Local solicitors offer urgent warning about Government’s ‘risky’ online legal tool

  • Local solicitors from McMillan Williams, have issued a warning about the Government’s online tool for Lasting Powers of Attorney (LPAs)
  • LPA tool leaving people at risk of financial abuse and fraud
  • Coalition of organisations including Solicitors for the Elderly (SFE), Action on Elder Abuse, Anchor, Contact the Elderly and SOLLA are backing new report

Katherine Carroll
Katherine Carroll
Partner - Private Client



Jane Amanda Flaherty
Jane Amanda Flaherty
Solicitor

Local solicitors Katherine Carroll and Jane Flaherty, based at MW Wimbledon and MW Devon, have joined a number of organisations representing older and vulnerable people to raise serious concerns around the Government’s online tool for creating Lasting Powers of Attorney (LPAs).

An LPA is a powerful legal document that allows a person to appoint trusted individuals to make important decisions about care and finances on their behalf, in the event of a loss of mental capacity through an accident or illness such as dementia.

In May 2014, the Government’s Office of the Public Guardian (OPG) launched its online LPA tool, which it claims allows people to create the documents without the need for professional advice from a solicitor.

But a new report, published by a coalition of organisations led by SFE, warns that anyone creating an LPA without taking specialist legal advice faces a significantly higher risk of being left with an ineffective legal document, incurring additional application fees, and even becoming a victim of fraud or coercion.

The report also raises concerns around the potential of a completely digital system proposed by the OPG, whereby ‘wet signatures’ – the physical signing of the document – would no longer be required.

Katherine and Jane are both Full Accredited members of SFE.  Jane Flaherty said:

“The prospect of being able to submit an LPA application entirely digitally is extremely concerning, and raises some serious questions around the potential for fraud and financial abuse.”

During a study conducted for the report, participants were invited to create LPAs using the OPG’s online tool and other ‘DIY’ methods. The study revealed that:

  • Some of the forms did not accurately express the way in which participants would want their affairs and welfare to be handled in the future
  • Documents made using DIY methods were more likely to contain elementary mistakes, rendering them ineffective and requiring additional application fees
  • Following consultation with a solicitor, most participants made significant changes to the permissions of their documents regarding how and by whom their affairs were managed

June McSparron, a 75-year-old who participated in the study, said: “You’re exposing yourself to a lot of risk by filling this form in on your own. There are so many bits that you can get wrong, and you can easily be pressured into making choices that you’re not entirely comfortable with.”

The number of LPAs being registered has increased steadily since the launch of the online tool, with over half a million registered in 2015/16 alone. The OPG is actively trying to convince more people to apply for LPAs online, having set a target for the service to comprise 30% of all applications from April 2016 to March 2017. In its latest Annual Report, the OPG even admits it is willing to take ‘risks’ in striking a balance between ‘empowering and safeguarding’.

With the OPG already receiving over 1,000 calls to its contact centre every day, the organisations behind the campaign say the Government body is potentially exposing people to unacceptable levels of risk and in doing so may be compromising its ability to safeguard those who are most vulnerable.

Katherine Carroll said:

“An LPA is by far the most powerful and important legal document an individual can have, because it allows you to pass potentially life-changing decisions about your affairs on to a third party.

It’s absolutely right that people should be planning ahead for the future with LPAs, but granting someone this sort of authority over your affairs is an extremely big responsibility for all parties involved. This is a specialist area of the law, and we recommend that anyone considering an LPA goes to a legal expert to ensure they get the right advice, consider all the options, and safeguard themselves for the future.”

To download the report ‘The Real Cost of DIY LPAs’ go to: http://www.sfe.legal

We Can Help

At MW, our mission is “to make quality legal services accessible to everyone” including those who cannot act for themselves.  If you are in any doubt that you may need to establish Power of Attorney either for yourself or a loved one call us today on 0203 551 8500 or email us at enquiries@mwsolicitors.co.uk.

tug of war

MW’s Head of Estate and Trust Disputes Team, Hayley Bundey, discusses the sad state of affairs which Lynda Bellingham’s sons have been left in following her death and their exclusion from her Will.

As most people are aware, Lynda died from cancer in 2014 and shortly before her death she executed a Will providing for her entire estate to be left to her husband Michael Pattemore.  Her children from an earlier marriage, Robert and Michael Peluso, are now bringing a claim against Lynda’s Estate in an attempt to restore their mother’s Estate to its rightful heirs.

