Tag Archives: wills

Want to Avoid Care Home Fees? Beware of the Pitfalls

An estimated 1 million or more people have had to sell their home to pay the cost of care fees within the last 5 years; unsurprising given the average cost of a care home is over £700 per week. Many people who are worried about this are now taking drastic action to try and avoid paying care home fees. The results are not always effective, writes Helen Dandridge, solicitor at Ridley & Hall.

“Any schemes that guarantee to protect your home from being sold to fund future care home fees should be treated with extreme caution” says Helen; “If it sounds too good to be true, it probably is.”

Helen has seen a recent case involving an elderly vulnerable lady which highlights the importance of obtaining independent legal advice from a trusted firm of solicitors before making life changing decisions.

This lady, who lived alone in the Huddersfield area, paid almost £3,000 for her property to be put into a trust. She did not need this service and undoubtedly did not understand what she was paying for. The idea behind the trust deed was to transfer the property out of her sole name, so that if she ever needed to go into a care home, her home would not have to be sold to fund care fees.

Ridley & Hall receive countless enquiries about creating trusts in relation to properties or transferring assets to a family member to protect against care home fees. Whether this option is appropriate to you depends upon your circumstances.

In this particular case, the elderly client went into a care home within weeks of signing the documentation. Her ability to understand complex legal transactions and to give clear instructions is debateable. Sadly, we will probably never know the true extent of what she was advised to do and more importantly, what she understood about the transaction she entered into.

The trust deed would never have achieved the desired outcome for this lady. It was not appropriate in her circumstances and she should never have been advised to sign the documentation. She was asked to pay the money up front and it is unlikely she will get it back.

Unfortunately, this is not an isolated case.

Many people wrongly assume that transferring their property to their loved ones will mean that the local authority will have to fund any care home fees if they need to move into a care home.

If you do not obtain specialist legal advice from a solicitor then you may have difficulties. Local firm Ridley & Hall are aware of companies who are cold calling elderly and vulnerable adults telling them they can protect their inheritance by putting their home into a trust.

If you need any advice regarding making or reviewing your will, inheritance tax planning or registering attorneys, please contact our Wills and Probate team on 01484 538421.

For further information, please see Age UK’s factsheet ‘Deprivation of Assets in the means test for care home provision‘.

Helen and some of her colleagues are running the Leeds 10km Abbey Dash in aid of Age UK on the 16th November 2014. If you would like to sponsor this worthwhile cause, please visit our JustGiving page.

The Trips and Traps of DIY Probate

With the UK economy still being far from flourishing, virtually everyone is looking to save money, with legal services being one area identified as being potentially expendable.

So when a relative dies, the increasing trend has been for the executors or administrators (known generally as personal representatives) to deal with the estate administration themselves. It is entirely possible to obtain probate and deal with the estate without ever having to see a solicitor, with personal applications to the probate registry costing approximately £100 – a noticeable saving on solicitors’ fees. This option also offers families the opportunity to deal with things between themselves, without the associated formality of going to a lawyer to discuss personal matters. The district probate registries are approachable and helpful, and can take some of the intensity out of an already distressing process. You can even now swear your documents at a local solicitor’s rather than having to attend at the registry itself.

However this route is not for the faint-hearted as it does carry some risks, as legal group Solicitors for the Elderly (SFE) have recently highlighted.

Many professionally drafted Wills contain trusts to save tax, to avoid those who inherit paying care fees and to reduce the likelihood of potential disputes. SFE members have noticed an increase in ‘DIYers’ returning to them to seek advice when they have made a mistake or find the paperwork too tricky. Mrs A’s Will had included a tax saving trust, but when her husband administered the estate, he paid the whole estate to himself. The solicitor was thankfully able to sort out the matter and avoid future complications occurring when Mr A eventually dies. In Mr G’s case, he sold some shares that had made a gain during the administration of his late sister’s estate and had to pay tax. If he had transferred the shares to himself first, before selling them, he could have avoided the tax.

A specialist probate research company, Title Research, has also identified that DIY probates are increasing the risk of tax fraud and the incorrect distribution of assets. Having reviewed government statistics, they say that the share of probates undertaken by solicitors fell by 7% over the five year period between 2004 and 2009 from 72% to 65%. As the economy has floundered and the use of the internet has increased, the current figure is likely to be less again. In turn, an almost inevitable effect of fewer people using solicitors or other professional advisers is going to be the incorrect or even fraudulent distributions of estates and inheritance tax (IHT) evasion. The idea that relatives can save on solicitors’ fees might be an attractive one, but probate and IHT are incredibly complex areas and the chances of making a costly mistake are high.

