When a person dies “intestate” (i.e. dies without leaving a valid Will that disposes of the deceased’s estate), the distribution of that person’s assets (or “estate”) among surviving family members is governed by the intestacy rules. However, the intestacy rules, which date back to 1925, have not been comprehensively reviewed for more than 20 years and the Inheritance (Provision for Family and Dependants) Act 1975 has not been vigorously reviewed since it was enacted, although it does now cover cohabitants, civil partners and same-sex cohabitants.

The Law Commission’s recommendations are included in two draft Bills: The draft Inheritance and Trustees’ Powers Bill and the draft Inheritance (Cohabitants) Bill.

The draft Inheritance and Trustees’ Powers Bill includes provisions that would do the following:  

1. Ensure that the assets of a married couple or a couple in a civil partnership will pass on intestacy to the surviving spouse in all cases where there are no children or other descendants;

2. Amend the legal rules which currently disadvantage unmarried fathers when a child dies intestate;

3. Simplify the sharing of assets on intestacy where the deceased person was survived by a spouse and children or other descendants;

4. Protect children, who lose a parent, from the risk of losing an inheritance from that parent if they are adopted after the parent’s death;

5. Remove obstacles to family provision claims by dependants of the deceased and anyone treated by the deceased as a child of his or her family outside the context of a marriage or civil partnership;

6. Permit a claim for family provision in certain circumstances where the deceased died “domiciled” outside of England and Wales, but left property and family members or dependants in the UK; and

7. Give all trustees more flexible statutory powers over the trust’s income and capital (subject to any express provisions in the trust instrument.)

The draft Inheritance (Cohabitants) Bill gives certain unmarried partners who have lived together for five years the right to inherit on each other’s death in the event that one of them dies intestate. In instances where the couple have a child together, this entitlement to inherit would accrue after just two years’ cohabitation, provided that the child was living with the couple when the deceased died. An application to the Court under the Inheritance (Provision for Family and Dependants) Act 1975 would therefore not be required.

This change, if implemented, would give unmarried couples similar rights to married couples in instances when one person dies without leaving a Will. With an estimated 2.3m unmarried couples living together (a figure expected to rise to 3.8m by 2033), the recommendations reflect the fact that cohabitation is much more prevalent in the UK than it was 25 years ago.

However, there is of course one easy solution to the problems of intestacy: make a Will and ensure that it is regularly updated.

The Act received Royal Assent in July 2011 (click here for details) and preserves the succession rights of the descendants of a person who:

1. Disclaims (or rejects) an inheritance in an estate; or

2. Forfeits his succession rights by killing the deceased person.

The Act also amends the current law so that the children of a minor are able to inherit their parent’s interest in an intestate’s estate, where the parent died before the age of 18 without having married or formed a civil partnership.

The Act will not apply where a death occurs before the commencement of sections 1, 2 and 3 (i.e. before 1 February 2012.)

Full details of the Act are here.

In its recent second annual report on the competitiveness of the UK tax system, the Institute of Directors (IoD) has suggested that capital gains tax and inheritance tax should be merged in order to help simplify the UK tax system (much in the same way as the integration of income tax and national insurance would do.) The IoD suggests that capital gains tax should be charged on those assets held at death above a fixed and “reasonably generous” (but unspecified) threshold, and that inheritance tax could then be abolished. Its full proposals are here (see page 26.)

This is not the first time that the IoD has put forward suggestions to change the tax system – in 2007, an IoD discussion paper called for the abolition of capital gains tax and inheritance tax – and it is an idea that has been mooted by others for some time.

Following on from Spain’s possible prosecution at the hands of the European Commission for discriminating against non-residents, the Commission has now referred the Netherlands to the European Court of Justice (ECJ) for discriminatory rules on inheritance and gift duties, after it failed to amend its laws following a formal request in September 2010. Under Dutch legislation, country estates located in the Netherlands are fully or partially exempt from succession and gift duties if they are open to the public, while inheritance or gifts of country estates in other European Economic Area (EEA) States are taxed on 100 per cent of their market value. The Commission considers the difference in tax treatment to be contrary to the free movement of capital.

