Tag Archives: private wealth law

Come on over to our new place!

ealth Lawyer UK has a brand new website and a fresh new look.  Click here for a link to the new site, now hosted on Fladgate’s website.

We’ve also made it even easier to get your fortnightly fix on developments in the legal Private Wealth world.  Just register your interest on the new website and blogs will be emailed direct to your inbox as they appear – it couldn’t be easier.

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UK tax legislation update: taxation of non-doms


Over the past couple of years, the Government has placed non-doms on notice of its intention to change the way in which they and their offshore trusts are taxed for UK tax purposes.  Now finally all previously trailed provisions have been reintroduced into draft legislation, so here is a brief reminder of the main provisions affecting the personal taxation of non-doms, with some practical pointers.  All of the following measures can be found in the Finance (No.2) Bill 2017:
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Can you disinherit your children if you want to?

You may recall that, a couple of years ago, the English press was full of reports of the Will case of Ilott v Mitson.  (For some background on the case, see my 2015 and 2017 blogs about it.) 

The case was of interest to any testator who is considering cutting out children from their Will.  However the Ilott case has now been applied in the more recent case of Nahajec v Fowle [2017] EW Misc 11 (CC), in which another impecunious child applied to the court and was successful in obtaining provision from her father’s estate, contrary to her father’s express wish that she should receive nothing.  So what can the Nahajec case teach us about whether it is possible, even, for parents to successfully exclude adult children from receiving any inheritance from them?
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IHT Residence Nil Rate Band: depending on downsizing?

HMRC have published new guidance covering the downsizing provisions of the Residence Nil Rate Band (RNRB) (click here for a link to it).  This will be of interest to advisers looking for a relatively straightforward introduction to this aspect of the RNRB which may be suitable for forwarding on to clients.
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Inheritance Tax planning for business owners is often overlooked


When it comes to selling up or transferring on a business to the next generation, entrepreneurs and family business owners are usually encouraged to take measures to reduce the level of Capital Gains Tax payable on the disposal of the business.  Far fewer entrepreneurs are advised to consider their Inheritance Tax (IHT) planning, though, and yet failure to consider the IHT aspects of a sale can cost families dearly in the long term, when 40% IHT is levied on the proceeds of the business sale in due course.Many think of IHT as a tax which only afflicts family wealth if the business owner is still holding the proceeds of the business sale on their death.  However, IHT is a complex tax, affecting lifetime gifts as well as assets held on death.  Successful IHT planning is not just about being caught with the proceeds ‘when the music stops’ (i.e. on death!).  It is not the tax equivalent of a game of musical chairs!
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UK beneficial ownership registers: now it’s your turn, trustees

On 26 June 2017, the UK Government introduced a beneficial ownership register for trusts for the first time, in response to its need to comply with the EU’s 4th Anti-Money Laundering Directive.  Which trusts will be affected and what will trustees have to do?

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Who owns the equity? Investment property ownership when relationships break down

The thorny issue of a couple’s beneficial interests in a jointly owned property following relationship breakdown has once again been examined by the court, this time relating to a Privy Council decision on appeal from the Bahamian Court of Appeal.  The case concerned the relationship between Mr Marr and Mr Collie, who together had jointly purchased several properties over the years in the Bahamas during their 17 year relationship.

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Will we have a UK public register for offshore entities owning UK property?

The UK may become the first country to introduce a beneficial ownership register for overseas companies and other legal entities owning UK property (of any kind) or who wish to procure UK Government work.

According to the Government’s April 2017 ‘Call for Evidence’ publication, the register will be modelled on the existing UK Persons of Significant Control (PSC) register for companies, with the information publicly available at Companies House.

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Protecting personal representatives: interim estate distributions

How should a personal representative (PR) deal with a request from a beneficiary for an interim distribution before the estate is finalised?  Estates can take many months to conclude but a beneficiary may be in need of some of their inheritance sooner.  Can an executor help out without putting him or herself on the line?
Any PR (be they an executor of a Will or an administrator of an intestate estate) facing a request for an early distribution should consider their own position as well as the beneficiary’s.  A PR owns a duty to the court, both to gather in the assets of the deceased and also to ensure that sufficient estate assets are retained to meet all liabilities and pay creditors.  Not all liabilities may be evident at the time of death.  Failure to retain sufficient funds to pay these may result in creditors pursuing the PR personally, so a PR must exercise caution in the face of such requests.

Unless the PR was very familiar with the deceased’s finances, or the beneficiaries can be entirely trusted to return estate assets if necessary, a PR should consider taking advantage of the protection offered by s.27 of the Trustee Act 1925 and advertise for creditors in the London Gazette (and elsewhere if appropriate, depending upon the deceased’s circumstances).  Once the two month notice period has expired and if the PR has still received no notification of a claim prior to distribution, any creditor who appears after distribution has to pursue the recipient of the estate funds, rather than the PR.

Section 44 of the Administration of Estates Act 1925 provides that ‘a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death’.  Accordingly PR’s cannot be forced to distribute sooner but could consider doing so if they are confident that all liabilities and creditors have been ascertained. 

For deceased UK domiciliaries, PRs should be aware that claims under the Inheritance (Provision for Family and Dependents) Act 1975 can be issued up to 6 months after the Grant of Probate is itself issued and the claimant then has a further four months in which to serve the claim.  Therefore 1975 Act claimants can appear up to ten months after the Grant has issued.

If an interim distribution is needed sooner, a PR should consider insisting on a form of indemnity from the beneficiary to confirm that, should a claim be made against the PR in connection with the estate, the beneficiary will indemnify the PR for that claim out of the funds distributed.  The PR will need to consider whether that beneficiary will be good for the money if the indemnity needs to be relied upon.  Ideally the PR will also obtain confirmation from the beneficiary that the beneficiary accepts the sums distributed at least in partial satisfaction of their interest in the estate.  It may be appropriate to provide a set of draft estate accounts at this point.

Alternatively, depending upon the assets comprising the estate and their administrative powers, the PR may be able to offer to loan a beneficiary a portion of their share of the estate, in return for a suitable indemnity.  This is likely to be more satisfactory for a PR, as the PR still retains ownership of the estate assets, albeit in the form of an IOU.  The creditworthiness of the beneficiary will need to be considered once again.
Lay PRs, in particular, can often feel under pressure from family member beneficiaries to make early distributions.  However, creditors need make no exceptions for lay PRs!  The law allows PRs to protect themselves and a prudent PR will do just that.

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Finance Bill 2017: Non-dom tax changes dropped – for now?

The Finance Bill 2017 contained a number of measures altering the way in which long term UK resident non-doms and UK residential property held in certain offshore entities would be taxed in the UK.  However, last week it became clear that all of the non-dom tax changes would be dropped from the Finance Bill, to allow a slimmed down version of the Bill to progress through the legislative process before Parliament is dissolved ahead of the General Election on 8 June.

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