Wealth Management Update – December 2018

Beware – scammers are improving!

Multiple clients have contacted us recently about a very high quality scam that is circulating, where fraudsters impersonating JP Morganare introducing themselves as JP Morgan Chase & Co. The literature sent toindividuals asks for investment into a Fixed Term Bond in return for guaranteedincome per year of 6–10%!

We have seen the literature and the payment agreement and can safely say that it is a very accomplished scam and one that will likely deceive many people into parting with thousands of pounds of their hard-earned savings. We have contacted JP Morgan who has confirmed that they are aware of this particular scam but that it is not linked to them in any way.

Please remain vigilant and remember that if something seems too good to be true then it probably is! A guaranteed annual return of 6–10% in the current economic climate is crossing into the realms of the ridiculous.

If you see anything suspicious please share it with us so wecan communicate it more widely to try to prevent innocent people falling foul ofthese dreadful scams.

Probate fees are landing

You may remember reports in early 2017 about a substantial rise in probate fees. This caused an uproar that saw the government back track on their decision until after the general election. Well, guess what … those reports are back!

We knew that an increase in probate fees would raise its ugly head again sometime, but with everything else going on at the moment (Brexit to name just one and the worldwide economy another), we thought the government might give us a break for a while – but apparently not.

All we know at present is that this is being revisited. Details are being held until a final decision has been reached, with plans for full implementation early next year. What we do know is that fees would never be more than 0.5% of the estate value. However, even at 0.5%, fees on a £250,000 estate would be £1,250, which is nearly six times more than the current level of £215 for estates over £5,000.

With receipts from inheritance tax reaching an all-time high in 2017/2018, the government’s justification for raising probate fees so sharply must be questioned, especially when a large estate does not always mean more work!

There is no way to avoid paying these fees. However, thereare things that can be done to reduce your estate for Inheritance Tax purposes and therefore reduce the size of the estate for the calculation of probatefees. Strategies that involve the implementation of trust arrangements andgifting from the estate would all be things to consider.

As most of you know, as you have trust arrangements in place with us already, we are specialists in estate planning. It also helps that we are infuriated with the government’s ability to extract money from individuals’ estates after death, the majority of whom have paid high levels of tax during their lifetime.

We will likely have more to say on this as the details become clear, but if you are concerned by this then please get in touch so we can advise you accordingly.

We spotted an article in one of the mainstream newspapersearlier in November to suggest that trusts could be stripped of their taxadvantages and will not be able to be used in the way intended.

If you or someone you know needs help with Probate then please visit www.penguinlegal.co.uk to find out how we can help

Don’t panic … your trusts still work!

We wanted to let you know that this was a report of a consultation and NOT a report that anything has actually changed. These types of consultations happen all the time, trusts being only one point of focus in this announcement, and we are not concerned about the discussion points at this time.

The history of trusts dates back centuries and the government are not planning on doing away with the concept entirely, which is good news as trusts clearly have their place in modern society.

We will keep you updated on developments in this particular review as we know about them, but for the moment it is business as usual.

Cohabitation myth busted

When you, your children, other family members or friends take that step to move in together, rarely does anybody think about what might happen if the relationship should fail.

When a relationship fails it can be very stressful, especially as it is likely that you are financially and emotionally connected to one another through property or other assets. But as things don’t always end as amicably as we imagine they will, there are some important things to think about and be prepared for.

The myth of the ‘common law’ relationship is just that … a myth. Cohabitees have no rights over property if they don’t own any part of it, regardless of how long they have been together – whether 6 months or 50 years, the rules are the same. They would have more grounds to claim if they contributed to the upkeep or improvement of the property, e.g. paying towards the mortgage, deposit or towards refurbishment; however, a claim will not definitely be upheld, it would need to be argued and proved, likely at a high cost through the court system if necessary.

Whilst some may think this is not a nice thing to think about, the reality is that relationships do break down, and it is sensible to educate yourself on your rights and have a practical conversation with your partner before you enter into any cohabitation situation. The website link below is a great tool that may make that tricky conversation a little easier, with handy tips on what to consider and explanations of your options.

Please pass this on to family and friends who may benefit from it.

Cohabitation Law

58% of British adults have no Will!

Wills are the cornerstone of any estate planning and are something we suggest everybody has in place, even if they think they don’t need them.

The age group most likely to have no Will is those aged 18–24years (89%), but 78% of 35–44 year olds and 63% of 45–54 year olds also admit to having no Will. The most common reason given by individuals for not having aWill is that they simply have not yet got round to it.

Many of those with no Wills may not be aware that their spouse will not necessarily be the sole beneficiary of their estate; the beneficiaries of an estate vary depending on the value of the estate being passed. The estate may need to be shared with either children or parents, subject to the family that survives the first death, in most cases a situation that is better avoided as it can cause unnecessary complications to do with assets and property.

We strongly recommend that all British adults put a Will in place – and not just a “do it yourself” one either! Make sure it is done by a well-established professional who will do things right … like us!

Penguin Legal can help you put your Will together to ensure that your estate is distributed exactly as YOU want – Visit our website to find out more

www.penguinlegal.co.uk

F&C fund name change

Please note that F&C have changed the name of their fund from F&C UK Property to BMO UK Property. This should appear on your valuations from now, so don’t be alarmed if you spot this.

Notes on Brexit

After a year and a half of complex and occasionally fraught negotiations, the Brexit deal is finally on the table, and has made it past the EU27 leaders in a brief 90 minute session. However, the British and EU parliaments must both vote to ratify the deal before it can go into force. Given the furor raised by various MPs here at home we still cannot anticipate if the deal will be agreed by parliament and, if it is not, the likelihood of a No-Deal Brexit rises substantially.

Having reviewed the longer summary document which accompanied the full 585 page Withdrawal Agreement, it seems that the negotiating team have no acquaintance with the adage “You can please some of the people all of the time” and, unfortunately, in attempting to please “all of the people, all of the time” have fallen foul of “pleasing none of the people, none of the time”. So anyone with any particular corner to fight has come away feeling thwarted and, understandably, resentful. Large groups of MPs are lobbying for a re-negotiation, but this deal is as much as the EU are prepared to give. Their motivation is to maintain the integrity of the block as a whole, which is more important to them than easier trade with a separate UK (yes, even to those German car manufacturers). With Mrs. May still saying that a further referendum is off the table, we are relying on a disparate group of conflictingly motivated individuals to reach a mutually acceptable agreement to vote in the best interests of the UK as a whole. Voting is scheduled for 11th December here in the UK and February in the EU, so we are still in a wait-and-see position, I’m afraid.

Book of the month

As most of you know, Tesla is a man, not just a car (I say most, but I am becomingly increasingly concerned at the number of people who think that Tesla is something dreamed up by Elon Musk!). Whilst most of you will know that Tesla was the man who discovered Alternating Current, most of us do not know that he also invented the neon lamp, the induction motor and the remote control!

But, despite his genius, he was a terrible businessman who was not able to capitalise on his genius and endured many years of legal battles regarding his patents.

In Tesla: Inventor of the Modern, Richard Munson has written a well-researched and entertaining book about the man and his genius. This is a good holiday read so, when the repeats and rubbish are on TV and you want to get away from the family, take this book to the pub for a couple of hours. It will be well worth your time.