So why are many parents still opting to leave their children

to Social Services when they die!

If both parents die without having nominated a guardian for their children who are under the age of 18, the courts, based on recommendations from social services, will decide who gets guardianship. For many people, who gets the money is easy. Who gets the children can be a very difficult decision. Yet failing to make that choice can result in children being separated and taken into care.

There have been cases where parents have died without a Will and grandparents have taken custody, only for social services to deem then unsuitable. Forget the myth about godparents, they have no legal rights.

The key decision to make is who, if you die, should look after your children and carry out your wishes for their care. An easy way to make this nomination is in a Will. Many people say I do not need a Will as I have nothing to leave. This effectively ignores their most valuable asset, their children.

Guardians should ideally be of a similar age to the parents. If appointing older guardians, then make sure you review their suitability at regular intervals.

Appointing guardians who live abroad, can cause problems as permission will be required to take them abroad and that might not be granted. Just because a person is a guardian to children, the children will not automatically be allowed to live in the guardian’s country (e.g. USA). Nor will the guardian be automatically allowed to live in England unless they are from the European Union. So, if appointing guardians who live abroad, if possible make them a first reserve and have the first choice guardian someone who lives in the UK.

Unless the guardians are a couple, do not appoint joint guardians. Typically appointing both grandmothers is a recipe for disputes. On the face of it they get on, but would they if they had joint guardianship of the children? Whom do they live with? What type of discipline do they get? Which church do they go to? The list is endless. The last thing you want is to risk your children being the centre of a dispute when they are already upset.

If both parents have parental responsibility, the appointment of any guardian will not usually take effect unless and until both parents die. This can lead to confusion and difficulty if each parent appoints a different guardian, so agreeing the same guardian is very advisable for parents that have separated.

Whoever is chosen, it is important to discuss expectations and wishes with the potential guardian, to ensure that they are happy to accept the role. If not, there is a risk that the appointed guardian may simply choose to disclaim their appointment.

The best way to resolve any issues is to appoint a guardian or guardians in a Will.

With thanks to Bob Zwolinsky of Wickham Wills for content

Will Writing for Financial Advisors

You may have noticed that our profession has been in the news over the last few days. Last week we had the news that the Consumer Panel of the Legal Services Board had completed its investigations into Will writing and had come to the conclusion that Will writing should be regulated. Click here for the full report or here for a summary news report.

This came as no surprise. Will writing has been under the microscope for some time now, and there have been reports of sharp sales practices and mis-selling. Though it is my clear understanding that these allegations have usually been made against companies who are not members of The Society of Will Writers or the Institute of Professional Willwriters, we all become tarred with the same brush in the end. While these organisations can police their own members, they cannot be responsible for other Will writers operating outside of the network; with this in mind both the IPW and the SWW have been pushing for regulation, with the IPW ahead of the curve compared to the SWW.

It now looks like we will get regulation within 2 years, but with the model working rather differently to the one in Financial Services. Both the IPW and the SWW have applied to become regulators and we await further developments. In short, we believe regulation will mean that we will need to sign up to a Code of Practice not so very different to the one we are already work under, but importantly that nobody will be able to operate within Will writing unless they are signed up.

Let me make it clear – this must be good news as it means that the cowboys will slowly fade away and the morally doubtful media scare stories put out largely by The Law Society will cease. I will return in a letter e-mail to the matter of regulation, but would re-iterate that we fully support regulation. It is worth remembering that the above report made it absolutely clear that Wills should not become the sole preserve of Solicitors as they are no better at writing Wills than Will writers, and Will writers provide a valued, more flexible service which the public clearly demands.

Legal Ombudsman

Yesterday several news agencies carried a story about the Legal Ombudsman saying that Will writers were ‘ripping off thousands’. I found this rather puzzling because those words didn’t appear anywhere in the text of the release, merely on the headline. What is more, the story was really about the Legal Ombudsman having no form of redress if people complain about Will writing or any of the other unregulated legal activities (including divorce). However, as with all news stories aiming to generate some PR, Will writers were put up as the patsy. It is quite remarkable that the Ombudsman can say that people were being ripped off on the one hand but had no powers to investigate the cases on the other hand! All members of the SWW are subject to a complaints procedure and will be thoroughly investigated if somebody complains.

The comments made by Des Hudson, chief executive of The Law Society are not becoming of someone of his position. He states that “the unregulated providers are not insured” – this is completely untrue and he must know this to be untrue, unless he is ‘doing a Rupert Murdoch’ with his level of knowledge of Will Writers. For the record, all members of the SWW and IPW have to carry Professional Indemnity Insurance as a condition of membership. I do not know any uninsured Will writers, though there may be a few.

