Day -v- Harris [2013], Curnock v IRC, Phizackerley

Just a quick reminder to myself that these are the current cases concerned the ability of attorneys to make valid gifts, and the interaction with IHT.

Day -v- Harris 2013 Day v Harris and others Same v Royal College of Music and another (Arnold and another, interpleader claimants) [2013] EWCA Civ 191; [2013] WLR (D) 112 and PDF of judgment concerns a registered EPA – and gifts made by the attorney (who was also a joint holder of a bank account) and whether the gifts that he had made were as attorney for the donor, or in another capacity as being access to the joint bank account as was his right as a joint bank account signatory

In my judgment, it remained open to Mr Day to operate the bank account after registration of the EPA as he had done before such registration. He could not use it to benefit himself without the full, free and informed consent of Sir Malcolm but, if he had that consent, as the judge held he did, gifts made by drawing cheques on the joint account were not invalidated by the effect of section 7(1)(c) of the Act even though made after registration of the EPA.

Had the gifts not been validly made, then they were still part of the donor’s estate for IHT purposes – on the basis of Curnock v IRC, Curnock v IRC [2003] SWTI 1053 where a cheque was not encashed prior to the death of the donor – and therefore the gift was not complete by the time of death.  This could also be seen in conjunction with Phizackerley, Personal Representatives of Phizackerley v HMRC [2007] SpC 591

An earlier version of Day -v- Harris, in 2010 concerned the nature of the accounting to be made for the researches of the executor into the amount of the gifts that were made and how far back the executor should go in attempting to ascertain what gifts had been made, and whether the expenses of the executor in doing so were reasonable.

Probate fees – a tax by any other name

 

The Ministry of Justice announced the consultation on probate fees last week.

 

https://consult.justice.gov.uk/digital-communications/fee-proposals-for-grants-of-probate/supporting_documents/probateconsultation.pdf

 

 

It is thought that new fee increases could be made effective from as soon as April 1 2016 – and there are many practitioners across the country who believe that this set of fee increases on probate fees is unjust, disproportionate and unfair.

 

Not only might these fees be unfair and disproportionate (the actual task of getting the grant of probate is already covered by the cost of the existing court fee) but the potential to charge quite high values of fees is seen by some as being similar to a tax.  Except the power to increase a tax is something that is given far higher scrutiny, both in the budget and in reactions to the budget – there is opportunity for more careful examination of the impact that increases in the tax burden will have on the behaviour of the populace – indeed, sometimes the reason for increasing taxes is so that the behaviour of the public is modified – towards the purchase of cars that consume less fuel, towards the purchase of particular types of alcohol – it is the primary example of applying a “nudge” philosophy – or behaviourist psychology techniques – encourage certain types of behaviour by reward, discourage certain behaviour by withholding reward (or rather, by making the retained money in your wallet significantly less).

 

Value of estate (before inheritance tax)             Existing fee       Proposed fee

Below £50,000 or exempt                                            £215                £0

Exceeds £50,000 but does not exceed £300,000    £215                £300

Exceeds £300,000 but does not exceed £500,000   £215                £1,000

Exceeds £500,000 but does not exceed £1m               £215                £4,000

Exceeds £1m but does not exceed 1.6m                       £215                £8,000

Exceeds £1.6m but does not exceed £2m                     £215                £12,000

Above £2m                                                                          £215                £20,000

 

Why would these increases be unfair?  Everything has to be paid for?

 

The probate court fees are already appropriate – the costs that are already being charged cover the cost of obtaining a one off service – this is a finite transaction – there are no ongoing case management issues – once the grant has issued, the court has no need for further supervision and intervention.  As a fee for a service, the fee is suitable.  To increase the fee so that it substantially exceeds the cost is unjust and unfair.

 

Obtaining a grant of probate is the rite of passage in most estates where there are assets that exceed £25,000 or thereabouts, since banks and building societies are frequently willing to release that sort of money without the need for any formalities.  In addition, there are many people who own assets jointly with a spouse or partner – and in those cases where assets are owned jointly, there is no need for a grant of probate in order for the asset to belong to the survivor.

 

So that’s alright then – all we have to do is to put assets in joint names and we’re golden?

 

Well, yes and no – just because assets are in joint names doesn’t mean that this is the best thing for an individual.  Putting assets in joint names whilst you are alive means that the other person can spend your money as if it was their own – potentially wiping out your savings and leaving you in a difficult situation.  If you were a vulnerable elderly person, you might be taken advantage of.