The Claim

Her sons claim the sole reason for Lynda leaving her Estate to her husband of some 6 years was for inheritance tax saving and she trusted him to provide for her children once she was gone.  Unfortunately, as is often the case in step-families, this did not transpire after Lynda’s death and instead Mr Pattemore is alleged to have spent thousands of pounds on several lavish holidays as well as several hundreds of thousands on a mansion.  At the same time he is stated to have provided little provision for Robert and Michael (some £750) and instead is seeking to evict them from their home.

Robert and Michael are now understood to be bringing a claim against Lynda’s Estate under the Inheritance (Provision for Family & Dependants) Act 1975 (“the 1975 Act”).  They are eligible to bring such a claim under section 1(1)(c) of the 1975 Act as children of the deceased.  If successful, the Court could redistribute Lynda’s Estate according to what it considers is reasonable financial provision for Robert and Michael according to the maintenance standard (which doesn’t place them on the breadline but tries to provide them with what they may reasonably need now and in the future from the Estate).

Robert and Michael have openly said that they have invited Mr Pattemore to resolve the claim amicably through mediation but so far he is reported to have refused their invitations.  This is an unfortunate position for Mr Pattemore to adopt given how keen the Courts are now for parties to attempt Alternative Dispute Resolution (ADR – including mediation) of such claims and it is likely that if he continues to adopt this position he will be penalised on costs at a final trial if and when Robert and Michael succeed on their claim.

The whole situation is a stark reminder for parents, particularly parents in second and subsequent marriages, to ensure that their Wills reflect their true wishes without relying on their spouses to “do the right thing” by their children.  Inevitably such trust is often misplaced and parents will therefore leave their children with the very daunting and distressing task of facing legal proceedings against their step-parent at the very time when they should be grieving their parent’s loss.

Thankfully, the 1975 Act is there to protect such children in the event that things don’t go as planned.  

We Can Help

At McMillan Williams, our mission is "to make quality legal services accessible to everyone", including step families who feel they may have been wrongly excluded from their parent's Will.  Our Specialist Inheritance Disputes Team are here to help  and can provide information about any type of inheritance dispute or claim.

If you are feel you are affected by anything in this article or would like to take advantage of our FREE CASE REVIEW, call us today on 020 3551 8500 or email us at enquiries@mwsolicitors.co.uk

A recent article in the Daily Mail has highlighted the plight of Grandmother Joy Williams, who may lose her £355,000 home because her "common law" husband's estranged wife inherited half the property she lives in.  

The facts of this matter were that Ms Williams, 69, had lived with her partner Mr Norman Martin for 18 years after he split from his wife.  Unfortunately, Mr Martin never divorced from his wife and never updated his Will, so when he died of a heart attack in 2012 his half share in the house that he shared with Ms Williams and his assets went to his estranged wife, Mrs Martin.  Ms Williams then launched an application in the Courts to have “common law” spouses officially recognised.  This case has yet to be determined but Ms Williams is seeking an award that Mr Martin’s share of the home should pass to her so she has some security for the future.

This case highlighted a need for the cohabitation laws to be reformed and in particular, emphasised that the commonly held belief that a couple who are cohabiting as common law “husband and wife” is a complete myth and there is no legal status for “common law marriage”.

How to Prevent Yourself from Falling into this Trap

Prior to cohabiting together or immediately following the purchase of their home together Ms Williams should have sought legal advice.  She would have been advised that as Mr Martin had never divorced his wife nor changed his Will, his wife as a beneficiary under the Will, would on Mr Martin’s death inherit his assets which would include his interest in the property jointly owned by Mr Martin and Ms Williams.

The Government has launched a consultation document with the intention of changing the tax status of distributions made in a solvent liquidation.  Their aim being to close the tax "loophole” that allows individual shareholders being paid their capital monies via a solvent liquidation to take advantage of lower tax rates.

The Government’s intentions are to change the status of any distribution from being a capital payment to being an income payment.  This could see individual tax payers seeing a rise in the tax from as little as 10% up to more than 35%.  Furthermore there are threatened proposals that will set minimum conditions, which if met, will force the payments to be treated as income and not capital under general anti-avoidance rules.

