With the wedding season upon us, it is worth reminding ourselves of several key considerations when entering into marriage or a civil partnership from a succession and inheritance tax perspective.

1. Under English law, marriage/civil partnership automatically revokes a Will. This is a quirk of English law – it is not applicable in Scotland and in other European jurisdictions.

   It means that if you have made a Will prior to getting married and your Will was not made in contemplation of your marriage, then following your marriage, your estate will pass under the Intestacy Provisions.  This may not be what you would like especially if you are entering into marriage with different levels of assets.  You may already own a property jointly with another person such as your sibling, and, in the event that something should happen to you, you may wish your share to pass to your sibling rather than your new spouse.

2. If it is not your first marriage, you should ensure that any new Will is carefully drafted to protect any children from your first marriage. If you leave everything to your second spouse, you cannot guarantee that they will look after your children as well as their own.  This could mean that your children may have to bring a claim on the estate of the second spouse – a costly and stressful process!

3. There is no such thing as a common law spouse under succession and tax laws (including both IHT and CGT). Therefore, if you have been in a long-term relationship but are neither married nor in a civil partnership, unless you have made a Will, your partner is not entitled to any of your estate.  Furthermore, there are no tax exemptions for assets passing to your partner even if you have made a Will.  For example, if you own a property together as joint tenants so that on your death your half share automatically passes to your partner by survivorship, if your half share is worth more than £325,000 (the current IHT exemption), then the balance would be subject to tax at 40%.

   As clinical as it may sound, one of the best ways of saving inheritance tax is to get married/enter into a civil partnership.  The latter can be both a same sex or opposite sex relationship.

   If you have not made a Will but were maintaining your partner, then he or she would have to bring a claim against your estate for financial provision.  However, they can only do so if when you died you were domiciled in the UK.

5. Prenups have been recognised in the English Court following the Radmacher Case and they may be worth considering if one party comes to the marriage/civil partnership with substantially more assets.

6. Finally, many people will be considering making cash gifts to the happy couple. Whilst there are a number of exemptions available for gifts from an individual on marriage/civil partnership including £5,000 to a child; £2,500 to a grandchild/great grandchild; and £1,000 to any other person, anything above those figures, after taking into account the £3,000 annual exemption, will be subject to the 7-year rule for larger gifts.

   Bear in mind that if you are making a gift other than cash, there could also be CGT implications. 

The above is not an exhaustive list but highlights a few matters worth considering.

Arthur has a particular specialism in art-related matters. He advises artists and those responsible for artists’ estates (such as family members, executors and trustees) on legal, commercial and strategic planning. One of his international artist clients comments “This guy is saving my life!”.

Arthur advises collectors and owners of heritage property on tax matters specific to this area such as the acceptance in lieu scheme, conditional exemption and the cultural gifts scheme.

A number of clients have expressed great regard for Arthur’s ability to understand the human dynamics in a situation and to advise members of families sympathetically and straightforwardly.

Arthur is a member of STEP, PAIAM, International Catalogue Raisonné Association, Institute of Art & Law and the Charity Law Association.

Enough said.

If your children are under the age of 18, have you thought about who should care for them if both parents passed away?

According to research, seven out of ten parents in the UK parents do not have a legal guardian in place to care for their children in the event of their deaths.

If both parents with parental responsibility die and a guardian is not appointed in the will, then the courts will decide who looks after your children. There is no guarantee the court will appoint the person or people you would have chosen as guardians, so it is important to make the decision yourself.

Whilst a mother automatically has parental responsibility, unless the father is married to the mother, listed on the birth certificate, or a has court order bestowing parental responsibility on him, he will not automatically become the legal guardian if the mother dies.

A common misconception is that any children will automatically go to grandparents. This is not the case.  In the absence of a will appointing the grandmother/ grandfather as guardian, it may be necessary to apply to court to formalize this appointment. In some scenarios, there is even the risk that children are taken into care while guardianship is clarified.