It is interesting, though, that UK inheritance tax laws in this area could themselves be potentially discriminatory. The UK offers a conditional exemption tax incentive (which is not limited to land in the UK) to historic houses that are open to the general public. Inheritance tax and/or capital gains tax is not paid when the qualifying property (or historic item, such as a painting or sculpture) passes to a new owner on death or is gifted. However, according to HM Revenue and Customs’ (HMRC) memorandum on ‘Capital Taxation and the National Heritage’, in order to obtain the exemption, the new owner must agree to look after the item/property, keep it in the UK if it is moveable, and allow “reasonable” public access to it. HMRC’s stipulation that public access to the property should be “reasonable” means that the relief cannot realistically be given to property or land outside the UK.

Not that the Government will be overly concerned about this.

With the EU currently threatening to sue the UK over its recently-signed tax agreement with Switzerland unless the Chancellor renegotiates it, the Government has more pressing things to worry about.

In its coalition agreement, published in July 2010, the Government stated that there was an urgent need to reform the social care system, so that individuals and carers had more control over care. Consequently, the Government set up a Commission on the funding of long-term care, led by the economist Andrew Dilnot, which investigated alternatives for funding long-term care.

After launching a call for evidence on ideas for a future social care funding system in December 2010, the Commission published its report containing the following recommendations:

1. Capping individuals’ lifetime contributions towards their care costs – which are currently potentially unlimited – to between £25,000 and £50,000, but ideally around £35,000. After the cap is reached, individuals would be eligible for full state support;

2. Means-tested support should continue, but the asset threshold, above which people are liable for their full residential care costs, should increase from £23,250 to £100,000;

3. Individuals should contribute a standard amount of between £7,000 and £10,000 to cover their living costs;

4. National eligibility criteria for social care service entitlement should be standardised, and a more objective eligibility and assessment framework should be developed by the Government;

5. Carers should be supported by improved assessments, which aim to ensure that the impact on the carer is manageable and sustainable;

6. The Government should run an awareness campaign to help people understand the system and to encourage people to plan for later life;

7. Those individuals who have entered adulthood with a care and support need should immediately be eligible for free state support, rather than being subjected to a means test; and

8. Local authorities should have sufficient government funding in order to implement these reforms.

The Dilnot Commission estimates that its proposals – based on a cap of £35,000 – would cost the State around £1.7bn per year. It believes that the combination of a cap on contributions and the higher means-tested threshold would ensure that individuals going into residential care would not have to spend more than 30 per cent of their assets on their care costs. Currently, some people can lose over 90 per cent of their assets.

The Government plans to consult on social care reform before publishing a progress report and White Paper in spring 2012.

Whilst the report is welcome and the Health Secretary, Andrew Lansley, described it as an “immensely valuable contribution”, we are in an era of public sector spending cuts and the Government will be aware of the significant costs (and year-on-year increases) of reforming the system and supporting an ageing population. Consequently, major change may still be some years away.

For the foreseeable future, individuals must consider the financial implications of meeting their care home costs and ensure that they protect their assets through careful tax and estate planning. If you would like to discuss your options, please contact me at iain.donaldson@mablaw.com.

Inheritance and gift tax in Spain are regulated at both state level and at the level of autonomous communities (i.e. local level.) Spain has 17 autonomous communities (or “Comunidades Autonomas”) and each has a territorial basis, their own government and Parliament, and broad legislative and executive powers. This legislation grants Spanish residents a number of tax benefits that, in practice, allow them to pay much lower taxes than non-residents. Consequently, Spain has been referred to the European Court of Justice on the grounds that this practice goes against the principle of free movement of people and capital within the EU, and breaches the Treaty on the Functioning of the European Union.

This is not the first time that Spain has been in trouble over this issue. In May 2010 and February 2011, the European Commission requested Spain to amend its legislation so that it complied with EU rules on inheritance and gift tax provisions. However, although Spain “tweaked” its laws, no satisfactory amendments have yet been made.

It remains to be seen how Spain will respond to the threat of legal action, and whether it will now satisfactorily change its inheritance and gift tax laws. According to the European Commission, approximately 95 per cent of infringement cases are resolved before they reach the European Court of Justice, so we shall wait and see…

The decision to investigate is based on advice given by the Legal Services Consumer Panel’s (LSCP) following its own investigation into the will-writing market, which began in summer 2010. The LSCP’s subsequent report found that many wills, prepared by both solicitors and unregulated will-writers, did not reflect the instructions of testators and contained many basic errors. Further background information is here and here.

