THE DEATH KNELL FOR THE DEATH TAX

Is it a “U turn” or something else?

• The predicted “Death Knell” in the governments intended death tax happened last night.  The savage rises in probate fees are no more, or at least for the present!

• The coup de grace took place yesterday when ministers announced that they would not be pushing ahead in this parliament with proposals to increase probate fees which in some instances would see them rise by as much as 129 times more than at present.  See earlier blogs for the detail on the intended graded system.

• “The Non – Contentious Probate Fees Order” which provided for the increases, was thrown into disarray just prior to the Easter break.  This was because the Parliamentary Joint Committee on Statutory Instruments savaged the proposals by saying that because the proposals were more akin to tax increases than fee increases the Lord Chancellor could not proceed because she did not have the power to do so.

• As a consequence lawyers and other interested parties were preparing for a possible judicial review if the measures were pushed through.

• The government does of course make no admissions about a “U turn” and simply says that because of the snap election decision there is not enough parliamentary time left to allow the issue to get onto the statute books. Whether the fee increases will re emerge if the government is re elected remains to be seen? At present this seems unlikely especially as the present Lord Chancellor does not appear to have the respect of the judges and therefore may not be re appointed in any event.

• That said the proposals if made law could have raised £300 million pounds. So where will this loss in revenue now come from?  Clearly wait and see but not until after the election. That said for most people yesterdays apparent “U turn” will be good news for many.

• The above is an overview only.  For a free appointment and to find out answers to the questions that need answering  and to get the care you or a loved one need email Andrew Douglas or his team on ajd@awdrys.co.uk or call on    0800 072 8636.  Alternatively visit our website www.abdcare.co.uk

                                       

IS THE GOVERNMENTS GREEN PAPER DOOMED FOLLOWING THE DECISION TO HOLD A SNAP ELECTION?

· A surprise indeed that we are all heading for the polls only two years after the last election. The question is will it change anything in the adult social care system.

· The last election did because shortly after being elected David Cameron postponed the Care Cap he campaigned on until 2020 at the earliest.  People will recall that this was a government pledge/promise that the maximum anybody would have to pay in respect of eligible elderly care costs would be £72,000.

· The present government is committed to delivering a green paper in the autumn discussing an overhaul of the care system. All major parties are committed to the concept of a discussion on the subject knowing that the present system is almost broken and underfunded no matter what the present government says. This election will inevitably result in a delay. If a labour government wins (unlikely if the polls are to be believed) they will want to review its remit and put their own spin on it, and if the Conservatives win they will be behind the game line by some seven weeks the time taken to fight the election.

· It is however, vital that a Green Paper is published and a proper discussion takes place for all the reasons that those involved or contemplating involvement in the care system know.

· The latest negative news comes this week from the Competition and Markets Authority who have been investigating the sector since last year. Complaints they have received ahead of the Green Paper include:-  

1. Care homes charging for rooms after a residents death.
2. Fear of complaining because of a worry about reprisals and care homes serving a notice to quit the home.
3. Self Funders having to subsidise those supported by local councils and paying up to 43% more.
4. Charges for unexpected fees such as trips to medical appointments and the unwillingness of care homes to cap increases in fees for self funders.

· Interesting times ahead and in the short term what will actually be in the political parties manifestos about reforming social care.

· The above is an overview only.  For a free appointment and to find out answers to the questions that need answering  and to get the care you or a loved one need email Andrew Douglas or his  team on ajd@awdrys.co.uk or call on 0800 072 8636. Alternatively visit  www.abdcare.co.uk

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ARE ROBOTS THE FUTURE IN RESPECT OF ELDERLY CARE?

· The latest message of doom in the care system came but a few days ago from the Chairman of the Home Care Association. He said the system was close to collapse.  This mirrors Age UK’s prediction that the adult social care system will begin to collapse this year.

· The number of over 75’s is according to the office of National Statistics expected to double by the year 2040. This is at a time when an estimated 900 care workers a day quit their jobs, of which 60% leave the industry altogether.  A consequence is that both time and consistent care in the industry cannot be given.

· The governments answer is that an extra £2bn is being provided to the sector over the next 3 years. That said there are not enough people to perform the caring jobs which already exist. The Governments Green Paper in the autumn on adult social care needs to address this issue amongst the many other problems the industry faces.

· The Green Paper could do worse than look at the thought processes which are on-going in Japan which, like every country in the world has it’s own similar crisis in adult social care.

