News / Press
November 2013 - A Testament to Legal Differences
DEBATES on next year’s referendum on Scottish independence seem to be in the headlines every other day but, on matters legal, Scotland has, of course, always marched to the beat of its own drum.
So when it comes to writing a will to govern what happens when someone dies, the laws in Scotland and England have always been quite different. Therefore for people with family and household interests on both sides of the Border – and there must be many thousands with varying levels of income and assets – the position is often too important to ignore when considering inheritance issues.
This raises the question as to whether a Scot who lives in England, or an Englishman who lives in Scotland, should sign a Scottish or English will, especially where there is still a close family connection, or other specific interests, on both sides of the Border.
When Sarah, a Scotswoman, married her English fiancé, Mark, eight years ago, she didn’t have a will in place. Following the marriage, she soon started a new family in London. She no longer had any close relatives in Scotland and sold her flat in Edinburgh to help purchase the couple’s joint property in Kent. But Sarah still considered herself very much a Scot and so was in a position to instruct her solicitor, still based in Edinburgh, to draw up a Scottish will, notwithstanding her South-east England address on the basis that she believed this to be in the best overall interests of herself and her family.
One example of the difference between the two legislations which is of practical everyday importance is that in Scotland, unlike in England, there is no automatic revocation of an existing will when someone gets married. Also, there are prescriptive laws in Scotland which protect spouses and children from being disinherited, no matter what is contained in a will; in England the matter of disinherited wives, sons and daughters is ultimately left to the discretion of the courts.
Which law applies to the last will and testament of any individual is governed by a piece of legal terminology known as “the law of your domicile”. In simple terms this means that everyone should draw up their will according to the law of the country they consider their permanent home. It is distinct from residence and nationality and while a person can have dual-nationality (and even residence) they can have only one country of domicile. And so, for the purposes of this article, that has to be either Scotland or England.
So where a person still considers themselves domiciled in Scotland (if, for example, they intend to return to Scotland at some point later in life, or to be buried there), Scottish advice should always be sought. This is particularly the case where the value of the estate exceeds the inheritance tax nil-rate band (currently £325,000), as Scottish forced heirship provisions (which give a spouse and children the right to challenge a will if they are disinherited) could have adverse inheritance tax consequences.
Even should a majority of Scots vote to remain citizens of the United Kingdom in next year’s independence referendum, these national distinctions are not likely to merge any time soon as the legal regulation of each jurisdiction develops. For example, the Scottish Law Commission recently made a number of recommendations on succession law, intestacy and ways to ensure that children and spouses are not disinherited under a will.
A Scottish Government spokesperson said it recognised that the legislation [in Scotland], now over 40 years old, “may not, therefore, meet the needs, or reflect the relationships of the citizens of a modern Scotland. The Commission’s work provides us with a firm foundation for taking this forward.”
The EU has very recently introduced new rules to help clarify the position in complicated situations, where the law of two or more EU countries could apply. From August 2015, most EU citizens will be able to choose whether the law applicable to the succession of their moveable estate (such as cash and investments) should be under the rules determined by the country of their habitual residence or the country of their nationality. However, the United Kingdom has chosen to opt out of these regulations and so the question of whether Scottish or English law applies to the affairs of someone in the UK will continue to arise, whatever the outcome of the vote in September 2014. • Peter Shand is a partner with law firm Murray Beith Murray www.murraybeith.co.uk.
November 2013 - A further attack on Trusts...?
Rumours are surfacing that the Autumn Statement will see the introduction of new rules governing the inheritance tax regime that applies to trusts. The move is apparently driven by the desire to ease the administrative burden of trustees, but the Treasury may also take this opportunity to close some gaps in the existing legislation and increase the tax take.
Following HMRC’s Inheritance Tax: Simplifying Charges on Trusts consultation that closed in August, the Government may introduce the proposal for a single nil-rate band to be shared across all trusts made by a settlor. Aside from making the tax calculation easier, this would put a stop to the multiple or pilot trust schemes that take advantage of the current rules.
