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.

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Open Letter to anyone who made a Will with HSBC and appointed them as Executors

Open Letter to anyone who made a Will with HSBC and appointed them as Executors.

 

It’s a good letter:  I’m not sure whether whoever reads it realises that it is carefully written and may have taken a good few hours to check and double check, particularly when it refers to the organisation(s) to whom the wills have been sold.  Just as “concerned” means “angry”  and “precise” means”nitpicking in the extreme” in legal terminology, the swathes of what is not said about Simplify and its associated companies speak volumes.

It might seem odd that your executors can sell on the rights to deal with your assets, as the bank have done here.  But this sort of thing has happened, by and large, for professional executors over the years, albeit perhaps not so obviously.  Law firms never die, they just get taken over…  successor firms can prove the wills of the prior firm if the will was drafted that way.  Or encourage the clients to make a codicil (and in doing so, both correct any massive errors in initial drafting and/or update terms).  It is no mistake that the wills stored by a firm are called a “will bank”.  Usually, however, with a whole firm takeover, the wills and live files, the contacts and reputation are all bound up together and described as “good will” valued for a greater or lesser amount than the desks, carpets and computers.  Slightly less clear that your will can be seen as a commodity in itself, for sale to another organisation for a price, whilst still being your own property as a client.

 

Who you choose to be your executors is a personal choice – you might prefer a professional executor because your family do not get on well with each other – or you think that it is too much of a burden for friends to bear.  That’s quite alright for you to make this choice – but as this letter rightly points out – the terms on which you appoint a professional do need to be made clear to you – they will charge for their work – and how they do this should be something you feel comfortable with – these are your assets, after all.

Some professionals are bound by professional codes in their conduct towards the public – solicitors are – you can make complaints to the SRA if you feel you have not been treated in a fair way.  Accountants have a professional body too – it is fair to say that complaints to a professional body can be incredibly damaging to the firm, and so a reasonable amount of time is spent in trying to do the right thing and not get complaints in the first place.

If you are to choose a professional, then it’s a good idea to see what institution regulates them – who is the person that they have to answer to when you are no longer alive to express your concerns – who can your beneficiaries turn to when they think they are being overcharged, or waiting for ages – is there anything or anyone to protect them?

 

Budget 2015 and initial thoughts.

Budget statement in pdf from Inland Revenue

Some of the things I think this means.

Terms:

Although this refers to a “main residence nil rate band” the personal representatives can elect for any property owned and lived in by the deceased to count as the residence for this purpose.  The term is not related to the main residence or Principal Private Residence.  Potentially, each spouse could have a separate private residence, therefore.

The residence nil rate band (which if someone else has not already labelled it thus, I shall call it the “RNRB”) can be transferred to a spouse and remain intact.  This applies no matter when the first death occurs, so long as the second death occurs after the start of the tax year 2017-18.

The RNRB might end up, therefore, also being called the TRNRB when claimed on the death of the second spouse. There will be new additional forms to complete in addition to the IHT402 and the IHT217.  There will need to be new evidential burdens to show that a recipient falls within the class of acceptable beneficiaries called “descendants”.

The NRB as we know and love it applies at the current rate until the tax year 2021-2 commences.  It applies to all transfers whether intervivos or on death.

The RNRB applies only where there is a residential property in which the deceased has resided (or the spouse of the deceased???) and where the “proceeds of sale of that property” or the property itself pass to a linear descendant of the deceased (or of the deceased’s former spouse??).  The bits in brackets are where I am less certain of the detail.  One thing is clear – the definition of what is considered “linear descendants” is different from the standard definition of “issue” or “bloodline” since it includes not only the usual adopted children and children of the bloodline but also step children and foster children.

Things I am not sure about:

I don’t understand quite how you can quantify the foster children – but perhaps it is possible to prove that an individual is a foster child or has been one at any date.  Similarly, step children.  But then again, this gives an allowance for those children, rather than penalising them or giving them an entitlement.