· The Japanese ageing population will need 1m new nurses by 2025. The problem they have is that they do not have enough people in the country to train. As a consequence they see a solution as being to introduce care giving robots, “the human support robot” to assist. Robots of this nature already exist in Japan. They can obey voice commands to fetch medication, draw curtains, stretch with their extendable arms to get items which are high up and pick up objects.

· Clearly developments in the Robotic world are on-going.  Help for many from a Robot can be seen as more dignified than from a human. Also it saves importing people from other countries and which in turn deprives those countries of their own caring resource.

· One question is, will our culture be prepared like the Japanese to consider Robots as a partial answer to the crisis in the sector.    Is their the will and of course the funding to explore this route.  Certainly and at the very least the Governments Green Paper needs to discuss this possible partial solution.

· The above is an overview only.  For a free appointment and to find out answers to the questions that need answering  and to get the care you or a loved one need email Andrew Douglas or his  team on ajd@awdrys.co.uk or call on 0800 072 8636. We have offices In Marlborough, Royal Wootton Basset, Devizes & Chippenham. Alternatively visit our website www.abdcare.co.uk

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DISABLED/VULNERABLE CHILDREN v MENTAL CAPACITY ACT ?

Vulnerable children and their transition to Adulthood

It will come as a surprise to some parents and carers to discover that they do not have the automatic right to make decisions for their older teenagers and adult children with Special Educational Needs.  The Mental Capacity Act (2005) is designed to protect and empower individuals who may lack the mental capacity to make their own decisions about their care and treatment.  When a person turns 16, the starting point is to assume they have capacity to make decisions for themselves (even though they are still legally a child until 18). The law says a person must be given relevant information in an appropriate format and time to understand it before a decision on their capacity is made.  So whilst you are considering the whole question of post-school options, you will also need to think about how much actual input you are legally given.

There are two key points to consider.  The first is how to remain in control and second is what arrangements you can put in place to manage the finances.   The following is a quick guide to the options available to you.

Managing Affairs

Lasting Powers of Attorney (“LPA”) and Deputy Orders are legal appointments of a person or persons to deal with the affairs of a person who lacks mental capacity. These appointments can be made to retain the power to make decisions about the person’s financial matters or their health and welfare.  They key difference is for an LPA, the child/dependent must give his or her consent for you to act on their behalf which can be difficult.  Therefore the option then has to be to obtain a Deputy Order via the Court of Protection. An application of this sort can take time and the outcome uncertain. You will need to work in conjunction with the social care department for the council involved with your child to ensure the best result

The Finances

A Trust can be set up into which money can be deposited for the benefit of the child but with the control remaining with the Trustees (be it parents, relatives, guardians).  There are a number of decisions which will need to be made here to include the type of trust and its purpose.  It will be necessary to distinguish between those difficulties that a young person experiences from birth and those that happen as a result of an accident.  So for the first category you would need a Disabled Trust and the second might require a Personal Injury Trust.

To qualify for a Disabled Trust the beneficiary must be a disabled person. For this purpose a disabled person is one who within the meaning of the Mental Health Act 1983 is incapable of managing his affairs, or qualifies under a 'benefits test'.   ‘Mental disorders’ such as bipolar disorder, schizophrenia, autistic spectrum disorder, learning disability (such as Downs syndrome) are also conditions which enable a person to qualify as disabled, if, as a result of having the condition, they are incapable of managing their affairs.  A parent or guardian can place their own money into this type of Trust.

For a Personal Injury trust to be relevant the child needs to have received compensation as a result of an accident and it is only that money which can be put into the trust.

For both types of Trust tax and DWP benefits need to be considered. There is then the question of who can benefit from the trust post death or should it then be wound up. Whichever Trust is chosen it  will need to be registered with the revenue and annual income and capital growth accounted for.

The above is an overview only.  For a free appointment and to find out answers to the questions that need answering  and to get the care you or a loved one need email Andrew Douglas or his  team on ajd@awdrys.co.uk or call on 0800 072 8636.

We have offices In Marlborough, Royal Wootton Basset, Devizes & Chippenham. Alternatively visit our website www.abdcare.co.uk

THE DEATH KNELL FOR THE DEATH TAX?

• Having reported recently on the proposed increase in Probate fees to help fund the running of the courts and tribunals system a problem has arisen. 

