UK Law and Practice Contributed by: Ros Bever, Claire-Marie Cornford, Helen Clarke and Ashley Hill, Irwin Mitchell
This offers protection for vulnerable beneficiaries not capable of managing money or who may be more at risk of financial abuse, or where entitlement would interfere with the beneficiary’s welfare benefits. Personal injury compensation can be ring-fenced from means testing for welfare benefits via a simpler bare trust arrangement, whereby the injured person remains absolutely entitled. This is because of spe - cific disregards provided for in relevant welfare benefit legislation. Certain types of trust for disabled individuals qualify for special IHT treatment (under Section 89 of the Inheritance Tax Act 1984): • broadly speaking, this is provided that only the person qualifying as a disabled person within the meaning of the legislation may benefit from the trust during that person’s lifetime (subject to an annual de minimis amount); • a lifetime transfer into such a trust is a PET rather than a CLT (see 1.1 Tax Regimes ); • the trust fund is treated as if part of the benefi - ciary’s estate for IHT purposes, rather than being subject to the relevant property regime of ten-year anniversary and exit charges; • an election can be made for income tax and CGT purposes for income and gains to be treated as if accruing to the beneficiary; and • a discretionary trust where the disabled person is one of a number of potential beneficiaries from the outset can sometimes be better suited from a tax and practical perspective, depending on particular circumstances and objectives. Certain trusts on death of the parent of a minor, pending the child reaching the age of 18 or where the deceased’s child will become entitled between the age of 18 and 25, also qualify for special tax treat - ment. 8.2 Appointment of a Guardian In England and Wales, the Court of Protection has jurisdiction under the Mental Capacity Act 2005 to appoint a “deputy” to manage the property and finan - cial affairs of an individual who has lost mental capac - ity.
This is typically relevant where the person who has lost capacity has not made a valid enduring or last - ing power of attorney, choosing one or more people as their attorneys to make decisions for them in that scenario. A deputyship order generally confers wide powers on the deputy, which must be exercised in the best inter - ests of the person who has lost capacity. The application is usually dealt with on paper but can take some months to conclude. It is not typical for a deputy to be appointed to make health and welfare decisions, and the application pro - cess is less straightforward. The Court of Protection can make orders about spe - cific financial and health and welfare issues relating to the person who has lost capacity. The Office of the Public Guardian undertakes ongoing supervision of deputies, who must make an annual return to account for their decision-making. Similar legal frameworks exist in different forms in Scotland and Northern Ireland for the appointment and supervision of “guardians” or “controllers”. 8.3 Elder Law The costs and complexities associated with living longer are very topical and a focal point for legal and financial planning. There is no statutory requirement to make a will, and the intestacy rules that determine the distribution of assets in the absence of a will are not always suited to the circumstances. The Law Commission has recently proposed making the process of drawing up a will simpler and more accessible while protecting vulner - able testators. The process of putting in place a lasting power of attorney is also being further refined and digitised, in order to optimise accessibility for the management of the financial affairs and the health and well-being of those suffering loss of capacity in later life.
565 CHAMBERS.COM
Powered by FlippingBook