This area of taxation is particularly complex and a
simplification of the rules would be welcomed. However, it is apparent that the current proposal would have retrospective effect unless trusts in existence at the time the change was announced were excluded from the new legislation.
It remains to be seen if, how and when any changes to the regime will take effect. For trustees concerned with these issues, the only way to have certainty of the position is to act before the Autumn Statement on 5 December.
If you would like further details of to discuss a particular situation, please contact Sean Cockburn or your usual Murray Beith Murray contact.
November 2013 - Why not give Murrayfield a try?
November 2013 - Sort out a Power of Attorney while you can
The public row over the care of former football commentator Jimmy Hill highlights that while a power of attorney is designed to remove future issues and headaches it does not necessarily take away the heartache, especially in an era of second marriages and extended families.
The face of Match of the Day for 25 years, Mr Hill is now suffering from Alzheimer’s disease and living in a care home. This only became public knowledge when Jamie, 46, and Joanna, 50, his two children from his second marriage, decided to highlight the difficulties that may arise when a parent with a large extended family becomes too poorly to make decisions for himself.
In 2005, while still in good health, Jimmy Hill granted power of attorney to Bryony, his third wife, and to his solicitor. This basically permitted the handling of all Mr Hill’s affairs to be taken over by them in the event of his becoming mentally incapacitated. The son is aggrieved that neither he nor his siblings were consulted about joint power of attorney.
While there may be valid reasons why a parent may not wish to grant a power of attorney in favour of their children, it would do no harm, wherever possible, to discuss the matter as a family beforehand. Alternatively, the reasoning for the appointment of certain individuals as attorneys could be given in a letter to be held with the solicitor, only to be disclosed if the power of attorney is required. Obviously, appointing all children as attorneys in a large or extended family would not be practical. As may be expected, the appointment of either a spouse or civil partner as an attorney is automatically revoked upon divorce or dissolution unless contrary to the provisions of the power of attorney.
Perhaps the biggest lesson to come out of the Jimmy Hill saga is that things could have been infinitely worse had a power of attorney – even one not to the satisfaction of all of his children – not been in place. Without it, relatives of a mentally incapacitated person have no option but to apply to the court for authority to administer financial and other affairs. The court application is lengthy and costly – more costly, many times over, than the outlay involved in setting up a power of attorney while hoping it will never be needed.
Angela McMahon, Trust & Estate Practitioner
October 2013 - From Beginning to End
Please see attached PDF
October 2013 - Sale fallen through? Blame the bankers and the politicans, not lawyers.
Whilst the house sale process in Scotland is not perfect, one of its strengths has been ensuring that a formal legal offer constitutes an early commitment to buy.
This continues to be the case in the vast majority of transactions, meaning that Scottish buyers are less vulnerable than their compatriots in England to gazumping, or sellers to gazundering, for that matter.
Nevertheless, there does seem to be a growing tendency for more sales to fall through, almost at the last minute, leading to suggestions in some quarters that this is the result of a breakdown in trust within society – i.e. a man’s word is no longer his bond – aided by the connivance of lawyers.
Whilst there are, no doubt, individuals without qualms about reneging on a commitment and a few solicitors prepared to interpret law society rules in a flexible manner, most failed transactions have nothing to do with falling personal or professional standards.
If there is a ‘culprit’ it comes in creeping government legislation in the form of compulsory Home Reports and tightening rules on money laundering, plus a much stricter attitude to mortgage lending by the banks and building societies.
The time taken to conclude missives has grown in recent years from circa ten days to six weeks or longer. This inevitably leads to a breakdown in some sales transactions – especially, as is so often the case nowadays, offers tend to be “subject to survey”.
Until recently, lenders were happy for the same solicitor to look after their interests as also those of their borrowers. HSBC have changed this, seeking a separate solicitor to represent only them and other lenders may well follow. Therefore with three solicitors involved in approving the contract conditions and title, rather than two, delays will inevitably occur particularly if the lender is slow in issuing the offer of loan.
