Category: Articles

Losing Capacity – Don’t leave it too late to get an LPA

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Most of us will need to consider who will manage our affairs and look after us in our later life or, if and when we lose the ability to do this for ourselves.  It may be that we first have to consider this for our ageing parents or a family member.

Most people first experience the need for a Lasting Power of Attorney (LPA) because a friend or relative has lost capacity without making one.  If you lose mental capacity and have not made a Lasting Power of Attorney, your relatives, friends or even the local authority, can apply to the Court of Protection to be able to make decisions on your behalf as a “Deputy”.  You should bear in mind that once mental capacity for decision making has been lost there is no option but to apply to the Court of Protection, which will normally be a time-consuming and expensive process, often lasting in excess of six months and during which time assets may be effectively frozen.

Generally, the Court of Protection do not appoint deputies to make decisions about your health and welfare – instead preferring to deal with issues on a decision by decision basis.

Loss of capacity is not, unfortunately, something that is limited to old age. We therefore recommend all our clients prepare both types of Lasting Power of Attorney before they are needed.

What is an LPA?

An LPA is a legal document that enables you (the Donor) to choose people (Attorneys) to make decisions on your behalf, about such things as your finances, property and your personal welfare, at a time in the future if you become physically or mentally incapable of dealing with those affairs yourself.

Anyone over the age of 18 can set up an LPA providing they have the mental capacity to understand the meaning and the effects of it. There are two types of Lasting Power:

  1. Property & Financial Affairs (e.g. dealing with the sale of your house and paying bills and making investments on your behalf); and
  2. Health & Welfare (e.g. deciding which care home you go to or where you live and medical treatment)

Appointing attorneys

You can appoint as many attorneys as you wish.

You need to consider, however, how you want them to act in practice. There are different options for this such as ‘jointly’ (doing everything together) or ‘jointly and severally’ (acting either together or separately) or a mixture of the two.

You can appoint different people for the different types of LPA based on their ability to carry out their duties. You can give attorneys as much power as you like (they do by default have the same powers as the donor). You can also place conditions and restrictions on their power.

Replacement Attorneys, who would step in if your first appointed attorneys could no longer act, can also be appointed.

The Property & Financial Affairs LPA can be used as soon as it is registered (the court registration fee is £82 per LPA, though this is reduced if your income is below £12k per annum or if you are in receipt of certain benefits). This can be useful from a practical point of view, if for example, you still have mental capacity but have had an accident and wish others to do things for you.

Whilst you have mental capacity, your attorney must follow your instructions when making any decisions with you/on your behalf.

Health & Welfare attorneys will only be able to make decisions for you once you are unable to make those decisions for yourself (case specific).

What if I have an Enduring Power of Attorney?

Enduring Powers, since October 2007, cannot be created anymore. If your Enduring Power of Attorney was made correctly, signed and witnessed before October 2007 it should still be valid. Even if they are valid, however, there are likely to be issues with them and they should be reviewed.

In particular:

  • Enduring Powers do not cover health and welfare decisions – they are limited to decisions over property and finance.
  • Much of what is covered now when Lasting Powers are prepared professionally was not considered when Enduring Powers were made.
  • Enduring Powers have less safeguarding than LPAs as there is no requirement to register them until the Donor loses capacity. This may appear to be a benefit, but registration takes time and during that time the document can often not be used easily.

Why should I seek professional help?

Whilst you can prepare LPAs yourself, seeking professional legal help is the only way to ensure you receive the individual advice needed to complete the LPAs properly.

Preparing the forms correctly is only one aspect of putting effective LPAs in place for the future. Without individual advice and support it is likely only your family will find out if the LPAs have been well done.

All our service options include:

  • Reviewing your surrounding circumstances and what you wish to do (i.e. who you wish to appoint and why).
  • Advising on the options available both in terms of who to appoint and how this will work in practice.
  • Advising on the authorities, conditions, and restrictions you should include (and those you should not) and discussing alternate options with you to achieve your wishes.
  • Providing practical advice on issues you are likely not to have considered yourself.
  • Confirming the advice provided in writing by way of a written report.

The different service options are:

  • Advice only: you prepare the documents (we will provide you with a link to do this) and we review them and provide advice. You can then finalise the forms knowing they have been checked over and the advice you need has been provided; or
  • Advice & preparation: we provide advice and prepare the forms to include acting as your Certificate Provider (an independent person who confirms you know what you are doing, no one is forcing you to complete the forms and there is no reason for you not to prepare them) and you then finalise the documents; or
  • Advice, preparation & registration: this is a full service in which we do the work for you, on your instructions, through to registration of the LPAs.