We have strived for seven years to build a business built on integrity and treating clients fairly and will continue to do so whether regulated or not.

Somewhere between 40,000 and 70,000 homes are sold each year to cover the homeowner’s care fees.  With care costs running up bills of anywhere from £30,000 to £50,000 per year, nest eggs that were built up to provide a children’s inheritance can be quickly wiped out.

How it works

If you cannot afford to pay for long term care privately then the local authority must fund your care. The problem arises when we explore what ‘afford’ means. The local authority will view it as follows:

• If you have assets above £23,250 no contribution will be made by the local authority as you are considered able to pay it yourself.
• Below £14,250 a full contribution will be made by the local authority
• If you have capital between the these two figures there is a partial contribution by the local authority
• Virtually all your income will also be taken into account

Crucially, in calculating what your assets are, your home is included unless certain other people, such as a spouse, are still living in it.

So the big problem comes when a widow or widower needs long term care as they are forced to sell their home to pay for it. There is of course the same problem if a husband and wife both require care.

Does this seem unfair to you?

Many of our clients tell us that this all seems very unfair to them, because it seems to penalise prudence and saving. Those who have not been careful with their money often seem get their care for free. It is often the case that two residents might be in rooms next to each other with one paying £30,000 pa and the other paying nothing. So many people are looking for ways of preventing their homes being lost if they require long term care.

Can’t I just give the house to my children and continue living in it?

Giving the home away to the children is sometimes seen as the solution, but it is not. This is because the Local Authority can look back and if they can show that this was done to deliberately avoid care fees they will reverse it. There is no 7 year rule. At a time when ALL Local Authorities are cash strapped, they will become increasingly vigilant.

There are other more compelling reasons not to give the house to your children.

• They can sell the house without your permission
• If they get divorced or go bankrupt or even die, your house is part of their assets and who knows what might happen
• When they come to sell the house after your death they may have to pay capital gains tax as it is not their primary residence

Here is an example of the problem, and how we can solve it:

Fred and Hilda are a couple in their sixties with grown up children. Hilda dies after a short illness and leaves everything to Fred in her Will. Because their house is owned jointly, Fred also now owns the whole house. Some years later Fred needs to go into a nursing home and because all of the assets are in his name, his family is forced to sell his house worth £300,000 to pay for his care. Fred lives for a further seven years, during which time the net care home fees have amounted to a breathtaking £250,000. On Fred’s death the amount left for the children has been massively reduced. This problem is increasingly common with our ageing population.

Solution number 1

Fred and Hilda could have become ‘tenants in common’ so that they own half their house each instead of owning it jointly. Then, if Hilda had made a Will which left her half of the home in trust for her children, rather than to Fred absolutely, the children’s inheritance might have been much greater. This is because Fred could have lived in the house up until the time when he needed care. Then his assets would have been means tested, and he could not be said to own Hilda’s half of the house, because it is in trust for the children. So as far as the local authority is concerned Fred’s half of the house counts as his assets (and the assessed value may be very low) – but Hilda’s half of the house is protected for the children.

It could then also be argued in some cases that Fred’s half of the house has little or no value because nobody would buy half a house, which would potentially protect Fred’s half (or the majority of it) too*.

Incidentally, writing your Will in this way also protects your half of the house if your spouse remarries or goes bankrupt after your death – this ensures that your children rather than your spouse’s new step-children inherit your assets.

Solution number 2

While Fred and Hilda are both alive they decide to give their house to their children, but they do it in such a way that the house is held in trust for the children. This means the children have no right to the home until both parents have died. It also avoids any issues with Capital Gains Tax and ensures that Fred and Wilma could sell the house and move to a different one if they chose. Even if one of the children got divorced or died, the assets are protected because they don’t belong to the children.

Importantly, in the example above, when Fred goes into Long term Care, he cannot be said to own the house. Also, because the house was put into trust some considerable time ago, the Local Authority cannot say that they did this purely to avoid care home fees. The house should therefore be protected for the children, whose inheritance is £250,000 more than it would otherwise have been. As a bonus, the children won’t need to go to probate when Fred dies as his house is not part of his estate – this alone can save thousands.

Why not call us today for a free, no obligation consultation to find out how we could help you protect your hard earned assets against care home fees and remarriage.

Call 0800 0934299 today – every cloud really does have a Silver Lining!

Stephen Wilkes is Managing Director of Silver Lining Estate Planning Ltd and a member of the Society of Will Writers (SWW), the UK’s leading professional body for the will writing industry with more than 2,000 members.