Recent reports in the press have highlighted the case of Eastenders actress Gillian Taylforth who will receive nothing from the Estate of her ex-fiancé as he had not written a will.  It is often the case that celebrity Wills and those of their partners often catch the media’s attention.  The deaths of George Best, Bernard Matthews and Jade Goody have all raised inheritance issues.  Most notable was the case of Peter Sellars whose fortune eventually passed to the children of his estranged wife, leaving his own children with almost nothing at all.

Common Inheritance Myths

The simple fact is that if you are in a relationship, but not married or in a civil partnership with that person, then if you die without a will your partner has no automatic right to receive any of your Estate.

The concept of common law spouse is all but a myth and exists, in legal terms, in very limited circumstances with no guarantee that a common law spouse will receive anything from their deceased partner’s Estate.

There are a number of other common misconceptions about what happens to your estate if you don’t have a will; including that your estate will all automatically pass your spouse or, in some circumstances, that it all goes to the Government!

How to Avoid Inheritance Confusion and Unnecessary Expense

A Bankruptcy Petition can be used by a creditor as a tool to recover money owed to them by forcing a debtor into bankruptcy.

The Law changes on the 1st of October, increasing the minimum level of debt for which an individual can be forced into bankruptcy from £750 to £5,000.

Why is The Change Happening Now?

The new proposals are regarded as long overdue by many as the creditor’s petition has not been considered for 29 years.  Inflation has had an undoubted influence on the change and debtors will be afforded more protection this this new minimum level of debt.  The Government are seeking to improve the help available to people struggling with debt and allow them to be safeguarded against life-changing debt recovery petitions for very small debts.

It is important to note that the law remains with respect to debtors who wish to voluntarily place themselves into bankruptcy and they need only have debts of £750 or above.

Whilst bankruptcy can be the best solution for some creditors, it is not always suitable, particularly where debts are low in value and the debtor has little or no assets remaining.  The aim of the new threshold is to renew the balance of interests between creditors and debtors.

How will this affect you as a creditor?

MW’s specialist Inheritance Disputes Solicitor and Head of Contested Probate, Hayley Bundey, discusses the recent landmark decision by the Court of Appeal in the long running case of Ilott v Mitson. The decision will inevitably improve the chances of adult children succeeding in their claims against their parents’ Estates, as well as the value of those claims, even when they have been specifically cut out of their parents’ Wills.

The Claim

Heather Ilott pursued her claim against her mother’s Estate pursuant to section 1(1)(c) of the Inheritance (Provision for Family & Dependants) Act 1975 (“the 1975 Act”).  She  argued that, as a child of the deceased, she did not receive reasonable financial provision from her mother’s Will from which she was specifically excluded.

Heather’s mother, Mrs Jackson, had left a side letter with her Will explaining that she had specifically excluded Heather because of her choice of husband many years previously which had caused their estrangement (of some 26 years) and for which Mrs Jackson had never forgiven Heather.  Mrs Jackson instead left the majority of her £486,000 Estate to three Charities.

Case History

Heather’s case has been ongoing for many years (her mother died in 2004) and has been before various Courts on different issues relating to her claim.

  • Her original claim was heard in 2007 when the judge decided that it was unreasonable for Heather to be excluded from her mother’s Estate, due in part to her straitened financial circumstances, and she was awarded £50,000 from the Estate. Heather didn’t agree that £50,000 was enough.
  • She appealed the decision on the value of the claim to the High Court,  where the Court in fact overturned the first Judge’s ruling that it was unreasonable to not make provision for Heather (i.e. they awarded her nothing).
  • Heather appealed that decision to the Court of Appeal and in 2011 the first Judge’s decision (that it was unreasonable for her to be excluded) was reinstated though the Court did not deal with the value of Heather’s claim at that hearing and sent the case back to the High Court to deal with that.
  • Then in March 2014 the High Court ruled that Heather’s appeal against the value of her claim was dismissed (i.e. the £50,000 award was to stand) and Heather then appealed that value decision to the Court of Appeal. 

A Landmark Decision

Yesterday  (27th July 2015) the Court of Appeal allowed Heather’s appeal on the value of her claim, replacing the £50,000 award with one for circa £164,000 (nearly 1/3 of the Estate).

The Court of Appeal felt that reasonable financial provision for Heather could only be made by giving her enough to purchase her housing association property (said to cost £143,000), with some money on top to cover the costs of purchasing it, plus an additional cash sum of £20,000 to provide for her future income needs.  This sum was calculated on the basis that it would not impact her state benefits.

