The coronavirus pandemic has pervaded all aspects of life, both personal and professional, without discrimination. Below are some essential legal housekeeping tips to keep on top of your affairs and issues to watch out for as an Executor, Trustee and/or Attorney during this challenging and unprecedented period.
Review any current Will you have to make sure it complies with your wishes and if not, take steps to bring this document up to date so that the beneficiaries you would like to inherit will do so.
If you do not have a Will, on death your Estate will be governed by the Intestacy Rules. This may or may not have adverse effects both in who ultimately receives your Estate but also how your Estate is taxed. Take advice on making a new Will to make sure that your Estate passes as you wish, all wealth protection mechanisms that can be in place are in place, and that you are maximising the tax allowances available.
With self-isolation and the current social distancing rules, adhering to signing and witnessing procedures for Wills presents its own challenges. Keeping safe and well has to be the priority and the Solicitors for the Elderly, STEP, the Law Society and the Ministry of Justice are looking at emergency legislation to amend the signing process to help.
Enduring Powers of Attorney (EPA) and Lasting Powers of Attorney (LPA)
Do check that you have the appropriate Powers of Attorney in place. LPAs replaced EPAs in 2007. EPAs made before this change are still valid but only cover decisions relating to your financial affairs
Under the LPA system you can create two types of Power of Attorney, one governing your financial affairs and the other your health and care. These documents will allow your chosen attorney/s to make decisions on your behalf if you no longer have the mental capacity to do this yourself.
Finances and Estate Planning
Check your financial affairs are in order. Make sure that all your death in service and pension nominations are in place and are consistent with the terms of your Will. If you have life insurance cover, check that critical illness cover is available and whether it can be written into trust or that this has already been done.
If you are considering gifting assets to the next generation, although there is no guarantee that investment values are at their lowest – the real economic fallout may yet to be seen – this could be a good opportunity to make gifts whilst investments appear undervalued for capital gains tax and inheritance tax (IHT) purposes.
You may manage the number of days you spend in the UK tax purposes under the Statutory Residence Test (SRT). If this is the case you may find that the current travel restrictions and quarantining prevent you from leaving the UK when you want to. HMRC have confirmed that in exceptional circumstances any additional days you spend in the UK as a consequence may not count towards your day count under the SRT but each case will be considered on its facts.
We all have so much of our lives online – bank accounts, bills, music, social media. Having a digital assets log to record what you have and how your online life can be accessed is essential.
As an executor your job is to maximise the estate assets and administer the deceased’s estate in accordance with the terms of their Will whilst being accountable to HM Revenue & Customs for IHT, any other taxes due and all other creditors. You will need to make decisions on whether to sell assets at a loss now to settle these liabilities, which presents the opportunity to claim an IHT rebate if sold within the permitted time frame, or to consider alternative funding arrangements and hold on to the investments in the hope of a market recovery. Bespoke legal and financial advice, as well as managing beneficiaries’ expectations, will be essential.
As trustees your duty is to preserve the trust assets and balance needs of the beneficiaries. In times of economic uncertainty it is wise to review the Trust’s financial strategy to make sure that it can work in times where asset values are falling and there is a likely knock-on effect on the trust’s income stream. Beneficiaries will need to be kept up to date and warned if their income or any planned capital distributions will be affected.
Health and Care – if you are in the invidious situation of having to make vital decisions, which may include decisions on life sustaining treatment, regarding a family member or friend’s care, work with the relevant medical professionals and remember your duty is to act in the best interests of the donor. Even in these uncertain times the Court of Protection is still able to make urgent decisions regarding a patient’s health, although these are now being dealt with via telephone or video calls so as to avoid face to face court hearings. If in doubt, always seek professional advice.
Financial – as an attorney you may be managing the financial affairs of someone else and anxiously watching the financial markets fall knowing that expensive care fees need to be paid. Keep talking to the donor’s professional advisors to get the best advice on what options are available in order to minimise the financial impact to the donor’s affairs over the long term.
Private business owners
Tax Breaks – make sure your business has advice on and is claiming the fast evolving tax and financial breaks and support being made available to help with cash flow and liquidity.
Exit and succession – if not already in order, get your exit and business succession plan in place so that the business can run smoothly in the event of unexpected illness or death.
Be fraud aware
In difficult times there will always be those who wish to take advantage of the situation. Be alert to banking fraud and check bank details over the telephone before making any bank transfer.
Always take bespoke professional advice.