What Decisions can an LPA make?

What Decisions can an LPA make?

Here I answer the question: “what decisions can an LPA make” (i.e. an appointed attorney)? Broadly, powers granted by an LPA are far reaching, however, they are constrained, not only by law but by the rights of other interested parties.

  • Attorneys have wide ranging powers to step into the shoes of a donor
  • Attorneys must act in the best interests of the donor, a calculation which is not trivial.
  • Attorneys’ powers interact with the donor’s rights/obligations as well as those of third parties.

 

Firstly, we have to be clear that there are two Lasting Power of Attorney (LPA) documents, one deals with Health and Welfare matters and one with Property and Financial affairs. Different attorneys may be appointed by each, and each document may constrain the decision-making power of the other.

There are intuitive “divisions of labour” between the two LPAs, however, also areas in which the line is blurred. Where costs are involved, health decisions may have implications for financial and vice-versa.

The best interests test introduces additional constraints, which may be more nuanced than immediately apparent. Taking the Health and Welfare document, attorneys are required to act in the donor’s best interests in the context of their values and beliefs.

Powers nominally include: decisions about the donor’s place of residence; medical treatments; personal care; life sustaining treatments etc.

If, however, an attorney disagrees with e.g. a GP, on a treatment for the donor, (subject to proper discussion) the GP may apply to the courts to act in the best interests of the donor. Courts are slow and GPs may deliver treatments while decisions are made. Thus, the decision of the attorney may be overruled.

With respect powers conferred by a Property and Finance LPA, powers nominally include: purchase/sale of Property; home maintenance; management of tax, bills and benefits etc. (for clarity, attorneys may not amend wills or take on trustee roles for a donor).

Once again, the best interests test may result in surprising complexity. Personally, circumstances in which donors assert that attorneys should make certain gifts on their behalf e.g. to charities or relatives, are entirely reasonable. Where wording is poor, however, and gifts mandated to the detriment of the donor, LPAs have been known to fail altogether.

Even greater complexity may arise where the donor has an interest or senior role in a business. In such circumstances, their role (e.g. a directorship) may demand them to act contrary to personal interests, in those of a company. In such situations it is not uncommon for donors to register multiple Property and Finance LPAs. Here, the powers of one attorney are not implicitly subordinate to those of another and negotiation must take place to avoid becoming stuck.

The picture that emerges, when one considers the decision-making powers of LPA appointed attorneys is one of a network of interacting and overlapping powers and obligations, aimed not only at upholding the rights of the LPA donor as a citizen, but at integrating their freedoms and responsibilities with the interests of those with whom they interact.

Lasting powers of attorney are often pivotal to quality of life. If you don’t know where to start, my advice is: start!

If you’re considering these issues, I urge you to act now, speak to our client advice team on 0121 202 4714 or click here and we’ll call you.

Does an LPA override a will?

Does an LPA override a will?

Asking ‘does an LPA override a will’, represents something of a ‘category error’, by which I mean that the two documents are not designed to be active at the same time, so would not usually conflict (at least directly).

 

  • The LPA is used in life and a will is used in death.
  • Notwithstanding, attorneys have far reaching powers and may impact gifts by a will.
  • A Living Will is a separate document to a will, which should be integrated with an LPA.

 

An LPA (Lasting Power of Attorney) is a power of attorney given by an individual (known as a ‘donor’), to those they trust (known as ‘attorneys’), so that the latter may act on their behalf, in the event they cannot (or do not wish to). This may be when the donor loses mental capacity or, if the document is so drafted (and not relating to health matters), on instruction by the donor e.g. if they are overseas.

A will is a document which directs a person’s assets on death (this is different to a ‘living will, which applies in life and may interact with an LPA’). The person making a will is known as a ‘testator/testatrix’ and those acting for them an ‘executor/executrix’.

The two documents are wholly different in ambit, one’s dealing with affairs in life and one in death. As such their use should not overlap. For the avoidance of doubt, an attorney appointed by an LPA, whilst having ranging powers to ‘step into the shoes’ of the donor, is not permitted to make alterations to their will. Notwithstanding, the actions of an attorney may have far reaching consequences for the effect of a will.

