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If any part of Jennifer's articles are used by third parties it would be much appreciated if acknowledgement could be made to Jennifer Margrave of Jennifer Margrave Solicitors LLP
- Getting the best out of your solicitor
- Don't waste money on a status symbol
- Trust me I'm a lawyer
- ABS - What does it mean to you?
-
Are you a ten per center?
Spring is a time for weddings and especially this year with the weddings of William and Kate and also Princess Anne’s daughter Zara later in the year.
With all the organisation that goes on, not many brides or grooms think of wills but what happens if you’ve made a will and then marry? What about making a will before the couple fly off to their exotic honeymoon?
What may people don’t realise is that a will is revoked by marriage so the prudent couple who make a will before they leave might find it is no longer valid after their wedding vows are taken. The answer to this is that a will can be made in contemplation of marriage, which means that, so long as the will is clear that the couple intend to marry, then any gifts to a new bride or her groom will still stand after the marriage ceremony.
Most couples being optimists wait until they return from their honeymoon to make their wills – or don’t make wills at all. Many couples – unmarried ones as well – assume that all their estate will pass to their spouse but this is not necessarily so, and the law says that spouses get what is called a ‘statutory legacy’, currently £250,000, and then the rest of the estate is shared between the spouse and children, if there are any. If there are no children then the deceased’s spouse’s family can claim part of the estate.
So what happens if you leave all to your spouse and then divorce? If the divorce is made absolute then any gifts to a former spouse are taken out of the equation and the will reads as if the next layer of beneficiaries get the spouse’s share – if there is no provision made in the will, then the estate will pass under intestacy. If no will has been made the same will apply.
So wills and marriage do go together – like the proverbial horse and carriage.
Funding for care – the scare stories and a silver lining….
Many older people are scared about how they are going to pay for their care if they become very frail or ill. Stories about people having to sell their homes to pay for their care are common and there is a fear that Social Services refuse to fund until the level of capital has reduced to a ridiculous level. It is true that Surrey County Council Social Services – the local authority responsible for funding care won’t fund unless a person’s capital has gone below £23,250. Even then a person will have to contribute their income to pay for their care.
But it is not known that medical care – whether in a nursing home, care home, or even in your own home - is the responsibility not of Social Services but of the National Health Service. And it is not means tested. If a person has a primary health care need then the NHS must pay for their care, without taking into account that person’s finances.
The trick is in the words primary health care need; the NHS have strict budgetary constraints to stick to so have to be careful with their money and it is often the case that it is not pointed out that a person may be eligible.
The law was confirmed in a 1999 case involving a paraplegic lady called Pamela Coughlan, when the Courts confirmed that the NHS was responsible for paying for her care.
The nursing staff and doctors in hospital are busy and don’t always have the time to tell families that this is a possibility and are pushing for discharge to free up hospital beds. There are horror stories of a person not getting NHS continuing care funding unless they are being fed with a Peg (a device to feed a person through their stomach) or have very serious nursing needs because, for instance, they exhibit very aggressive behaviour. But this is not necessarily the case.
The NHS award the funding after carrying out a series of assessments based on 12 needs, including behaviour, cognition, skin viability and nutrition. Each need – or ‘domain’ – has several categories from ‘low’ to ‘high’ and some needs have higher categories of ‘severe’ and ‘priority’. It depends on the score in each of the domains as to whether a person is awarded the funding. Our firm has the nursing expertise to investigate a person’s medical records, care home records and other relevant information to mount a serious case for many people to obtain NHS funding.
We have successfully appealed against decisions not to award NHS funding on behalf of several clients which has meant, in the majority of cases, a significant repayment of care fees backdated to when the patients first started to receive nursing care.We have also been successful in claiming a refund of care fees after patients have died.
Most of our clients come to us after trying to claim such funding themselves and not being successful because they do not have the weaponry to fight the professional assessors that the NHS employ – we will talk to new clients to work out what they want to achieve and we will offer a fixed fee service to let them know whether it is worth pursuing a claim for NHS continuing care funding.
All it takes is a phone call to our offices.
How to get the best out of your solicitor
Seeing a solicitor is like going to the dentist – frightening because you don’t know what to expect AND how much it is going to cost.
Is that true? It ain’t necessarily so, as the song goes – mainly because the Solicitors’ governing body, the Solicitors Regulation Authority now expect all lawyers to give an estimate of the fees at the beginning – and if you look at my website www.jennifermargrave.co.uk you will see that, as far as possible, we work with fixed fees so you know what to expect.
