There have been many changes over my career, not least the move into compulsory CPD hours and the move out of them, only to look like there may be a move back once more on the horizon. The beauty and the curse of law and tax is that it never stays the same, so we are constantly on guard, trying to avoid being tripped up.

Here are just some of the things which have changed over the period, in no particular order:

• Legal Aid – came in, was extended and then retracted across most areas of law
• Inheritance Tax – replaced Capital Transfer Tax and now looks like it will be reformed if not abolished in the near future
• The IHT 205 came in in 2000 with much annoyance and then has gone in January 2023 also with much concern
• Enduring Powers of Attorney – came in in 1985; and the risks of abuse were too great, so we moved to Lasting Powers of Attorney in 2007 and even those have had the protections watered down. We now have to wait so long for registration (20 weeks) that digitalization looks likely even though safeguards are likely to be watered down
• Trusts of Land entered the lexicon in Trusts of Land & Appointment of Trustees Act 1996 and replaced trusts for sale
• Trust Registration came in 2017/18 and has introduced a list of taxable and some non-taxable trusts for the first time with much attendant work and therefore cost
• Risk management is a major concern and our professional rules place it at the heart of supervision of law firms and by law firms. This is not likely to diminish
• Regulation of lawyers changed with the Legal Services Act 2007 and the changes are increasingly causing competitive difficulties and not protecting the consumer as much as they could. The reserved areas for regulation are an historic mess and need a logical system applied for inclusion, review and updating. There are too many regulators (22). The cost of compliance is high, but it is doubtful that the consumer is any better protected (take the current debacle over Axiom Ince)
• The Wills Act 1837 has served us well but is now showing its age and is hopefully going to be overhauled for the better; electronic Wills are not popular with professionals because of the risks for fraud and abuse, but will probably become inevitable over time needing separate regulation.
• The probate process worked brilliantly for hundreds of years and in a moment of madness it was centralised and digitalized at a cost of £5.8 million pounds and is now malfunctioning and causing much grief to the profession, executors of all kinds, administrators and beneficiaries. The centralization of the process meant huge amounts of expertise left and it is only being replaced by very junior people who have to be trained. To achieve anything like the same level of knowledge as those who left will take years. It is a service now which is not fit for purpose despite an enormous amount of engagement with professional bodies. Its current review by the Justice Committee might hopefully ensure improved investment to try and remedy the situation.
• A similar story applies to HMRC in general and HMRC Inheritance Tax in particular where Making Tax Digital is costing millions of pounds but is over budget and late. The self assessment helpline is suspended and generally HMRC are not functioning at all well to the frustration of all practitioners who have to deal with them. Although HMRC Inheritance Tax is run by hardworking people they are compromised by under investment and lack of computerization so that there is a lack of expertise across the piece to handle enquiries adequately and keep on top of the high numbers of IHT 400s which require checking and IHT421 to be issued to keep the probate process moving. Once again junior staff are being employed who then have to be trained.
• The rise of entrepreneurs in the Wills and Probate space has meant new innovations in Will drafting using software, registration of Wills; searching and checking in probate; support in valuations and property management in general as well as other services which have made the work of practitioners better and hopefully less of a risk.

I won’t go on, but there is a long list of changes, and it will never end – let’s just hope that some of the future changes will be for the better.

I wish you all every success in your future, and who knows, our paths may cross again.

Article 5 of the UK GDPR sets out seven key principles, one of which requires organisations to ensure personal data ‘is accurate and where necessary kept up to date; every reasonable step must be taken to ensure that personal data that are inaccurate having regard for the purposes for which they are processed, are erased or rectified without delay. Providers of professional services are considered to be ‘data controllers’, gathering and storing a client’s personal information in order to provide them with a service.

The challenge for legal firms managing Will Banks is that data becomes out of date quickly if not managed effectively, and for any firm offering Will Writing services, it is likely they have a sizable database of customer information on file.

People’s circumstances can change often. We move house, get married, possibly divorced and inevitably pass away. Without regular monitoring of address changes and mortality, the database could contain hundreds, if not thousands, of incorrect and out-of-date records, potentially breaching GDPR regulations. Unmaintained data also causes a lack of clarity for potential probate work within a law firm’s existing client pipeline.

This passive approach is reflected in our recent consumer survey of 2,000 UK residents, which found that 64% of people with a Will had re-written it, but often (in 20% of cases) with a different provider. If clients aren’t returning to provide updates to their Will, just how much work are probate practitioners missing? Luckily, technology can provide a solution.

Estatesearch focuses on helping legal firms take advantage of technology to streamline processes and comply with regulatory requirements. We have spent the past 18 months incorporating client feedback and developing a simple, cost-effective data management tool which initially provides a health check of the testator database enabling firms to see the percentage of out-of-date records and review the next steps. Our new Will Bank Management service now helps firms maintain the health and integrity of their Will Bank while also maximizing the opportunity for probate work at the same time. A three-phase process of screening, cleansing, and notification ensures ongoing compliance with GDPR, with several legal firms already reaping the benefits.

