is being forced to wait for the money following the death of her Saudi billionaire ex-husband.

Sheikh Walid Juffali was ordered to pay Christina Estrada the lump sum, which is the largest ‘needs’ pay-out ever awarded by an English court, no later than 4pm on Friday July 29.

However, Dr Juffali died in a Zurich clinic from lung cancer a week before the payment was due.

Miss Estrada’s solicitors returned to the High Court to inform Mrs Justice Roberts – who had earlier said she awarded the lump sum to reflect the "exorbitant standard of living" and "magical" lifestyle enjoyed by their client – that the money had not been received.

Charles Howard QC, representing Miss Estrada, added that she had no “periodical payment or interest”.

But Mrs Justice Roberts said there was no need to issue an enforcement order at this stage, as she was confident that Dr Juffali’s estate would eventually pay up.

She said: “I continue to stress that Dr Juffali engaged with this process throughout his life time and following his death… I hope we will get this sorted out without the need for further litigation."

There had been fears that Miss Estrada might be forced to sue the estate’s beneficiaries – her own daughter and two step-daughters – in order to obtain her award.

Dr Juffali’s representatives have now been informed that unless the settlement is paid, a further hearing will take place in October to determine whether an enforcement order is required.

Lee McClellan, a partner and expert in estate administration matters, said: “This case highlights a number of important issues relating to the death of an estranged spouse.

“For example, in the event that Dr Juffali had died prior to the settlement order being finalised by the Court, but after the agreement had been concluded, Miss Estrada’s law team could still have argued that the parties had reached a concluded agreement – known as a Xydhias agreement – which is not yet a court order, but which you have been bound to.”

Lee continued: “In the absence of any binding agreement, the provision made for the estranged spouse would depend upon:

  • Whether the deceased left a Will;
  • If so, whether any provision is made for the estranged spouse within the Will
  • If not, what provision might be made for the estranged spouse under the intestacy rules
  • Whether or not decree absolute had been issued – if it had, the ex-spouse would not be entitled to share in the estate under the intestacy rules and if any Will pre-dated the decree absolute then the ex-spouse would no longer receive any inheritance left to them under the terms of the Will

“If the end result is that the estranged or former spouse receives no or limited benefit then they would have the right to pursue a claim against the estate [link to https://palmerslaw.co.uk/our-services/wills-trusts-probate/claiming-against-an-estate/] under the Inheritance (Provision for Family & Dependants) Act 1975 and it would be left to the Court to decide what provision, if any, is made.

“This case underlines the importance of ensuring, wherever possible, that financial orders within divorce proceedings are implemented promptly and is also a reminder that anyone separating from their spouse or partner should ensure that they have an up to date will in place which meets their current circumstances and wishes.”

For advice on all aspects of both family law and estate administration, please contact us.

Holiday Lets made subject to Inheritance Tax

Palmers Solicitors Business News, Estate planning for life’s journey
Holiday Lets made subject to Inheritance Tax

A 2015 First Tier Tribunal (FTT) case may have significant implications on the inheritance tax treatment of furnished holiday letting (FHL) businesses.

In the case of Green v HMRC, the FTT assessed whether the activities conducted by Anne Green were extensive enough to rebut the assumption that her FHL business was an investment.

Mrs Green claimed 100 per cent business property relief (BPR) on the lifetime transfer of her FHL business into a trust. She argued that there was a wide spectrum of businesses involving the use of the property, ranging from the granting of a tenancy to running a hotel. The management and maintenance of her FHL was similar to that of a hotel and, unlike traditional investments, the income was not generated passively, as she provided services to her guests.

However, the FTT looked at the activities associated with her FHL business, such as management and maintenance, and concluded, on balance, that BPR should be denied because the activities performed by Mrs Green were ancillary to the business and did not override the assumption that the FHL business was one of investment.

SS 104 and 105 Inheritance Tax Act 1984 provide that an interest in a business transferred on death is relieved from inheritance tax at 100 per cent, subject to this being “relevant business property”.

In considering whether a business interest is relevant business property the Act states that:

“A business or interest in a business… [is] not relevant business property if the business… consists wholly or mainly of… making or holding investments.”

Lee McClellan, a partner and estate planning expert at Palmers, said: “It is worth noting that the legislation which deems that furnished holiday lets should be regarded as “trading” in nature for income and capital gains tax purposes, has no application to inheritance tax. “If you own or manage an FHL business, then you need to be aware of the implications of these findings, as they may impact upon the inheritance you pass on to your relatives.”

For more information on Palmers’ estate planning aimed at business owners, together with all aspects of commercial property law, please contact us.

Dementia scheme raises estate planning fears

Palmers Solicitors Business News, Estate planning for life’s journey, Library, Wills, Trusts & Probate

An NHS scheme offering a £55 payment to GPs for each patient they diagnose with dementia could have significant implications for people who have yet to make plans for their financial future.

NHS England has set aside a £5 million pot to fund the payments to GP practices for each new patient diagnosed with dementia by 31 March next year, as part of a drive to achieve an NHS target of two-thirds of patients with dementia being diagnosed by 2015.

Doctors have reacted with caution to the scheme, with the British Medical Association saying on 22 October that GPs did not need a financial incentive to do something they were already doing and that the money would be better spent supporting practices to care for dementia patients.

Now financial advisers have warned that a diagnosis of dementia could make general financial planning and estate planning more challenging, including in relation to inheritance tax (IHT) which is levied at 40 per cent on estates valued at £325,000 or more. In addition to the various available IHT reliefs and allowances, certain gifts are exempt from IHT, while more substantial assets given away will not be taken out of the estate, unless the person making the gift then survives for a further seven years.

They say financial decisions or a will made in the run-up to a dementia diagnosis could be left open to challenge and that even if someone has made a Lasting Power of Attorney (LPA) – which gives a trusted person or persons, known as an attorney, the power to make decisions about their finances and/or their health and well-being once they no longer have capacity to do so themselves – it offers little scope for estate planning once activated.

Stephen Berry, personal finance specialist at insurer NFU told the Telegraph on 2 November: “Most people are completely unaware that estate planning becomes almost impossible once an attorney takes over. This is to prevent any attempts to siphon off money to favour the attorney’s children or family over others.

“The threat of higher numbers of dementia diagnoses should spur people on to think about giving away assets earlier than they might otherwise have done, to avoid big IHT (inheritance tax) bills later on.”

Lee McClellan, a partner in Palmers’ Wills, LPAs or inheritance tax planning, please contact our Wills and Probate department.”

Our offices will close at 5:30pm on Monday 23 December and reopen at 9:00am on Thursday 2 January 2025

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