Unless otherwise stipulated, an attorney appointed under and LPA may access the donor’s will. The attorney may be charged with managing financial and welfare matters for the donor. This will almost certainly entail paying for goods and services. Furthermore, it’s worth noting here, that LPAs are most usually in effect during late life, a period which might prove the most expensive with respect to a person’s care.

With the above in mind, the attorney is likely in a position to determine the amount spent on care, and from which of the donor’s resources these costs are funded. In the context of decisions around residential care, which can run to over £100,000/year, these decisions might radically affect the overall size of gifts made by the donor’s will. Moreover, where a will makes, for example, specific gifts, or gifts of property e.g. “I leave the contents of bank account 12345676, to John Smith”, the actions of an attorney in applying resources to which these gifts relate, might disproportionately affect certain beneficiaries of a will.

In advising clients on the creation of LPAs I am careful to emphasise the fact that attorneys have far reaching powers and act in a manner that is largely unpoliced. These documents mat be infinitely preferable to the pursuit of deputyships through the courts, however, it is crucial that the attorneys are trusted to act with absolute integrity by the donor.

As a point of clarification, it is worth mentioning the ‘Living Will’ or ‘Advance Decision’. This is a document that is quite different from the will itself, giving as it does instruction on how the maker is to be treated (medically) in certain situations (e.g. persistent unconsciousness). These documents necessarily override LPAs, and care should be taken to properly account for them at drafting stage.

LPAs are extremely important documents; they take a long time to complete and errors/rejections are common. The vast majority of those making them appoint professionals to do so. If you would like to discuss creating LPAs, please visit Confidence Wills at – www.confidencewills.co.uk

Can GP overrule power of attorney?

Can GP overrule power of attorney?

This question (“Can GP overrule power of attorney?”), may be informed by two further questions: 1. “is the person who gave the Power of Attorney, capable of making the decision themselves” and 2. “is the decision in the best interests of that person”?

  • Attorneys must act in the best interests of donors.
  • Attorneys may not decide death is in the best interests of a donor.
  • Health and Welfare LPAs may only be used when a donor lacks mental capacity.

Lasting Powers of Attorney (“LPAs”) are documents which allow individuals to grant powers, in advance, to those that they trust, to act on their behalf, should they lose the mental capacity to do so.

The person making the LPA i.e. giving the powers, is called the “donor”. The person acting on their behalf is called “the attorney”.

There are two types of LPA: the first (the Property and Finance LPA) deals with financial matters and the second (The Health and Welfare LPA), with matters relating to health. We will assume, for the purposes of answering the above question, that it refers to a health and welfare decision made, under a Health and Welfare LPA.

Decisions made by an attorney under a Health and Welfare LPA: 1. Can only be made when the donor lacks mental capacity and 2. Must be made in the best interests of the donor, Mental Capacity Act (2005).

This brings us to a situation in which a GP may challenge an attorney’s right to make a decision, under a Health and Welfare LPA.

If, in the view of the GP, a donor has the capacity to make a decision themselves, it would be a very brave and/or foolhardy attorney that didn’t give serious consideration to the objection.

The Mental Capacity Act (2005) emphasises (Health and Welfare) LPAs’ use as a decision-making tool of last resort. A person is to be assumed to have capacity, unless it is established otherwise. Moreover, assumptions about capacity must not be made superficially on the bases of behaviours or appearance. Further, consideration should be given as to whether the person may gain the capacity, to make such decisions, in the future, and whether the decision in question can be delayed until then.

A GP may be integral to decisions around mental capacity. That is not to say the GP’s position should not be challenged, if an attorney feels that they are right.

A GP may also seek to overrule a decision relating to treatment, made by an attorney, on the basis that it is not in the best interests of the donor.

Attorneys may be given authority to make decisions around life sustaining treatments by a Health and Welfare LPA (this is not always the case). If so, these decisions must be made in the donor’s best interests (and critically not motivated by a desire to bring about the donor’s death). They must further take into account the wishes of the donor (and any named thereby), and refuse treatments that they are instructed to, by the LPA itself.

If a GP disagrees with the attorney’s decision, then they may overrule on the basis of a successful application to the Court of Protection. They must first discuss the decision with the attorney and seek a second opinion. While the court considers the matter, medics may administer treatments to prevent the donor dying or their condition worsening.