 

Putting assets in joint names can also have the effect that you are treated for some purposes as if you had made a gift of what you own – if the relationship you have with the other joint owner should become difficult, or they should themselves be in financial difficulties, your own money might be lost.

 

Just because someone receives money by survivorship after death does not mean that Inheritance Tax should not be paid on the estate.  Although the application for the grant of probate normally triggers the requirement to pay Inheritance Tax, the obligation to account for Inheritance Tax still applies, whether or not a grant of probate is required.  This is something that the public might easily not be aware of.  Failure to account to the Inland Revenue for tax that is due causes penalties in itself.  Failure to pay the tax that is due can cause penalties, and is likely to result in charges for underpaid tax and the interest on that tax.  Potentially, this means that problems can be stored up for the future, all because there was a desire not to pay this probate fee.    Trying to untangle what taxes should have been paid, the penalties and interest will be very stressful for families later on.

 

What do I do if I’m single? 

 

Good point  – you are going to need a grant of probate.  No matter who you leave your money to – even if you leave all that you have to charity, this bill will still have to be paid.  There is no Inheritance Tax to pay when you leave all your assets to charity, but still the probate fee will apply.

 

I thought it was free to leave everything to my wife?  Now you say she will have to pay?

 

Your executors will have to pay the probate fee, even if all that you have passes outright to your wife.  If you have made arrangements to give your wife everything for life, and then to go to your children (perhaps because you have been married before) then even though there is no Inheritance Tax to pay, there will be a probate fee.

 

How will my executors pay those massive fees?

 

Yes, that’s a problem.  When it is Inheritance Tax, you can pay a portion of your tax bill in instalments if your money is tied up in your house.   Usually your bank will only allow payments to be made for Inheritance Tax and for your funeral bill.  Perhaps the banks will start to allow payments to be made for probate fees.  It might take them a little while to get structures in place though.  Until then, it will be for your executors to produce the money out of their own pocket.  If they don’t have the money, they will have to borrow it.

 

This really sounds like a bad idea – who thought it up?

 

Yes it does.  And I can’t actually point to the Chancellor of the Exchequer and blame him for making the rules.  Still – it is “open for consultation” so feel free to comment directly.

Regulate the Probate Services Industry | Campaigns by You

Regulate the Probate Services Industry | Campaigns by You.

 
A petition to call on all probate service providers to be regulated in some way.

Because not all people who provide legal advice are regulated.  This means they may or may not be qualified to give legal advice.  They may or may not carry insurance.  They may or may not sign up to any standards of professional behaviour.

Because this is a time when families are vulnerable and where financial details are being exchanged, and the public needs to have some certainty that they can trust their advisers to do a proper job (and if they do not, there will be compensation) to not sell on their details, to administer the estate as efficiently as possible, whilst taking a reasonable amount of care.

Vulnerable people should be treated with respect, and not merely fodder for the mincing machine.  They need to be protected, because of their vulnerability at a sensitive time.

An unregulated business has no interest in anything but their profit, and remaining within the confines of the law. Whilst an unregulated business may choose to ascribe to a code of ethics, if that is not regulated, then how can it be enforced?  There is no obligation on such a company to even profess such concepts.

legalchap: Will Aid and the solicitor/non solicitor.

legalchap: Will Aid.

Yes, it qualifies as a rant – but perhaps justifiably.  Other reports on the Law Society Gazette and the Private Client Section 

The whole Will Aid system is built on the idea that lawyers do something good for a month (as if we do not do good  for the rest of the year by providing a good service, albeit for a fee) by waiving their fees for charities.

Actually, it is more like there is a fundraising charity out there, which does all the marketing, then says they will donate the proceeds of the campaign to 8 or 9 charities.  I have not looked too closely about the amount that actually *goes* to the end charities *after expenses*.  Certainly as solicitors, we are expected to pass on the whole of the donation to the charities and not to retain any part of the donation.  We are at liberty to charge an additional fee if the will concerned is more than a “straightforward” will – but then again, few of the people who consult during that period require very basic wills – most being middle class and well provided for.  Almost as if the message about making a will never reaches those for whom it would really be beneficial, like those on benefits, for whom the usual prices for wills would be well outside what they would consider affordable.  And once they are in front of you, charging extra when they have been led to believe that it’s £95 (and no VAT) becomes moderately difficult – some take it as an affront.

The thing is, the most recent slap in the face appears to be that after last years will aid campaign – there were still people who had not made wills and who had missed the boat for that year.  Unwilling to pay the usual prices to solicitors rather than the discounted fee that they would have donated to charity, those enquiring were told that making a will did not require a solicitor, and could be done by an unqualified person.