 

The Team here at Wellers will ensure that you receive the advice you need to put the appropriate documents in place to suit your personal circumstances.  Get in touch today to start your LPA. For our London office please call 020 7481 2422 , for Bromley the number is 020 8464 4242 and for Surrey call 01372 750100.

Contact us by email: enquiries@wellerslawgroup.com

 

Gifts to Pets in Your Will

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In the realm of estate planning, one aspect that is often overlooked or not well-understood is the inclusion of provisions for pets in your will. Whilst pets are considered cherished members of many families, the law typically views them as property. As such, they require special consideration in your estate planning to ensure their continued care and well-being after your passing.

The first step in bequeathing a gift to your pet in your will is to clearly identify the pet or pets you wish to provide for. Include their names, species, and any distinguishing characteristics to avoid any ambiguity. This will help ensure that there is no confusion regarding your intent.

Selecting a trustworthy individual to care for your pet is crucial. This person will be responsible for your pet’s daily needs and ensure they receive the love and attention they deserve. Make sure to discuss your intentions with this person beforehand and gain their consent.

To support your pet’s care, you can set aside funds in your will. It’s advisable to specify a reasonable amount to cover food, veterinary care, grooming, and any other needs your pet might have. You can either leave a lump sum or establish a pet trust to manage these funds.

A pet trust is a legally binding document that outlines how the allocated funds should be managed for your pet’s benefit. This ensures that the funds are used exclusively for your pet’s welfare. Specify the trustee’s role, the duration of the trust, and how any remaining funds should be distributed after your pet’s passing.

Life circumstances can change, and it’s essential to revisit your will periodically to ensure that your pet’s needs are adequately addressed. If your designated “pet guardian” becomes unable or unwilling to care for your pet, it may be necessary to appoint a new caretaker.

Consulting with an experienced estate planning professional is advisable when including provisions for your pets in your will.

This article was prepared by Naomi Augustine-Walker, a private client solicitor in our London office. You can contact Naomi by email: Naomi.Augustine-Walker@wellerslawgroup.com or by telephone: 020 3831 2669 For our Bromley office please call 020 8464 4242 and for Surrey please call 01372 750100.

Ownership of Property Depends on Intention

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Property can be owned in joint names as joint tenants, which means that each co-owner owns an undivided share in the whole property (and would therefore be the sole owner on the death of any co-owners), or as tenants in common, where each co-owner has a specified share in the property that is not necessarily equal. It is also possible for the deeds to a property to be in the name of one person but for another person to acquire an interest in it.

The relevant law in this area was set out clearly in a recent High Court case, which involved a dispute over the exact ownership of a converted barn in North Yorkshire. Arthur Aspden met Joy Elvy in 1985. In 1986, following Mr Aspden’s purchase of Outlaithe Farm, the couple began living together and went on to have two children.

The couple split up in 1995/1996. Ms Elvy left the farm with the children, but continued to be in daily contact. In 2006, Mr Aspden transferred a barn at the farm into Ms Elvy’s name and this was subsequently converted into a dwelling house at a cost of about £90,000. Mr Aspden alleged that he had provided the majority of the cash funds and carried out labouring work for the conversion, which he said he had done because the couple intended to marry and live in the barn. Ms Elvy denied this. She argued that it was ‘in recognition of her contributions to the family’ and that Mr Aspden consequently had no beneficial interest in the barn, which by this time was worth £400,000.

Judge Behrens pointed out that if a property is in joint names, the presumption will be that the co-owners intended to own it as joint tenants. This presumption can be overturned, but it is difficult to achieve this unless there is evidence that the co-owners actually intended to own the property in agreed proportions. By comparison, where a property is in a sole name, the person alleging a beneficial interest, whose name is not on the deeds, has to establish the existence of some sort of trust. There is no presumption of joint ownership. However, such a trust could arise some years after a property was initially acquired in one name.

In this particular case, the judge held that there was ‘a common intention that Mr Aspden should have some interest in the barn as a result of his substantial contribution in money and labour’. He found that Mr Aspden had a beneficial interest in the property which the judge assessed at 25 per cent.

Ripped Off By a Rogue Trader? You Can Be Compensated!

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Elderly people and those who are vulnerable are sadly prime targets for rogue traders, but the law is not powerless when it comes to helping those affected. The successful prosecution of a rogue builder promises more than £200,000 in compensation for his victims.

The builder’s modus operandi was to con householders, mostly pensioners who lived on their own, into paying extortionate sums for unnecessary work that was shoddily carried out. One victim paid more than £300,000 for work which was assessed as being worth only £1,500.

The builder was ultimately jailed for five years and four months after pleading guilty to three counts of fraud and one of theft. Proceedings followed under the Proceeds of Crime Act 2002 and he received a confiscation order requiring him to pay £217,214. That sum represents the entirety of his available assets and the authorities intend to use it to compensate his victims for their losses, at least in part.

