Hempsons: Legact Administration
Upcoming SlideShare
Loading in...5
×
 

Hempsons: Legact Administration

on

  • 1,377 views

An introduction to legacy administration by charities

An introduction to legacy administration by charities

Statistics

Views

Total Views
1,377
Views on SlideShare
1,377
Embed Views
0

Actions

Likes
0
Downloads
9
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Hempsons: Legact Administration Hempsons: Legact Administration Presentation Transcript

    • LEGACY ADMINISTRATION – MAXIMISING THE BENEFIT
    • LEGACY INCOME
      • Vital Funding Source
      • £1-9 billion raised in 2008
      • Can represent 80% of voluntary income
      • Economic downturn poses threat
    • CHARITABLE GIVING
      • 2/3 regularly give to charity in lifetime
      • 1/3 make a Will
      • 15.7% of wills in 2008 charitable
    • MAXIMISING LEGACIES
      • Check all legacy receipts carefully
      • Monitor progress
      • Look to the future
    • TOPICS FOR TODAY
      • The Will – what to look for
      • Probate procedure and timescales
      • Basic tax – IHT and CGT
      • Accounts
      • Income tax and tax deduction certificates
      • What can go wrong – looking out for fraud
      • Assessing fees
      • Making the most out of legacies
      • Questions
    • THE WILL
      • No set form
      • Must be in writing
      • No need to be dated
      • No need to be on paper
      • Can dispose of almost anything
      • Complete testamentary freedom
    • VALIDITY REQUIREMENTS
      • S9 Wills Act 1837 as amended:-
      • “ No Will shall be valid unless:-
      • (a) It is in writing, and signed by the testator, or by
      • some other person in his presence and by his
      • direction; and
      • It appears that the testator intended by his signature to give effect to the Will; and
    • VALIDITY REQUIREMENTS Cont’d
      • the signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time; and
      • each witness either:-
      • ( i) attests and signs the Will; or
      • (ii) acknowledges his signature
      • in the presence of the testator (but not necessarily
      • in the presence of any other witness),
      • but no form of attestation shall be necessary”
    • WHO MAY MAKE A WILL?
      • Anyone over 18 (unless privileged)
      • Intention to make a Will
      • Mental capacity
      • Free from undue influence
    • WHAT MAY BE DISPOSED OF BY WILL?
      • Any assets owned by testator except:-
      • - some jointly owned assets
      • - some pension funds
      • - property held in trust
      • - donatio mortis causa
      • - some foreign assets
    • COMMON PROBLEMS
      • Will invalidly executed
      • Will is lost/unattested alterations
      • Contains mistake
      • Ademption
      • Mis-description
      • Legal challenge
    • EXECUTORS’ POWERS
      • “ Collect and get in” the estate
      • Power to sell
      • Power to appropriate
      • Power to insure
      • Power to invest
      • Power to appoint nominees
      • Power to delegate
      • Power to charge
    • EXECUTORS’ DUTIES
      • Trustee Act 2000
      • Duty of care
      • Duty to account
    • BENEFICIARIES’ RIGHTS
      • Right to due administration
      • Right to information
      • Right to remove/place PRs
    • WHAT TO LOOK OUT FOR
      • Always read entire Will – does it make sense?
      • Compare with schedule of assets/liabilities
      • Check signature/Death Certificate
      • Executors – professional or lay?
      • Who are beneficiaries – family/charity?
      • Are there foreign assets?
    • PROBATE PROCEDURE
      • Some starting points:-
        • Time of bereavement
        • Who contacts you?
        • Family?
        • Professional?
        • The beneficiaries – who are they?
        • Communication is key
    • THE WILL
      • Where is it?
      • Funeral wishes
      • Who can see it?
      • Home-made/professionally drawn?
      • Executors –professional/lay? None?
      • Problem assets
      • Construction issues
      • Possible legal claim?
    • THE ASSETS
      • Sole or joint?
      • Valuations
        • Shares
        • Property
      • Protection of assets
      • Tax/variation issues
    • GRANT OF PROBATE
      • Is it necessary?
      • Inland Revenue account
      • Oath
      • IHT loans
      • Timescales
    • ONCE THE GRANT IS OBTAINED
      • Trustee Act Notices
      • Pay debts
      • Pay legacies
      • Realise assets
      • Claims
      • Consider Deed of Variation
    • TAX
      • IHT/CGT – who to sell?
      • – exemptions
      • Appropriation
      • Deduction of costs
      • – IRC -v- Richards’ Executors
      • Reliefs – shares – 1 year
      • property – 4 years
      • Penalties
    • TAX RETURNS/ACCOUNTS
      • Tax to date of death
      • Estate administration return
      • Estate accounts
      • Corrective Accounts
      • Tax Clearance
    • WINDING UP
      • Approval of Estate Accounts
        • Receipts and indemnities
      • Distribution
      • Tax Deduction Certificates
        • - R185E (Estate Income)
    • BASIC TAX
      • Inheritance Tax – IHT
      • Capital Gains Tax – CGT
    • INHERITANCE TAX
      • A direct tax on transfers of value
      • Lifetime transfers
        • “ PETs”
        • Chargeable transfers
      • Transfer on death
    • WHAT IS TAXABLE?
      • Share of joint property
      • Interest in trust
      • Life policies
      • Gifts with reservation
    • EXCLUSIONS:-
      • Property outside UK (if non-UK domiciled)
      • Reversionary interests
      • Certain life/pension policies in trust