Our bespoke application interface (API) uses information from key data partners to complete the initial screen prior to the cleansing phase. Deceased subjects are identified, and incorrect addresses rectified. Unmatched records which may need further review are also identified. The optional ongoing monitoring phase notifies firms of life events which may impact files and allows databases to be updated.

Uniquely, we accept different formats of Will Banks, including any configuration of an Excel spreadsheet to map with our software for cleansing. This makes it easy for law firms to take steps to manage the data contained in their Will Banks.

Estatesearch’s Will Bank Management Service also reduces overheads in relation to ‘return to senders’ and ad hoc database administration in addition to reducing off site storage costs for invalid or deceased Wills.
Sam Cash, Practice Manager, Bennett Oakley, stated: “As one of the first users of Estatesearch’s Will Bank Management Service, I can honestly say we are very impressed.
We now have a more confident understanding of our Will Bank data and can trust that it’s up to date. This is proving to be very useful. Because of the work that Estatesearch have carried out, we can very quickly identify relevant opportunities to speak to clients, all whilst keeping on the right side of GDPR.”

Estatesearch also offers a range of additional services, including Asset and Liability searches, Trustee Notices, Overseas & UK Bankruptcy Searches, Unoccupied Property Insurance, Early Distribution Insurance and Share Valuations. All accessed through our secure online portal, with no registration or subscription fees, our customers simply pay for the disbursements they need, when they need them.

Clients regularly comment on the ease of use of our technology and ordering system and our approach to customer service. In our recent client survey of over 200 respondents, we were delighted that 98% rated their overall experience with Estatesearch as excellent or good, and 100% would recommend us. Our team are always ready to discuss the individual needs of law firms looking to manage their Will Banks more effectively and discuss any of our other services.

This is a book review by Gill Steel of Williams, Mortimer & Sunnucks – Executors, Administrators and Probate – 22nd Edition.

Purpose

This book is designed to provide a comprehensive text on the process of estate administration from whether a Grant is required through to distribution of the estate whether testate or intestate, solvent or insolvent.

This book is a companion to Theobald on Wills. The detailed treatment of the law on the validity of Wills has been incorporated there instead and in an effort to keep this edition of Williams, Mortimer and Sunnucks as concise as possible there is just a brief summary of the law on validity included in this edition.

Content

There are eight parts to this text:

• Part 1 covers preliminary matters
• Part 2 covers Executors and Administrators
• Part 3 relates to Obtaining a Grant
• Part 4 deals with Devolution and Liability
• Part 5 covers the Administration of Estates
• Part 6 looks at Family Provision
• Part 7 covers Administration and other actions
• Part 8 deals with Distribution of Assets

The text takes into account the development of online probate applications whilst retaining details of the paper procedure, which is still required for the more complex cases. There is also a whole chapter on digital assets. Following Brexit, cross-border estates have become even more complex, and this text helps the practitioner find a way through all the difficulties.

Structure & Layout

Within each part of the book is a number of chapters each of which is sub-divided by topic. There is an extensive table of cases, a table of statutes and a table of statutory instruments. Each sub paragraph within the book has a heading and is numbered for ease of reference.
The text runs freely with references referred to in footnotes on each page.

Clarity & readability

Dealing with tax and the administration of estates can be both baffling and complex. This book approaches such difficult topics like the Residence Nil Rate Band by succinctly explaining the rules and providing a logical progression through all the terminology.

There are some oddities, in that the reference in the index to Insolvent estates does not direct you to the part of the text which covers the detailed treatment of such an estate. Instead, this is located in the chapter dealing with the payment of debts. But this is to be picky.

The text is so comprehensive it is easy to see why it was difficult to shave hardly any pages off its length despite switching some content to Theobald on Wills.

Relevance to practitioners

This book is relevant to all practitioners handling estate administration and should form part of a firm’s private client bookshelf whether in paper form or electronic.

It is doubtful whether this article will start a revolution, but there is a point to be made and needs to be made by someone somewhere at some time in the hope that the point will escalate and, in due course, be a revolt if not a revolution.

From my perspective, the issue is one of “what is good for the goose is sauce for the gander”, or the necessity in the law and tax for a level playing field.

I suspect we have all become aware recently of the ever growing uses of legislation which impose further and further burdens on the taxpayer. As I see it, over the last decade or so, there has been little substantive tax law enacted in respect of capital gains tax or inheritance tax, but an ever-increasing volume of procedural law is finding its way onto the statute book, much of it to do with interest and penalties.

I can quite understand HMRC becoming thoroughly fed up with taxpayers who delay payments by taking points that have some or have little or even no merit, and I can equally understand that the government, being desperately short of money, though it seems to have no problem in borrowing amounts beyond the wit of man to understand, becoming equally frustrated by the lack of tax revenue coming into the coffers of the Treasury. Not recently – there has been enough cash received to encourage calls for tax cuts; not yet appropriate, we are told.

