Wealth Management Update – October 2018
Lasting Powers of Attorney – new guidance released
You may have read our article back in July suggesting some golden rules for attorneys. The governing body, the Office of the Public Guardian, has now released some very useful advice for people starting out as attorneys or for those who have recently been appointed as attorneys.
Please use the following links for further information, and get in touch if you need anything clarified.
Getting Started ‘Property and Financial Affairs’
Getting Started ‘Health and Welfare’
Corporate Governance Framework
LPAs are suitable for nearly everyone (although maybe not all) as they provide valuable protection if anything happens to you during your lifetime. If you do not already have LPAs please get in touch with us at Penguin Legal to see if they apply to you and we can help you put them in place.
Once a bully, always a bully
In 1995 the World Trade Organization (WTO) was established to create a fair-trading environment for the world: an environment where success was based on the ability to trade wisely and flexibly. It was designed to prevent the largest economies driving through agreement just because they were the biggest.
Last month President Trump threatened to pull out of the 164-country organisation unless it “shaped up” (whatever that means!). The WTO has a tribunal system, with seven judges who hear and decide cases. Since taking office, Trump has consistently blocked the appointment of new judges, to the point that there are now only three, which is the minimum needed to hear a case. Therefore, the system is backing up, with massive delays in hearing cases.
What is Trump’s claim? That most hearings involving the USA find against the USA, and that this is unfair. Guess what? He is right. Of the 150 cases brought against the USA, 90% found against them. Is that unfair? Well you may think so, until you hear all the facts. EVERY country that has been sued in the WTO court has a losing rate of 90%! That is because a country is generally not sued in the WTO unless there is a very strong case against them. Here’s another fact that Mr Trump obviously didn’t read (he is notorious for not reading his briefing documents): the USA WINS 90% of the cases where it sues!
The hidden agenda is clear. The USA is the biggest and it wants its own way, no matter what … it seems that the Bully Trump can just change his spots, and that’s a bad thing for everyone who lives somewhere other than the USA.
Bank scammers – out in force
More than £500m has been stolen from customers of British banks so far in 2018. £358m was lost to unauthorised fraud, which means customers weren’t conned into transferring money, but rather that the scammers helped themselves to bank account contents.
These instances of unauthorised fraud come in many different guises, such as purchase scams, where we are convinced to buy goods or services that do not actually exist; card cloning or digital theft of bank details. Most victims of these types of fraud will have their money refunded by their bank. However, if you transfer money to someone and it turns out to be a scam, it is unlikely you will get any refund as you have authorised that payment.
This strikes a personal note with us this month that has added to our outrage. One of the team opened up their online banking app to find there were a number of purchases they didn’t recognise. The scammers are becoming more and more sophisticated, as these were purchases from some of the online stores that were used quite regularly and so the scammers clearly had accessed information to suggest what the spending history would be and, in an attempt to camouflage themselves amongst other purchases, had chosen similar outlets.
If you don’t check your account regularly, have joint accounts or have the ideal situation of maybe not noticing money going missing each month, the scammers could make a fortune. Lucky only £100 or so went missing before it was noticed, but on contacting the bank they said that a further £1,000 had been requested to be debited from the bank account which had luckily been blocked!
The message here is be vigilant and keep an eye on things! As technology evolves we have certainly become less concerned with where passwords and credit card information are stored. With everyone offering to remember these details for you, why wouldn’t you jump with joy at not having to remember 87 different passwords? In an ideal world your bank will call to advise you of this type of situation – after all that is one of the reasons we use a bank, rather than keeping our money bundles stuffed underneath our mattresses, right?
Maybe there are just too many scammers out there to keep up with …
Whatever happened to Child Trust Funds?
The Child Trust Fund (CTF) was introduced in 2005 and was set up for every child born between 1st September 2002 and 2nd January 2011. It preceded the Junior ISA (JISA) and works in much the same way, originally created to encourage saving for the long term and at regular intervals. If you have an existing CTF you can still contribute to it, but these can be transferred to JISAs if you would prefer.