    • EXEMPTIONS AND RELIEFS
      • Gifts between spouses
      • Gifts to charity
      • Gifts for National Purposes/National Heritage
      • Small lifetime gifts
      • Relief for business/agricultural property
      • Quick Succession Relief
    • POTENTIALLY EXEMPT TRANSFERS (“PETs”)
      • Taper relief
      • Reduces tax payable not value of the gift
    • HOW TO CALCULATE IT?
      • Current threshold - £325,000
      • 0 - £325,000 – NIL
      • Over £325,000 – 40%
    • S41 INHERITANCE TAX ACT 1984
      • “ Notwithstanding the terms of any disposition:-
      • None of the tax on the value transferred shall
      • fall on any specific gift if or to the extent that the
      • transfer is exempt with respect to the gift,
      • AND
      • (b) None of the tax attributable to the value of the property comprised in residue shall fall on any gift of a share of residue if or to the extent that the transfer is exempt with respect to the gift”
    • EFFECT OF S41:-
      • Gross up legacies exceeding tax band
      • If residue is split charitable/non-charitable:-
      • - charitable share will pay tax on legacies
      • - charitable share won’t pay tax on share of
      • residue
    • BENHAM:-
      • “ as to the residue …… to pay the same to those beneficiaries as are living at my death and who are listed in List A and List B hereunder written in such proportions as will bring about the result that the aforesaid beneficiaries named in List A shall receive 3.2 times as much as the aforesaid beneficiaries named in List B …..”
    • WHEN IS IT PAYABLE?
      • 6 months after end of month of death
      • Instalment option may apply
      • clearance certificates
    • CAPITAL GAINS TAX
      • A capital tax on the disposal of capital assets producing a gain
      • Not payable on death transfers to legatees/trustees
    • SALES BY EXECUTORS
      • Annual exemption of deceased available for tax year of death and the next 2 tax years
      • 18% rate
      • Base cost is value at death
    • EXEMPTIONS
      • Disposal of Government Stock
      • Transfers between spouses
      • Disposal by charities
      • Main residue exemption ceases on death
    • CALCULATING THE TAX
      • Sale value
      • Less - base cost
      • - allowable expenditure
      • - costs deduction
      • - annual exemption
      • Multiplied by rate of tax (18%)
      • Appropriation
    • VARYING A WILL
      • Deed of Variation
      • Disclaimer
    • WHY VARY?
      • Make use of nil-rate band
      • Compromise a claim
      • Make Will more tax effective
    • WHO CAN VARY?
      • Beneficiaries giving up entitlement
      • Executors
      • Minors/mentally incapable excluded
    • THE TAX EFFECTS
      • S142 IHTA 1984
      • S62 TCGA 1992
      • Income tax – not retrospective
    • TIME LIMITS
      • Within 2 years of death
      • Election for tax within 6 months of Deed
    • ESTATE ACCOUNTS
      • S25 AEA 1925 as amended
      • “ When required to do so by the Court, exhibit on Oath in the Court a full inventory of the estate and when so required render an account of the administration of the estate to the Court”.
    • WHEN SHOULD THEY BE PREPARED?
      • Before major distributions
      • Each tax year
      • At end of administration
    • WHO IS ENTITLED TO SEE THEM?
      • Executors
      • Residuary beneficiaries
      • Legatees?
    • WHO SHOULD APPROVE THEM?
      • Executors
      • Beneficiaries
      • Indemnities
    • FORMAT
      • Narrative
      • Balance sheet
      • Estate Account
      • Administration Account
      • Income Account
      • Distribution Account
      • Schedules/Notes
    • CHECKLIST
      • Check assets and liabilities
      • Check administration expenses
      • Check legal fees
      • Check Inheritance Tax
      • Check Income Account/R185
    • INCOME TAX
      • Pre-death
      • Post-death
    • INCOME AFTER DEATH
      • Interest on savings accounts
      • Dividends
      • Rental income
      • Interest on client account
    • WHAT IS NOT INCOME?
      • Refunds
      • Premium bond prizes
      • Encashment of assets
    • WHAT SHOULD THE EXECUTORS DO?
      • R40
      • Complete Trust and Estate Tax Return
      • No personal allowance
    • TAX DEDUCTION CERTIFICATES R185
      • Each year in which a distribution is made
      • Final year of the administration
      • Distribution includes appropriation
    • STEPS TO TAKE
      • Calculate net residuary income
      • Divide income between beneficiaries
      • Compare net income with amount actually received
    • WHAT HAS THE BENEFICIARY RECEIVED?
      • Nothing – carry forward income
      • More than his share – include all income on certificate
      • Less than his share – include income equal to distribution and carry forward balance
    • WHAT TO CHECK?
      • Do the figures add up?
      • Is the certificate in your name?
      • Have you received one for each tax year you received a distribution?
      • Has it been signed?
    • WHAT CAN GO WRONG?
      • Construction problems
      • Delay
      • Negligence/rectification
      • Fraud
      • High fees
    • WHO IS AT FAULT?
      • Executors
      • Beneficiaries
      • Solicitors
      • Other third parties
    • FEES
      • Solicitors
      • Banks
      • Will-writing companies
      • Lay Executors
    • MAKING THE MOST OUT OF LEGACIES
      • Set procedures
      • Communication
      • Tackling problems early
      • Pooling resources
      • Seeking professional advice where appropriate
      • Follow-up
      • “ New for old”