Paintings Are Not Furniture, Fixtures and Fittings

The Earl of Cardigan, who has been in the press recently due to his daughter’s appearance on the TV prpgramme “The Voice”, has lost a case he brought against the trustees of his family estate at Savernake Forest in Wiltshire.

The Earl had sought to prevent the sale by the trustees of some family paintings, which the trustees wished to sell to raise money for the estate.  One of the arguments put forward on the Earl’s behalf was that many of the paintings had been leased to him in 1999 together with Savernake Lodge, which he occupies.

The lease to the Earl included the 'furniture, fixtures and fittings' in Savernake Lodge.  The court has held that paintings do fall within that definition and that, in any case, the trustees were entitled to have the lease set aside as at the time it was granted the Earl was a trustee of the estate and so was prevented from selling or leasing trust property to himself (the so called 'self-dealing rule' intended to prevent conflicts of interest).

New Strategy for Charitable Trustees

Charity Trustees shoulder a substantial burden of responsibility, especially the trustees of charities that deal with vulnerable people.  To assist them with this duty, the Charity Commission has revealed a new strategy that consolidates key guidance for charity trustees and is designed to help them to safeguard children and vulnerable adults.

The Commission's key guidance documents include the following:[bulletlist]

Please contact us if you would like guidance on any matter relating to charity law or your role as a trustee.

Budget Tax Break for Non-Dom Spouses

The Government has announced that it intends to increase the amount that a UK-domiciled person can transfer to his or her non-UK domiciled spouse or civil partner free of Inheritance Tax.

At the moment, the spouse-exemption is limited to £55,000 in these circumstances (in all other cases, the spouse exemption is unlimited).  Under the new proposes, the limit will be increased to £325,000.  This is in line with the Nil Rate Band Allowance and will increase in line with it in the future.

The Government also intends to allow non-UK domiciled persons who have a UK-domiciled spouse or civil partner to elect to be treated as domiciled in the UK for the purposes of IHT.

It is understood that the change is being introduced by the Treasury to avoid a legal challenge from the EU.

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European Court Rules Next of Kin Includes Adoptees

A case decided by the European Court of Human Rights (ECHR) has applied anti-discrimination law to confirm that adopted children are 'statutory next of kin'.

The case concerns a £3.2 million trust set up by a father in 1948 for the benefit of his daughter.  She benefitted from the trust during her lifetime.  When she died, she had no surviving parents, siblings or children.  She had had a sister, but that sister had died before her, leaving two adopted sons.  The trust deed stated that if the daughter was childless and her sister died before her, the trust fund passed to her 'statutory next of kin'.

The Court was asked to decide whether her nephews by adoption fell within the definition of statutory next of kin.

The Court held that the definition of statutory next of kin did not include the adopted children as that was the relevant law in 1948 when the trust was created.  However, the Court also decided that the ECHR could affect the trust and that the trust should be interpreted to eliminate discrimination against the adopted sons.  Thus the trust fund should pass to the sister's adopted children rather than to distant cousins.

Local Authority Trustee Feels Wrath of Charity Commission

A local authority's failure to understand the difference between the assets of a charity and its own assets has brought a stinging rebuke from the Charity Commission.

The charity, The Knotty Ash Special School Trust (which provides special education services and facilities to schools in Liverpool), appointed Liverpool City Council as its sole trustee.  The Council allowed one of its employees to occupy a lodge owned by the charity, rent-free for over 20 years.  This caused a loss to the charity of £89,000.

The Charity Commissioner's report reminds trustees that they must use charity assets reasonably, and in furtherance of the charity's objects. They must always act to protect property owned by the charity, monitor its condition and ensure that it is being used properly.  Failure to do so can result in trustees facing personal claims for compensation if their charity suffers a loss.

Please contact us if you would like advice about your rights and responsibilities as a charitable trustee.

Cowboy Will-Writers in Last Corral

The Legal Services Board (which is the independent body responsible for overseeing the regulation of lawyers in England and Wales) has announced that both will-writing and the administration of estates are to be brought within the list of 'Reserved Legal Activities'.

'Reserved Legal Activities' can only be carried out by authorised or exempt persons, such as for example Solicitors, Barristers and Legal Executives.

The move follows a persistent stream of cases of maladministration of estates and problems with wills drafted by unqualified will-writers.

Examples of malpractice by unregulated will-writing companies include:[bulletlist]

  • approaching young mothers in shopping malls, telling them that their children would be taken into care after they died if they didn't make a will,

  • charging an elderly man £12,000 for executor services, only for his family to find out after he had died that the will-writing firm had gone out of business and had disappeared with his will and the money, and

  • dumping 1000 wills in a street when the company went out of business.[/bulletlist]

The changes are aimed at ensuring that people who charge for Wills Drafting or administering the estates of Deceased Persons are 'fit and proper persons' and are registered with an appropriate regulatory body that will ensure that acceptable standards are maintained.

All practitioners in these areas will also have to carry professional indemnity insurance also.  Many people who have suffered loss due to the activities of 'cowboy' will-writers have later found that their attempts to gain compensation have been stymied by the absence of insurance on the part of the will writer.

We at Armstrong's are properly insured, properly qualified professionals, who specialise in this area of law.  Please contact us if you would like advice about making a Will.
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