Additionally, while godparents can have a crucial role in the lives and upbringing of children, they have no legal rights in respect of children in the event that their parents die. If you wish your children’s godparents to also be their legal guardians, you should ensure such an appointment is made by will.

Deciding who the guardian(s) should be is a difficult decision, so when appointing the guardian(s) here are some things to consider:

• Do your children know the guardians? If so, what is their relationship like?
• Do the guardians have the financial ability to raise your child if your estate cannot cover all the costs?
• Do the guardians have similar beliefs, values, and outlook in life as you do?
• Where do the guardians live?
• What are the guardians ages?
• Are the guardians likely make similar decisions to those that you would have made yourself for your children?

Also bear in mind, if each parent appoints different guardians the guardians must agree on decisions relating to the children, and if they can’t, it will be for the court to decide.

Finally, it is worth noting that your chosen guardians do not have to accept the appointment, so it is important that you discuss it with them, and they accept the responsibility, before appointing them.  However, providing your guardians are willing to accept the guardianship, you’ll have peace of mind you have done as much as possible to protect your children, even if you’re no longer around.

She works closely alongside Nicole Marmor, Aisling Kelly, Louise Stradling, Rebecca Daniels and Charles Burrell to assist their clients and ensure all matters are dealt with swiftly and to the Sherrards standards.

Those are the facts pure and simple.

She specialises in Will drafting including those containing Trusts, the preparation of Lasting Powers of Attorney, obtaining Grants of Probate, and the administration of Estates. Rebecca also assists senior members of the team in more complex probate matters that have an international element.  

Rebecca understands that the nature of these matters is that they are personal and important to each individual.

She is committed to listening to your wishes and providing the best solutions for you and your family.

That’s Rebecca for you.

Louise prides herself in her friendly approach to help clients feel at ease during their difficult circumstances. She offers celar explanations and works hard to break down legal jargon.

Louise is a full member of The Society for Trust and Estate Practitioners (STEP) and the Private Client Section of The Law Society.

Outside of her work, Louise can run for miles and dedicates her time to practising Yoga. She then rewards herself with finding the best afternoons teas!

That’s Louise for you. 

She works closely alongside Nicole Marmor, Aisling Kelly, Louise Stradling, Rebecca Daniels and Charles Burrell to assist their clients and ensure all matters are dealt with swiftly and to the Sherrards standards.

Those are the facts pure and simple.

In October 2020, amendments to the Money Laundering Regulations came into force introducing new rules extending the scope of The Trust Register (TRS) so that it applies to a wider range of trusts, both based in the UK and some non-UK Trusts regardless of whether or not the trust is liable to pay tax.

Relevant trusts must register with TRS if they are liable to UK taxation in any year.

Although estates themselves are not subject to registration, in some instances Personal Representatives will need to register the estate, for example, if they are selling property worth £500,000 or more. Bearing in mind local property prices, many Personal Representatives may be caught and may be unaware of their obligations.

There are deadlines for registration of new and existing trusts; for existing non-taxable trusts that have not yet been registered this is 1 September 2022.

Trustees are also required to ensure the TRS is kept up to date, and again there are deadlines for doing so.

Types of trusts

The most common type of trust that needs to be registered is an “express trust”. These include bare trusts, discretionary trusts, interest in possession trusts (if created on death they are excluded from registration for two years as with other will trusts), protective trusts, pilot trusts (often set up to receive pension benefits) created before 6 October 2020 containing more than £100, and pilot trusts created after 6 October 2020 regardless of amount held. 

Charitable trusts and Child Trust Funds do not have to register.  Bereaved minor trusts and statutory trusts (created on an Intestacy) do not have to register as an express registrable trust but may have to register if they have a UK tax liability.

For trusts relating to land, eg where two or more people have bought a property together, where the Trustees and Beneficiaries are the same people, there is no requirement to register.  However, if there is a Declaration of Trust in place and the Trustees/Legal Owners of the property are not the same as those with a beneficial interest then the trust is required to register. 

