Private Client

Introduction

The Adults with Incapacity (Scotland) Act 2000 was one of the first pieces of social legislation passed by the Scottish Parliament.

The issue of adult incapacity can, sooner or later, affect most of our families. Incapacity can be caused by either a physical disability or a mental disorder and means that an adult is incapable of making decisions for themselves, communicating decisions, understanding decisions or indeed retaining memory of decisions.

Capacity is not an "all or nothing" condition. It may be that an adult is capable of operating their day-to-day finances but may need assistance with larger decisions or transactions.

The Adults with Incapacity (Scotland) Act 2000 provides a range of options to help those who are or may become incapable of looking after their own financial or welfare affairs. The main options are as follows:

Access to Funds Applications

This is a procedure which allows an individual, individuals or organisations to obtain authority to access and manage the funds held in, for example, a bank or building society account. The account or accounts must be in the sole name of an adult who is or no longer able or capable of accessing their funds. Access to more than one account may be authorised however authority cannot be given for accounts held in joint names.

The funds requested in the application are to be used to pay for the adult's day to day living expenses, such as paying gas, electricity bills etc. or buying things such as clothes, toiletries, food, or anything that the adult was in the habit of buying or paying for on a regular basis. It can also be used to request a lump sum to pay off any existing debts or to purchase specific items required by the adult.

An individual, individuals or an organisation may apply to access the funds. An individual could be anyone with an interest in an adult's financial affairs, such as a relative or friend. In such instances a person will require to countersign the application to say that the applicant is suitable to carry out the role and that the application is appropriate.

Intervention Orders

An intervention order is a court based appointment which authorises a person to take action or make a decision of which an adult is incapable of making for him or herself. Before applying for an intervention order, the applicant should make sure that the intervention will benefit the adult and be the least restrictive option for the adult.

An intervention order can cover more than one aspect of the adult's property, financial affairs and/or personal welfare. There is no fixed period for the appointment as it will last until the intervener has concluded the matters authorised by the court. An intervention order would normally be suitable when dealing with issues where the outcome can be predicted. A guardianship order on the other hand would be more appropriate where ongoing management of the adult's affairs is required. This may be a financial or property transaction, such as signing a legal document on behalf of the adult or a personal welfare matter such as arranging for the adult to attend a medical appointment.

Guardianship Orders

A guardianship order is a court appointment which authorises a person to take action or make decisions on behalf of an adult with incapacity. A guardianship order can be in relation to property and financial matters, personal welfare, or a combination of these. Guardianship is likely to be more suitable where the adult has long-term needs in relation to these matters. The standard term for a guardianship appointment is 3 years, although the Sheriff has the discretion to make the appointment for a longer or shorter period.

Guardianship can be applied for when a person is over the age of 16 years. For young adults about to reach the age of 16 years, guardianship can be applied for in the three month period leading up to their 16th birthday. This means that the guardianship will take affect on their 16th birthday.

Paris Steele W.S. has many years of experience in dealing with the issues arising from incapacity and we will be happy to advise and assist you.

In later life decision making can become harder. Often issues cannot be discussed with the family for various reasons, or there may simply be nobody to discuss them with. Problems arising later in life are many and varied.

You should of course ensure that your Will is up to date, and reflects your wishes. You may wish to grant a Power of Attorney, so that others can take decisions for you if you become unable to do so. You should consider mitigating any Inheritance Tax that your family will have to pay after your death, and look at ways of increasing your income in retirement. You might need help of a more practical nature in completing Tax Returns, or paying Household Bills or Nursing Home Fees, or even in investigating the different types of accommodation that are available.

Paris Steele W.S. has many years of experience in dealing with Wills, Powers of Attorney, Income Tax and all other matters involved in caring for the elderly and we will be happy to advise and assist you.

When someone dies, their assets (known as their "estate") have to be transferred to those persons who are entitled to them, and their debts have to be settled. The person given the responsibility of doing so is known as their "Executor". The person who has died may, or may not, have left a will. If there is a will, they are said to have died "testate" but if there is no will they are said to have died "intestate". If the will has been properly drawn up, it will have appointed an Executor, and will stipulate to whom the estate is to be transferred. If there is no will, the first step will be to have an Executor appointed by the Sheriff Court, and the law lays down rules for who the estate then passes to. Even where there is a will, it is still possible for certain relatives (spouses and children) to make a claim if they have not been mentioned in the will. This is known as making a Claim for "Legal Rights".

