Murray Beith Murray LLP is a leading Scottish private client law firm.
For 175 years we have specialised in meeting the legal, financial and administrative needs of individuals and families, family trusts, charities and private companies.
When it comes to family businesses, there is an old adage that goes “The first generation makes it, the second generation maintains it and the third generation blows it”. In a family business, there are tensions and expectation not only across the generations but amongst those involved in managing the business and those who are not.
Whilst every family business is different, there are common themes running through them, not least the important of succession planning.
When there is a charity appeal, there is no doubt that the Scots are generous! The wish to “give back” has grown over the years, and never more so in gifting to charities through a Will. Recent consumer research conducted by Remember a Charity concluded that the number of people deciding to make a charitable donation through a legacy in their Will has increased by 43% in the last 10 years. But how do you go about leaving a legacy in your Will?
There is a complex maze of rules surrounding Inheritance Tax (IHT) which means every estate must be reviewed in detail to determine how much, if any, IHT is payable. You must carry out sufficient investigation into the extent of the estate to establish its value. This must include enquiry about the extent of any relevant gifts made by the deceased during their lifetime.
Once the extent of the estate is known, unless the estate is an “excepted estate”, full details must be provided to HMRC, even if no IHT is due. When you have carried out the necessary IHT calculations, the next step is to pay the tax. It is important to note that Confirmation to the estate (the Scottish equivalent of Probate) cannot be granted until after at least some of the IHT has been settled with HMRC.
A Power of Attorney allows you to make provision in advance for the possibility of you becoming incapable of managing your own financial and welfare affairs during your lifetime. This becomes increasingly important as the risk of supervening mental incapacity grows through longevity, illness, or accident.
The standard form of Power of Attorney in England and Wales is the Lasting Power of Attorney (LPA). These forms can either be to cover Property and Financial Affairs, or Health and Care Affairs. In practice, these forms can be very difficult to complete as they must be signed and dated in a very specific order and the smallest mistake will result in the application for registration being rejected. It is widely accepted that the procedure can be confusing, inflexible, and bureaucratic.
Since the introduction of LPAs in 2007, the world has changed with the growth of technology and people’s expectations have changed with it. The Government has decided to reform the process of making and registering LPAs in England and Wales to make it safer, easier, and more sustainable.
Your succession planning is not an exercise to carry out and then forget. You must be vigilant throughout your life to ensure your end-of-life wishes can be fulfilled and that your estate planning remains effective.