But we are seeing more and more legislation to encourage the taxpayer to pay up, and to pay up promptly.

As recently as the Budget of 3 March 2021, a tougher regime of penalties for late payment of income tax was announced. Admittedly, it did not come into effect until April 2023, but thenceforth, penalties are calculated according to the amount of tax owed and the lateness of the payment at rates between 2% and 4% of the unpaid tax with daily accrued penalties on balances owed and paid 30 days after they were due for payment.

At one level, I do not argue with this, but there is another side to this coin, and this is where the revolution starts.

I have every sympathy for those working for HMRC at the coalface of income tax, capital gains tax and inheritance tax. They are being asked to deal with more and more work with less and less staff to help them and with respect to more and more complex issues. But in my view, this has all now gone far too far.

The revolution can be stated thus: if the taxpayer is required to pay interest and penalties on overdue tax, there ought to be an equivalent penalty on HMRC for its delays in dealing with matters. They are now resulting in what might be described as a miscarriage of justice. I have given my apologies to the staff – this revolution is aimed at the higher echelons of HMRC and the politicians who direct them.

I am sure we all have our examples of the delays in obtaining responses from HMRC. In one recent CGT case (see Chisnall v HMRC [2023] UK FFT 857 TC) where the taxpayer tried to persuade the Tribunal that the conduct of the case by HMRC although deplorable did not decide the dispute in favour of the taxpayer. It makes me wonder quite how bad HMRC have to be before the Tribunal will realise that what HMRC have done is unacceptable and ought to be penalised. Likewise I have had an income tax case. HMRC opened an inquiry in 2006 and did nothing about it until 2018. I have an inheritance tax case which took five years for HMRC to get round to dealing with the complicated returns on a ten yearly charge where there were claims for agricultural and business property relief. The story that HMRC came up with is that it is always open to the taxpayer to pay the tax that they consider to be due, if any, and therefore to complain about delays and interest is a false argument.

But it is not a false argument for the taxpayer to have paid his tax in 2006 and be presented with a bill in 2018 based on figures which are not acceptable to the taxpayer. Quite often complicated cases take a long time to resolve. Assume that there is a deal done between HMRC and the taxpayer which is somewhere between the figure submitted by the taxpayer on his return and HMRC’s assessment of the position. Added to the additional tax is interest from the date that tax was due which, in my first example, is more than ten years before HMRC got round to dealing with the issue that they have raised initially. How can the taxpayer be expected to pay tax and therefore interest on monies that he did not know HMRC considered to be due? And perhaps (she)he thought, reasonably, that no tax was due but had to pay some tax after HMRC decided to deal with the case.

There needs to be a system whereby HMRC are obliged by statute to deal with matters within a particular timeframe. I would have thought that three months is a generous amount of time to give HMRC to deal with a return or correspondence. I know, as do all of us, that, if we kept a client waiting for three months we would have a problem with him or her especially a problem getting our bill paid; and possibly no client at all. Indeed, three weeks is a long time for a client to wait for a response so in my first case 12 years is outrageous and in my second case 5 years is not far from outrageous. Something has to be done to produce a level playing field.

If HMRC consider that money is the answer to all the problems then they ought to be required to pay a penalty and interest on that penalty if they do not respond to properly completed tax returns or correspondence within a specified period – I am prepared to give them three months but after that there has to be some kind of financial penalty to level up the position with the taxpayer.

It is about time that the senior individuals in HMRC tell the politicians to whom they are accountable that they have been put under huge pressure by those politicians to deliver the returns (money that is) that are required but without giving them the staff to do the job. I know that large amounts of tax work is now done by computer almost without the human hand or brain being involved. But someone has to press all the relevant buttons.

We live in a complex and complicated society. We have a tax system that mirrors our society. If our legislators wish us to have such a tax system they have a duty to ensure that the system has sufficient numbers of staff of sufficient ability to manage the system. Currently the government is failing those who have elected it to provide enough civil servants to manage the tax system properly. Who suffers? See above, the tax payers. There have been large cuts in Revenue and Customs staff. It reduces the government wage costs which we all applaud but the consequences are unacceptable and we, the taxpayers, are not making anything like enough fuss about these consequences. It is time for us to man (excuse the personal pronoun) the barricades.

However, there are large parts of the tax legislation, and by and large they are the difficult parts, where computers are an irrelevance. For instance the issue of valuation particularly of shares in private companies, particularly property companies. There is no way a computer can conduct a discussion with the taxpayers agent on this topic. It has to be done by individuals and preferably by individuals in HMRC who have some experience of the valuation of companies and private company shares.