• An influential Parliamentary committee, named the Parliamentary joint committee on   Statutory Instruments says that the Lord Chancellor’s decision to increase Probate fees in  some cases by up to 129 times more than presently required, is more in line with a tax increase than a fee increase and should be referred back to both Houses of Parliament.

• This decision means that the proposed fee increase could now be delayed or scrapped altogether. It also means that even if the fee increase is approved it could be challenged successfully in the courts especially as the increase was opposed by almost all respondents during the consultation process.

• The government remains resolute with its plans.  That said the fee increase will be considered by Parliament after the Easter break. As a result let us watch this space since it may be the death knell for the death tax?

• As a reminder the changes proposed mean that any estate worth 2 million or more will have to pay £20,000. The changed system works on a sliding scale as follows:-

         1.   Estates under the value of £50,000      -  will pay nothing
         2.   Estates valued at between £50,000      -  £300,000 will pay £300
         3.   Estates valued at between £300,000    -  £500,000 will pay £1,000
         4.   Estates valued at between £500,000    -  £1 million will pay £4,000
         5.   Estates valued at between £1 million   -  £1.6 million will pay £8,000
         6.   Estates valued at between £1.6 million - £2 million will pay £12,000                    and over this figure, £20,000

• The above is an overview only.  For a free appointment and to find out answers to the questions that need answering  and to get the care you or a loved one need email Andrew Douglas or his  team on ajd@awdrys.co.uk or call on 0800 072 8636. We have offices In Marlborough, Royal Wootton Basset, Devizes & Chippenham. Alternatively visit our website www. abdcare.co.uk

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GROUND RENT AND SERVICE CHARGES

Potential escalating costs in a leasehold property

Recent reports in the media have highlighted the problems that can arise when buying, or indeed selling, a leasehold property.

Leasehold properties can be attractive for a variety of reasons, not least because they are often a relatively affordable option in a property market which can be increasingly difficult to break into.
The purchase of a leasehold property is typically accompanied by two additional annual charges, Ground Rent and Service Charge.  Ground Rent is an amount paid to the freeholder or to the superior leaseholder if the property is sub-let.  The Service Charge covers the cost of the maintenance and upkeep of the site the leasehold property is a part of; it may also provide for a reserve fund for unforeseen expenses or for a large maintenance capital outlay.

The Lease will provide details of how the Ground Rent and Service Charge will be calculated and/or apportioned between the different leasehold properties.  It is very important to scrutinise the terms of the Lease.  Provisions such as allowing for a doubling of the payments every few years are a red flag, as are provisions allowing for high percentage increases.   In the case of Arnold v Britton (2015) a clause that provided for annual increases of 10% compound interest to the Service Charge in a 99 year lease was upheld by the Supreme Court.  This was despite the fact that it would result in payments of approximately £1 million per year by the end of the term of the Lease.  The court said that the purpose of interpretation was to identify what the parties had agreed, not what the court thinks they should have agreed. The court’s function was not to relieve parties of the consequences of imprudence or poor advice.

A leasehold property’s freeholder, or their Management Company, is obliged to provide 3 years of accounts and to disclose any disputes with Tenants regarding the service charges as part of a purchase transaction.  This information is very important in ensuring the property being purchased is being correctly and fairly managed.

As a seller, if you have unwittingly purchased a property with escalating  service charges you could find yourself out of pocket not only due to the increases but also because your property becomes so unattractive that you cannot find a buyer.

For further information contact a member of our Commercial team at our Marlborough Office on 01672 518620.

HOME NOT SO SWEET HOME

Buying a house? Think you know what you are paying for it? Of course you do.....or do you?

If you are buying a house that is held under a lease (instead of buying the freehold) you might be thinking that you can buy your freehold easily for a nominal sum.

However there is a growing trend of house builders selling the freehold to investment companies who then ask for big sums in return for selling the freehold.  The developers are allowed to sell the freehold as rights of first refusal apply to flats but not houses.

We  know of one case where a developer was willing to sell the freehold to the homeowner for less than £3,000 but once the freehold was transferred to the investment company they wanted over £30,000. That's ten times as much!

If you are in this situation we can help. Did you know there is a statutory process which will enable you to buy your freehold after 2 years?  This process will also establish the price and the legal fees you need to pay meaning you will not be left having to negotiate with an investment company seeking to extract as high a sum as possible.

If you would like to talk to someone please contact a member of our Commercial Team at any of our offices.