Currently, will-writing is not a reserved legal activity in England and Wales, although the preparation of probate papers and the administration of oaths are. This means that the writing of wills is not restricted to solicitors and barristers, who are regulated by the Solicitors Regulation Authority and the Bar Standards Board respectively. With unregulated private will-writing companies now claiming to write approximately 10 per cent of all new wills, consumers who use them are often unaware that this incredibly important legal document may be written by someone who has little or no legal training.

In a related matter, yesterday’s national newspapers published details of the Legal Services Ombudsman’s plea to the Government to take action over unregulated companies that offer consumer financial services, including will-writing. The Ombudsman said that since it became operational late last year, it has received 38,155 complaints and accepted 3,768 cases for investigation – 13 per cent of which involved will-writing. The consumer organisation Which? and the Law Society have also called for more protection for consumers.

Change in the industry has already begun. In February 2011, following discussions with the Office of Fair Trading, some of the UK’s biggest banks voluntarily agreed to review and, where necessary, improve the way they sell will-writing and professional executor services to consumers.

However, any further move towards the regulation of will-writing is currently on hold: a spokeswoman for the Ministry of Justice has said that the Government will await the outcome of the LSB investigation before taking any action.

The Bill was introduced into Parliament as a Private Members’ Bill, so its passage into law was uncertain. However, because the Bill more or less implemented the recommendations of the Law Commission, it was supported by the Government – a luxury most Private Members’ Bills do not receive. 

When I discussed this legislation back in February, the Act was only a Bill and at the time there was no guarantee that it would become law. Full details of it are here. As it turned out, the Bill received few amendments during its parliamentary progress and received Royal Assent relatively quickly.

The Act will amend the law in relation to who may inherit a beneficiary’s interest which is forfeited under the Forfeiture Act 1982. The forfeiture rule prevents a person from acquiring a benefit from unlawfully killing another person.

To summarise, the Act reforms the law of succession in the following two ways:

1. If a person either disclaims an inheritance or is disqualified from receiving an inheritance by the forfeiture rule, the inheritance rights of that person’s descendants will be maintained; and

2. The children of a minor (i.e. an individual under the age of 18) will be able to inherit their parent’s interest in an intestate person’s estate where that parent died before the age of 18 and was unmarried or had not entered a civil partnership.

For full details of the changes and further background information , please click here.

At the time of writing, there is no date for when the Act will come into force.

Although the Bill’s proposals on this issue were generally supported by respondents to the consultation and the Justice Committee, the Government has decided to defer any changes, pending the outcome of the Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill, a Private Member’s Bill that is currently before Parliament and which proposes the majority of the reforms on the law of succession contained in the Civil Law Reform Bill.

The proposals in the Civil Law Reform Bill sought to amend the law of succession so that where a person was disqualified or refused an inheritance, his or her heirs were not disinherited. The Bill intended to reform the law governing the distribution of estates of deceased persons in three areas; that is whereby:

1. An inheritance is disclaimed (i.e. rejected);

2. An inheritance is forfeited (i.e. where a person has killed another person and is disqualified by the forfeiture rule from inheriting property from his or her victim); and

3. A person loses (but not forfeits or disclaims) a benefit on intestacy by dying under the age of eighteen and without having married or formed a civil partnership.

Under current common law, any children of a disqualified heir are also disqualified from inheriting. The Law Commission, after conducting its own consultation on the issue in 2003, deemed this situation to be unfair and its proposals for change were incorporated into the Civil Law Reform Bill. To back its call for change, the Law Commission cited the Court of Appeal’s 2001 ruling in Re DWS deceased, in which two grandparents, who were murdered by their only son, died intestate (i.e. without leaving a valid will) and the Court reluctantly held that the law did not allow their grandson (the murderer’s son) to inherit the property whilst the son (the murderer) was still alive.

The Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill seeks to change the law by allowing the deceased’s property to be distributed as if the potential heir had died, rather than been disqualified through forfeiture. It also addresses the current situation whereby the children of a minor, who is entitled to inherit an interest in the estate of an intestate person but who dies unmarried and without entering a civil partnership before the age of eighteen, are unable to inherit their parent’s interest in that estate.

Although the Bill is supported by the Ministry of Justice, Private Member’s Bills are not usually allocated enough parliamentary time to be debated and, thus, become law. Consequently, even with the Ministry of Justice’s backing, there is no guarantee that the Bill will become law.