I do not expect that this article will produce an immediate change for the better on the part of HMRC. I would dearly love to see it but I am realistic enough to know that it will not happen. Nevertheless, as I wrote at the outset, revolutions have to start somewhere and if, in a 100 years time when the problem has been resolved, the origin of a solution to the problem is to be found in this article then I will happily turn in my grave to celebrate the product of a lengthy gestation period that produces fairness between the taxpayer and the government.

Communicating with taxpayers who are involuntary customers of HMRC; this is a large part of the job of HMRC and frankly they are not very good at it. In a bizarre item in The Times the First Permanent Security of HMRC told the journalist that HMRC is struggling to answer telephone calls and, at the same time, wants to reduce customer contact by 30% by the end of 2024. So more people want to have direct contact with HMRC and HMRC want to reduce customer contact. This seems a strange way of going about things, typified by the closure of HMRC self-assessment help line. HMRC added that there are no resources to deliver a satisfactory service through “the traditional channels of phone and post”. HMRC go on to say that some demands are unnecessary (just ask a taxpayer with a query if he thinks his demand is unnecessary) and some demands “can relatively easily be serviced online”, except for those people who are not on-line – presumably the elderly – but, HMRC reply, they will die off soon leaving only taxpayers who are online.

Meanwhile we all have to suffer interminable delays waiting for our telephone call to be answered or our letter to be answered. Quite unacceptable service on every level.

And as a footnote to delay. What on earth is still going on with the Probate Registry? What used to take three weeks at a local level is now taking more like three months at a national level. Again a reminder that Lord Palmerston exclaimed that we did not need reform because the world was bad enough as it was and reform would only make it worse. Case proved by the Probate Service.

This is a book review by Gill Steel of Cryptoassets for Private Clients: A Practitioner’s Guide by James Brockhurst.

Purpose

This book is designed to explain in practical terms the innovation of blockchain technology and the issues surrounding cryptoassets in a world where the law and regulatory frameworks are playing catch up. James Brockhurst is a partner in the private client team at Forsters LLP and he has made a very technical subject reasonably accessible. Its great accomplishment is to focus on how testators, personal representatives and trustees should approach these assets and gives some guidance on tax considerations and planning.

Content

This book has ten chapters as follows:

1. Blockchain and cryptoassets: a primer
2. Smart contracts, Decentralised Applications and Decentralised Autonomous Organisations
3. Centralised Finance and Decentralised Finance
4. Non-Fungible Tokens
5. Legal status of cryptoassets and Smart Contracts
6. Trusts and Fiduciary issues
7. Estate planning with cryptoassets
8. Probate with cryptoassets
9. Tax considerations and planning
10. Regulatory considerations for cryptoassets

There is a table of Statutes and a Table of Cases.

Structure & Layout

Each chapter starts with a chapter summary and contains numbered paragraphs for ease of locating the relevant text from the book’s index. There are footnotes to references for each numbered paragraph, as appropriate. Each chapter is broken down into a number of sub-sections. For example, chapter 7 on estate planning with cryptoassets has the following sub-sections

• Estate planning: creating an inventory
• Where should the inventory be kept?
• Private key management plan
• Alternative strategies to deal with private keys
• Choice of executors
• Will drafting considerations
• Powers of attorney
• Inter vivos trusts and cryptoassets
• Illiquidity issues with cryptoassets and obtaining life cover
• Storing Wills on blockchains

Tools

There are one or two tools contained in the text such as a Drafting checklist for trusts and letters of wishes and Estate planning: creating an inventory.

Clarity & readability

This is a fast-moving and highly technical area of law where there is a considerable amount of jargon, but there are useful explanations here. For example, in paragraph 1.42 the author says in explaining private and public blockchains:

“In layman’s terms, a public ledger might be compared to a website such as Wikipedia, which is maintained by any willing participants, whereas a permissioned ledger has the features of a private website which is maintained by a centralised firm or by nodes given access to it. “

Relevance to practitioners

As David Neuberger says in his foreword to the book, we are in the midst of a financial revolution the like of which we have not seen for centuries. The law, regulation, academics and practitioners have struggled to keep up with the technicalities involved. This book will provide the private client practitioner with the information and resources to help their clients and keep on top of this developing area of practice. I recommend it to you.

The timescale goal set is ‘before the next general election’, which many expect to take place in 2024. However, this is a target and not necessarily guaranteed.

Even though there have been promises this change will be made pretty much annually since 2017, there is now a sincere feeling within parliament that with an election on the horizon, the Prime Minister will need to make a large gesture to win back dwindling public support for the Conservative Party, and this Bill will certainly help swing favour back his way. With so much focus on the housing market, passing this Reform could certainly make a huge difference in how the public feels about the party.

We should, however, keep in mind that the Leasehold Reform Bill was announced in the Queen’s Speech in 2021 – and nothing came of it then! All we can do is wait and see!

What can we expect from a Leasehold Reform Act?

The short answer is a lower cost for extending the leaseholder’s lease or to purchase their freehold. There is a hope that ground rent will be lowered to £0 too.