Solicitors – and their clients - have no alternative but to work within the current rules. Both buyers and sellers can however take steps that will help minimise delay and ensure the transaction goes through as intended.
Not all lenders will offer a mortgage based on the valuation recorded in a Home Report and many will insist on carrying out their own survey. Checking your lender’s policy will help minimise delays once you make an offer on a property.
Similarly, sellers should ensure that any repairs or alterations identified in the Home Report are backed up by relevant documentation and forwarded to the surveyor in advance as this will also help speed up the process. Sellers can give their solicitor their lender’s details to order up the title deeds in advance of any offers being received.
Sellers of flats, where repairs and improvements may be communal, should have full details and receipts for any works or estimates.
Buyers may want to commission specialist surveys, for instance on a roof, in addition to the home report and should allow for the extra time and expense.
As for the anti money laundering regulations, there is not much either party or their solicitors can do. Until recently, a solicitor did not need to concern himself as to the origins of a buyer’s deposit. Now the buyer’s solicitor is required to ensure, within reason, that these monies are bona fide gains or savings and not the result of criminal or other unlawful activity. He will want to see documents backing up the source of the funds and whether one agrees with the personal intrusion, there is no doubting its negative effect on the process of buying and selling property. Somewhat ironically, it may also mean that a cash purchase could take longer to complete than one with a high mortgage if the source of funding has not been checked in advance.
In what has been a slower market, a seller is more likely to be the victim of a sale falling through before completion as there has been less pressure on a buyer to conclude. Recently, the market has picked up, and with added competition, sellers can put pressure on buyers to conclude with the threat of reverting to another buyer who may be able to move more quickly.
So whether you are buyer or seller, if you are prepared well in advance the Scottish system of swift conclusion of missives should return.
September 2013 - Lawyer Ceri named among UK ‘Top 35’
Ceri Norman-Short of the Edinburgh-based law firm, Murray Beith Murray, is among those featured in the latest exclusive 'Top 35 Under 35' list of private client practitioners operating in the law, accountancy, the IFA sector and trusts.
The list is operated by eprivateclient, the website and news service which is part of the PAM (personal asset management) structure which provides wealth management sourcing and hosts industry awards.
She has made it onto this year’s list after only five months with the Edinburgh-based law firm, Murray Beith Murray. The ‘Top 35 Under 35’ comprises 35 men and 35 women, all under the age of 35, who have been chosen for their excellence in private client work by eprivateclient from a long list of nominees throughout the UK. Like the 69 other successful entrants to the list, Ceri will have the opportunity to network at a series of private client events across the UK over the next 12 months.
Eprivatelcient is part of the PAM (personal asset management) structure which provides wealth management sourcing and hosts industry awards.
Aged 29, Ceri trained at the London-based law firm, Collyer Bristow, from 2008 before qualifying in 2010. She joined Murray Beith Murray last February and is preparing to sit exams which, if passed, will make her dual-qualified in English and Scots law. At only two years PQE she is already STEP-qualified.
Eprivateclient said Ceri had impressed nominators with “her tax knowledge and in particular in-depth knowledge of inheritance tax for UK and non-UK domiciled clients and trusts” and through her training in London has “gained knowledge of cross-Border estate planning for high net-worth individuals.”
She said: “I was delighted to be selected for this prestigious accolade and have all my efforts over the past few years recognised by Private Client Practitioner and intend continuing to focus on progressing my career through continued professional development over the coming years.”
Peter Shand, a partner at Murray Beith Murray commented: “Ceri has made excellent progress since she started with Murray Beith Murray. She thoroughly deserves this accolade and it reflects Murray Beith Murray’s commitment to professional developments in the workplace and ensure our staff meet their potential.”
September 2013 - A New Crackdown on Tax Evasion
From 1 September HMRC has powers to access information of all debit and credit card payments to UK businesses. This is retrospective for four years and will be used to assist HMRC to identify fraud and evasion. The first requests for data will be issued this week. This has already proved successful in other countries.