The facts of the case emerged as he challenged the order before the Court of Appeal. He argued that his matrimonial home and a bank account containing about £100,000 were his wife’s alone, although both were held in joint names. The Court rejected his appeal as entirely lacking in merit.

Unfair Post-Nuptial Agreement Set Aside by Court

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A Russian ‘serial non-discloser’ of assets said to be worth millions of pounds had his attempt to bind his ex-wife to the terms of their post-nuptial agreement dashed recently in the family court.

The agreement was entered into in Israel after ten years of marriage. Mr Justice Mostyn ruled that although the man’s ex-wife would have understood the agreement in a literal sense, she would not have understood the rights she was thereby giving up under English law. The agreement, therefore, was grossly unfair and was set aside by the court.

Instead of the $1 million specified in the agreement, the ex-wife was awarded £12.5 million to meet her reasonable needs and those of the couple’s children.

However, the practical issue for the woman will be locating and obtaining her ex-husband’s assets. He denies having significant wealth, claims to face litigation to settle a $10 million debt and appears to have placed his assets in offshore trusts.

British courts will not enforce agreements that are, on the face of them, grossly unfair. A pre-nuptial or post-nuptial agreement which is reasonably fair and which is entered into by both parties freely and with the benefit of professional advice is likely to be upheld by the court. This was not such an agreement, however. Further information on agreements can be found in an article written by Diane Flowers, one of our family law team here.

Please contact our family team on 020 8464 4242 or email enquiries@wellerslawgroup.com for more information.

What Amounts to ‘Marital Reconciliation’? Unique High Court Ruling

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Some couples have second thoughts in the midst of divorce proceedings and get back together. However, in a unique decision, the High Court has ruled that the resumption of a toxic relationship does not amount to marital reconciliation.

The case concerned a wealthy couple who had been married for about two years when the wife petitioned for divorce. In doing so, she asserted that the husband’s behaviour was such that she could not reasonably be expected to continue living with him and the marriage had thus irretrievably broken down.

She obtained a decree nisi and, following financial relief proceedings, orders were made in accordance with the terms of a pre-nuptial agreement that both she and the husband had signed after taking legal advice. Provision was made for her housing, maintenance and other needs. However, she thereafter took no steps to finally terminate the marriage by obtaining a decree absolute.

Some years after the decree nisi was granted, the wife applied to rescind it. She did so on the basis that she and the husband had reconciled soon after it was issued and their marriage had thus continued. She asserted that her original divorce petition should be dismissed and the financial orders set aside. She acknowledged that the marriage had now finally broken down and, if her applications were granted, she intended to lodge a fresh divorce petition.

Ruling on the matter, the Court noted that it had not previously encountered a case in which a spouse sought to impeach an earlier decree nisi made in his or her favour. The wife’s applications were superficially curious and the facts of the case were very unlikely to be repeated in the future.

The Court observed that the wife’s motive in making the applications was purely financial in that the pre-nuptial agreement provided for her to receive increasing levels of financial provision depending on the length of the marriage. If the marriage had lasted for eight years, as she contended, as opposed to two, the level of her provision would therefore be substantially increased.

In dismissing the applications, the Court acknowledged that a relationship of sorts had resumed after the grant of the decree nisi. It was, however, as unhealthy and toxic as it had been since the early days of the marriage. Whilst they may have still referred to themselves as husband and wife, there was no mutual comfort or assistance and they obtained no enjoyment from each other’s society.

The Court found that it would be an abuse of language to describe the resumption of such a dismal relationship as a marital reconciliation. The original decree nisi was not granted in error in that there had indeed been an irretrievable breakdown of the marriage. The husband was granted a decree absolute, with the result that the financial orders would now, at last, take full effect.

Tenancies Can Be Worthless If Mortgage Lender Not Informed

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A lease may not be worth the paper it is written on if the landlord’s mortgage lender does not consent to the tenancy. A recent ruling by the Court of Appeal opened the way for the eviction of a mother and her two children after it found that they had no more rights than common trespassers.

The woman had taken a five-year lease on a house which was subject to a £425,000 mortgage charge. The loan agreement contained the usual term prohibiting the borrower – the landlord – from granting a lease of the property without the lender’s consent. No such consent had been sought prior to the granting of the tenancy.

Unbeknown to the woman, the mortgage had been obtained by fraud so that the identity of the property’s legal owner could not be ascertained. The counterparty to her lease was a man who claimed to act on behalf of the unidentified landlord. Mortgage repayments were only sporadically made and the woman had taken to paying her rent directly to the lender to cover sums due and arrears.

The lender obtained a possession order in respect of the property and an order for its sale from the County Court on the basis that it had not been informed of the woman’s lease. It claimed that the lease was not binding upon it in that it post dated the registration of the mortgage.