The Legal Services Board, the independent body responsible for overseeing the regulation of lawyers in England and Wales, had asked the LSCP to conduct this investigation, with a view to considering the possible regulation of the industry.

Will-writing in England and Wales is not currently a reserved legal activity under the Legal Services Act 2007, meaning that the writing of wills is not restricted to regulated lawyers, who are independently regulated by the Solicitors Regulation Authority and the Bar Standards Board respectively. Consequently, some consumers are unwittingly using unregulated private will-writing companies, whose will-writers may have had little training or have little expertise in putting together what is one of the most important legal documents a person will ever create. Concern about unregulated will-writers has grown so much that the BBC’s Panorama programme recently investigated the issue (click here.) Interestingly, across the border, will-writing in Scotland is expected to become a regulated activity very shortly, after the Legal Services (Scotland) Act 2010 received Royal Assent in November 2010.

The LSCP has received a lot of responses to its consultation, which closed on 15 December 2010, with both consumer bodies and the legal profession strongly supporting the regulation of will-writing. Full details of the responses are here.

The Law Society, which backs regulation, said that although will-writers should not have to have the same qualifications as solicitors, there should be a regulatory regime which has “minimum training requirements; compulsory insurance cover; a compulsory compensation fund; a code of conduct; a complaints management system; and a robust disciplinary mechanism.”

The Trades Union Congress, Remember a Charity, Citizens Advice and the National Consumer Federation, amongst many others, all called on will-writing to become a reserved activity. However, the Office of Fair Trading has said that it is yet to be convinced that regulation is required.

The LSCP will now report its findings back to the Legal Services Board, who will decide whether regulation should be introduced to the will-writing industry.

Matthew Arnold & Baldwin LLP is experienced in all matters relating to the preparation of wills. We offer quality tax, trusts and inheritance advice to ensure that your personal affairs are arranged as efficiently as possible, and that your assets are passed on to your heirs in the way you want them to be. If you would like to discuss writing a will, please contact me at iain.donaldson@mablaw.com, or my colleague Emma Alford at emma.alford@mablaw.com.

EDMOs were introduced in 2006 by the previous Government in an attempt to reduce the number of unoccupied homes in the UK, and they allow local authorities to take over properties (and seize furniture, fixtures and fittings) that have been empty for as little as six months.

There are currently two types of EDMO – (1) an interim EDMO which gives a local authority one year to help the homeowner get the property back into use; and (2) a final EDMO (this occurs when no agreement has been reached between the local authority and homeowner; a final EDMO can last up to seven years.)

Under EDMOs, local authorities have the right to, amongst other things, seize properties after six months if:

1. They have been left vacant following the death of the occupant or owner. (Homes of the deceased can be confiscated for up to seven years, even if inheritance issues have not been finalised), or

2. The unoccupied home is on the property market, but the local authority believes the asking price is “unrealistic.”

The Government has now said that it will do the following:

1. Limit EDMOs to empty properties that have become targets for vandalism, squatters and other forms of anti-social behaviour;  

2. Only allow an EDMO to be obtained if a property has been empty for at least two years; and

3. Give property owners at least three months’ notice before issuing an EDMO.

This move, which is subject to consultation, will be welcomed by private homeowners, particularly those who regularly spend a lot of time away from their homes, as it will reduce the possibility of their properties being seized by local authorities. The news will also benefit bereaved families, who, during a traumatic time, may be unable to decide whether to occupy, sell or rent out their loved one’s home.

According to the research, in the past year more than 20,000 pensioners were forced to sell their houses to meet residential care home fees – a rise of more than 17 per cent in the past five years. When a person enters care, they are “means tested” and most of their assets, including their home, are taken into account. If that person has assets of more than £23,250, he or she is deemed to be able to meet the full cost of their care. With the average care home fee reported to be £470 per week (according to Age Concern and Help the Aged), it is no surprise that people are being forced to sell their homes to meet these growing fees – meaning they are unable to pass their most valuable asset to their children or other beneficiaries through their will.

However, it doesn’t have to be this way.

With careful estate and trust planning, it is possible to protect your home and other assets, so that on your death they can be passed down to family members through your will.

If you would like to discuss your options, please contact me at iain.donaldson@mablaw.com.

If you miss the deadline it could be costly, as paper returns filed after this date could mean a £100 penalty.

An alternative to paper-filing is to file your return online, which benefits from a January deadline.