 

 

With the above in mind, it’s easy to see how a poorly drafted LPA can lead to conflict and delay around key decisions.  You should talk to a professional before creating these documents. Visit www.confidencewills.co.uk to find out more.

 

 

 

 

 

 

 

 

 

What do LPAs do?

What do LPAs do

Lasting Powers of Attorneys (LPAs) present a means by which you are able to appoint someone trusted to make key decisions for you should lose the ability to do so yourself, this is called a ‘loss of capacity’ This is the broadest answer to the question ‘What do LPAs do’?

 

  • LPAs allow you to appoint someone you trust to act on your behalf.
  • They enable decisions around health and finance.
  • In their absence, the court of protection’s involvement may result in great cost and delay.

 

LPAs can only be made while the person making them has mental capacity. They may take several months to register and useable. The length of this process leads a vast majority of people to appoint professionals to undertake creation of the documents (since errors are common and may not be detected for a long period of time).

If someone loses mental capacity (e.g. from stroke, dementia or head injury) without an LPA in place, a Deputyship must be applied for through the courts. These are much more expensive to pursue and may take more than a year to obtain. During this time, payments may continue to leave your bank accounts and key decisions around your lifestyle may be made by authorities.

 

There are two types of LPA: the ‘Health and Welfare’ LPA and the ‘Property and financial affairs’ LPA. These are separate documents intended to guide your attorneys in the management of health and financial matters, respectively.

 

Health and Welfare LPA

 

The ‘Health and Welfare’ LPA permits your attorney to make a range of decisions with respect to your welfare including (but not limited to) matters as critical as the delivery of ‘life sustaining treatment’. Remember, life sustaining treatment may include things you consider mundane, such as provision of asthma or diabetes medication. Crucially, these decisions encapsulate ‘consents for treatment’.

 

Property and Financial Affairs LPA

 

The ‘Property and Financial Affairs’ LPA permits your attorneys to make decisions about the management of your money and property. This might include matters such as payment of bills, collection of benefits etc.

 

A really important difference between the two is that the ‘Health and Welfare’ document may only be enacted when you can be shown to have lost capacity. The ‘Property and Financial Affairs’ document may apply as soon as it is registered with the authorities (this is because such documents are often used by those travelling abroad to permit management of assets domestically).

 

The Government has recently conducted research into these documents as part of a wider push aimed at driving uptake. Their findings are stark, (research compiled by the Office of The Public Guardian, 2019):

  • While 40% of people have wills less than 1% have Lasting Powers of Attorney;
  • 45% of people under 45 knew nothing of Lasting Powers of Attorney when asked;
  • 33% of people over 65 develop dementia. One person is hospitalised every 90 seconds with brain injury;
  • 60% of people (wrongly) believe a ‘next of kin’ would have final say if they are unable to make decisions themselves.
  • 60% of people believe that if they share a joint bank account with another the other can make decisions for them legally.
  • 53% of people know someone with an LPA
  • 40% of people who are not interested in a LPA say they ‘do not think they will lose capacity or don’t want to tempt fate.

 

Put simply these documents are crucial and under used, more ominously their absence can prove catastrophic, leaving affairs in limbo for extended periods, at a time of crisis.

If you would like to discuss making these documents, please visit our website at www.confidencewills.co.uk and speak to us without obligation.

 

LPAs for Business Owners

LPAs for Business Owners

LPAs for Business Owners – Against a backdrop of antidiscrimination legislation and shifting demographics the use of separate ‘personal’ and ‘professional’ LPAs for Business Owners grows increasingly common.

 

  • Legislation acknowledges the need for separate Business LPAs
  • Distinct Business LPAs allow Attorneys to put the interests of a Company first
  • Removal of a mentally impaired director may take an impractically long time

 

Personal Lasting Powers of Attorney (LPAs) are typically used by a ‘Donor’ to appoint trusted third parties to make critical finance and welfare decisions, on their part, if they are unable to (owing to loss of capacity for instance) or (in the case of financial matters) choose not to.

