Shiny gym kit and gym membership purchased. Check.
Probiotic yoghurt slurped. Check.
Cut back on one’s favourite tipple. Check.
That would appear to be the new year resolutions sorted… until January ends.
Here we look at some easy new year steps which will benefit you and your family beyond 1 February. Unusually for new year resolutions, these steps might lead to you and your family gaining pounds or at least protecting them.
Make a will. Take control of who will inherit your estate and on what basis (e.g. making sure appropriate trust provisions for young or vulnerable beneficiaries or where asset protection is important). This helps avoids unexpected results (for the default rules of succession might not be what everyone would think they should be) and unexpected costs and tax. A will can be an important building block in ensuring your loved ones are protected.
Have an up-to-date will. Are the beneficiaries correct? Are the executors appropriate for the decision making roles they will have? Are the executors in anyway conflicted (e.g. where there are business interests involved)? Have the family and financial circumstances changed for you? Who will look after young children if both parents pass away? Have the tax rules changed since you made your will (on this point, legacies to anyone other then a spouse/civil partner or charity on the first death should be carefully considered and probably removed)?
Title to your house. Alongside having an up-to-date will, your title deeds should be up-to-date and consistent with your will. A title to a house which is held e.g. by “husband and wife and the survivor” may benefit from a change to simply “husband and wife”. This can have asset protection benefits in wills.
Do you cohabit with a partner but are unmarried/ not in a civil partnership? The default rules in this area are really quite unhelpful and can readily cause significant financial and emotional stress for all involved if a cohabit passes away. It is very important that cohabitants put in place wills rather than rely on the default succession rules.
Do you wish to favour one child over another in your will? Do you wish to “skip” a generation and have your grandchildren inherit? Is a spouses entitlement under a will restricted in some way? Scots succession law provides certain “protections from disinheritance” or “forced heirship” rules. These are called “legal rights” and apply to spouses/civil partners and children. These are automatic and fixed entitlements which arise on death. Where the intention is to e.g. exclude a child from inheriting, legal rights must be carefully considered. We have blogged on developments in this area on three recent occasions (the general issues about legal rights, legal rights and land and rural interests and a high profile English case that caused a scare). If you want to find out more without reading the blogs, just get in touch directly.
The “assets” people might not think about. Death benefits associated with life policies, (employment) death in service or pensions can be very valuable. You should ascertain what these benefits are and the best way for these to be dealt with on death. With recent significant changes to pensions rules, this an area which should be reviewed to make sure your arrangements are up-to-date. This is certainly one area where we cannot help alone and the input of good financial advice is fundamental to arriving at the correct and joined up solutions for protecting and securing death benefits to best help your loved ones.
Everyone must have a power of attorney. Without one assets can be frozen and welfare decisions cannot be taken while e.g. a spouse or children begin the slow process to obtain a guardianship order from the sheriff court. Spouses and children have no default power as “next of kin” to make decisions on your behalf if you lose or have diminished capacity. We have previously blogged on our connection to the “Start the Conversation” campaign which seeks to encourage more people to grant powers of attorney and help individuals and families take control of managing affairs in a straightforward and efficient way if capacity is lost.
Shareholder and partner protection. If one of your fellow shareholders or partners dies or suffers from a severe illness, your business may well be faced with serious questions about retaining control among the other shareholders or partners. At the same time the beneficiaries of your deceased business partner will expect a fair value for their interest in the business. Many businesses will have insurance policies in place to produce the necessary cash. However, equally important is making sure that this cash is available in the “right” way, at the “right” time for the “right” people and the business. It is this latter issue that may need particular attention. From time to time we find that the cash is not available for the “right” people and often crucially (inadvertently) the business does not benefit at all. We looked in more detail at this important topic in this blog.
Finally, attention at this time of year often turns to sunnier climes. For those with foreign assets within the EU, EU-wide (broadly) changes to succession law came into force in August 2015 which open up the possibility that Scots law (and thus your Scottish will) can be selected to apply to govern succession to a foreign asset rather than the law of the country in which the asset is situated. This will be particularly relevant for those with land and buildings in an EU country. To find out more on this potentially very helpful EU rule change, read this blog.
This blog was written by Alan Eccles- 0141 245 6255 or firstname.lastname@example.org
For more on wills, succession, executries, trusts, estate planning or inheritance tax please contact your usual Brodies contact or any of the partners in our Legal 500 and Chambers & Partners Band 1 rated private client team:-
Alan Barr- 0131 656 0103 or email@example.com
Susanne Beveridge- 0131 656 0218 or firstname.lastname@example.org
Mark Stewart- 01224 392 282 or email@example.com
Norman Kennedy- 0141 245 6265 or firstname.lastname@example.org
Alan Eccles- 0141 245 6255 or email@example.com
On January 6, 2016