If you would like assistance in preparing and filing your tax returns, please contact James Odds on 01923 202020 or james.odds@mablaw.com.

This investigation into will-writing follows recently-publicised concerns over the quality of wills and poor sales practices in the industry, which culminated in a Panorama investigation, aired in August 2010.

The Panel is investigating whether the will-writing industry should be regulated. Currently, will-writing is not a “reserved legal activity” under the Legal Services Act 2007; this means that the writing of wills is not restricted to solicitors and barristers, who are regulated by the Solicitors Regulation Authority (SRA) and the Bar Standards Board respectively. Unregulated private will-writing companies now claim to write about 10 per cent of all new wills, but consumers are often unaware that these companies are unregulated and that their will-writers can have little or no legal training. A survey published by the Society of Trust and Estate Practitioners (STEP) in August 2010 provided evidence of such companies charging ‘hidden’ fees that were not outlined in the stated price for a will, of companies going out of business and ‘disappearing’ with their clients’ wills, and general incompetence that resulted in consumers receiving additional tax bills.

The investigation also follows the Scottish Parliament’s decision in June 2010 to propose amendments to the Legal Services (Scotland) Bill, meaning that non-lawyer will-writers in Scotland are expected to become subject to the same regulation as their legally qualified counterparts from 2011. There is now growing support amongst lawyers and consumers for England and Wales to follow suit.  

The deadline for submissions to the investigation is 15 December 2010.

A statutory will is a will made on behalf of someone who lacks the necessary capacity to do so themselves by application to the Court of Protection.

In the case of Re D (statutory will), the Court of Protection considered what principles should be applied in determining whether to order the execution of a statutory will for and on behalf of a person who lacked the mental testamentary capacity to do so.

The Court of Protection held that under the Mental Capacity Act it can authorise a statutory will on the grounds that the validity of an earlier will is in dispute.  Decisions taken on behalf of a mentally incapacitated adult must be taken in his or her best interests.  This can include being remembered for having done the ‘right thing’ in his or her will.  In this case the judge ruled that the ‘right thing’ meant ensuring Mrs D’s memory was not ‘tainted by the bitterness of a contested probate dispute between her children’.

Comment

It is heartening to see the Court taking such a practical (and sensitive) approach.  The alternative would have been for the beneficiaries to have waited until Mrs D had died and to then contest her will in the courts.  This would have been far more stressful and expensive and would almost certainly not have been what Mrs D would have wanted.

If you would like advice on statutory wills or mental capacity please contact me on iain.donaldson@mablaw.com or 01923 202020.

 This is a device of long lineage, first noted judicially in 1769 (the same year the last wild wolf was killed in the British Isles) in Dufour v Pereira a case tried by Lord Camden (yes, the man who founded Camden Town), who amongst the “haths” in his  judgment, had this to say

“It is a contract between the parties, which cannot be rescinded, but by the consent of both. The first that dies, carries his part of the contract into execution. Will the Court afterwards permit the other to break the contract? Certainly not.”

Sounds a bit scary, a bit like a suicide pact, but in reality it’s not, it is just an arrangement where two people irrevocably agree to leave their estates reciprocally . But aren’t all wills recovocable until death, I hear you say? Absolutely, and theoretically this is no exception to the rule, being in fact the application of a prior constructive trust.

Say A and B agree to make wills leaving all to each other, subject to a proviso that if the other dies first the estate passes to X. A dies and the estate passes to B, who contrary to the earlier  agreement with A, then makes another will leaving all to Z.  On B’s death X can apply to have the gift to Z set aside, citing the agreement for mutual wills as the document that sets out the terms of the prior trust. Don’t most husband’s and wives write wills in that form? Well yes, all apart from the agreement that the wills are to be in irrevocable mutual form.

The recent case that underlined the continuing effectiveness of mutual wills involved the estates of two sisters Ethel Willson and Mabel Cook.  Mrs Cook died in 1995 having made a mutual will by agreement with her sister Ethel, who died in 2006,  having made a new will 2 months before she with provision materially different from the earlier mutual will; Ethel cut out the earlier bequests to relatives and friends  in favour of the sisters’ hairdresser, who duly received the £390,000 estate. The disappointed relatives and friends took their greivance to Court, and in a case involving allegations of undue influence and mental incapacity, the Court concluded that the sisters had made mutual wills the terms of which should be upheld, such that Mrs Fraser was required to hand back the cash.

