Thinking ahead to old age

Most of us have worked hard to establish our family and build up a nest egg for a rainy day and for our retirement. It is human nature to wish to conserve as much of these hard won savings as we can and to have them available to pass on to our children and grandchildren. The best way of achieving this is to plan ahead for retirement and against the possibility of illness or infirmity in old age requiring residential or nursing home care. Steps can be taken to seek to minimise the effect of long term care on a person's estate. Planning can be by way of sound investment of capital for the future, by way of Will or in appropriate circumstances lifetime trusts or indeed by judicious use of gifts and annual exemptions. Alternatively, if the liability is identified, steps can be taken to fund it by way of suitable insurance. We at Storie, Cruden & Simpson can assist with all aspects of this planning from general financial advice to the preparation of any detailed documentation that may be required. While we have considerable investment experience within the Office itself we also have access to accredited Independent Financial Advisors where there is need for specialist financial products such as Long Term Care Bonds or Inheritance Tax efficient investment bonds.

Residential Care

As we grow older one of the major concerns that many people have is what happens to them and to their savings if they have to go into a residential or nursing home. In fact this happens to only a small minority of people but nonetheless it is worth giving thought to the possibility. As always some planning in good time before the event is likely to stand you in good stead. It may be possible to arrange a care package at home and indeed current government thinking is trying to encourage this option. Care in such homes is expensive (as is home care) as, if your capital is more than £18,500 (year 2002), then the State require that you meet the residential, personal and nursing care costs out of your own pocket. It is proposed that the state will meet the cost of the nursing (and in Scotland the personal care element) in future but details and timing are not yet clear. Provision for the cost can be made in a number of ways. The best foundation is to have a good occupational pension if this is possible. This will be supplemented by a persons Retirement Pension and in many cases the person going into a home will qualify also for the tax free and non means tested attendance allowance. In addition suitable re-organisation of investments can help to boost income to meet the cost of the home. Where necessary the house can be sold and its proceeds used to supplement ongoing income. In many cases it will be possible to arrange matters so that a good part of a persons estate can be preserved for quite a long time so that it remains available to pass on to his or her heirs. In some cases the use of Long Term Care Bonds from insurance companies will be an appropriate route to protect a persons estate while in others suitable lifetime gifts to family members may be a possible course of action to pass assets down to the next generation. At Storie Cruden & Simpson we are experienced in advising on all aspects of planning for the possibility of care in a home from the making of prudent re-allocations of your savings, the criteria you should look at when choosing a home, right down to administration of your finances when you are in a home should this be necessary.

Powers of Attorney

Most of us who reach retirement do so in reasonable physical and mental condition. As the years roll on however, ultimately some elements of our health are inevitably likely to deteriorate. At that stage it is helpful to know that there is someone around on whom you can rely to look after your financial affairs in your best interests. A Power of Attorney is a document that enables you to give another person permission to do this for you. It is an important power to give anyone and so the person chosen must be someone on whom you can rely. It can be a relative or trusted friend or it can be your solicitor who is not only experienced in looking after your financial affairs but is also backed by a substantial Professional Indemnity Insurance and ultimately the Law Society Guarantee Fund in respect of his administration. It is important however that steps are taken to put the documents in place while you are still capable of taking the decisions for yourself. The Power may never be required in practice but, if matters are left too late until an incapacitating illness has struck, the it may be too late to use the Power of Attorney option, and a formal Court supervised Curatory or Guardianship Order may be the only option available with its attendant formality and expense. We can assist with the preparation of appropriate Powers of Attorney, attend to the new Registration requirements relating to Powers of Attorney and, where required, the administration of finances for clients who are in residential or nursing home care.

Making a Will

Making a Will is the sensible course to take to make sure that, on your death, your estate is dealt with as you wish it to be, and by the people you wish to administer it. Where there is no Will the law will decide who gets your estate. Sometimes this will not be very different from your own wishes but in others there can be dramatic differences. Where you do not appoint executors to administer your estate, application to the Court will be necessary with the attendant time delay and expense. All of these matters can readily be catered for by the simple step of making a Will. A Will may be quite simple leaving your estate to your spouse whom failing your children. Such a Will is relatively inexpensive to prepare. On the other hand, your wishes may require the use of liferents, trusts, charitable bequests or the administration of business property by your executors or family. These would require a more complex and consequently more expensive document. However it may be money well spent in establishing your wishes as to how your estate is to be dealt with and in giving you the peace of mind that you can get on with your life knowing that your affairs are in order. We have over 100 years experience in the preparation of both simple and complex Wills and trust documents . We would be happy to advise in detail.

Inheritance Tax Planning

There is no inheritance Tax on a persons estate below £250,000 (year 2002). Thereafter however Tax is payable at 40% on every additional pound. A persons estate can very easily reach the Inheritance Tax threshold where there is a reasonable sized house and moderate life insurance and savings in addition. However with a little foresight and planning, liability for Inheritance Tax can be reduced by prudent use of annual gift allowances (£3,000 per annum). Larger gifts carry potential exemption from Tax provided the giver survives seven years. In some cases regular gifts out of income which leave the givers standard of living unaffected may be the way to go, while in complicated cases, discretionary trusts, loan backs or specialist Inheritance Tax efficient insurance policies may be worthy of consideration. We can advise you on the likely Tax liability in your circumstances and recommend appropriate action to moderate or even , in some cases, eliminate the liability. Where it is desired to use insurance policies as the method of reducing Tax, we can call on specialist contacts in that field to supplement and implement our initial advice.

Trusts

There may be occasions when the preparation of a straight forward Will does not meet adequately a client's requirements for financial and inheritance tax planning. In such situations it may be beneficial to look at the use of trusts to achieve the long term financial advantages which the client wishes to achieve. It may be that provision for education of grandchildren can be made through accumulation and maintenance trusts or that better inheritance tax planning can be achieved through the use of a lifetime discretionary trusts or perhaps through a Will trust with inheritance tax nil rate band discretionary trusts with wide lending powers. Or it may be that you wish to set up a permanent charitable trust designed to benefit a section of the community. It is obviously important that such a trust is properly set up as to qualify for the tax reliefs available to true charitable trusts. Whatever type of trust may be in mind we can advise in both general terms on the appropriateness of a particular type of trust, its advantages and drawbacks, and also on the detailed terms of the trust deed and balanced choice of trustees. We would be happy to discuss your individual circumstances and requirements with you further on request.

Winding up a deceased's estate

When someone dies it is very often a most stressful time for members of the family who have to cope not only with the pain of bereavement but also with the practical arrangements for the deceased relative's funeral, the breaking up of the house and contents and the subsequent drawing together and administration of the deceased's estate. At such a time we can provide sympathetic yet practical help and guidance through all aspects of registering the death, arranging the funeral and associated matters. We at Storie Cruden & Simpson have wide experience stretching over more than six generations in winding up estates and so we are well equipped to deal with all aspects of Executry work from the initial investigations of the estate to the calculation and payment of Inheritance Tax, obtaining of Confirmation (the executors legal title to administer the estate), cashing in or transferring items of estate and distributing the net estate, after payment of debts and taxes, to the correct beneficiaries either in terms of the person's Will, or where there is no Will, in terms of the law of Intestate Succession. We can also, where this is required, guide clients, both through our own in-house financial experience and the more specialist IFA advice which we have on tap, on appropriate investment by clients of their inheritance. Again our partners have many years experience of such work.