 

It is now acknowledged in law that there are “Cases where the donor should have made two LPAs: one for their business affairs and the other for their personal finances” (Senior Judge Lush).

 

A Business LPA bears both differences and similarities to personal documents. A key tenet of the Mental Capacity Act 2005 is that Attorneys must act only in the best interests of the Donor. Companies, however, have their own distinct legal personalities. Whilst an Attorney appointed under a Business LPA still acts for the Donor as an individual, legislation recognises that decisions made by e.g. company directors, must be made in the interest of the entity, even when these are contrary to those of the individual.

 

It’s important to differentiate a Business LPA from a Business Power of Attorney, the latter are made frequently but do not persist in situations where a party loses mental capacity, as do Business LPAs.

 

LPAs for Business Owners

The importance of Business LPAs is highlighted when one considers a situation in which the Director of a company loses mental capacity. The director in question cannot be removed from the company simply for mental health problems, as legislation prevents this on the basis of its being discriminatory. Further, any company action e.g. a shareholder vote, to remove such a director cannot be implemented, since notice cannot legally be served on one without capacity. In the absence of a Business LPA, the only way to manage such a situation is to pursue a deputyship through the courts which may take many months.

 

A critical (and challenging) component of putting a Business LPA in place is selection of suitable Attorneys. The powers conferred on such individuals are significant as are the challenges they face. At the broadest level, Attorneys must have knowledge of their fiduciary obligations. They must also potentially have matched technical expertise/qualification with the Donor e.g. Attorneys for accountants and solicitors must be so qualified; performance of regulated financial services demands authorisation on the part of the Attorney.

 

The pool for candidates may prove shallow. Selection from competitors raises questions over the management of conflicts of interest and commercially sensitive information. Conflicts may even arise when considering those within the same company, particularly where the duties of a director must be resolved with an interest in ownership, as in the case of director shareholders.

Business LPAs are critical documents which must be created and managed with great care. If you are considering creating these, we strongly recommend speaking to a professional. Visit us at www.confidencewills.co.uk to book a free consultation without obligation. Nothing in this article should be considered financial or legal advice.

 

Leaving money in trust for grandchildren UK

Leaving money in trust for grandchildren UK

Leaving money in trust for grandchildren UK, with families increasingly dispersed, relationships between individual members grow more diverse and leaving money in trust or grandchildren (UK) becomes more popular.

 

  • Discretionary trusts give ongoing decision-making powers to trustees
  • Assets may be protected from bankruptcy and divorce
  • Trusts may persist for 125 years

 

At the broadest level a trust describes an arrangement in law where property is legally held by one group of people (the trustees) for the benefit of another (the beneficiaries). Trustees owe a fiduciary duty of care to beneficiaries and must act in their interests.

 

The type of trust likely viewed as most attractive for the purposes of leaving money to grandchildren is the ‘discretionary trust’. This is an arrangement by which, beneficiaries may be named by the party making the trust, but which gives trustees discretion as to how the trust’s contents are put to their benefit.

 

These trusts may be created in life or created by a will on death, and persist for up to 125 years, rendering their life span long enough to accommodate multiple generations. At the heart of these trusts’ operation is the notion that beneficiaries lack an absolute right to assets held by the trust (only having the hope thereof).

 

Two broad aspects of these trusts render them attractive for gifting to grandchildren, firstly the discretion conferred on trustees allows them to react to prevailing circumstances (potentially decades from the time the trust is made). Secondly, the nature of arrangement means that assets are not legally included in the beneficiaries’ estate. This separation offers a potentially significant level of protection.

 

Regarding the former, the trustees’ ongoing power to make decisions allows them to protect trust assets from misfortunes which may befall beneficiaries, such as divorce, bankruptcy, profligacy, alcohol or drug abuse. Resources may be directed to one (of several named beneficiaries) in particular need at a certain time. Rights to occupy property may be managed or withheld. Money might be released over time as beneficiaries mature.

 

The absence of absolute rights to trust assets, on the part of a beneficiary, excludes them from means testing for care home fees or benefit applications. These assets are also afforded protection in bankruptcy or divorce.

