Private Client Newsletter – May 2017

Welcome to the latest departmental newsletter from Davis Blank Furniss.  Our focus this time is on our Private Client team.

DeBrieF NEWS: Laura Willis – associate solicitor in our Private Client team – discusses the Residence Nil Rate Band.

What is the Residence Nil Rate Band?

You may have seen in the news that a new Inheritance Tax threshold was introduced on 6th April 2017.  It is referred to as the Residence Nil Rate Band (RNRB) and it is an additional allowance and it may help to mitigate IHT that would otherwise be payable in your Estate at the time of your death.  It is essential that you review your Wills now to ensure that they are up to date and will benefit from the RNRB.

The RNRB is applied to qualifying property in your Estate first and then the nil rate band (currently £325,000) is applied to the rest of your Estate.  If the property is worth less than the RNRB then it cannot be applied to other assets in your Estate.

Will my estate benefit from the residence nil rate band?

The RNRB will apply in Estates where the death occurs after 6th April 2017.  If a person dies after 6th April 2017 then they may be able to claim unused RNRB from a predeceased spouse or civil partner, even if the spouse or civil partner died before 6th April 2017. In order to qualify, you must own all or part of a property that you have lived in at some time and you must leave all or part of the property to your direct descendants.

For Estates worth more than £2million, the RNRB is reduced at a rate of £1 for every £2 over £2million, which means that it will not apply for Estates worth more than £2.2million.  If this applies to you then you should seek advice about general estate planning to discuss ways in which you might be able to deal with assets in your Estate so as to qualify for the relief.

Who are direct descendants?

Direct descendants include children, grandchildren, stepchildren of the deceased, adopted children of the deceased, foster children of the deceased and children of whom the deceased was a guardian or special guardian.

How much is the RNRB?

The RNRB will start at £100,000 for 2017/18. It will rise to £125,000 for 2018/19, £150,000 for 2019/20 and £175,000 for 2020/21.  These figures apply to an individual.  Any unused part of the threshold is transferable between spouses or civil partners and so a couple may benefit from a double allowance.

What if I sell my home or downsize?

The RNRB will still be available if you have downsized or even if you no longer own a property provided that you sold your home on or after 8th July 2015 and at least part of your Estate is inherited by a direct descendant.  The provisions in the law relating to downsizing are complicated, but it is essentially the amount of RNRB that has been lost as a result of selling your former home.

What if I have more than one home?

The RNRB can only apply to one property and it cannot be split across a number of different properties in your Estate.  It can only apply to a property that you have previously resided in.  Your executors would need to choose which one of the properties will benefit from the RNRB.  Foreign properties can qualify for RNRB provided that you have resided it in at some time and provided that you are domiciled in the UK for tax purposes.

What should I do now?

We strongly recommend that you review your Will or make a Will if you don’t have one.  The conditions for claiming the RNRB are complicated and you should seek expert advice to ensure that your family can benefit from the additional threshold.

If you would like your estate to benefit from the residence nil rate band, please contact Laura Willis at our Manchester office on 0161 832 3304, or Lewis Thompson at our Glossop office on 01457 860606. For more information about Laura and her work, please click HERE.

DeBrieF TEAM SPOTLIGHT: Charlotte Tyrer, trainee solicitor in our Private Client team.

What does your role at Davis Blank Furniss involve?

I am currently involved in assisting with Probate matters as well as drafting Wills and LPA’s. This involves sitting in on meeting with clients and liaising with the Probate Registry.

What is the best thing about your job?

I enjoy having the opportunity to work directly with clients and getting to see that I am able to make a difference by assisting them with their queries.  It is very rewarding to know that we are providing support to them during what is often a very difficult and stressful period of their lives.  I am also enjoying learning from the other members of the department and working with them to achieve the best possible outcome for our clients.

What is the best case that you have been involved in?

I have recently started working on a matter where an individual has passed away leaving a basic Will that contains an element on ambiguity as to the identity of the possible beneficiaries. This matter will be very interesting as it will require a thorough review of the Will in order to act in the best interest of our client.

Name the person who has had the biggest influence on your career.

My parents are my rock and have always encouraged me to pursue whatever path I chose. They have been incredibly supportive and have always encouraged me to push myself.

If you were not a lawyer, what would you be doing/where would you be?

I would be travelling and exploring different parts of the world. I got the opportunity to go to Sri Lanka last year and work on an elephant conservation project. I would love the opportunity to do something like this again in addition to visiting different places and experiencing different cultures.

For more information about Charlotte and her work, please click HERE.

DeBrieF Q&A: Lewis Thompson – solicitor in our Private Client team – discusses Trusts.

What is a trust?

A trust is an arrangement whereby assets (money, investments, property) are held by someone or by a group of people for the benefit of another person or group of people. The people responsible for looking after the assets are known as Trustees. A person who benefits from the assets in the trust is called a Beneficiary. Trusts are used for a number of different reasons. The main reason is often to reduce the amount of tax payable when someone dies leaving their estate to other people.

How is a trust created?
A person who puts assets into a trust is called the Settlor. The Settlor’s wishes for the trust are often recorded in their Will or in another document created during their life, known as a ‘trust deed’.

What does a Trustee do?
The main role of a Trustee is to ensure that the assets in the trust are properly managed and used for the benefit of the Beneficiaries. Trustees must act in the best interests of the Beneficiaries of the trust and must be involved in managing the trust assets.

What is the difference between a Trustee and an Executor?
An Executor is someone who is named in a Will and is responsible for administering the estate of someone who has died. An Executor will collect and cash in the assets in the estate, pay off any debts and tax which pay be payable and then distribute the assets according to the wishes of the deceased. Often a Will also creates an ongoing trust and the same people will be appointed as Executors and Trustees, however, the role for the Executors will end once the estate has been distributed.

What decisions can Trustees make in relation to the trust?
Trustees have powers to manage and make decisions in relation to the trust. The document that creates the trust (the Trust Deed) will set out some of the powers that the Trustees have but other powers are prescribed by law. Some of the powers that a Trustee has are to invest the assets in the trust, to insure the assets in the trust, to provide for Beneficiaries who are minors and to delegate to some of their duties to another person such as an accountant or financial advisor.

What am I responsible for as a Trustee? Is there anything that I must do?
Acting as a trustee is a big responsibility. The law imposes a range of duties on Trustees to ensure that they act appropriately. In particular, it prescribes that Trustees must act with reasonable skill and care when dealing with trust assets and they can be held to a higher level of accountability if they possess specialist skills or knowledge.

Some of the other duties that Trustees have are:

  • To act impartially between the Beneficiaries;
  • To make sure that they do not put themselves in a position where their own interests conflict with those of the Beneficiaries;
  • Take care when investing trust assets and seek advice from an independent advisor if necessary;
  • To distribute the trust assets in accordance with the Trust Deed (or Will); and
  • To provide information relating to the trust if asked to do so by a Beneficiary.

Can I be personally liable for decisions that I make as a Trustee?
Yes, Trustees can be personally liable to beneficiaries for breaches of duty or responsibility. It is for this reason that Trustees often seek advice from independent advisers to ensure that they are acting appropriately and in the best interests of the Beneficiaries. Trustees should regularly meet with their Co-Trustees to make decisions and review the trust position.

For  more information about Lewis and his work, please click HERE.

Contact Us

If you have any queries or require any further information, please do not hesitate to contact our team of specialist solicitors on 0161 832 3304.

Share this article

This entry was posted in , , . Bookmark the permalink.