But if the job is not within our fixed fee range, how can you keep the costs down? Most solicitors charge by the time spent on a matter, the argument being that the more experienced solicitor will not need to spend so much time researching the law or preparing complicated letters of advice, so you will see that I am ‘charged out’ at a higher rate than my assistant solicitors. When you meet with us we will firstly talk about the level of expertise that is required for your matter and allocate the right person for the job but you will always see a solicitor or a fully qualified legal executive.
We will work with you to try to achieve a level of fees that is acceptable to you and the way we do this is to discuss with you what you can do to help. If, for instance, you are an executor of a will you can collate the paperwork, we can obtain probate for you and you can then deal with collecting in the assets.
Or if you need to deal with a family situation that involves legal work, we will discuss with you at the beginning of the matter what you can do and what we will do. For instance, we don’t need to collect papers if you already have them but be prepared to hand them over to us when you come.
Try to keep interviews short by preparing a written note of what you think your problem is and make sure you bring all relevant documents with you. For instance, if there is a problem regarding your house, it is always sensible to produce your deeds. Remember that we have probably heard your story before, so try to keep to the bare facts and let us ask relevant questions to get the fuller picture.
Most people know it is now a legal requirement that we verify identification with an up to date document with your photograph on it and a utility account of not less than three months’ old so make sure you bring that with you.
At the first meeting we will outline how we will work with you and what you can do to help us – if you need to obtain records from some other body we might prepare a form of authority for you but it could save time if you arranged for the records to be obtained.
You will see that our logo is ‘we advise on law but do much, much more.’ That is largely true. A lot of what we do is administrative but necessary and behind the scenes, but still has to be charged for. The rules we are governed by require us to ‘know our client’ so we have to record basic information about you in a confidential way but also in a way that can be accessed in the future and this all takes time. In addition many clients come back time and again and we already have records so do not have to waste time having basic information repeated, so in the long run, that administrative work saves time.
When we meet with you we will try to give you a time table when we could expect to process the matter and we try to stick to that time but you can save costs by ensuring you also keep us informed – quite often costs increase because we have to chase!
We like our clients – and enjoy working with them so (with apologies to dentists) it’s not like going to the dentist – we work with you to get the best out of us.
© Jennifer Margrave
Who would you approach to deal with the administration of an estate? Solicitors have traditionally been the people who deal with probates and most families would expect to see a solicitor about this work, even though some feel they are expensive, longwinded and take forever to wind up the estate.
However, it is now a truism that there are several ways to deal with the estate of a person – so why use a solicitor?
Firstly let’s look at what might happen. When a person dies the first action is to register the death, and the registrar might give you some helpful leaflets, which invite you to call a freephone number (is there anything free in life?); then when you visit the funeral director, he may too give you a leaflet with another freephone number to ring.
However, the savvy family know a thing or two and decide, well, why use anyone? Do it yourself and save lots of money. Yes, that might be fine if it is a simple estate with a few bank accounts and a house leaving all to surviving wife or husband. But what if there are shares? Family arguments? A complicated will? Inheritance tax to pay? So a decision must be made about who to consult, especially at a time when you are deeply upset and perhaps not thinking straight.
You have that leaflet with the freephone number so you think it’s a good idea to take advantage of it. You are then visited by a person who tells you that solicitors take months and charge thousands. You believe them. They ask you to sign forms and give them all the information and off they go. One of the forms they ask you to sign, perhaps, is a power of attorney so you need not do any more signing; all will be dealt with in-house.
How long will you have to wait to hear from them again? It should be, according to their own literature, a few months. Is it? I have been hearing stories that it is not. I have also been hearing stories of high fees, and inefficiencies.
I do not know whether these stories are true or not but what I do know is how solicitors deal with probates especially in our firm. Firstly, we take between eight and ten weeks to obtain probate, if there are no complexities and sometimes less. Often, we then hand the probate to the family executors to collect in the assets; why do we need to do this if it is all passing to a widow or widower? We talk about our fees at the beginning and discuss with the family how those fees can be kept to a minimum if the family are concerned about that.
Sometimes a probate might take longer but we tell you why; it might be because of a company not replying to letters, or additional assets being found. But we will tell you this and, if you are concerned, you can pop into our office and discuss your worries with any member of the team. We are here for you, locally.