I am not sure about the “proceeds of sale” aspect of things.  The Inland Revenue states that identifying what has been the proceeds of sale of a family home and making sure that there is a credit for this will be something that will be the subject of a consultation paper shortly.  Presumably, there is some paperwork required for Inheritance Tax purposes on the sale of a family home – so where downsizing from any home worth less than £2,400,000 is potentially eligible for this – so as to preserve the relief on this home.  This will be something that all conveyancing solicitors will need to know about as well, since otherwise it would not be something that would be mentioned to the client.  Few clients associate the sale of their home with the need to consider how it fits in with estate planning.

Does this now mean that flexible life interest trusts now need to be altered so as to take account of this potential future relief?  A “FLIT” by which I mean a discretionary trust, subject to a prior life interest.  I think it does.  Because the whole flexibility of these relies on the discretionary trust *not* being an individual or descendant.  Time to review these I think, and adjust expectations and drafting accordingly.

I think the new legislation means that (at least initially) if you are worth £2.4 million or more, then this RNRB is useless to you.

I also think this means that if you are selling up so that you can free up capital to make potentially exempt transfers, then you have to weigh up carefully whether doing so means that you will lose out on the RNRB.  The RNRB *only* applies on death, and does not apply to PETS that become chargeable.  Worst case scenario is that you free up funds, give some away to your children and do not survive the seven years.  When I say “some”, I mean if you give away more than one Nil Rate Band’s worth of gifts.  So – PETs will have to be limited to below £325,000 for each individual donor if they are within 7 years of death, or statistically likely to be so.  Or in other words, there is no such limitation, but without advice on the pros and cons, the decision should not be taken without, for example, more seriously considering term life insurance, in the very least.

 

In conclusion:

Possibilities of legal involvement in people’s affairs seem to have increased.  And in a way that doesn’t seem right – why should the taxpayer be hemmed in at every turn?  Why not just increase the whole of the NRB to £500,000 each – and not have this extra complication?  What about those childless couples who want to leave their money to nieces and nephews?  Why is this budget not making it easier for the rich to pay tax, rather than harder for the middle income people to manage the burden of it?  This extra complexity just means more work for the civil servants, more bad luck for the childless, more work for lawyers, more fees for professional advice.   And the extra complexity is not actually needed – it doesn’t close any major loopholes or planning issues where “clever lawyers/accountants” have been finding “loopholes”.

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….

The law’s delay…

On telephoning the Inland Revenue to find out the progress of my P1001, signed and sent back to them over a month ago, I am told that they are currently experiencing a postal backlog of FOURTEEN WEEKS!

Since the P1001 authorises me to speak to the Inland Revenue on behalf of the Personal Representative, who, quite understandably is grieving and has instructed me to deal with the estate on his behalf – I cannot communicate effectively with them.

A reply will be expected in September, by which time I might have finished the (rest of the) administration with some time to spare…

When journalists ignore source material it is public debate which pays the price / Pink Tape

This is a family law case, and a family barrister writing about it, but it’s very good reading.  A total destruction of the journalist’s article, and rather well done.  Found through the Jack of Kent twitter feed here 

 

When journalists ignore source material it is public debate which pays the price / Pink Tape.

When William died he left £300,000 but his son never saw a penny: Why you must write a will | Daily Mail Online

When William died he left £300,000 but his son never saw a penny: Why you must write a will | Daily Mail Online.

There’s a lot about this article that really rings true – and I don’t think that about most things that the DM publishes.

The terrible fact is that although most adults have home insurance and service their cars regularly, few have wills.  And really, the cost of a will might be far less than a car service in the short term, let along the longer term.

I still find it hard to understand why people can get married (which costs usually several thousands of pounds even for more modest arrangements) and not spend a few hundred pounds on sorting out their financial futures, now they are legally bound to each other.

With all the costs of a new house or a new baby, I can see why you might not want to spare the budget for doing your will in the short term as well – but thinking about how much I pay in childcare costs for after school club now, a will is less.  And there is absolutely nothing more important in my life than my child, whose future I want to take care of.  As for the new house – well, the smallest fraction of the purchase price could be set aside for a quick brush up of your will.

 

So – moving house might mean moving jobs, perhaps half way across the country, far away from your previous home and associates – meaning that the likelihood of your will being actually found diminishes, even if you made a will in the first place…  a good reason to update it, and also to register it with a service like Certainty.

 

Why does it have to be so much harder if a person dies without a will?  When it costs so little (compared to a night out in London, a car service, a new igadget,) to make it straightforward?