For understandable reasons such cases rarely come to Court.  In the opinion of the solicitor acting on behalf of the disappointed family and relatives such a proposition has been upheld only 3 times in the last 80 years. Such wills are rare, falling outside many a seasoned draftsman’s experience. It’s also quite likely that should the survivor of such an arrangement subsequently make a different will the fact that the provisions cut across an earlier mutual will may not be brought to anyone’s attention. Errors of drafting or administration in this particular field can still have spectacular consequences, as this case amply illustrates. Get thee to a lawyer if you are at all concerned!

A will is one of the most important documents you will ever write, so it is important to ensure that it is done properly.

Tonight’s Panorama on BBC 1 at 8:30 has a look at some of the issues involved with getting a will drafted and some of the pitfalls.  According to the report on this morning’s Today programme on Radio 4, will writers and banks get rather pummelled whilst the legal profession comes out on top.

The reasons for this are clear.  It boils down to professional standards. 

Customers of will writers and banks are enticed by slightly lower fees but often find themselves encouraged (and in some cases pressured) into appointing the will writers or the bank as executors without being fully informed of what this means in terms of fees (which can amount to about 4% of the estate).  Customers are often then charged to have their wills stored.  To add insult to injury the advice in preparing the will is not always correct with no legal redress against the will writers.

How can this happen?  Simply put, the will writing industry is unregulated and anyone with a PC and a desk can make themselves a will writer. 

Solicitors, conversely, are regulated by the Law Society and the Solicitors Regulation Authority.  We have a code of conduct which places the client first.   Whilst not all solicitors are experts in trusts and inheritance tax, one must have a certain level of expertise and training to be admitted as a solicitor.

I’m not saying that the legal profession is perfect.  There is a diverse range of solicitors from sole practitioners on the high street to the multi-nationals in the city.  But what using a solicitor offers is the security of a skilled professional, putting your interests first, backed up by the guarantee of insurance should something go wrong.  Because of this costs are sometimes higher, but at the end of the day you know what you are getting.

Matthew Arnold & Baldwin LLP does have a dedicated team of Wealth Management specialists with expertise in wills, tax, trusts and probate.

If you would like to speak to someone about making a will, please contact Suki Sandhu or Emma Alford on 01923 202020, or email info@mablaw.co.uk.

Prior to 2003, the European Commission did not think it was necessary to examine whether member states’ IHT laws were compatible with the EU Treaty. However, it has now revised its opinion because, since that date, (1) a number of IHT cases have been referred from national courts to the European Court of Justice, and (2) it has received a growing number of complaints from EU citizens about problems arising from cross-border inheritance.

The consultation paper identifies two main areas in which individuals and businesses may face obstacles:

1. Discriminatory application of IHT rules. Member states’ IHT laws tend to be less favourable to citizens whose assets or beneficiaries are in another country. This fact is particularly evident when you consider that in the eight IHT disputes that have been referred to the European Court of Justice since 2003, the Court ruled in six of them that the IHT laws of the member state in question were incompatible with EU rules on the free movement of capital; and

2. Double or multiple taxation of an estate. Most EU Member States levy IHT upon the death of a person; however, problems can occur because some member states (such as the UK) tax the deceased’s estate, while other member states tax the deceased’s heirs, who may be living in another member state to the deceased. This problem is further highlighted by the fact that there are only 33 bilateral IHT treaties between member states (out of a possible 351.)

Aside from the financial impact that these issues can have on EU citizens, the European Commission has also identified a social problem: that is to say, the way member states’ IHT rules apply in cross-border situations may be hindering EU citizens from fully exercising and benefiting from their right to move, as well as operate, freely within the EU.

The consultation closes on 22 September 2010; the European Commission will then study its findings to try and find a solution to these problems (and any others that are identified during the course of the consultation.)

The CBI argues that decreasing the deficit should be done by controlling spending rather than increasing taxes.   Specific points made by them include:

• The CBI wants to see a broad definition of business assets (which would benefit from tax relief) to prevent disincentives to investment or start-ups, and the tax should be structured to minimise the impact on long-term investment.
• The CBI is encouraged by the Dyson commission’s support for the R&D tax credit and urges the Government to retain it in its current form.
• Changes to tax treatment of pensions, planned to come into force from April next year, are unnecessarily complex and expensive to administer, and in their current form would make it harder for UK businesses to attract and retain global talent.