There were two errors in the law which the Court said the original Judge had made when valuing Heather’s claim as low as £50,000. The first error was that the original Judge should have verified the impact of an award on Heather’s state benefits, rather than just assuming what the impact would be. The second error that the original Judge made was to limit Heather’s award because she had no expectation of provision from the Estate (she accepted that she didn’t expect her mother to leave her anything in her Will).

The Court of Appeal Judges went on to confirm that:

  • Whilst it is not for the Court to provide an adult child with an improved standard of living equally the Court is not bound to limit an award for an adult child (on the maintenance standard) to merely enough for them to subsist. They found that Heather’s present income was not reasonable financial provision for maintenance given the restrictions imposed on her expenditure (such as an inability to fund holidays) and the lack of any provision for her future needs (when she is older or if she suffers ill health).

  • A person’s existing means are not conclusive of the appropriate level at which that person is entitled to be maintained.

  • £143,000 would allow Heather to purchase her housing association property under the right to buy scheme and also enable her to cover any further income needs she had in the future by way of equity release.
     
  • The additional sum of £20,000 was calculated on the basis of it giving Heather £331 per year for the remainder of her life so that she would have some provision for future needs without needing to go for equity release immediately. Further, it was stated that the £20,000 was “not a large amount” because the Judges weighed in the balance the Section 3 factors against Heather i.e. the fact she was an adult child living independently, that Mrs Jackson didn’t want to make provision for her and (to a small extent) the fact that there was an estrangement.

Commentary

Hayley Bundey, comments that

"This is likely to be a watershed in the pursuit of 1975 Act claims for adult children who for too long have had barriers placed in the way of the pursuit of their claim by the Courts which do not exist in the legislation itself. Adult children should be treated in the same way as other applicants under the Act who are judged on the maintenance standard and the Court of Appeal has now firmly confirmed this so that there should be little doubt going forward that if an adult child is unreasonably excluded from their parents’ Wills (even if they were estranged) the Court can correct this injustice and substitute a just award in its place."

We Can Help

Hayley leads a team of specialist inheritance disputes who can help with a wide range of inheritance dispute claims.  If you are an adult child who believes you have a claim for reasonable financial provision from your parents’ Estate under the 1975 Act then take advantage of our free case review by contacting Hayley Bundey or Sharon Bell on 020 3551 8500 or emailing us at enquiries@mwsolicitors.co.uk.

You may have heard someone refer to making a “Joint Will”, whilst this is possible in many other spheres, in Law there is no such thing.

A Will is a legal document that applies to a single person.  In many cases what the person is actually referring to is either a Mirror or a Mutual Will.

Our Inheritance Disputes Solicitor, Sharon Bell, explains the differences between Mirror Wills and Mutual Wills.

MW’s specialist Inheritance Disputes Solicitor, Sharon Bell, discusses Promissory Estoppel in the context of a recent case.

An Enforceable Promise

The basic principle of Promissory Estoppel is that a promise is enforceable by law.  If a promise is made to a party and they act upon that promise to their detriment they can make a claim promissory estoppel.  For a claim to be successful the Claimant must show that:

  1. An assurance was made;
  2. that was relied upon;
  3. to the detriment of the promisee.

The above elements must be present to such a degree that it would be unfair not to grant relief. The Court will take into account the degree of detriment suffered and make an order which is appropriate.

Lothian v Dixon and Webb

In this recent case Mrs MacArthur made a Will in 1983 leaving half of her estate to her cousin Mrs Lothian and half of her estate to her sister, Mrs Webb.  In 2010 Mrs MacArthur was diagnosed with terminal cancer and asked Mrs Lothian to stay with her in her hotel in Scarborough. Mrs MacArthur told Mrs Lothian and her husband that, in return for them looking after her and helping her to run her hotel, she would leave her entire estate to them.

In the two years preceding Mrs MacArthur’s death, Mrs Lothian spent some nine months of each year caring for Mrs MacArthur and running the hotel.  Similarly, her husband would visit most weekends. 

Following Mrs MacArthur’s death it transpired that she had not updated her will to reflect her promise and the couple were due to receive half of the net residuary estate under the 1983 will.  Mr and Mrs Lothian brought a claim for proprietary estoppel on the basis that they had relied upon promises made by Mrs MacArthur to their detriment.