And we try to wind up an estate as soon as possible because we understand that this helps the grieving process.
So before trying that freephone number, or even after meeting with others, speak to us and give us a chance for you to compare the service you will receive.
‘There’s no need to make a will now that we get that double nil rate band, is there?’
That’s the sort of comment I’ve been hearing from couples for some time now but ‘it ain’t necessarily so’ as the song goes. In this area, with houses still worth £500,000 or more, and with some savings, it is still useful to consider a will. The tax planning wills that used to be prepared, before the Government changed the law, included a discretionary trust which meant that the family had flexibility on the first death. The surviving spouse or civil partner was protected but some of the family assets could also be ring-fenced for the children.
Although it is not necessary to carry out this ring-fencing on the first death for inheritance tax purposes, such discretionary trusts are useful in certain family situations, where the testator is worried about beneficiaries not being able to use the money wisely.
In addition if a person is a beneficiary of a discretionary trust – such as the surviving spouse or civil partner - if they needed care, only their assets are taken into account, not those in the discretionary trust. I have often found that many couples who buy their council houses often find they have to sell them to pay for their care.
I have also heard the common misunderstanding that ‘all will pass to my spouse when I die anyway....’ which again is not necessarily true, as there are statutory limits to what a spouse receives, depending on whether there are children or not. And what happens if you die together?
3 out of 5 people die without making a will with unintended consequences, and many make home made wills which often have inconsistencies or mistakes in them which can be expensive for a lawyer to sort out. It is not just sufficient to say ‘All to mother’ – which is an actual case, when the husband always referred to his wife as ‘mother’. And what does ‘I leave all my money to...’ Is it the coins in your pocket, the money in your bank account, or your investments in Premium Bonds or other savings?
Quite often such inconsistencies can be corrected after someone has died if the family act within two years of death but only if all are adult and can agree.
It is even more important for couples who are not married to make wills; especially with young children – to appoint guardians at the very least. If guardians are not appointed then quite often Social Services will become involved and children be put into care when there might be a family member or appointed close friend who is willing to take on the children.
And if you’re going on holiday and haven’t made a will my team will be able to prepare a simple will within a few days....
So review your situation now.
© Jennifer C Margrave
THE NEW LASTING POWERS OF ATTORNEY
If you knew about lasting powers of attorney which were introduced in 2007 and were put off by the length and complexity of the form, then you may be pleased to hear that new forms are being introduced on 1 October which are much simpler to do.
Most people prepare such forms in order to make sure they choose the people who will be able to act for them if they cannot. There used to be a four page user-friendly document called an enduring power of attorney but this could no longer be created after 30 September 2007 (although if you had prepared one before that date they could be used later). Then the Mental Capacity Act 2005 introduced a new document called a lasting power of attorney which was some 25 pages long, but anybody completing it was required to read accompanying notes of some 26 pages long. It has now been admitted that it was so badly drafted, that even so-called experts found they were ‘getting it wrong’ with consequent problems of nobody being able to act for a person who might well have become, in the meantime, incapacitated. Even if one box had not been ticked the form would be rejected by the Court of Protection and the only recourse then was either to prepare a new form or to go through the expensive procedure of applying for a deputy to be appointed.
Because the forms were perceived to be so difficult to complete, and expensive, many people are using other methods of helping their elderly relatives with their finances. For instance, many banks were encouraging clients to add relatives (or friends) to their bank accounts or allow them signing powers under mandates. This gives no protection if the person added is unscrupulous as they could withdraw all the funds quite legally. Another way of dealing with the problem is to encourage people to use a general power of attorney, which, strictly, would lapse if the donor became mentally incapable but the general feeling was ‘who would know anyway?’
At least the Office of Public Guardian, the official body responsible for people who lack capacity, has heeded the pleas for change, and undergone a process of consultation with interested parties, and agreed a new form, which is to launch on 1 October. In this respect, Solicitors for the Elderly, of which I am a member, took part in the extensive consultation myself and other colleagues being involved in meetings when there were many discussions which sometimes became rather heated! This, I believe, showed the dedication of SFE members to ‘getting it right’ for our elderly clients, who were often the group of people trying to wrestle with these documents.