Undoubtedly, their concerns are echoed across the country.  I have spoken with many clients concerned about their own position if capital gains tax increases on 22 June.  Whilst there are steps which can be taken prior to then, the time for doing so is getting increasingly tight.

If you want to speak to an advisor about CGT increases please call 01923 202020.

Landlords of residential properties where the annual rent is more than £25,000 are not currently required to register a tenant’s deposit with a tenancy deposit scheme but they will  need to protect that deposit before 1 October 2010. Failure to do so will result in a Landlord falling foul of the requirement to protect a tenant’s deposit in accordance with the provisions of the Housing Act 2004, leaving them open to a claim by a tenant for failing to register the deposit.

For tenants this change means greater protection as they will be afforded the rights granted to them under the Housing Act 1988. Landlords face potential claims against them for failing to register a tenant’s deposit. The change will of course impact Landlords with expensive properties in London where rents are higher than the rest of the country as well as Landlords of larger properties which are occupied by multiple tenants such as student houses where the rent is more likely to exceed the current threshold.

The changes will increase the number of tenancies coming within the Assured Shorthold Tenancy regime which will standardise procedures for Landlords to gain possession and allow use of the accelerated possession route (only open to Landlords of Assured Shorthold Tenancy Agreements).  Landlords who do not and who are required to register a tenant’s deposit will be unable to get possession of a property on a “no fault” basis until the deposit is registered, causing unnecessary delay.

Landlords – review rental levels register your deposits without delay.

Managing Agents – notify your Landlord clients immediately of the impact of this change and the steps they need to take.

We are already seeing cases in the County Courts regarding non-registration of deposits and no doubt Court offices across the country will see further cases next year arising out of these changes.

In April or May 2008, shortly after commencing a relationship with Mr Despallieres, Mr Ikin drafted a new Will, revoking his former Will. This new Will purported to leave his entire estate to his partner. In October 2008, Mr Ikin and Mr Despallieres entered into a civil partnership. On 12th November 2008, Mr Ikin died unexpectedly.

In accordance with the Will in his favour, Mr Despallieres obtained a Grant. The beneficiaries under the original Will sought to challenge the validity of the second Will, arguing that it was a forgery, that Mr Ikin had remained domiciled in New South Wales and that as a consequence of the civil partnership, the second Will had been automatically revoked, not having been made in expectation of a civil partnership. 

The initial question to be answered was  – had Mr Ikin made the second Will in contemplation of his forthcoming civil partnership?

It was held that on a proper construction of the wording of the relevant sections of the later will (“… my last Will and Testament shall not be revoked by neither subsequent marriage, Civil Union Partnership nor adoption.”) there was nothing to suggest that Mr Ikin actually expected to form a civil partnership or, a civil partnership specifically with Mr Despallieres. The earlier grant of probate relating to the later Will was therefore revoked and the earlier Will consequently governed the administration of Mr Ikin’s estate.

The court held that when the second defendant transferred her property to the first defendant, she was suffering from a disability due to her psychiatric condition. A contract made by a person who lacks capacity makes it voidable, but not void. Even though she was suffering from a disability, the onus was on her to establish that the other party knew of the incapacity at the time, or knew of such facts and circumstances that he must taken to have known of the incapacity.

Although the second defendant was unable to recollect the facts surrounding the property transaction, the court found that her incapacity should have been apparent and therefore the conveyance of the second defendant’s property was a voidable transaction giving rise to an equity in her favour.

The next major issue was whether the second defendant was in actual occupation of the property when the legal charge was registered. If she was, then the claimant’s charge would take subject to her equity in accordance with the Land Registration Act 2002. Even though she was living in a care home because she was suffering from mental health issues and was prevented from living in her home by the Mental Health Act, her furniture remained there, arrangements had been made by those responsible for her finances to pay the regular bills, she intended to return there and she still considered it her home. The court decided that she still occupied the house even though she was resident elsewhere, for the time being. As such, her equity had priority over the claimant’s charge.

Accordingly, where a party sells a property under a disability, that agreement will be voidable, giving rise to an equity. That equity will be binding on a bank if that party is held to have been in actual occupation when the charge is registered, even if that party is not in residence as long as they intend to return to their home and continue to be responsible for bills, etc, relating to the property.

Link Lending Limited v Noreen Hussein and Susan Bustard by her litigation friend 24 September 2009