It was also suggested that the rise in DIY probate could, in part, explain why there are an increasing number of legal disputes over inheritance that reach the courts and perhaps why HM Revenue & Customs are now so concerned over IHT evasion. There has been an 85% leap in the number of high court cases launched by claimants dissatisfied with their inheritance. Such disputes can dissipate the assets of an estate very quickly, so DIY probate can be a false economy.

A lot of these issues can be resolved over time, but it is obviously better that they be avoided altogether. As a personal representative carries a certain amount of personal liability in their role, they can be opened up to substantial legal claims. There are lots of ways to slip up, if corners are cut, or the personal representatives are unaware of the laws and their obligations, especially when the deceased did not leave a Will. The caveat should therefore always be that if in any doubt, seek professional advice, otherwise the £100 personal application may turn into a legal claim of thousands.

Here at Ridley & Hall, we have a qualified and experienced Wills & Probate team who can assist you deal with the administration of an estate as much as you need us to. We are always here to help you at a difficult and distressing time and can usually offer you a qu

Tidying Up Your Affairs

Most of our resolutions may be pretty much forgotten about, but it is still the beginning of a New Year and a good time to take stock of our personal affairs. Use the motivation of the fresh start to look at the arrangements you have in place, as it will be Easter, Summer Holidays, then Christmas again before you know it!

Far too often however, people do not consider the future, thinking only about today, this week or the next couple of months at most. This can mean people fail to take the appropriate steps to ensure that their various assets and affairs can be dealt with in the event that they cannot do this for themselves – either during their lifetime or on their death.

It is therefore important for each of us to think about how our families and friends would cope in sorting things out if we were not able to do so. During later life, where physical or mental incapability may prevent us from dealing with our day-to-day things, such as paying bills, transferring money or sorting out our benefits, we need to think about who could do that for us. With direct debits being a popular form of payment and The Pension Service now crediting bank accounts directly, it is all too easy to assume that these things would take care of themselves. This is not necessarily the case, but if you think about these issues in plenty of time, you have the option of making a lasting power of attorney (LPA) which is a document that appoints a person or persons of your choice (your attorney) allowing them to deal with your property and financial affairs or your health and welfare and make decisions on your behalf. These documents can be as flexible or as rigid as you dictate, but can be very useful if you become incapable of dealing with matters yourself. Also, because you have put these arrangements in place whilst you still have the necessary mental capacity, it is much more straightforward and cost-effective than if your loved ones needed to make an application to the Court of Protection for deputyship had you not done made an LPA and then lost capacity.

Similarly, the same applies for making arrangements to deal with your affairs on your death. By making a Will and appointing executors, and specifying how you wish your estate to be distributed, this again makes things a lot more straight-forward. If you were to die without making a Will, this means that the intestacy rules set down who is entitled to receive your estate and in what proportions and also who can administer your affairs. If you have made a valid Will, it removes this uncertainty. Sometimes people mistakenly believe that all their estate will be dealt with by their spouse, or their next of kin, but this is not necessarily the case. It is therefore far more sensible to leave a Will which outlines your precise instructions and leaves nothing to chance. You can also use a Will to mitigate inheritance tax or protect your estate from future care home fees, for example.

So when you soon have that thought that it’s time to start your “Spring Cleaning” over the coming weeks, don’t just think about having a spotless house, but think about the mess you could avoid for your loved ones by leaving your affairs nice and tidy too.

Should you wish to discuss either of these matters in greater detail, please contact a member of the Private Client department who will be happy to talk things through with you.

 

For more information about Wills, powers of attorney or Court of Protection, please contact the Private Client team on 01484 538421.

Inheritance Disputes – The Dementia Timebomb

In the UK some 800,000 people are living with dementia; over 64,000 in our region.  Rising property prices, the baby boom and the wealth of the over 50’s have led to an increase in inheritance disputes where it is argued that the person who has made a will did not have the mental capacity to do so, usually as a result of dementia.

Inheritance disputes are often expensive to litigate but when the stakes are high, two recent cases illustrate the lengths that family members will go to, when arguing over a will.

In a recent case Constance Simon, a mother of 4 made her last will at her 88th birthday party in 2005.  She died in January 2009 at the age of 91 and left 3 surviving adult children, her eldest son Jonathan, another son Robert and his twin sister Hilary.  Her assets at the time of her death included a house in St John’s Wood, North West London valued at the time at £1.7 million and a flat in Westcliffe on Sea, Essex worth £262,500.

Her will was challenged by Robert who claimed that his siblings had coerced his mother into changing her will (which originally gave him most of the estate because he had helped run the family business).

From about 2000, before the onset of serious mental decline, Mrs Simon lived with Robert and his wife Michelle.  Prior to that in 1996 she had made a will in his favour, but in December 2005 at her 88th birthday party she made her final will.  Robert did not attend that birthday party – Hilary and Jonathan were there and the will was prepared and executed without Mrs Simon being medically examined and without a solicitor being present.