That is of course true – but the fact that so many solicitors (and the Law Society) have been donating time and expertise pro bono, as well as the risk associated with the work (so covered under the lawyers’ insurance not the charity’s insurance) it seems a bit of a slap in the face.

Why would anyone slap the hand that feeds like that?  Could it be that there is some incentive that is paid to the charity for so many potential clients being referred?  Could it be that the regulatory requirements of the non solicitors are far lower, or that the attention devoted to the clients is of lower quality?  Could it also be that if the non-solicitors retain up to a quarter of the “donation” that this is not in fact, setting both sets of providers on a level playing field?

You give and you give, and then someone else walks off with the prize…  Perhaps it is somewhat naive of solicitors not to expect professional fund raisers to act in this way, if they can get money for the charities thereby.  If chuggers can pursue the elderly so they are desperate enough to commit suicide then this is fairly minor in the scales of the lengths to which fundraisers will go.

Will we do Will Aid this year?  Ho hum….

Health and welfare of an autistic adult and a parent being unsuitable to be a Deputy.

AY v (1) Hertfordshire Partnership NHS Foundation Trust & Ors [2015] EWCOP 36

From the latest 39 Essex Chambers newsletter, a case that strikes my heart as well as professional interest, on the care of an autistic young adult  (X) with severe autistic symptoms

It is broadly accepted by all parties that X suffers from an autistic spectrum disorder and that he has moderate to severe learning disabilities. Dr. Dalton is “confident that [he also has] an illness with affective and occasional psychotic components….probably best characterised as bipolar affective disorder” and this conclusion has not been challenged. The parties’ descriptions of X depict him similarly as largely non-verbal but fully mobile and able to read, write and use an i-pad to assist his communication. All parties agree that he is fully dependent on carers to meet all his personal care needs, food and fluid intake; and that he lacks capacity to litigate these proceedings, and to make decisions about where he lives, how he is cared for and the treatment he receives.

and his mother wishing to remain acting as his Health and Welfare deputy.

The legal case,  is about whether the mother would be the proper person to be the deputy – a role ranking higher in health and welfare terms than a parent, although the parent’s introduction of evidence in the context of proceedings about care for an incapacitated adult is considered as highly important  (“the evidence of the parents is of the utmost importance” in fact finding) MA Local Authority v. M, E and A 014] EWCOP 33.

In this case, sadly, the mother was convinced that the diagnosis of autism resulted from a reaction to vaccines and was influenced by the discredited Wakefield study.  She was further convinced that the vaccinations had triggered inflammation of the gut and that a restricted diet with compensating supplements assisted her son, and this was evidenced by his behaviour.

The mother (perhaps because she had made an emotional investment as well as one of time, not to mention money) was unwilling, it seemed to the court, to accept the more standard treatments and suggested causes for both autism and its effects on the individual.   Despite much work and many reports from leading experts in the field (as opposed to “experts” that the court found fell far below the standards required [1] ), she remained unconvinced that there might be an alternative explanation for the behavioural issues experienced by her son (that he was experiencing the difficulties of an autistic person, rather than caused by inflammation of the gut. “I am amply satisfied from AY’s presentation of her case within these proceedings that she is unable to accept that autism, rather than any bowel condition, is fundamentally the cause for much of X’s behaviour.”

As suggested by the Official Solicitor, representing X, “a person who does not listen to medical experts and work in collaboration with professionals in the best interests of the incapacitated adult is particularly ill-equipped to act as a personal welfare deputy”

The Local Authority saw the Deputy’s view as being restrictive and damaging to the wellbeing of her son.  The revocation of the deputyship order was necessary so that respected clinicians could be allowed to treat the patient, following a more conventional approach to the patient’s situation.  In addition, it was seen that the Deputy’s intervention in the treatment of her son had made his treatment far more difficult than it would otherwise have been, as it involved constant record keeping and other burdens on the carers time “The various e-mail chains included in the hearing bundles amply demonstrate that at times AY’s requests to care staff for information as to what and when X is eating, and how his bowels are functioning, have been excessive and unmanageable”

The comment on this case by 39 Essex chambers:

The Court had no doubt that AY was devoted to X and dedicated to promoting his wellbeing as she saw it. However, the Court was struck by the rigidity of her views and her refusal to accept professional medical advice. Rather, AY continued to pursue her views which worked against X’s best interests and therefore her appointment as welfare deputy was revoked. The revocation of AY’s welfare deputyship meant that she alone would not have authority to make these decisions for AY. However, the Court emphasised that AY was not excluded from the decision making process. The revocation of the deputyship merely restored AY to the usual position for the parent of an incapacitated (adult) child where her views would be taken into account in making any decision in X’s best interests. The Court championed the usual approach of collaborative decision making and in the circumstances agreed with the OS that there was no need to appoint anyone else as replacement welfare deputy. We would emphasise that there will be very many cases in which the appointment of a parent as the health and welfare deputy for a child with profound disabilities is entirely appropriate and correct so as to secure a privileged voice in decision-making. It often comes as a huge – and very unwelcome – shock to parents in such a position to discover that they cease to have any formal role at all in such circumstances when their child turns 18, and appointment as a health and welfare deputy can be very important. This case, though (as with A Local Authority v M) demonstrates the boundaries of the authority that a parent deputy can exercise.

The judgment in full here 

Conclusions, paragraphs 112-116

Diet and treatment

When X’s diet was restricted and he was taking supplements, he remained autistic. At least since the beginning of this year, he has had access to previously restricted foodstuffs , and since July he has had an unrestricted diet, without any noted deterioration in his behaviour or the condition of his bowels. Restriction of diet is an infringement of X’s freedoms; and a requirement to take nutritional supplements is an imposition. In the absence of evidence of positive benefit from either the infringement or the imposition, I consider that neither is in his best interests.

Given the finding that AY will continue to seek testing and administration of 5HTP and nutritional supplements, I am satisfied that it would not be in the best interests of X for AY alone to have authority to make such decisions for X. I am satisfied that instead, it is in his best interests for decisions in respect of X’s diet and treatment to be taken in a collaborative process, after due consultation in accordance with the general approach of the Mental Capacity Act 2005.

Deputyship

AY’s views run counter to the generally accepted approach in respect of treatment for autism, yet she has pursued, and as I have found will continue to pursue, those views to the point of placing unworkable strain on those responsible for X’s day to day care. It follows that I am satisfied that she has behaved, and proposes to behave, in a way which is not in X’s best interests (however much she believes to the contrary.) It is clear that AY’s appointment as welfare deputy has worked against X’s interests, not to further them. I am satisfied that the appointment should be revoked.

I understand that AY will feel the revocation of her welfare deputyship as a blow. It is therefore appropriate to make clear that it should not – and I am confident that it will not – operate to exclude her from contributing to the process of welfare decision–making for her son. Rather, it restores her to the usual position for the parent of an incapacitated adult, as envisaged by those who framed the Mental Capacity Act. AY is clearly a person interested in X’s welfare (as well as being his deputy for property and affairs). Accordingly, wherever it is practicable and appropriate to consult her, any person or body making a ‘best interests’ decision for X must take into account her views, pursuant to section 4(7) of the Act.

There are good indications that “the usual approach” of collaborative decision-making can operate successfully for X. In particular, I note that the parties have been able to agree where X should live; and now that he is there, they have been able to maintain contact arrangements sufficiently well that no restrictions and no orders of the court are sought. With the issues of dietary restriction and supplement resolved by decision of the court, I agree with the Official Solicitor that there is, at present, no need to appoint anyone else as replacement welfare deputy.

[1] “In respect of X, Ms. Hayward’s statement falls a long way short of standards which would be expected of an expert witness. I have no confidence that the “recommendations” she makes are properly based on an informed consideration of his circumstances and medical history. I do not regard Ms. Hayward’s statement as reliable evidence in support of the assertion that X derives any beneficial effect from 5HTP or dietary supplements.”

On a final note, which is a very personal one, the view that the mother was the best person to make decisions for her son, because she knew him best is one that is frequently expressed, perhaps to empower parents, perhaps an overreaction to the “frigid mother” attitudes of the last century.

In this case, it appears that the court has burst that bubble – has clearly stated that the mother is not the best person to take care of her son and that she does not know her son best, and that her approach is not the best one for him,despite clearly being all consumed with the desire to care for him.

Perhaps the mother’s rigidity of view is based on an inability to support other views :  this may indicate an autistic trait in herself.  Perhaps, on the other hand, the support given to parents after diagnosis too often is about empowering the parent to take control, because there are inadequate resources for anyone else to do so.  Who else would have been an unpaid carer for so many years, with such devotion, in the face of so many difficulties?  If life has been hard for this parent, and she is defiant in her opposition to the ideas of others, it is hardly surprising.