The SWW this week launched its new Code of Practice and Stephen says it will offer even greater assurances and peace of mind to customers when making some of the most important decisions of their life

“Our new Code of Practice has been painstakingly compiled after extensive consultation with members and consumer bodies including the Citizen Advice Bureaux and Age UK to ensure it offers the public total peace of mind. It provides reassurance that they are dealing with a reputable professional backed by the UK’s largest will-writing body. We see this as a natural progression for Silver Lining, who always aim to be at the forefront of improvements and tighter regulation in the industry.

“I would urge anyone considering a will to check that the person to whom they are entrusting their and their family’s future is a member of the SWW and ask to see a copy of the Code of Practice,” said Stephen.

Members of the Society of Will Writers, who are fully trained and have professional indemnity insurance, are able to visit people in the comfort of their own home to discuss their will and estate-planning needs.

Having listened to our partners we have developed a two day course specifically for professionals in financial services. The course, delivered by Head of Estate Planning Steve Wilkes, will enable you to:

• Incorporate Will Writing / Estate Planning into your financial services business as a significant income stream
• Use each Will to generate between 4 and 6 new prospects for Wills or financial services
• White label the service to match your trading style
• Market Wills and legal services (and get yourself in front of possible clients for financial services) with fewer constraints
• Create a residual income for your business and a reason to keep in touch with clients
• Give yourself an edge over the opposition by dealing with both financial and estate planning needs from start to finish
• Take full instructions and receive fees for Wills (we prepare all the legal documents under our PII cover)

Importantly, we follow the course with unlimited telephone, e-mail and video support as you find your feet. We truly believe that it is this level of support which makes us different.

By the end of course you will be able to confidently take instructions for complex Wills, Trusts and Lasting Powers of Attorney with the protection of our PII. You can expect average client fees of at least £500 depending on the complexity of the work but they may be significantly higher. Our average fees for producing the documents are between 1/4  and 1/3 of the client fee, so the income achievable is substantial. Clearly, the cost of the course could be covered by your first Will client.

The price for the two day course will be £350 + VAT per candidate which includes all refreshments and lunch. We also offer a £75 referral fee for each other person that you bring along. We feel that this represents exceptional value for something which has the potential to increase your earnings significantly in the next 12 months. A full agenda will follow nearer the time but they will be full days, with lots to learn and talk about.

To learn more or to book yourself on the course please call Steve Wilkes on 01473 276186 or e-mail us at info@silverliningep.co.uk

Alternatively, why not talk to us anyway about partnering with us? We offer a range of solutions including commissions for referrals and white-labelling.

However, an often an often overlooked asset comes from an employee’s ‘Death in Service’ benefit. Usually (but not exclusively) provided by larger employers, this benefit is usually 2-3 times salary. When added to the total value of an estate, this can often cause major Inheritance Tax problems.

Here’s how it works – if you have a Death in Service benefit, you will usually have been asked to nominate somebody to receive it if you die (you don’t have to actually die while at work to receive it). The effect of nominating somebody is that it pays out outside your estate, and is therefore not liable to Inheritance Tax. But that’s the easy part.

Most people nominate their spouse or partner as the beneficiary; this means that the surviving spouse’s estate has increased by 3 x your salary. If your joint estate is over £650,000 for married couples, or £325, 000 for unmarried couples, this leaves the survivor with a much increased Inheritance tax bill on their death (payable at 40%).

Thankfully, there is a simple solution to this. Instead of nominating the spouse, we prefer to set up a trust called a Spousal Bypass Trust, and nominate the trust as the beneficiary of the Death in Service benefit. The beneficiaries of this discretionary trust are the surviving spouse and children / grandchildren. That means that the survivor can have use of the assets in the trust but usually by borrowing anything they need; on their death, the money has to be paid back before Inheritance Tax is calculated, so their estate does not increase at all.

If you earn £50,000 and your Death in Serive benefit is £150,000, a Spousal Bypass Trust could save £60,000 in tax. Isn’t estate planning simpler than you thought?

Steve Wilkes

Head of Estate Planning

Silver Lining Estate Planning Ltd

This is a very common device used in estate planning. Many people on second marriages feel very awkward as they really want the assets to end up with their children in the end, and using a trust is the best way to achieve this with any certainty.

However, what interested me more was the second couple featured. The husband had stepchildren from a previous marriage and he wanted to ensure that most of his estate ended up with those step-children in the end, while providing for his current wife. But the current wife had a different motivation altogether – she thought that the entire joint estate should be used for charitable purposes. She had no children. He was about to go and serve in Iraq so making a Will had become urgent, and he seemed like a terribly nice guy. His stepdaughters, while not expecting everything from him, did not seem entirely happy at the prospect of all of his money ending up going to charity. Gerry Robinson was visibly uncomfortable with what was being proposed and we can only guess what a positive influence he may have had on the final Will.