 

Leaving money in trust for grandchildren UK

With respect to inheritance tax, property passing into a discretionary trust are taxed as normal on entry i.e. assets above the Nil Rate Band (NRB) are taxed at 40%. In the case of lifetime trusts, IHT can become payable in life. Subsequently, anniversary charges (of up to 6% of assets above the NRB) may be levied against the trusts every 10 years. Exit charges on distribution of a trust fund are also charged (these are calculated with reference to the period of time since the most recent Anniversary charge, the maximum exit charge being 6% of assets over NRB). Being relevant property trusts, gifts to discretionary trusts are not eligible for inclusion in Residents Nil Rate Band calculations.

 

Income above £1,000 from trusts is taxed at 45% or 38.1% for dividends. Recipients are then supplied with a certificate by which they can claim the tax back (if they do not pay tax or do so at the lower rate). Exemptions & allowances (half the CGT allowance for an individual is available to these trust) notwithstanding, CGT is payable by the trusts at rates of 20% for non-residential property and 28%for residential.

Nothing included in this article must be taken as advice on taxation or finance, you should seek advice on all such matters from a professional. If you would like to discuss the use of discretionary trusts in your will visit www.confidencewills.co.uk now and book a free consultation.

 

Best way to leave money to a child UK

Best way to leave money to a child UK

Best way to leave money to a child UK

It is impossible for a minor to received gifts by a will in English law. As such, the best way to leave money to a child (UK), speaks to the manner in which gifts are held by trustees for the child.

 

  • Bereaved minor’s trusts are available to children who lose (step) parents.
  • Discretionary trusts may be used to guard against profligacy or divorce longer term.
  • A letter of wishes may be used to guide trustee behaviour.

 

If a party who is a minor (at the time of death of the testator) is named as the recipient of a gift in a will (and unless otherwise stated) the gift will pass to the will’s trustees to hold on trust for the beneficiary until they reach the age of majority (18). For the avoidance of doubt, it is the executors and not the guardians (appointed by the will), that typically take on the role of trustee.

 

If a beneficiary is the (step) child of the deceased, the trust which arises may be a ‘bereaved minor’s trust’. From a taxation perspective, Bereaved Minors Trusts are not subject to anniversary and exit charges. Since 2006, ‘bereaved young person’s’ trusts have allowed assets held on trust for those aged 18-25 to receive similarly preferential tax treatment.

 

In such situations trustees have broad powers to apply capital and income to the benefit of the children named as beneficiaries, under s31 and 32 of the Trustee Act 1925 (TA 1925). Trustees, however, owe a duty of care to the trust and may face difficult decisions around what they can and cannot spend such funds on. One might consider using a professional trustee or simply documenting your wishes around trustee behaviour. You may, for example, wish trustees to co-purchase a larger property in the name of the trust, with the children’s’ guardians, with a view to providing accommodation for them.

 

 

Best way to leave money to a child UK

If you wish to exert control over the dispersal of gifts to children over the longer term, a discretionary trust may be considered. This type of trust gives trustees a significant amount of control over how funds are managed and who will ultimately benefit (though you may name beneficiaries).

In order to guide (though critically, not to legally bind), the actions of discretionary trust trustees, a substantial letter of wishes should be made, indicating how the party making the trust wishes the trustees to apply funds.

 

Discretionary trusts are popular. Amongst the more common applications are those by which testators seek to ‘protect beneficiaries from themselves’. Concerns might centre around a beneficiary’s use of drugs, alcohol or being a spendthrift. The impact of bankruptcy or divorce may also be mitigated. Wealthier clients may simply feel a gift ‘too much’ for a younger beneficiary to handle. Discretionary trusts also allow for ‘generation skipping’ where grandchildren maybe named as beneficiaries.

If you wish to discuss any of the matters raised in this article, contact us now via www.confidencewill s.co.uk for a no-obligation conversation.

Do I need a trust to avoid probate?

Do I need a trust to avoid probate?

To make sense of the question ‘do I need a trust to avoid probate?’ it’s important to understand firstly, why the enquirer wishes to avoid probate at all and secondly, what they might direct into any future, trust.

  • Probate is the authority by which one administers the affairs of the deceased.
  • Care must be taken in using trusts as rules are complex.
  • Avoidance of probate is arguably a poor reason to consider trusts.