Now that hard work has crystallised into new documents - there are two, one for Property and financial affairs and the other for health and welfare – the process should be simpler and cheaper. These documents are much shorter and easier to complete although it is still important to take independent advice before completing them. After all you are giving someone power of your affairs at a later time when you will not be able to act, and there are still court rules that need to be complied with.
For instance, on the front page there is a warning: ‘This lasting power of attorney could be rejected at registration if it contains any errors!’ So independent advice from someone familiar with the forms will help to make sure you get it right.
Once completed, the forms will still need to be registered as before and cannot be used until they are so registered.
The Court of Protection have given people a time of grace so that they can still use the old forms up until the end of March 2011. The reason for this is that you might have had the document signed by the person who wanted to make the power of attorney but the attorneys have not yet signed the documents. So the forms can be used, but because they are 25 pages long and the new forms are considerably shorter, I suspect that most people will want to use the new forms.
I confirm that if you have made an Enduring Power of Attorney you do not have to make another document.
© Jennifer C Margrave
You may have read in the press that the government has opened up legal services so that non solicitors can give legal advice.
I have no problem with this. After all, if you are sick you can decide to use your grandmother’s sure fire recipes such as honey and lemon to cure a common cold, or go to the chemist for a pharmacist’s recommendation, or, if you are really worried, go see a doctor. The doctor may recommend you to a specialist, if the symptoms persist.
Many solicitors are worried about the way in which the government have opened up legal services but the law can be both simple and complex, and it seems to me that the same analogy can be applied to the law as it can to medicine or any other discipline. For instance, some people feel comfortable about decorating their own houses; others use the experts; most of us are comfortable with changing a fuse but would not want to re-wire a house.
But in all things, if you want to use the services of others who claim to be experts, you should make sure that those claiming to be specialists really are what they claim to be. How do you do that?
I started this article by asking what is Tesco law? That is the phrase that the popular press has coined and it implies mass production, availability and access for all – and any company providing legal services would claim quality as well. But how do they achieve this and how do you, the consumer, know that their claims are justified?
Many companies providing legal services may have an in house training programme in the particular law that they are going to provide, whether it be conveyancing, will making or contract law. Who provides that training? Well, it is going to be law lecturers, or lawyers. And how do they maintain the quality to a mass market? Usually by doing volume work in a mass produced way to keep the costs down. This may work well when it is a ‘simple’ will or a ‘simple’ sale and purchase of a property but who decides what is simple? It is not until a full investigation has taken place that the legal aspects of these transactions can be assessed as to their simplicity or complexity and then the service appropriate to that transaction given and only a well trained person can make a full and proper assessment.
I asked above how you can know that the claims of service providers are justified. I can only say go by personal recommendation or the fact that a person belongs to a respected trade association. For instance, Surrey Trading Standards runs a quality control system which means they check out organisations before they can be listed.
And, it should be appreciated, that before a solicitor is allowed to practice, they have to undertake at least six years study, with four years academic setting and two years working with other lawyers under a training contract. In addition they are governed by the law itself as to how they can practice, charge, and have a very full and detailed code of conduct which they have to comply with and, if they don’t, they can be struck off. There is a compensation scheme so that if a person suffers loss, the whole profession is responsible for paying into that scheme to pay out appropriate compensation.
So, before you consider ‘Tesco law’, make sure that your adviser, at the very least, belongs to a body which governs how they work. For instance, I belong to The Law Society; find out to whom you can complain, and, if you do complain, that there is some compensation if you have suffered loss. For instance, if you seek advice from my firm, I will give you detailed terms of business setting out all this information.
© Jennifer C Margrave
Published letter to the Surrey Advertiser regarding elderly population statistics
Dear Sir
There are statistics and the sensible interpretation of statistics; can I take issue with the scare-mongering article on page 5 of this week’s Surrey Advertiser? (2 July 2010).
It states that by 2030 nearly 1 in 5 of Surrey’s population are likely to be over 65 and therefore there will a greater demand for services.
If you look at this in context, 4 out of 5 of the population will be under 65 – looks different then doesn’t it?
There is also the implication that all those over 65 will become a huge burden on the rest of society, but what is forgotten is that ‘65’ is the new ‘50’ – and that is one reason why the government is proposing to increase the statutory retirement age. We are all living longer but many of us are also living healthier lives so that instead of being a burden on society, those over 65 are quite often making a very valuable contribution to society by being volunteers, carers of both older relatives and grandchildren, and also working part-time.
