Those of us of a certain age, I hope, will have a song from Willy Wonka and the Chocolate factory playing in our heads. For those who don’t, the song is tunefully sung by a very spoilt young girl by the name of Veruca Salt.
Now, Veruca was financially fortunate in the sense that she was the only offspring of her parents, who went to exasperating lengths to indulge her. Most of us, however, have siblings, and do we ever really grow out of competing for our parents’ attention?
Sibling concerns about equal treatment can linger well past childhood when we may anxiously tot up our respective Christmas presents to see if we have received roughly the same. Increasingly, these issues are becoming apparent when we lose a parent, with arguments developing over who has had what and who is going to get what.
Despite mis-conceptions, parents do not have to leave their estates to their children in equal shares, but we, as children, tend to expect them to do so. Indeed, they do not have to leave us anything at all.
In the Private Client department at the firm, we would enquire as to the reasoning behind these instructions, and explain that, in the case of an unequal distribution, one of the children is likely to be unhappy, and may seek to further query the distribution of the estate.
As one of four siblings, I appreciate that my parents love (and loathe!) us all in equal measure, and that our needs have been different at varying times. Where one of us might go to the ‘bank of Mum and Dad’ for a car, another might have been given monies for a deposit, or a holiday, whilst the youngest has always been playing catch up with a savings account.
If my parents wanted to, for example, they could include a provision in their Will to say that if they gave me, but not my siblings, a substantial sum of money, and that this lifetime gift should be taken into account for any further provision made for me in their estates, so as to try and even out the eventual distribution of their estates between me and my siblings. My parents would need to state the exact sum given to me, and ideally keep a bit of a paper trail if possible. This is known as the ‘Hotchpot Rule’, and is useful for gifts made before a Will is prepared.
You might wonder what would happen if this gift were to take place after my parents had made their Wills, and there is a very useful rule called the rule against ‘Double Portions’. This is one of the equitable maxims, in the sense that the law assumes that those providing for their children in their Will would not want for them to benefit unequally by reason of a substantial gift made after the Will. The wording here is important as the gift does need to be of a ‘substantial’ nature, and the gift would be treated as though the child had already received a ‘portion’ of the estate. The onus would then be on the child receiving these funds to prove that they should not be taken into account.
Indeed, some children see their prospective inheritance from their parents’ estate as their ‘right’ rather than a ‘windfall’ but with increasing care home costs, an inheritance is by no means guaranteed.
Quite often now, we ‘children’ find ourselves taking on a very active role in assisting with Mum or Dad’s long-term care needs.
We regularly assist clients to help place their affairs in order, in terms of Lasting Power of Attorney documents for both Property and Financial Affairs and Health and Welfare, and Court of Protection applications where a client may no longer have the capacity to complete these documents. It is difficult to overstate the importance of either of these documents.
Lasting Power of Attorney documents enable you to appoint people you trust to deal with your affairs, and to act in your best interests, adhering to your instructions. Quite naturally, this can be quite a daunting prospect, but the alternatives can be even more cumbersome.
If I use my lovely Mum as an example. If something were to happen to her tomorrow which meant that she was no longer able to manage her financial affairs for herself, in the sense that she was deemed to no longer have the mental capacity to be able to do so, if she had prepared, and registered, a Lasting Power of Attorney document for her Property and Financial Affairs, and appointed my Dad and then myself and/or my siblings as her attorneys, we would be able to carry on paying, for example only, the water bill, the gas bill, the mortgage, whatever it may be, provided that we were able to produce this validated document. Indeed, whilst Mum retains capacity, her attorneys may be able to assist her, with her consent, provided that she gave instruction for this when her documents were registered. Like a lot of married couples now, my parents do not own all of their assets jointly, and so even where the spouse is fit and well, it is not always the case that they will have ready access to all of the ‘joint’ finances.
Again, using my Mum, if her Lasting Power of Attorney for Property and Financial Affairs had been prepared, but not yet registered, we would have a valid deed, but one that still needs validation from the Office of the Public Guardian before we could use it to assist my Mum, which can take a few months to issue. In the meantime, we would have to try and navigate our way through a difficult time emotionally, as well as dealing with the strains of additional paperwork.
If Mum had not prepared any documents at all, we would be looking at a Court of Protection application which would, again, take many months to issue, given the level of safeguarding that is required, quite rightly, where someone cannot provide an instruction as to who they would wish to deal with their affairs for them.
I gave the example earlier of a mortgage needing to be paid. If Mum was also unwell, physically, it might mean that she might need to go into care. The family home might need to be sold to pay for this, but we would not have the ability to do so, as possible attorneys, or deputies under a Court of Protection application, without the relevant documents being validated.
With a Lasting Power of Attorney document for Health and Welfare, we, as attorneys, would be able to make decisions as to Mum’s wishes for her long-term care, whether this be her daily diet and routine, or her wishes around life-sustaining treatment, provided that Mum lacked capacity and was not able to provide these instructions for herself.
In the Private Client department at the firm, we fully appreciate these are sometimes not easy conversations to have, but if we can help you to put adequate framework in place, we hope that what is already a difficult time, can involve a little less time spent on sorting these matters out further down the line.
The abiding hope would always be that these documents never need to be used, but with many more of us reaching our nineties and beyond, there is an increasing realisation of how useful these documents can be. It’s almost like having a ‘rainy day fund’ for your future self.
As a short postscript, I should add that my Mum is, thankfully, fit and well, and if my siblings are reading this, I haven’t received any ‘substantial’ gifts of which you need to be aware!
If have have any queries regarding inheritance or would like to speak with one of our Private Client Solicitors, you can call us on 029 2034 2233 or email us at [email protected]
Published: 21/05/19