 

When a person dies in England or Wales, someone must take responsibility for distributing or disposing of their ‘worldly goods’ (their ‘estate’). Where a valid will has been identified for the departed, ‘executors’ may have been appointed, by the deceased, to fulfil this role.

 

‘Probate’ itself describes the legal authority, given by the court, to e.g. an executor, to administer a deceased person’s estate. It is nothing more than this: a role or function. The duration and complexity of the executor’s job, arguably has much more to do with the structure of the dead person’s estate, than it does with administrative aspects of probate itself.

 

Do I need a trust to avoid probate?

Probate is not required in all cases, irrespective of any trusts which may or may not exist. Where an estate is smaller than £5,000 in value, for instance, it may not be needed. Beneath this threshold, institutions may release monies on seeing only a death certificate.

For estate valuation, it’s important to remember that the deceased’s ‘estate’ is made up of things which they own solely and directly (plus debts). Jointly held assets e.g. bank accounts may pass to co-owners outside of any will. Pensions and insurances may or may not form part of the deceased’s estate, depending on how they are organised.

 

The above hints at a situation in which a trust may, usefully, help one to avoid probate. Pensions, life insurances and other contingent forms of remuneration (such as Death in Service payments), do not form part of a person’s estate in life. It is only on death that they may crystallise in their estate, so demanding administration through probate. Such payments may be configured so as to pay out directly into an ‘asset protection trust’, outside of the deceased’s estate, whose beneficiaries might be loved ones of the deceased. If the person’s other assets are low in value, probate might thus be avoided.

 

A trust might further, be used to avoid probate, simply by providing a destination for lifetime gifts (which may so be removed from the estate). It’s worth reflecting on whether such gifts, might, more usefully, be made to the intended beneficiary, in life.

 

One should be extremely careful around using trusts for several reasons. Non-exhaustively:

  1. The notion of “reservation of benefit”, may result in a gift’s being treated as never having taken place (in law). By way of example, if a property title is transferred into the name of a trust, but the transferor continues to live in the property. In this instance, benefits have been arguably, ‘reserved’ by the transferor.

 

  1. Any gift (with certain exceptions) that takes place within 7 years of a party’s passing away will fall under scrutiny as part of inheritance tax assessment.

 

  1. Trusts cost money to establish and operate.

 

  1. You may trigger Inheritance tax liabilities, payable in life, if assets being transferred to any trust exceed thresholds.

 

It is highly likely that your anxieties around probate reflect those associated with the unpicking of a complex estate. A general ordering of affairs might save more upset than the introduction of a potentially risky trust structure.

If you’d like discuss the use of asset protections trusts or any aspect of probate, visit our website at

How to get power of attorney when person is incapacitated UK

How to get power of attorney when person is incapacitated UK

When clients enquire as to how to get a power of attorney when a person is incapacitated UK, the first thing we explore is their interpretation of the word ‘incapacitated’. Typically, such questions are posed when the subject of the enquiry is unable to act for themselves, because of some deteriorating condition or accident.

 

  • Lasting Powers of Attorney can only be obtained by those with mental capacity.
  • Implementation of these documents may take many months.
  • Applications are often rejected due to error.

 

Where ‘incapacitation’ is expected to persist for some time, the appropriate instrument may be a ‘Lasting Power of Attorney’ (‘LPA’). LPAs come in two forms: the ‘Health and Welfare Lasting’ LPA (for health decisions) and the ‘Property and Finance’ LPA (for financial decisions).

LPAs can only be created while the person giving power of attorney (the Donor) has mental capacity. ‘Incapacitated’, as used in the question above, may describe a physical impairment or a mental health event.

Mental capacity is not the same as vulnerability or mental illness. In law, a person must be assumed to have mental capacity unless it is established otherwise, moreover, all practical steps to help the person make decisions for themselves must be taken. Nobody should be assumed to lack mental capacity simply because they do something ‘silly’ or imprudent.

In broad terms, mental capacity is assessed by integrating observations of: appearance/behaviour; speech; mood; thoughts; perceptions; information processing and insight, to form a view of the individual’s capacity for: cognition, orientation and memory (Much Hon Craig Ward of Lundy 2020). If there is doubt, a professional assessment should be sought.