However, Mrs Webb contested that claim on the basis that, the outright transfer of the net residuary estate to Mr and Mrs Lothian was excessive and not reflective of the detriment that they had suffered.  Mrs Webb’s defence was that Mr and Mrs Lothian should be awarded an additional £40,000 plus travel expenses to reimburse them for the two years of care and management of the hotel.

His Honour Judge Roger Kaye QC, sitting as a High Court judge, disagreed saying that:

 “detriment is not a narrow or technical concept but must be judged in the round” and that it “need not be expenditure of money or other quantifiable financial detriment but it must be substantial”.

The case demonstrated that:

  1. there had been a promise
  2. there had been reliance upon that promise and that;
  3. detriment had been suffered

It was then left to the discretion of the judge to consider the appropriate relief. 

He found that Mr and Mrs Lothian had suffered detriment of a substantial kind in that they had altered their entire lifestyle in the run up to the deceased’s death and, although they had free board and lodging whenever they were at the hotel, the judge held that this was not meaningful compensation in the circumstances. 

Judge Kaye also ruled that Mrs MacArthur's promise was

“clear, certain and continued up to her demise”

and that

"there was a clear expectation that Mr and Mrs Lothian would inherit the entire estate."

The judge awarded the entire net residuary estate to Mr and Mrs Lothian.

The case demonstrates that the Court has a wide discretion when considering what awards to make in promissory estoppel cases and will consider all the factors.

We Can Help

Our Specialist Inheritance Disputes team can help with a wide range of inheritance issues.  If you think you have a claim for promissory estoppel or would like to take advantage of our free case review contact Sharon Bell or Hayley Bundey on 020 3551 8500 or email us at enquiries@mwsolicitors.co.uk

family banner

The actor Rik Mayall unexpectedly died in June 2014 leaving his family exposed to a large Inheritance Tax bill (IHT) because he had not made a Will.  However, his family can still try to lessen the impact of the IHT by drawing up and executing a Deed of Variation.

Variations can also be made to Wills.  Ed Miliband was recently accused of benefiting from a deed of variation to his father’s will made by his mother.   In 1994 Mr Miliband, his brother David and their mother agreed to make a posthumous amendment to the Will of their father.

Under the change, each of the Milliband brothers received a 20% share of the family home thereby reducing Mrs Milliband’s share to 60% and reducing the inheritance tax liability on her estate.

Although, Ed Miliband denied any tax benefit from the arrangement, Chancellor George Osbourne, announced a review on the avoidance of inheritance tax through the use of deeds of variation as part of the government’s wider tax avoidance strategies in the 2015 budget statement.  The findings are expected to be published this Autumn for inclusion in a future Finance Bill.

What is it?

Also known as a Deed of Family Arrangement this type of Deed allows beneficiaries to rearrange or vary their entitlement.  The beneficiaries of a deceased’s estate are able to alter the distribution of or relinquish a bequest from an estate.

Conditions that Must be Met

The law states that subject to strict conditions a variation takes place as if it had been made by the deceased and is “read back” into their Will/estate for IHT purposes.  It is therefore classed as a gift which is legitimately allowed to take place, but for IHT and Capital Gains Tax (CGT), the consequences are as if the gift had been made by the deceased.

In order to establish a Deed of Variation all the beneficiaries must be in agreement, if minors are involved an application must be made to the court for consent to be obtained as they cannot themselves consent to the changes.  It is also possible for a beneficiary to redirect their entitlement into trust with the deceased being treated as the settlor of the trust for IHT purposes.  However, for CGT and Income Tax purposes the original beneficiary not the deceased is treated as the settlor.

What are they Used For?

Deeds of Variations are not just used for tax reasons, in fact the origins of these types of deed are much older than the IHT rules and fit well with our freedom to leave our estate by Will to whoever we choose.  

Examples are numerous, for example when a grandparent leaves a legacy in a will to named grandchildren and then does not update his or her Will when further grandchildren are born.  The deed would allow the new grandchildren to be added to the Will.

They can also be used, with care, to resolve a family dispute or unhappiness.  For example a claim may be brought against an estate by a person expected to inherit under a will but who has not.  This sort of claim could be settled by the other beneficiaries using a deed of variation to make provision for them.

Clearly they have legitimate uses rather than just as a tax avoidance technique, so lets hope they survive the Autumn!

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