Monthly Archives: December 2018

Merry Christmas

We would like to wish you all a very Merry Christmas and a Happy New Year and also thank you for your support over the last 12 months.

The office will close at 5pm on  Friday 21st December 2018 and will re-open at 9am on Wednesday 3rd January 2019.

As in previous years, in lieu of sending Christmas cards, this year we have donated to Shelter UK and Alzheimer’s Society

 

The Return of the Rise in Probate Fees

Back in 2017 we covered the proposed rise in probate fees which was subsequently abandoned when the general election was called.  The current probate fee is a flat fee of £215 or £155 if the probate application is made via a solicitor.

In November 2018, the Government brought before Parliament proposed legislation which if approved, will introduce a new banded structure of fees, tiered according to the size of the deceased’s estate as set out below: –

·         Up to £50,000:                        no charge

·         £50,000- £300,000:                  £250

·         £300,000- £500,000:               £750

·         £500,000 to £1m:                    £2,500

·         £1m to £1.6m:                         £4,000

·         £1.6m- £2m:                             £5,000

·         Above £2m:                              £6,000.

Whilst there are significant increases for the larger estates, (although not up to as much as the £20,000 previously proposed), it is estimated that 80% of estates will not pay more than £750 and fewer estates will be liable because the probate fee threshold will rise from £5,000 to £50,000 which should exempt about 25,000 estates every year. The additional income raised, estimated to be £145m, is to be invested in the Courts and Tribunal Service and will be used to fund improvements to the Probate Service. This includes the ability to apply for a grant of probate online. Interestingly, a separate statutory instrument has been issued to introduce this online application process and will lead to an administrative cost per application of only £9.30.

However, as the probate process is broadly similar regardless of the size of the estate, it could be argued that the new fees represent a stealth tax on property as property is normally the main constituent of the estate. Indeed, a House of Lords committee has reiterated this and is concerned that the proposals will lead to a move away from ‘the principle that fees for a public service should recover the cost of providing it and no more’. Executors may find themselves having to find the required fees themselves where estates are relatively illiquid, while professional executors may raise their fees to cover this.

Charities will also be adversely affected as they are not exempt from probate fees. It is estimated that they could lose about £10m a year of legacy income and so there will be lobbying for a relevant exemption to be introduced.

The Government are hoping to have the legislation through Parliament by April next year and if it is agreed, it will clearly be important to ensure that funds are available to your executors to pay the fees.  This can be easier said than done and particularly as these have to be paid before any of the assets can be distributed.  This is something that we can discuss during our meetings and incorporate into your financial plan.

 

 

 

 

Financial Decision Making in Later Life

Financial Decision Making in Later Life

The World Health Organization reports that by 2050, 2 billion people (22% of the World’s population) will be age 60 and older, up from 605 million (11% of the population) in 2000. Older adults must make important, and often irreversible, decisions that impact the rest of their lives.

Examples include when to take pension benefits, whether to buy long-term care insurance, how to most efficiently draw down savings and whether to annuitize assets.

Unfortunately, while advances in wealth and medical science have led to rising life expectancies, longer lives create the risks of running out of financial assets sufficient to support a minimally acceptable life style. The longer we keep going then the risk of cognitive impairment increases, which, amongst other things makes us more susceptible to becoming the victim of financial abuse.

Thoughts of retirement can be dreams of being free of job responsibilities and enjoying travel, leisure activity and having fun. We look forward to having time to do the things we didn’t have time to do. Our thoughts usually do not include fear that someone is going to rip us off. Unfortunately, financial abuse does happen, even to the smartest people.

Most of us do not want to face the fact that, over time, we may lose our mental acuity. However, declining mental sharpness is inevitable for many. That makes us more vulnerable. Even if you do not suffer any decline in mental sharpness, there is no guarantee you will be untouched by those seeking to exploit you.

Determined, professional thieves know that many older people have nest eggs that can be stolen. Educated and powerful people can be taken advantage of and manipulated right along with those who lack these advantages. No one is immune.

Carolyn Rosenblatt, who is a well-known American expert and author with extensive experience working with both healthcare and legal issues offers the following checklist of warning signs of cognitive impairment (which can increase the risk of financial abuse):

  • It appears to others you trust that you are no longer able to process simple concepts.
  • You appear to be forgetful, with short-term memory loss.
  • You appear unable to recognise or appreciate the consequences of financial decisions.
  • You make decisions that are inconsistent with your long-held goals, investment philosophy or commitments.
  • You demonstrate erratic behaviour.
  • You refuse to follow appropriate investment advice, which you have generally accepted in the past.
  • You seem to others to be paranoid about someone taking your money or missing funds that are not missing.
  • You lose the ability to understand recently completed financial transactions.
  • You appear in any way to be disoriented, get lost in familiar places, such as finding your way home, or you forget where you are.
  • You forget to groom, bathe or take basic care of your physical needs.

If you (or a loved one) are experiencing these signs, it’s time to seek help. You do not want to wait until after the damage is done.

Rosenblatt also offers the following 10-point smart retirees’ checklist that generally covers many of the bases of how to help your family and you be best prepared for things you need to manage in this phase of life and avoid abuse. The bottom line here is transparency and open communication.

1. Decide with whom you want to communicate about your future. Set a date and get together.
2. Have a signed and registered lasting power of attorney in place to cover finances.
3. Have a signed and registered lasting power of attorney to cover health and care decisions.
4. Make a list of all bank accounts, investment records and financial planning you have done, and provide contact information.
5. Provide written permission to your loved ones to talk with your solicitor, accountant and financial planner.
6. Make a list of all insurance policies, including life, disability, health, property and anything else you own that will protect your heirs.
7. Make a copy of your mortgage statement, any other loans, financial statements and bank statements. Keep them in one place. Update when changes are made.
8. List your doctors, care providers and medications. Give written permission for your loved ones to speak with your doctors.
9. Put in writing your wishes for burial or disposition of your remains.
10. Update your will and/or trust with a local solicitor. Laws change and documents need to be up-to-date.

Have a family meeting to share and explain items 2 to 10 to your loved ones.  Carpenter Rees can provide a list as to what should be included here to enable you to prepare a folder of relevant documents and contact details.

If you or your family don’t have such a plan already in place, maybe treat this as a timely reminder to act.