In court Robert accused his siblings of “sinister and reprehensible” behaviour.  The judge said that as Hilary and Jonathan had benefited from the changes at the expense of Robert. He had been bound to approach the issue of knowledge of the new will and its approval with care, but he did find the evidence of Hilary and Jonathan and other witnesses to be “truthful and substantially accurate”. He rejected the accusations of sinister behaviour in finding that Mrs Simon knew that her existing will did not favour her children and their families equally and wished to execute a will that did so.

Robert’s argument was that the will was invalid because at the time that it was made his mother was suffering from mild to moderate dementia and therefore lacked mental capacity to make a valid will.  Interestingly the judge agreed that Mrs Simon “was not capable of remembering her reasons for preferring Robert in her previous will, or its terms” but he went on to find that to rule that Mrs Simon did not have testamentary capacity “would be inconsistent with the authorities that support the right of elderly people to make a will disposing of their property as they see fit, even if their mental faculties are far from being at their peak.”

The judge went on to say that there “must be many legal cases in which people could no longer remember all the circumstances relevant to the division of their property between the people they wish to benefit.”  His view was that there might be cases where it may be necessary for a testator to understand the different provisions of an earlier will but “this is not such a case.”

Judgement was handed down in this case on 29th May 2013.  Permission to appeal was refused.

Another case which is still ongoing could turn on whether a senior judge finds that Daphne Jeffrey was well enough to enjoy a trip to Wimbledon in July 2007 to see Venus Williams win her 4th title at the Wimbledon women’s final.

The bitter dispute is between Mrs Jeffrey’s two sons Andrew, 50, and Nick, 54.

Nick, who inherited most of his mother’s estate, says that she remained “a delightful old lady” and a “shrewd business woman” right up to the end of her life.  His case is that his mother made a rational decision to cut his brother out of her will after she fell out with him in an argument about the family insurance broking business that they ran together.

Andrew claims that his mother was addicted to prescription drugs, had mental health problems and was very unwell when she wrote him out of her final will two days before the visit to Wimbledon.

Daphne Jeffery died in 2010 aged 77 and left an estate worth approximately £500,000.

Nick Jeffrey’s wife Nicola gave evidence supporting her husband and said that on the day of the trip to the Wimbledon championships her mother in law, who was a keen tennis fan, was in good physical and mental health; “She drove us to Wimbledon and had no problems driving.  We met her husband David outside the centre court … she was fine.  We were there the whole day.  I had no concerns about her at all.  It was a very hot day and our seats were in direct sunlight and we sat there the whole day.”

Andrew Jeffrey claimed that his mother had in fact shown signs of unusual debilitation that day which cast doubt on her soundness of mind when she signed her new will.  He is seeking a declaration that his mother’s will was invalid and that she died intestate; if he is successful then his mother’s estate will be split equally between himself and his older brother.

Dementia is not always easily or quickly diagnosed and in a report recently published by the Alzheimer’s Society, Dementia 2013, The Hidden Voice of Loneliness, a key finding was that only 44% of people with dementia in England, Wales and Northern Ireland have a diagnosis.  This has increased just 3% from last year.

When someone makes a will, if they instruct a solicitor then that solicitor should carry out a capacity assessment to determine whether the person has testamentary capacity – that is, sufficient mental capacity to make a will.  The test is set down in the case of Banks v Goodfellow, a case from 1870 which held that it was essential that “a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right or prevent the exercise of his natural faculties – that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.”

This case continues to be relevant even since the passing of the Mental Capacity Act 2005.

The courts are, generally speaking, very reluctant to set aside a will – it is the last known expressed wishes of the deceased and a judge must be satisfied by the evidence on the balance of probability (i.e. be more than 50% sure that the will is not valid, before it will be set aside).

Very few cases are fought out at trial and each case turns on its own facts so it’s vital not to read too much into case law.  That said it is likely that in the future judges and solicitors will increasingly be presented with cases where it will be argued that the person making a will lacked the mental capacity to do so.  A diagnosis of dementia does not necessary mean that an individual lacks the capacity to make a will.  But it is vital that to protect the will as far as possible, steps should be taken if there is any doubt about capacity including a medical assessment and will advice from a solicitor accredited by Solicitors for the Elderly.

Those seeking to challenge a will after the death of a loved one should consider very carefully what evidence there is in support of the claim and seek advice from a specialist in contentious probate law.

Sarah Young is a Partner with Ridley and Hall solicitors. She specialises in contentious probate and personal injury. Sarah has an LLM in Personal Injury Law and has a record of bringing the most complex cases to a successful conclusion.

For further information please contact Sarah Young of Ridley and Hall, Queens House, 35 Market Street, Huddersfield HD1 2HL on 01484 538421, 07860 165850 or by e-mail.