Currently, leaseholders are unable to buy the freehold, so this freedom will allow those living in flats, for example, to escape the feeling of being held to ransom by a landowner who is able to make considerable changes to lease charges, which can financially cripple homeowners and put off any potential future buyers – leaving many feeling they are ‘imprisoned’ within their own bricks and mortar.

If a homeowner decides that buying the leasehold is not for them, whether through considered choice or a lack of the finance related in doing so, there will be the option to extend the lease by 990 years rather than 90 – which, when we look at mortgage lending, will make a huge difference as many banks and building societies having policies that restrict lending once a lease drops below a certain number of years. Then there is the cost of ongoing lease extensions, which, even if handed down through inheritance, is still one that can be considerably and fairly diluted.

In one case highlighted, someone bought a flat in 2008 with a £300 ground rent and a 10-year doubling clause, meaning the homeowner now pays £600. The same homeowner was quoted £25,000 to extend the lease – (information sourced by AJB, with thanks).

There are some other key changes that could make an appearance; they are:

• Abolishing the two–year ownership condition (this is the restriction that sees current leaseholders having to wait two years before they can extend the lease (or if the property is a house, buy the freehold to it).
• Abolishing leasehold houses – yep, this is still a thing! However, this could come with a caveat. Most houses sold as leaseholds are done so as to reduce the cost of the property. It will be interesting to see if this affects house prices on new home sites.
• Abolish ‘Marriage Value’ – Shockingly, this is also still a thing. So, as an example – if you have a flat, and the lease is 60 years, once you increase the length of the lease, the value of the property will increase quite significantly. This increase is known as the ‘Marriage Value’ and, by law, must be split with the freeholder. In my humble opinion, this should be abolished regardless of the reform, as it can see landowners profiting from a homeowner’s investment and from a fee paid not through choice but necessity. Imagine this: you own the lease, and for someone to sell a flat that stands on the land, they have to pay you £10,000 to increase the length of the lease. Then, when they sell their flat, you are automatically legally entitled to a percentage of the difference in the value from the lower lease to the newly extended lease – not a small figure at all. Great if you own the leasehold, but not so good at all if you are the homeowner that does not.
• Ground Rent to be abolished – although I cannot see this happening, it would be great news if it was. What I predict is that, at best, we will see a calculated cap.

I have been involved in the property market for the best part of 30 years now, and there are some trends and lessons I have seen and learned during this period.

Firstly, new build flats are expensive but cheaper than new build houses. For anyone on a budget who wants a brand new home, flats/apartments (or the aforementioned leasehold house) are the way forward. However, as with any new build, the resale value drops and with flats, the drop is steeper. Therefore, selling flats, or properties for the over 65s, becomes a longer process which, in many cases, ends up with a sale price lower than initially hoped for by the Vendor.

The problems with selling a leasehold?

I think this is where I should stress that I have no personal problem with leasehold properties in the slightest. I understand they have their place, and without them, we would have a very different-looking market. However, the law as it stands is outdated and is well past due to being reformed when there are changes in society, our environment and lifestyle changes. We can dive into the buying habits of the UK, which usually follow something along the lines of:

1. First-time purchase – a flat or one-bedroom house.
2. Second purchase – a second bedroom is introduced, maybe with a small third.
3. Third purchase – a three-bedroom terraced/semi-detached with parking and a garden is usually on the shopping list.
   Depending on the individual situation, there is a bigger purchase, which could be four or five bedrooms.
4. Next is usually where we see homeowners downsize. Maybe due to the children leaving home, or the owner wants to do less housework.

With more family diversity and family breakdowns, these trends can change with people moving from the third purchase back to the first purchase stage. Why is this relevant? Well, think re-sale, think the cost of living too – with the additional stress any unexpected rise could have on a person.

What I am saying is that we need to see a change in the way leaseholds are put together and, indeed, managed. The resale market for flats is challenging due to the sheer volume of them that get placed for sale. Add to that reduced lease terms and potential increases in charges, and you have an even harder task.

This reform will enable leasehold homeowners to retain better value in their property, which will make buying financially easier.

Some stats:

• In 2021-22, there were an estimated 4.98 million leasehold dwellings in England. This equates to 20% of the English housing stock. Of these, 2.86 million dwellings (57%) were in the owner-occupied sector, and 1.85 million (37%) were privately owned and let in the private rented sector. The remaining 272,000 (5%) were dwellings owned by social landlords and let in the social rented sector.
• 70% of the leasehold dwellings in England (3.5 million) were flats; the other 30% (1.5 million) were houses.
• At the Regional level, London and the North West had the highest proportion of leasehold dwellings, at 36% respectively, significantly higher than all other regions of England, which had between 9% and 17%.
• The number of leasehold dwellings in England increased in the two years between 2019-20 and 2021-22 from 4.65 million to 4.98 million. The apparent increase from 4.68 million in 2020-21 to 4.98 million in 2021-22 is not statistically significant.
• (data sourced from gov.uk).
• Just over a fifth of property sales in 2019 were leasehold – 238,000 transactions (approximately) – data provided by the Land Registry.
• Around 752,000 households with children, and 1.48 million over 65’s are leasehold homeowners – gov.uk sourced.