The first task of the Executor is to find out all the assets and liabilities of the person who has died, and then to have them valued accurately on the date of death. The assets are listed in an Inventory, and arrangements are made to pay death duties (known as "Inheritance Tax".) The amount payable will depend on the value of the estate. The Inventory is lodged with the local Sheriff Clerk, who in turn grants Confirmation to the Estate and this confirms the Executor's authority to administer the estate. The Executor then makes arrangements for all the Bank Accounts, Investments, Life Policies and other property to be either sold, cashed in, or transferred to the beneficiaries. The debts will be settled, an Income Tax Return to the date of death has to be lodged, and any remaining funds are paid out to the beneficiaries. All in all, winding up an estate can be a complicated business and you are always advised to see a solicitor at the earliest opportunity after somebody dies.

Paris Steele W.S. has many years of experience in dealing with Executry Estates and we will be happy to advise and assist you. 

Paris Steele W.S. will be happy to assist you with your inheritance tax planning. Where your estate exceeds the Inheritance Tax threshold (currently £325,000) you may face a not insubstantial tax liability and the specialist advice of your solicitor may be invaluable.

Lifetime Gifting

Lifetime gifts are an effective and efficient method of tax planning. Each individual can gift £3,000 per annum. If you do not use your full allowance in one year you can carry it forward to the next.

You can also make small gifts to any number of people providing the value of the gift does not exceed £250. The recipient of the gift cannot also receive your annual gifting allowance (£3,000).

If any of your children are planning to marry each parent of the bride or groom can gift £5,000 free of Inheritance Tax and Grandparents or other relatives can give £2,500. Anyone else can gift £1,000. You must make the gift before the date of the wedding.

Gifts out of income are permitted providing these come solely from your income and not your capital. These could include birthdays or Christmas gifts. If you have surplus income you may choose to make regular contributions into an investment which can be written into trust for your beneficiaries and will not form part of your estate for tax purposes.

Any gifts that you make in addition to the aforementioned options will fall to be “potentially exempt transfers”. Providing you survive for seven years after the date of the gift these gifts will be deemed to have left your estate for inheritance tax purposes.

Gifts with Reservation

When making a gift you must be careful to avoid creating a “gift with reservation of benefit”. An example of this would be transferring your home into the names of your children without giving up possession. These types of gift do not qualify as a gift for tax purposes.

Can I gift into a Trust?

If you feel that your children are too young or due to certain circumstances you would prefer not to make an outright gift to the eventual beneficiaries of your estate at this time it may be possible to gift certain assets into trust. Certain forms of trusts, known as “Discounted Gift Trust” provide an immediate exemption for inheritance tax for at least part of the value of the gift irrespective of the seven year survival rule. Should you have a need to retain your current level of income a “Loan Trust” may be a suitable solution.

Lifetime gifts into all trusts are free from inheritance tax (subject to the seven year survival rule) providing the value of the trust fund is within the donor’s inheritance tax nil-rate band (currently £325,000). The donor will have a new nil-rate band allowance every seven years.

Other Gifts

Gifts between husband and wife are free of any tax consequences. There are also exemptions for gifts to UK charities, UK political parties and gifts of land to registered Housing Associations.

Why use Paris Steele W.S. to advise on my Inheritance Tax Planning?

Trust and Estate Tax Planning is a complex area and your solicitor together with your accountant and independent financial advisor will be able to advise you on all of the relevant issues.

Our solicitors can provide you with all of the relevant information on your tax allowances and assist in minimising your tax liabilities. Feel free to make an appointment to discuss your requirements.

Paris Steele W.S. has many years of experience in providing inheritance tax planning advice and we will be happy to advise and assist you.

Introduction

Making a will is the only way to ensure that your estate will be dealt with according to your wishes after your death. If you do not leave a will there can be problems for your family after your death. It is generally understood that less than half of the Scottish population have made a will. Many feel that they are too young or not wealthy enough to need a will. Others assume that on their death their estate will automatically transfer to their family.

Intestate Succession

If you die without a will your estate will be administered in accordance with the rules of intestate succession as laid down by the Succession (Scotland) Act 1964. Your Spouse will enjoy automatic “Prior Rights” of succession to the matrimonial home, the furniture contained in that home, and an entitlement to a sum of money. Both your Spouse and your Children will enjoy “Legal Rights” of succession.

Preparing a Will

The preparation and alteration of a will should always be entrusted to a solicitor. You should appoint at least one "Executor" in your will. This need not be a beneficiary. The Executor is the person who will look after the estate and is responsible for ensuring that your instructions are carried out.