Recently, it has been highlighted that some CTFs were opened automatically and hold only the funds put in by the government, with no further contributions ever made. There are reportedly 1 million of these accounts sitting dormant, having been forgotten by numerous families. The good news is that these can now be tracked via the government website and the following link: https://www.gov.uk/child-trust-funds.
The 16th anniversary of the CTF has arrived, meaning those children who are now 16 can take over management and control of their fund if they wish, with full entitlement and access at age 18. If you think your child has a CTF somewhere but you aren’t sure where, now is the time to look into it before they become solely entitled to the funds. By transferring the CTF into an ISA it immediately becomes an adult ISA at the age of 18, but wouldn’t every 16- to 18-year-old want to withdraw the funds and get spending, which they would have every right to do under the rules of the CTF or ISA. Finding out if your child has a CTF is the first step and then educating them on the importance of saving is the next stage.
Cohabiting and your financial planning
There are many things that, as a cohabiting couple, you may not be aware that you are not entitled to. The most common myth about cohabiting rights is “common law”, which is the belief that because you have decided to live together as a family you will get the same financial rights and benefits that you would as a married couple.
As an example, cohabiting couples are not entitled to any tax breaks or sharing of allowances (e.g. personal allowance) that married couples are. One of the most important things to remember is that if you are part of a cohabiting couple and one of you dies without a Will, your surviving partner will receive no benefit. If they are named as a beneficiary in a Will there will be no spousal exemption in relation to inheritance tax, so tax will be applied on both the first and second death!
Those are just a few things to be aware of; the list regarding entitlement of cohabiting couples is long and complex. We would strongly recommend you seek sturdy financial advice on your finances, including your home and the legal basis of how this is held. The advice will be unique to each couple and their circumstances, but the advice may well be … to get married. Whilst many people do not want to get married for numerous reasons, in some cases it really is the simplest and most effective solution. For those who really abhor the idea, there are certain areas of planning that can help, but be sure to consult a professional.
Notes on Brexit
With the Prime Minister’s “Chequers” proposal being so poorly received in Salzburg, the pressure has definitely increased on the civil service to find some way to deliver an acceptable withdrawal agreement from the EU in the next few weeks. It does make you wonder how a group of diplomats and politicians could have misread the mood of their European counterparts so badly. Perhaps being so focused on the seemingly arbitrary and self-defeating red lines drawn by Mrs May, rather than focusing on delivering a workable solution, is part of the problem. Leaving the opposition with no room to negotiate feels like it defeats the purpose of a negotiation, so it is no surprise the delivery of the now infamous “Chequers plan” went down like a lead balloon.
Reports suggest that approximately 80% of the points for withdrawal have been agreed in principle. Those not yet agreed include maintaining a frictionless border in Ireland, the governance for the Withdrawal Agreement, and a range of other separation issues including data protection, geographical indications and ongoing police and judicial cooperation in criminal matters, among others. If negotiators fail to finalise the Withdrawal Agreement, the points that have been agreed will fail and the UK will withdraw from the European Union without an overarching deal – the so-called “Hard Brexit” scenario – and concerns are mounting. The government are releasing a series of papers relating to all aspects of UK infrastructure potentially impacted, including trade, movement of people, and the Irish border. These are being sensationalised in the press, as ever, but if you are interested in the topic they make a good, and in some cases surprising, read.
Book of the month
When Jordan Peterson, a clinical psychologist began sharing his lectures on YouTube, he had little idea of what a “rock star” of thinking he would become. With the success of his latest, and most easy to read book, 12 Rules for Life, Peterson has jumped to the stratosphere of modern influence.
The book sets out 12 rules, or strategies, many of which turn existing ideas around. For example, the pursuit of happiness being a pointless ideal or goal, and that ‘meaning’ should replace happiness. But many ideas will simply reinforce what you know is right, but often fail to implement, such as putting your own house in order before criticising others.
We can’t recommend this book highly enough for those who are still struggling to understand what they want their life to be about, and what direction they should take. At the same time, it will help everyone to reflect on where they are, and if that is where they want to be.