In summary

It is my opinion that if these changes are made and the Reform Bill is passed, this will be great for leasehold homeowners – current and future.

All we can do is hope that the right decision is made at the earliest opportunity. If this was not in the best interest of homeowners, it would not keep being referred to.

This is a book review by Gill Steel of Declarations of Trust: A Drafting Handbook 6th Edition ISBN 978-0-414-11191-2.

Purpose

Catherine Sanders has written a practical book providing the practitioner with over 50 useful precedents to cover all situations where declarations of trust can be used to protect clients’ interests. Many practitioners are interested in this area particularly now that the scope of the Trust Registration Service affects some declarations of trust which this edition has been updated to include. It explains the role of a declaration of trust, when it should be used and what it should achieve.

Content

This book contains nine chapters and 53 precedents within its 153 pages. The chapters covered the following content:

• Chapter 1 – General Principles
• Chapter 2 – Property purchased as tenants in common
• Chapter 3 – Property purchased by beneficial joint tenants: Subsequent adjustment of interest
• Chapter 4 – Sole legal owner of home holding for another (or for self and another)
• Chapter 5 – Insurance policies
• Chapter 6 – Company shareholdings
• Chapter 7 – Indivisible assets
• Chapter 8 – In conjunction with Wills: The half-secret trust and mutual Wills
• Chapter 9 – Joint bank accounts

The large number of precedents will be particularly helpful.

Structure & Layout

Each chapter consists of a number of topics with sub-headings and each paragraph is numbered for ease of investigation.

The precedents are listed in the contents page and form an extensive appendix. They range from a simple precedent following a purchase of property by two persons as tenants in common with an agreement on division of sale proceeds in percentage shares where there is no mortgage; to the more complex declaration for a home held on trust until the happening of certain events, then for former spouses in unequal shares, occupying spouse responsible for repairs etc and power to replace property.

Tools

The essence of this book is its wide range of useful precedents.

Clarity & readability

The book takes on board the development of the TRS and its explanation of this is a good indicator of the clarity the author has brought to her subject: “Since most of the precedents in this book create bare trusts, then, unless they fall within one of the excluded categories, they will be registrable as express, rather than taxable, trusts. However, a number of them will fall into excluded categories. More detail is given in the individual chapters….”

Relevance to practitioners

This little gem of a book is relevant to conveyancing practitioners but also family lawyers and estate planning practitioners who need to put in place appropriate declarations to protect their clients and their wealth. It should be on the bookshelf of all private client practitioners.

What’s different from 2^nd edition?

The main amendment adds to the interpretations the fact that a ‘Trust Corporation’ has the same meaning as in the Trustee Act 1925 and in clauses 9 and 10 a Trust Corporation appointed as a trustee is appointed on that corporation’s standard terms and conditions as published from time to time and is entitled to reasonable remuneration and the reimbursement of proper expenses.

The old clause 5 in the 2^nd edition is no longer required as it altered the wording of ss 31 and 32 Trustee Act 1925, which were changed by the Inheritance and Trustees Powers Act 2014.

The old clause 8 (now clause 7) on apportionment remains as before save that it now refers to the law in s.1 Trusts (Capital and Income) Act 2013.

Have the Special Provisions changed?

The provisions are now in clauses 13 – 20. Clause 15 replaces the old clause 14 in relation to supervision of companies. The new clause is more extensive and gives the trustees power to incorporate any company in any part of the world. It also gives the trustees the power to compromise or make arrangements with any company in which the trust is invested and enter into any arrangements in relation to the winding up or liquidation of a company in which the trust is invested.

The Specified Age for the purposes of s.31 Trustee Act 1925 used to be 21 in the 2^nd Edition. The new clause 16 changes the Specified Age to 25 to bring it in line with Age 18-25 trusts. The clause in the 2^nd edition giving the trustees the ability to apply capital for the benefit of a minor or a beneficiary without capacity has now been incorporated within the standard provisions at clause 5.

Clause 18 (formerly clause 20) regarding the appointment and retirement of trustees has been extended to include a paragraph about dealing with an incapable trustee.

The power to appropriate assets at their value at the time of death (formerly clause 22) has been removed entirely. This is because a valuation should be made at the time of the appropriation as a matter of the general law. It was thought by those preparing the 3^rd edition that if such a power was required it could be included as a bespoke power after discussion with the client and it should not be hidden in a set of general powers which address more commonly arising situations.

When should the STEP provisions be used?