No personal data identifying the card owners or card numbers will be obtained.
This is the latest HMRC attempt to reduce tax evasion.
If you have any queries in relation to your tax affairs, please contact Sean Cockburn or Christine Burns in our tax department.
September 2013 - Self Assessment Registration Deadline
For those who require to register for self assessment in respect of the 2012/13 tax year, you must do so by 5 October or risk incurring a penalty.
From 2012/13, those requiring to complete a tax return will include parents on higher incomes who opted at the beginning of the year to continue to receive child benefit. The High Income Child Benefit Charge came into effect on 7 January 2013 and concerns individuals who received the benefit where they or their partner had an income in excess of £50,000 for the year. The partner with the higher income is liable to pay the charge. People who opted to stop receiving child benefit payments before 7 January 2013 do not need to take any further action.
For further details, please contact Sean Cockburn or Christine Burns in our tax department.
August 2013 - Can the dependants of a deceased former employee recover the loss of his death in service benefit?
The Court of Appeal considered in Fox v British Airways plc  EWCA Civ 972 whether it was possible for the dependants of a deceased former employee to recover the loss of his death in service benefit as part of compensation for an unfair dismissal and disability discrimination claim which was brought on his behalf.
Mr Fox was an employee of British Airways. He was off work on long term sick leave as he suffered from a back condition. He was due to have surgery to help his back condition and hopefully allow him to return to work, however, he was dismissed on the grounds of capability 5 days prior to the surgery. Following the surgery Mr Fox died unexpectedly around three weeks later. While Mr Fox had been employed he had been entitled to a death in service benefit of around £85,000 (three times his salary) under the pension scheme. His dependants did not receive the death in service benefit as Mr Fox was not in employment at the time of his death. However Mr Fox’s dependants did receive £29,000 from Mr Fox’s pension benefits. Mr Fox’s father raised a claim in the Employment Tribunal for unfair dismissal and disability discrimination on behalf of his son.
The Employment Tribunal found that the loss of the death in service benefit was not a loss of substance to Mr Fox as they thought it to be a benefit to his dependants. The Tribunal decided that, if liability were made out, a nominal sum should be awarded (around £350) which represented Mr Fox’s loss of the comfort of knowing that his relatives would be compensated if he died. Mr Fox’s father appealed the decision of the Tribunal to the Employment Appeal Tribunal.
The Employment Appeal Tribunal upheld the appeal and found that the loss of the death in service benefit was a loss of substance to Mr Fox and that loss could only be quantified by awarding the full sum payable on his death. British Airways appealed this decision to the Court of Appeal arguing that Mr Fox’s father was not entitled to recover compensation for the loss of the benefit as Mr Fox could never have enjoyed it himself as it was payable to his dependants.
The Court of Appeal upheld the decision of the Employment Appeal Tribunal as they agreed that the loss of the death in service benefit was a valuable benefit to Mr Fox which was recoverable by his dependants on his behalf. They found that it was the whole amount, £85,000, which was recoverable by the dependants and not just the amount of securing a replacement scheme, as Mr Fox had died so soon after his dismissal. The Court of Appeal left it open to the Tribunal to decide whether to discount the £29,000 which had already been paid to the dependants through the repayment of Mr Fox’s pension contributions.
It is an unusual situation where an employee dies soon after dismissal and any claim raised on behalf of the deceased is likely to behindered as the deceased will have suffered no financial loss following the date of death. For this reason it may be uneconomical to raise a claim in the Employment Tribunal despite the circumstances surrounding dismissal.
However, following this case there will be some comfort now to dependants as they may be able to recover any death in service benefit, if they are able to establish liability. However it is important for surviving dependants to note that liability will be difficult to establish without hearing the evidence of the deceased and as a result successful claims may be rare.
It is also important for employers to note that the compensation for loss of the death in service benefit does not appear to be subject to either the statutory cap of £74,200 if the dismissal was prior to 29 July 2013 or 1 year of the deceased’s salary if the dismissal was after 29 July 2013.