Mental capacity is time specific and item specific. This means that the subject need only have sufficient capacity and intention in relation the decision in hand (e.g. the instructing of a Lasting Power of Attorney), at the time they do it.  For clarity, it should not be assumed that, just because an individual lacks such capacity at one point in time, it won’t return.

If the party clearly lacks capacity e.g. they are in a coma, then an LPA is not appropriate. In such instances a deputyship might be sought through the courts.

 

How to get power of attorney when person is incapacitated UK

Assuming the Donor has mental capacity, there are other factors relating to the LPA one should understand.

Firstly, to be used, LPAs must first be approved and registered by the Office of the Public Guardian (‘OPG’). This registration process is lengthy (at time of writing around five months). The OPG charges for registering the documents (at time of writing up to £82/document i.e. £164 for both LPAs).

Secondly, the vast majority of those making LPAs use professionals to do so, and for good reason. Tens of thousands of LPA applications were rejected last year. Associated documentation and law is comparatively complex, and errors frequently made. The impact of such errors is exacerbated by the length of time it takes to register the documents. It is perfectly possible for a donor to apply for an LPA only for the OPG to notify them of an error sometime later, by which time the applicant has lost mental capacity.

LPAs are very important documents which are not straightforward to put in place. I urge you to reach out to a professional as a first step in the process of application.

If you would like to discuss Lasting Powers of Attorney with Confidence Wills visit our website now and book a free consultation (www.confidencewills.co.uk).

 

 

 

Can an executor withhold money from a beneficiary UK?

Can an executor withhold money from a beneficiary UK?

The answer to can an executor withhold money from a beneficiary UK is ‘yes’, though only for certain reasons.

  • Executors can withhold monies from beneficiaries, though not arbitrarily.
  • Beneficiaries may be unable or unwilling to receive a gift by a will.
  • The executor’s job is onerous and the time taken to execute a will may vary greatly.

Whilst, at the highest level, the role of an executor is to ensure that wishes laid out in a will are fulfilled, doing so correctly places significant duty and obligation on those appointed.

It’s important to differentiate an executor’s withholding money from a beneficiary, from an executor’s simply: ‘doing the job of an executor’.

The time it takes to execute a will may vary enormously. It is not uncommon for the process to take 9-12 months. Moreover, executors owe a statutory duty (2000 Trustee Act) to carry out their functions with due skill and care. They are required to act in the best interests of the beneficiaries of the will and to not harm the estate in any way. This demands precision, diligence and often, delicacy. Executors risk personal liability for failure to follow procedure.

The law recognises the demands placed on an executor and does not allow beneficiaries to force an executor pay out during the first 12 months of their role (the ‘executor’s year).

 

Can an executor withhold money from a beneficiary UK?

Yes, but their reasons for doing so matter!

Firstly, it’s worth noting that an executor’s withholding of money from a beneficiary may arise from the beneficiary’s inability to receive it, or a desire on the latter’s part not to receive it.

Minors are unable to ‘give receipt’ for gifts by a will. In such a situation, executors may be required to retain a minor’s gift (e.g. under a bereaved minor’s trust) until they come of age. Some wills make provision for ‘parental receipt’, whereby an executor may accept receipt from the parent of the intended beneficiary, though this is at the discretion of the executor.

An executor may not force a gift on a beneficiary and so may withhold it. Beneficiaries may agree to refuse gifts by a will, where they wish to so vary for e.g. tax efficiency.

Other scenarios in which money might be withheld from beneficiaries, are limited but include:

  1. Situations in which unspecified creditors come forward. In such cases, settlement of the will may be delayed by up to 6 months as this situation is resolved.

 

  1. Where there are safety concerns. In the case of a child, these are likely to be around parental issues, in which case settlement may be withheld until the child reaches 18.

 

  1. In the case of an adult, concerns over issues such as addiction or mental capacity may lead to a beneficiary’s gift passing into a trust established for their protection.

This article doesn’t cover every situation, and depending on the detail of yours, you may only have a limited time to act. If you suspect you are being treated unfairly, you should contact Dr Simon Pearce at Confidence Wills immediately, who will be able to direct you – 0121 202 4714