The husband’s character ended up being his downfall, and at one point in the programme it appeared that he was going to leave all the money to his new wife for her to do with as she wished. She even mentioned that she was intending to try and ‘prick his conscience’ to make him change his mind about his Will. This could have left a real mess because it would have given the stepdaughters the perfect reason to contest the Will – a Will can be challenged if it is believed that it was written under undue influence from somebody else or if coercion of any kind was used.

In the end, because of the expert level of advice given, the couple were dissuaded from their points of view, and a solution was devised where the husband left a lump sum to his step-daughters and his wife, and then left the residue on a  trust for the wife until she died, after which it would pass to the stepdaughters. This, to me, showed the value of good advice. In estate planning, good advice is about having somebody to take the time to talk to you about the whole family set-up and the emotions that you are going through. If this couple had been visited by a Will writer offering to write their Wills for £50, or gone to a High Street Solicitor with a similar price, they could not possibly have received the time and attention that was required to come up with a solution. There could have been a real mess left behind if the wife had managed to influence her husband’s Will and he had given in for the sake of a quiet life. This was never really mentioned on the programme, but it was the thing that indirectly led to all the squirming and awkward meetings.

When making a Will, always make sure you use an experienced professional who will allow you the time to make the right decisions; the cost will reflect this, as with anything I life, but ‘going cheap’ on these things really is a false economy and could end up costing thousands in legal fees and a whole lot of upset after you have gone.

Steve Wilkes is the Managing Director of Silver Lining Estate Planning Ltd based in Ipswich in Suffolk, experts in Wills and Trusts with consultants across much of the UK. For more information on this or any other Will related subject call him on 0800 0934299.

Business owners are busy people – I am one myself. There are 101 things to do every day. We probably often ask ourselves what made us start our own businesses in the first place? The answer is probably different for everybody but one thing is certain – this ‘thing’ that we have created is fragile and needs to be protected. We certainly would not want to see all our hard work go to waste.

So what’s my point? Well, did you know that if you were to lose your mental capacity as a business owner you could lose control of your business? Let’s imagine that you own 1/3 of the issued shares in your limited company. You make decisions on a daily basis which affect the running and the future of the business. Undoubtedly you will have had to fight against some changes you didn’t agree with. But if you lost your mental capacity tomorrow, you lose your voice until your family have made an application to the Court of Protection. This process takes at least 6 months which is a long time in business. During that time, although decisions can still be made, you have no input and that could be disastrous.

By creating a Lasting Power of Attorney you appoint people, in advance, to manage your affairs and make decisions on your behalf if you unexpectedly lose mental capacity. This avoids the need for an application to the Court of Protection and means your family or professionals appointed by you could continue to make decisions in your place.

Sounds easy doesn’t it? That’s because it is, and the cost starts from £175 +VAT. Now what are you waiting for?

Steve Wilkes is Managing Director of Silver Lining Estate Planning Ltd, a Suffolk based firm with national coverage. More than just Will Writers.

Steve Wilkes, Managing Director of Silver Lining Estate planning sits on the Executive Council of the Society of Will Writers (SWW), the UK’s leading professional body for the will writing industry with 2,000 members. The SWW is aiming to discover the true picture and find out why so few people carry out one of the most important tasks they could ever do. Estimates vary as to how many people in the UK have written a will but some put it as low as 30 per cent.

Results of the survey will also be offered to the Legal Services Consumer Panel which has just launched a call for evidence to start its investigation into whether the will writing industry should be regulated.

Mr Wilkes said: “The true picture concerning people’s attitude to writing a will has never been clear but all the evidence we have suggests only a small number of people get round to writing a will. All too often we see the problems caused when people die intestate (without a Will in place), or with a DIY Will which just doesn’t do the job.

“We hope our survey will not only result in a clearer picture but raise awareness of the importance of having a will to ensure your lifetime’s accumulated wealth is passed onto the people of your choosing.

Writing a will need not be an expensive exercise and we will always offer professional advice and guidance to those not sure how to go about things all in the comfort of their own home.”

People can take part in the survey by going to www.willwriters.com Everyone responding will be entered into a draw with the first one drawn out of the hat on December 3 winning £50 of Marks and Spencer vouchers.

Steve Wilkes of Silver Lining Estate Planning can be contacted on 0800 0934299.