Fools and Horses – Private Client Affairs
Never before has there been a time when information is so readily available – at the click of a mouse or the push of a button. We have seen an increase in the number of people relying on this information to make ‘DIY’ Wills and Lasting Powers of Attorney or to administer Estates and Trusts. It is unheard of that someone would try to carry out a complex brain operation or a heart transplant having read up on it on the internet or having watched it being performed on air. Rarely would you select the cheapest consultant for such an operation. Somehow, many seem to believe that because the answers to their “simple” legal problems appear to be readily at hand, then they are the best suited for the task at hand. In most instances however, a solution which on the face of it appears simple, could have many unintended consequences. The full extent of these consequences will not be readily available to an untrained mind in an area that requires care and professional advice. So why take the risk when we have trained and skilled Solicitors and experts in our team who are regulated by a strict code of conduct and whose services are underwritten by a guarantee.
Red Adair, an American Oil Well Fire Fighter who pioneered the highly specialised profession of extinguishing capping oil well blow outs, coined the phrase that “If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur”. This holds very true when we examine how non-professionals go about making Wills, Administering Estates or Trusts and setting up of Powers of Attorney. Indeed solicitors often make more money from a homemade Will when it goes wrong than drafting a correct Will in the first place!
We are often asked by an individual to draft a Will or to advise on a home drawn Will and are told that “my circumstances are very simple and straightforward” only to find out that the individual has not considered elementary Tax implications, protection against third parties, protection for vulnerable beneficiaries or any substitute provisions to guard against intended beneficiaries dying before they inherit. Ambiguous drafting can lead to a Court application to determine the correct meaning of the Will. Often even the basic legal requirements for validity are not adhered to, such as a consideration of mental capacity or proper execution. This can not only lead to unintended consequences but can be potentially disastrous for the intended beneficiaries.
Often individuals have read about Inheritance Tax and thought of their own ways to try and mitigate their liability. Unfortunately this can result in ineffective and contrived Inheritance Tax planning exercises such as “I’m going to give my house to my children” or “I’m going to sell my property to my children for £10”. This type of planning often has disastrous consequences and is almost always not Tax efficient at all. Generally the Revenue has already thought of these schemes and put in place rules to prevent them.
Individuals can make their own Lasting Powers of Attorney online. However when making the documents yourself without legal advice you do not benefit from the safeguards of having a member of our team explain the importance of acting only in the Donor’s best interests to the Attorneys. The appointment of even trusted individuals who do not fully appreciate their obligations can have ruinous consequences for the Donor. Why would anyone want to gamble with everything they have in their later life? Powers of Attorney are very useful documents provided that they are set up correctly and used correctly. The expense of the security that we add is a very small price to pay for the overall protection of the donor and the guidance for trusted attorneys.
An Individual may believe they know how to apply for Probate and they can find the forms online. But do they understand what a complex Estate is and the increased obligations of a complex Estate? Do they know what the penalties for providing inaccurate information are? Do they appreciate the tax implications and time limits that they will need to comply with? Do they know how to arrange the deceased’s affairs in a Tax efficient manner even after their death? Do they know how to make maximum use of the available tax reliefs and allowances, for example relating to the valuation of the house, or the possible Capital Gains tax bill arising between the date of death and the date of sale? At Herrington Carmichael, our team can often save the Estate well in excess of the fees charged. Having a member of our team acting for the Executors often provides an important Independent party that is accountable to all the beneficiaries. Beneficiaries are less likely to fall out having the comfort of knowing that at the end of the day there will be a proper account with every asset, liability and obligation accounted for and most importantly that each beneficiary will receive their rightful share.
Perhaps there’s some merit in the words of Red Adair and the most cost efficient method is to use a professional straight away rather than gambling on the free online advice available.
If you would like any assistance with the preparation of Wills or Lasting Powers of Attorney or with the administration of Estates and Trusts please contact our Private Client department where our highly specialised experts will be able to help you and provide you with advice you can rely on.