You should discuss with your solicitor who you wish to be your Executor, and who you wish to receive your assets on your death. Any tax implications should be discussed at this stage, also the right of any of your relations to make a claim to your estate on your death.

You can use your will to make special requests for your funeral, and to leave any individual items you may wish to go to a particular person.

Once a will has been made it can easily be changed, and indeed it should be reviewed periodically.

To assist you with preparing to meet with one of our solicitors we suggest that you complete our will planner and bring this to your appointment.

Download will planner

Inheritance Tax Planning

Your will may provide you with an opportunity to carry out valuable Inheritance Tax planning. Each individual enjoys an exemption from inheritance tax known commonly as the “nil-rate band”. The current level of the nil-rate band is £325,000. Any estate which you hold over and above this figure will be taxed at the rate of 40%.

Paris Steele W.S. has many years of experience in advising on wills and Inheritance Tax and we will be happy to advise and assist you.

What is a Power of Attorney?

A Power of Attorney is a written document which authorises someone to act or take decisions on your behalf. You need to think carefully about the person that you choose to act on your behalf, the range of powers that you wish to give them, and how you wish your incapacity to be determined.

There are two types of Powers of Attorney. A Financial Power of Attorney helps with matters such as property and money. A Welfare Power of Attorney deals with decisions made regarding your personal welfare, accommodation and medical treatments. You can also combine both options in one consolidated deed. One of our solicitors will be happy to discuss these options with you.

When should I grant a Power of Attorney?

Most people think that Powers of Attorney are only for the elderly but illness and accidents can happen to anyone. If you leave it too late you may be unable to grant the Attorney and a court action may be required to appoint someone to act on your behalf.

Who can I appoint to act as a Power of Attorney?

You are free to appoint who you wish and you may appoint a different person to act as your Financial Attorney from that who is acting as your Welfare Attorney. You may wish to appoint a member of your family or a close friend. However, your Solicitor, Accountant or other Professional Advisor may also be happy to accept the appointment.

Where can I get a Power of Attorney?

All of our solicitors will be happy to prepare a Power of Attorney for you.

What is the Office of the Public Guardian?

Before a Power of Attorney can be used it must be registered with the Office of the Public Guardian. One of our solicitors will be able to sign the necessary certificate and prepare the registration form.

What happens if I change my mind?

If you want to cancel a Power of Attorney you can do this by providing written notice to this effect to the Office of the Public Guardian. One of our solicitors will be happy to assist with this.

Alternatives to a Power of Attorney

If you do not have the capacity to grant a Power of Attorney there are four main options:

1. Access to Funds Application – This scheme allows someone to access an account held by a person who has lost the capacity to act on their own behalf for a period of up to three years. Access to the funds is limited to certain agreed purposes e.g. payment of utility bills

2. Intervention Order – This allows the Intervener to do a one-off activity e.g. sell a house for someone who has entered a nursing home.

3. Guardianship Order – This allows someone to be appointed to act on someone’s behalf to manage their affairs on an ongoing basis.

4. Benefits Appointee – if the incapacitated adult is solely reliant on state benefits you may be able to be appointed to received those payments on his or her behalf.

One of the solicitors in this office will be happy to provide advice to you in these matters.

Where can I get further information?

We will always be happy to answer any of your queries. Further information is available from the Office of the Public Guardian, Hadrian House, Callendar Business Park, Callendar Road, Falkirk, FK1 1XR; Website: www.public-guardianscotland.gov.uk or from your local Citizens Advice Bureau.

Why use Paris Steele W.S. to prepare a Power of Attorney?

Our solicitors can provide you with all of the relevant information you require to grant a Power of Attorney and, if required, will be happy to be appointed to act on your behalf. Feel free to make an appointment to discuss your requirements.

Paris Steele W.S. has many years of experience in preparing Powers of Attorney and we will be hapy to advise and assist you.

There are several types of trust available under Scottish law, but generally all are created with the object of either saving tax or preventing an asset falling into the wrong hands. Put simply, a trust is created when somebody transfers property, either while they are alive or when they die, to somebody to hold for the benefit of a third party.

In some cases, the Trustees may be given complete discretion as to how they dispose of the asset and they can decide when and to whom the asset is to be transferred. In other cases they may be told exactly when and to whom the asset is to be transferred. Trustees may be charged with the duty of managing the trust fund, as in the case of a share portfolio, or they may simply be asked to hold, for example Savings Certificates, as nominees. Whatever the reason, you will require the expert advice of your solicitor in deciding which kind of trust would be best suited to you.

Paris Steele W.S. has many years of experience in dealing with trusts and we will be happy to advise and assist you.