I work with many elderly people and it is true that some have health problems but that is not necessarily caused by the aging process itself. In addition, other statistics will show that the average length of stay in nursing homes is decreasing which is in implication that less people need complex nursing care for less time before they die.
I agree that, as a person ages – which can be at 70 or 90 or any age between or after, they may require help from others and this help should be made freely available (either nursing or daily living care), because those who reach that grand age have paid taxes all their lives so their contribution should be recognised by accepting responsibility for them. But do not put the fear of the cost of such by saying ‘Almost a fifth of the population.....’ because it is not true to say that that proportion will be costing society an inordinate amount of society’s resources.
© Jennifer C Margrave
Financial abuse and what to do about it
Do you know a neighbour who is isolated but is visited by strangers on a regular basis? If challenged, they may claim to be carrying out building or gardening work, but there is no evidence of this. Could this be financial abuse?
Or have you seen someone in your bank or building society being led to the counter and assisted to take out large sums of cash? This might be financial abuse as well.
In my job we see quite a few cases such as this and it is always difficult to prevent it, especially if the older person is suffering from short term memory loss so can’t remember what they have done. Quite often the person being abused does not recognise it as such, being grateful for the care they are being given and wanting to reward the carer.
So what can you do about this? Ignore it? Or try to stop it? If you are concerned about somebody you could contact Social Services who have a vulnerable adult team and a process that could involve the police. If you do not want to contact Social Services, you could contact the Charity, Action on Elder Abuse, whose advisers are trained to assist. Their telephone number is 020 8835 9280.
Another port of call, if you believe rogue traders are ‘working’ on a neighbour, is to contact Trading Standards. You will see the ‘Buy with Confidence’ mark on my advert and this is because the Trading Standards in Surrey (a County Council organisation) has vetted the way in which I work (see previous article in an earlier Burpham Pages) but Trading Standards officers are also involved in investigating when tradesmen might be abusing their position by charging vulnerable people too much (which of course should not happen if the tradesmen has a ‘Buy with Confidence’ accreditation). If the trading standards cannot prosecute under contract law, they might report the matter to the county council’s social services team to visit the older person and see if they can help.
There is now a dedicated police team to investigate financial abuse but they are often hampered by the lack of evidence because the older person is not able to give a witness statement.
With the information above, it should be possible to notify one of the agencies, such as trading standards – if it is a tradesman – or the police or social services, or get advice from the charity
© Jennifer Margrave
December 2010
How to get the best out of your solicitor
Seeing a solicitor is like going to the dentist – frightening because you don’t know what to expect AND how much it is going to cost.
Is that true? It ain’t necessarily so, as the song goes – mainly because the Solicitors’ governing body, the Solicitors Regulation Authority now expect all lawyers to give an estimate of the fees at the beginning – and if you look at my website www.jennifermargrave.co.uk you will see that, as far as possible, we work with fixed fees so you know what to expect.
But if the job is not within our fixed fee range, how can you keep the costs down? Most solicitors charge by the time spent on a matter, the argument being that the more experienced solicitor will not need to spend so much time researching the law or preparing complicated letters of advice, so you will see that I am ‘charged out’ at a higher rate than my assistant solicitors. When you meet with us we will firstly talk about the level of expertise that is required for your matter and allocate the right person for the job but you will always see a solicitor or a fully qualified legal executive.
We will work with you to try to achieve a level of fees that is acceptable to you and the way we do this is to discuss with you what you can do to help. If, for instance, you are an executor of a will you can collate the paperwork, we can obtain probate for you and you can then deal with collecting in the assets.
Or if you need to deal with a family situation that involves legal work, we will discuss with you at the beginning of the matter what you can do and what we will do. For instance, we don’t need to collect papers if you already have them but be prepared to hand them over to us when you come.
Try to keep interviews short by preparing a written note of what you think your problem is and make sure you bring all relevant documents with you. For instance, if there is a problem regarding your house, it is always sensible to produce your deeds. Remember that we have probably heard your story before, so try to keep to the bare facts and let us ask relevant questions to get the fuller picture.
Most people know it is now a legal requirement that we verify identification with an up to date document with your photograph on it and a utility account of not less than three months’ old so make sure you bring that with you.
At the first meeting we will outline how we will work with you and what you can do to help us – if you need to obtain records from some other body we might prepare a form of authority for you but it could save time if you arranged for the records to be obtained.