The explanatory notes to the STEP provisions make it clear that they are only suitable for use in Wills and Trust made in accordance with the law of England and Wales. They are not designed for use in documents governed by the law of different jurisdictions. Any such use may well result in litigation because of differences in interpretation, meaning or conflict with the laws of that jurisdiction.

It remains the case that where there is any inconsistency between the wording of the STEP provisions and other clauses in the Will or settlement containing them, the terms of the Will or settlement take priority. Many practitioners use their favourite clauses in Wills and then for good measure incorporate the STEP provisions with the result that without this treatment you would have two different ways of dealing with a particular issue. Nevertheless, the alternative wording of the Will may take precedence, but does it sit well with the other STEP provisions? It is better to have one set of workable terms rather than a mixture which may not operate well together.

Toolkit

Alongside the STEP Provisions 3^rd Edition is a Toolkit for Will writers. This is an excellent tool and must be read by everyone using the STEP Provisions. It provides guidance on the use of the STEP Provisions and an explanation of the main clauses to help you in guiding your clients when you use the provisions.

Overview

This is a guide for clients to read alongside or instead of the STEP provisions. You could supply a link to it or a hard copy to a client where you have incorporated the STEP provisions in a Will or settlement and the client just wants an explanation and not a copy of the full provisions.

Frequently Asked Questions (FAQs)

There is a set of FAQs for both the lay person and the practitioner.

All in all, it is good to have an updated version of the STEP provisions. Now all you need is time to read them and consider their appropriateness in each client’s case.

Contentious probate in the UK refers to a legal dispute that arises when the validity of a Will or the distribution of an estate is called into question. This can happen, for example, when a family member or other interested party feels they have not been fairly treated in the Will, or they suspect that the Will was made under duress or without complying with the proper legal formalities, both reasons that can invalidate the contents.

Invalid Wills

In the case of Mundil-Williams v Williams [2021] EWHC 586, the High Court ruled that a Will was invalid because the testator (a Welsh farmer) lacked knowledge and approval of its contents. The case is a timely reminder of the need to ensure that farm Wills are valid.

In this case, rather than find the Will to be invalid, the Court rectified the Will by excluding words from it so that the Will more accurately reflected the deceased’s intentions.

The facts were that the testator died in 2017 leaving four sons. His estate (value £983,000) primarily consisted of the family farm (value £700,000). The testator’s eldest son had been a partner in the farming business and had taken over the practical running of the farm by the time the testator executed his Will in 2014.

Many UK farms are currently valued at considerable amounts, especially where there is potential development value (see case of Foster v Revenue and Customs [2019] UKUT 251 (LC)) and the propensity to challenge a farmer’s Will is high.

The need to express clearly and the challenge

Under the terms of his previous 1990 Will, the deceased left the residue of his estate to his four sons equally. He executed a new Will in 2014, at which time his eldest son was in charge of the day-to-day duties on the farm. The deceased gave verbal instructions for the Will in person to a secretary at the family’s solicitors. The secretary took a handwritten note which she then typed up and gave to the paralegal responsible for drafting the new Will. However, the Will  provisions drafted did not accurately reflect the instructions of the deceased farmer.

In reality, the deceased wished for his eldest son to receive an agricultural tenancy and 62.5% of the residue, yet the Will provided that he would receive the farm outright, leaving the three other brothers with only 12.5% of the residuary estate, which excluded the farm. The deceased approved the draft of the Will and then executed the approved Will.

One of the sons, Timothy Mundil-Williams, challenged the Will following his father’s death on the basis that it did not represent his father’s wishes and intentions as expressed to the family and the solicitors. No doubt was cast upon the deceased’s capacity.

It is important at all levels for farmers to update the Wills with:

• Clear instructions
• Clear understanding
• Clear witnessing

Resolving disputes

As advisers it is important to help resolve  any dispute. This may involve advising on the legal options available to the client, such as contesting the Will, negotiating a settlement with other beneficiaries or seeking a court order to protect a client’s interests. However, those involved must be ever mindful of the need to avoid conflicts of interest when advising the parties to a dispute.

Farm tax advisers and accountants must be aware of the propensity for farming families to dispute and make sure everything is protected by legal documents.

Reasons for disputes

Contentious probate disputes can happen for a variety of reasons, including but not limited to:

• Inadequate financial provision – this is common among spouses and children who feel they should have received more from the deceased’s Will, especially if they were financially dependent on them under legislation – Inheritance (Provision for Family & Dependents) Act 1975.
• Issues with executors of the Will, such as a disagreement regarding the appointment or actions of one who might also be a beneficiary.
• Lifetime gifts and promises – there have been several cases based on proprietary estoppel in recent years affecting farms.
• Mistakes and disagreements, such as a dispute over the correct ownership of property or the value of an asset or the drafting of the Will.