This may occur where a third party has lent monies to assist with a property purchase and wishes to protect their investment, or, for example, children have assisted their parents to purchase a property under the Right to Buy Scheme.

Excluded trusts

Trusts for retirement policies are excluded from registration during the lifetime of the person assured provided that the policy only pays out on their death, terminal illness, critical illness or permanent disablement, or to meet the cost of healthcare services.

Information required

The information required by the TRS can be submitted online and the type of information required depends on whether the Trustees and Settlors (the person or people creating the trust) are individuals or a business or organisation, such as a charity.

Trusts with a UK tax liability need to provide more extensive information, including details of the trust assets as part of the annual tax return. 

There are penalties for failing to provide the information required by the appropriate deadlines.  However, given difficulties with both registering new trusts and updating the register, and a recognition that the last tax year was the first year that trustees have been able to meet their obligations, HMRC had indicated that they will not automatically be charging penalties. However, it is not clear how long this honeymoon period will last.-HMRC has certainly not been lenient on penalties in relation to late reporting of capital gains on UK properties.

If you are the Trustee or Settlor of a trust created at any time or you are dealing with an estate especially one where there is a property to be sold, and you are uncertain as to whether the new rules apply to you, please contact Sherrards and our trust experts will be happy to guide you in the right direction.

To find out more, please contact Private Client Partner Nicole. 

It is my firm advice that everyone should make a Will, but if you don’t then it is important to be aware of the consequences of not having one. Without having one in place at the time of your death, or if your Will is no longer valid, the law dictates how your estate will be divided in accordance with the Intestacy Rules. These rules could potentially result in your loved ones not benefiting from your estate in the way in which you would have wanted.

Why make a Will?

Below are some key points of why you should make a one to help protect your family and assets.

• To avoid your assets being distributed in accordance with the Intestacy Rules which could mean, for instance, your spouse not inheriting all of your estate
• To ensure that those you wish to inherit your assets on your death get them
• To nominate executors of your choice to deal with the distribution of your estate
• To nominate your preferred guardians of your children
• To make small personal gifts
• To take advantage of tax saving strategies.

When to update your Will and things to remember

The general advice is to review it every 5 years, or if you’ve had a change in circumstances in the family particularly births, deaths, decisions to marry, divorce, form or dissolve UK civil partnerships.
On marriage or entering a civil partnership (or remarriage or a new civil partnership), your old Will is automatically revoked and has no effect, unless it has been made in contemplation of that marriage or civil partnership and contains a relevant statement to that effect. If you pass away without making a new Will your estate will pass to a list of your relatives specified by law under the Intestacy Rules.
On divorce, any gift in your old Will to your ex-spouse or civil partner is cancelled as is their appointment as Executor but the rest of it stands. This can create problems so normally it is better to make a new Will.

The pitfalls of making a DIY Will

Homemade or “DIY” Wills have become a popular option over the last few years. The appeal is understandable with costs starting from as little as £10 for a pack, and there are also many online companies offering to make your Will for you for a low fee. However, there are disadvantages that comes along with homemade Wills and below are just some to keep in mind before making the commitment.

1. Poor wording and mistakes – Without legal training, DIY Wills can be a minefield. If your wording is incorrect or unclear, you run the risk of your wishes not being fulfilled.
2. Witnesses – They are often incorrectly signed and witnessed, which leads to them ultimately being invalid. This is where the presence of a qualified professional is beneficial, as they ensure mishaps are avoided.
3. Complexities – If you own property abroad, you have foreign investments, or you own a business, you should seek assistance when you it comes to drafting your Will. You want to make sure everything goes to the right person, and complex scenarios aren’t easily catered for in the one-size-fits-all DIY option.

A Will is a legal document, and, as such, legal advice should be sought when you’re in the process of drawing one up. Whether your Will is simple or multi-faceted, the advice that a professional can give you is invaluable and can get you to think about things that may have been overlooked. Having in place a valid Will ensures your loved ones will be well looked after when the time comes. Contact Nicole for more information.