You will see that our logo is ‘we advise on law but do much, much more.’ That is largely true. A lot of what we do is administrative but necessary and behind the scenes, but still has to be charged for. The rules we are governed by require us to ‘know our client’ so we have to record basic information about you in a confidential way but also in a way that can be accessed in the future and this all takes time. In addition many clients come back time and again and we already have records so do not have to waste time having basic information repeated, so in the long run, that administrative work saves time.
When we meet with you we will try to give you a time table when we could expect to process the matter and we try to stick to that time but you can save costs by ensuring you also keep us informed – quite often costs increase because we have to chase!
We like our clients – and enjoy working with them so (with apologies to dentists) it’s not like going to the dentist – we work with you to get the best out of us.
© Jennifer Margrave
ABS – what does it mean to you?
If you’re a car person, it could be the anti-lock breaking system on your car; if you’re a keep fit enthusiast, it could be your abs – the muscles in your arms – and, if you’re a chemical wizard, it could stand for acrylonitrile butadiene styrene, a common plastic. But there’s going to be another definition after October this year, when alternative business structures come into being, and it means that solicitors – who traditionally practice together – can run their businesses with other professionals.
What does this mean to you, the client? Firstly, you might be confronted by a sales person in a stationers or a supermarket fronting a franchised firm of solicitors asking if you have made a will or have had a personal injury where you might get compensation.
Many big firms are hoping that merchant banks or private equity firms will invest in them so that they can market their products to the public. Other companies such as the funeral directors and banks are setting up legal departments to carry out work such as probate which was traditionally only done by solicitors.
Many lawyers though have expressed the worry that, if you have non lawyers who share in the fees made, those non lawyers will prejudice the way in which the lawyer gives advice.
All solicitors have to give independent and confidential advice and act in the best interests of their clients; but with the need to make a profit for investors, extra pressure may be put on them to only accept the most profitable work, or their fees will increase.
But there will still be the smaller firms like my practice, where we pride ourselves on the fact that most of our clients come to us because of the expertise and skills we display in giving advice and assisting many with their legal problems. We try not to be gimmicky or work with others who might prejudice the way we can give independent advice, although we also try to keep up to date by using such tools as Twitter and Facebook to keep our clients informed of what we are doing.
So how do you differentiate between these new ‘giants’ and the ‘minnows’? The only way is to ask around – and we find that our clients are pleased to recommend us because they have been pleased with the service we provide. I repeat, ask around – and think about what you want from lawyers; do you want a remote service, using far distant call centres or do you want to be able to pop into your local solicitors’ office and have a quick chat with an approachable and friendly person? Many people prefer the anonymity of a large firm while others need the comfort of face to face contact.
Also ask about fees – we have heard that large companies have been telling people that solicitors’ fees are excessive and very high – especially in the probate field – whereas this is not necessarily the case. I repeat it again; ask around and find out before signing any paperwork.
So, I suggest that ABS can mean to you – put the brakes on before you sign a contract with any person offering legal services; use your ‘abs’ to pick up the phone and ask around – and make sure the chemistry between you and the lawyer, whoever you choose, is right for you
© Jennifer Margrave, Jennifer Margrave Solicitors LLP June 2011
I was given a pair of socks by a client which had printed on them ‘Trust me, I’m a solicitor’. Another friend gave me a coaster with the Shakespearean quote, ‘First, we’ll kill all the lawyers.’
(I hope they are being ironic, but that’s another story….)
So, why do we have to ask people to ‘trust us?’ and why kill the lawyers first? A recent survey commissioned by the Legal Services Consumer Panel claims that solicitors fall below doctors and teachers as trustworthy members of society.
I was surprised by another statistic as a result of the same survey, that 47% of the population, i.e. less than half, trusted their solicitor to tell the truth.
However, the survey results also show that, of those whose solicitors had completed the work, 84% were satisfied or very satisfied with the outcome of that legal work. And 56% considered they had got value for money.
So is this a case of the bogeyman in the cupboard who you don’t know – and if you open the cupboard and face the fear, it’s not as bad as it seems?
Perhaps there’s an historical reason for the facts – not quite going back to Shakespearean times.
Traditionally only the wealthy dealt with lawyers for property matters – and before the Second World War it was not unknown for solicitors to render their bills once a year. This was because only those who came from a moneyed background could afford to become solicitors in the first place. Many ‘articled clerks’ would pay for the privilege of following their principal around, learning the ropes as they lunched or dined with clients from the same background.