In dismissing the woman’s appeal against that decision, the Court of Appeal rejected her plea that the lender had actual or constructive knowledge of the lease in that it had accepted the repayments that she had made. It was not arguable either that the lender had consented to treat the woman as its tenant or that it had waived its right to treat her as a trespasser.

The possession order was granted.

Architect Liable for Contractor’s Errors

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A couple who engaged a contractor to carry out work on their house have succeeded in their claim against the architect in respect of the cost of putting right defects in the contractor’s work.

The couple bought a five-storey house in Putney in June 2005. Before moving in, they wished to make changes to the layout of the property, in particular the ground and lower ground floors. The house was near the River Thames and the lower ground floor was below ground level at the front of the property. They engaged an architect to redesign the house. Most of the necessary works were carried out by a contractor recommended to them by the architect.

The architect’s firm failed to ensure that the contractor had installed waterproofing, plumbing, mechanical services and electrical installations without defects.

About six weeks after they moved into the house in May 2007, the homeowners discovered extensive damp in the lower ground floor of the house. The problem was assessed by experts, who concluded that the contractor had failed to carry out proper waterproofing. There were also problems with the electrical works and the plumbing. The couple had to move out of the property for more than 18 months while remedial works were completed.

They sought compensation for the cost of remedying the works, as well as consequential losses. The contractor subsequently became insolvent.

The architect defended the couple’s claim against it on several grounds, including that, as a result of the contractor’s financial situation, the problems would not have been remedied even if the architect had detected them. The architect’s terms of engagement contained a clause limiting its liability to ‘the amount that is reasonable for us to pay’ in respect of work carried out by ‘other consultants, contractors and specialists appointed by you’. Such clauses, known as ‘net contribution clauses’, attempt to limit a service supplier’s liability to their ‘share’ of any damage. Where such a clause is not in place, all parties to a contract are jointly and severally liable for any claims resulting from it.

The court found that the architect was unable to rely on the net contribution clause. The term limiting liability in respect of ‘other contractors’ was ambiguous: given that the homeowners were consumers, the court considered the impact of the Unfair Terms in Consumer Contracts Regulations 1999 on their contractual arrangements and concluded that the ambiguity must be resolved in their favour. Whilst the clause would apply to some of the work carried out on the house, it could not apply to the work done by the contractor. Crucial to this decision was the fact that the architect had received a fee from the contractor in relation to the work.

Couple’s Claim for CGT Loss on Holiday Home Succeeds

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HM Revenue and Customs (HMRC) may appear a very big battalion indeed but, with the right legal advice, individuals can succeed in overturning their decisions. Exactly that happened in a case concerning a couple who lost over £6 million in a disastrous attempt to buy a luxury holiday home overseas.

The couple entered into a contract to purchase off plan, for $25.9 million, two neighbouring villas on the island of Barbados as a holiday home for their family. They paid a deposit of over $5 million, and stage payments as construction targets were met brought their overall outlay to almost $11.3 million.

However, after the developer experienced cashflow difficulties arising from the 2008 financial crisis, building works were first delayed and then suspended. Although the couple retained rights to the villas, they were of negligible value in that the works were unlikely ever to recommence. The partially built villas stood derelict and the couple had yet to recover any of their money.

The couple, who calculated their joint losses at almost £6.25 million, sought to set that sum off against Capital Gains Tax (CGT) liabilities arising in subsequent tax years. After HMRC refused to allow them to do so, the couple lodged an appeal to the First-tier Tribunal (FTT).

In upholding the appeal, the FTT noted that it was accepted that they had acquired an asset when they contracted to purchase the villas and that they had suffered a commercial loss in that the villas were unlikely ever to be completed. They had paid the relevant sums to acquire, or enhance, their contractual rights and Section 38 of the Taxation of Chargeable Gains Act 1992 thus entitled them to deduct their losses from future CGT liabilities.

Law Overrides Will That Excludes Partner

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The law that allows someone who was dependent on a deceased person during their lifetime to make a claim against their estate if there is no, or inadequate, provision for them in the will is one of long standing (the Inheritance (Provision for Family and Dependants) Act 1975). However, many people think it applies only to blood relatives.

That this assumption is incorrect was emphatically confirmed in a recent case in which a 70-year-old woman was awarded £325,000 from the estate of a man with whom she had had a relationship lasting more than 20 years, the last seven of which they had spent together in the man’s home, which was the principal asset of the estate.

His will left his £1 million estate entirely to his two daughters, both of whom are comfortably off. When his former partner made a claim under the Act, they opposed it, contending that the relationship was not one of permanence and substance.

The judge concluded that the man had clearly had a responsibility to his partner and made the award.

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