Considering IHT liabilities and planning

IHT liabilities do have to be considered at the Will drafting stage as shown by a recent decision in the First-tier Tribunal, N Hall and another (as trustees of Carolina Raboni deceased)  [2023] UKFTT 32, which concerned whether an interest in possession arose in a ‘cash poor’ estate where a ‘companion’ occupied the house after the widow left it  to her five nieces and nephews.

The case shows the importance of Will drafting. The deceased had granted her friend and companion the right to live in the house rent-free other than insurance and maintenance costs for the rest of his life. The property was not to be sold without his consent. The companion moved into the house in 2003 and Mrs Raboni died in 2004. The nephews and nieces decided to pay the IHT by instalments as otherwise the house would have had to be sold to pay the IHT due on the deceased death. This brought to an end the right to occupy granted by Mrs Raboni to her friend. Had the tribunal decided that the right of occupation under Mrs Raboni’s Will until her companion’s death there would have been IHT due on the house’s then £827,000 value instead of what was paid by the nephews and nieces on Mrs Rabioni’s death when the house was only worth £300,000.

The nil rate band and its enhancements staying frozen means that there are more estates paying inheritance tax.

The likely IHT liability and the impact on the distribution must be considered by the Will drafter. One of the problems in practical terms is the marginal nature of potential inheritance tax liabilities. For example, in the Hall case, the value of the house was significant. It is key to understand the values of the assets in the estate and to have professional advice as to potential values. If necessary, this should be on regular review of the Will.

Occupation of the farmhouse

In farming, the occupation of the farmhouse can be complicated.

In the Hall case, the First-tier Tribunal decided that, contrary to the way in which a beneficiary with a right of occupation had commonly been treated, an occupying beneficiary had not in fact enjoyed an interest in possession in the deceased’s property under her Will but rather at the behest of the nephews and nieces who then owned the property This was notwithstanding the fact that his occupation of the property was until his own death in 2017.

The tribunal was of the view that to decide what right the companion had under the Will, it was necessary to consider what the executors could have done, in the absence of any consent by any of the parties. Had they done nothing, the residuary beneficiaries could have compelled administration of the estate, and HMRC could have compelled the payment of their liability. The only option then would have been to sell the house and, in that case, there would be no interest in possession because the house was sold.

The executors believed the only option was to sell the property subject to the companion’s right of occupation – which would impact on the open market value. Faced with this, and considering the wishes and intentions of the deceased, the beneficiaries opted to pay the inheritance tax bill themselves and to wait until the companion died before selling the property.

Gifts

Gifts to friends must be clearly understood in the drafting of Wills. Careful drafting of the Will and the wording in respect of a right to occupy can be used to ensure that an interest in possession is created or, if more beneficial, avoided.

Practical interaction of drafting and tax planning

It is essential that those drafting the farmer’s Will take into account a number of documents to be clear on ownership and practical impact.

• The farm accounts to consider partnership property (100% BPR – Business Property Relief) and non-partnership property (50% BPR) and also to look at the impact on the “living business”
• The farm partnership agreement for full understanding of what should happen to partnership property etc, and to be aware of complexities that could arise
• Any IHT planning report together with a succession report that can help tie into the wishes of the testator.

The advantages of the limited company

The limited company can suit a large number of diversified activities, for example, viticulture operations together with operations involving risk, such as tourism and food production, and/or a lot of R&D such as work to qualify for “farming for the environment” grants. It is therefore essential to understand how the new full expensing (FE) rules work. It is true that the company will be liable to a balancing charge, should a disposal value be required to be brought into account for an asset upon which a full expensing FYA has been claimed. This is contrary to the existing rules for disposal values upon which the Annual Investment Allowance (AIA) has been claimed, which would be deducted from the pool to which the asset had been applied and only trigger a balancing charge where the disposal value is in excess of any unrelieved expenditure in the relevant pool (Capital Allowances Act 2001, s 55).

This, therefore, presents a dilemma of whether to claim FE or AIA.

The choice

Assuming that both full expensing and the AIA reliefs would apply at the time of incurring the expenditure, it would therefore be advisable to claim the 100% relief through the AIA rather than the full expensing FYA. This, however, might be complicated by any additional expenditure incurred within the relevant period by the business, or if applicable their wider group companies, which may restrict the amount of AIA that is available up to the current £1m cap. FE is unrestricted, although it is only available to companies subject to UK corporation tax.

Regarding the computation, it is important to clearly denote how the capital allowances calculations have been arrived at; setting out the basis of each pool including any tax written down value brought forward, as well as any additions for the period, and how the allowances are being claimed – via the 100% AIA or, if applicable the FE FYAs.

There are advantages (pros) and disadvantages (cons) of FE v AIA.

100% Full Expensing (FE)

Clearly where the expenditure is due to be greater than £1 million the FE is the “stand out” choice.

Annual Investment Allowance (AIA)

Where the expenditure is second-hand or relates to leased assets the AIA appears the “stand out” choice. However, as shown significant choices must be worked through with anticipation.