Another historical point is that a large number of people did not buy their houses before the Second World War, preferring to rent, so few people had contact with solicitors. The boom in house ownership took place in the late fifties and sixties, just as the legal world was opening up to ‘ordinary’ applicants.
By the sixties, grammar school children were coming into the law – many, like myself, from a working class background. This means that now, most lawyers are, I hope, understanding of all types of people from all sorts of backgrounds. A large part of the misunderstanding between lawyer and client is usually lack of communication; well, that is going now.
The Solicitors Regulation Authority (‘SRA’) is introducing a new system of overseeing solicitors in October, called ‘outcomes focussed’ which means, simply, if a client is happy then the SRA won’t interfere.
So, it is a requirement of our governing body that we must communicate with the client, explaining how we charge before the matter starts, for instance, and agree with you, the client, how we are going to work with you, giving you time limits, etc. Most lawyers will welcome you and be approachable, happy to develop a good relationship to build on for the future. And if they are not, find one who is….
© Jennifer Margrave, Jennifer Margrave Solicitors LLP, July 2011
Do you believe in giving to charity? The Government, trying to encourage us all to do so, is introducing a new relief from April 6 whereby if person leaves 10% or more of their estate in their will to a charity then less inheritance tax will be payable.
At the moment estates are taxed, very simply, at 40% over the ‘nil rate band’ of £325,000.
But after April the 40% tax is reduced to 36% if 10% of the relevant estate is given to charity.
Sounds great doesn’t it? Does it mean that you will be able to leave more to your children or others? The tax won’t apply when estates pass to spouses because they are tax exempt anyway (so there is no point in trying to save tax); let us have a look at what it means.
First what is a person’s estate for IHT purposes? This can be complex because it may include property in trusts or assets which a person thought they had given away but the gift is not ‘perfect’ – called a gift with reservation of benefit. So, before making a will giving 10% to charity it is best to seek professional advice just to work out what the 10% is.
And how do you work out the 10% even when you know what your estate is? One point is that you do not know the size your estate will be the day you die; you may have to go into a care home and your house, usually your main asset, may have to be sold to pay for your care.
And will it mean you are able to leave more to your non charitable beneficiaries? Let us look at some examples.
Mr John Smith has a £5 million pound Estate (lucky him!). His wife died 15 years ago and his house is worth half the Estate and he lives on the remaining income.
When he dies he can use the two nil rate bands of £325,000 (being his own and his wife’s unused NRB) so his taxable Estate will then be £4,350,000 which will be taxed at 40% which means £1,740,000. This is a lot of money to give to HMRC.
What options does Mr Smith have? He could give away money to his children and grandchildren and if he lives for a further 7 years this money would be exempt from inheritance tax as it would count as a potentially exempt transfer.
However, if Mr Smith was altruistic and wanted to give money to charity, he could give £500,000 (being 10%) to a charity and then his taxable estate would be reduced to £4,500,000. He could then still use the two nil rate bands worth £650,000 and that would leave £3,850,000 to be taxed at 36% (as he has given 10% i.e. £500,000 to charity) and then the IHT will be £1,386,000 which saves £354,000 from the jaws of the taxman! But it should be appreciated that his family are not going to benefit because 10% of his estate has gone to charity.
If we consider an example of a more common estate valued at £850,000 now and from 6 April 2012:-
Now 6 April 2012
Estate worth £850,000 £850,000
Less charitable legacy of £ 52,500
Less the available nrb £325,000 £325,000
The net estate for 10% £525,000
Less minimum charitable legacy to pass 10% test £ 52,500
£472,500 £472,500
@ 40% £189,000 @ 36% £170,100
So, the amount left for distribution to non-charitable beneficiaries (i.e. the estate value less any charitable legacy and IHT due) would be £608,500 now and £627,400 from 6 April 2012.
If there had been no charitable legacy the amount available for beneficiaries would be £640,000 (the estate less IHT due which is £210,000). The charitable legacy results in a reduction in the amount left to other beneficiaries of £31,500 now and £12,600 post 6 April 2012.
So, do you want to benefit charity and pay less tax? Then the new scheme will be for you – if you want to make sure your beneficiaries get most of your estate, then the 10% reduced tax will not be useful.
©Jennifer Margrave for Jennifer Margrave Solicitors LLP
February 2012