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Your Will at separation or divorce

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A divorce or separation is a very time consuming and emotionally taxing circumstance. The last thing you would want to do in this situation is worry about whether your Will is up to date.  However, not considering your Will could end up being rather costly to you and your intended beneficiaries.

It is common for spouses to be an executor and main beneficiary of each other’s Wills. So when you decide that the relationship is no longer working, it is likely that you will no longer want your spouse to benefit from your assets in the event of your death or be in charge of them. Accordingly, your Will would need to be reviewed as soon as you have made the difficult decision to part ways.

A divorce is not considered as valid until a decree absolute is granted. Should anything happen to you during the interim, your old Will remains valid and your estate would be administered accordingly. This means that your ex-spouse can still inherit from your estate.

A separation has no legal status without a court order. It also doesn’t invalidate your Will. A divorce also does not invalidate an existing will.  If the previous Will remains unchanged following a divorce, any gifts to your ex-spouse will fail but this does not necessarily mean that all unwanted consequences are avoided. The assets in your Will intended to originally pass to your ex-spouse may be governed by intestacy rules which may conflict with how you would have wished these assets to be distributed. Furthermore, if your ex-spouse was the named executor of your estate or one of them, this may mean that you are left without an executor and left to the law to decide who will be responsible for your assets. .

We would therefore strongly recommend that you put a review of your Will at the top of your to do list if you do find yourself amidst a martial dispute.

Changes to Visa schemes for STEM specialists

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At last, some Positive news for international students who wish to gain valuable work experience in the UK after studies. Boris Johnson has unveiled a new post-study work visa that allows international students to work in the UK for two years following graduation, reversing a 2012 decision by then home secretary Theresa May.

Johnson’s offices said that international students make up half of all full-time postgraduate students in STEM subjects. It is hoped that the new category will help recruitment and retention of the strongest global talent, while also promoting opportunities for future breakthroughs in science, technology and research.

New Global Talent Visa Scheme for STEM Subjects

Preparations for Brexit – and possibly even a no deal Brexit – are having an inevitable impact on UK immigration and employment law, giving immigration solicitors plenty to think about.

Now, following the announcement of recent changes to the Shortage Occupation List, the government of Boris Johnson has announced it is considering a so-called “Global Talent” visa for individuals with demonstrable excellence in science, technology, engineering and mathematics (STEM) subjects.

Johnson’s aspiration to “cement the UK as a science superpower” will begin with Tier 1 Exceptional Talent being rebranded as the new Global Talent visa category for which both EU and non-EU nationals will be eligible if they meet the criteria of ‘elite researchers and specialists’ in STEM subjects, and are either beginning their careers or have already established international recognition and reputation.

Immigration methods from Australia

Furthermore, the prime minister has asked the Migration Advisory Committee to consider the suitability of an Australian-style Points Based System. In fact, Johnson has been keeping a close eye on the immigration policies of the similarly conservative Australian government; just last year its immigration department piloted something it called the Global Talent Scheme.

There has been long-standing criticism of the current Tier 1 (Exceptional Talent) scheme, particularly from immigration solicitors, with many claiming it is inefficient and unnecessarily complicated to the point of being unfit for purpose. It is a heavily reference-based system in which, say critics, well-connected applicants may have a significant advantage over equally or more qualified but less well-connected peers.

The new Global Talent visa scheme would not have a cap – unlike the current Tier 1 which is capped at 2,000 applicants per year. However, unless the new scheme can reform systemic problems with Tier 1, this may be irrelevant; the 2,000-cap limit has never actually been reached.

How will Global Talent work?

Successful applicants will be issued with a three-year visa and will become eligible for indefinite leave to remain in the UK at the end of this period. As well as receiving permanent right to reside in the UK, they will be able to bring their dependants (spouses and children) to reside with them. Dependants will then have full access to the NHS, state education and the labour market.

Furthermore, candidates need not meet a minimum salary threshold and the status will not be tied to a specific job, meaning that the applicant will not need to have a confirmed job offer before arriving in the UK (unlike the existing Tier 2 route for skilled workers). Additionally, the new scheme will enable UK research institutes and universities to provide endorsement to exceptional candidates who have not been awarded a research fellowship.

The government also proposes the creation of an additional criteria that confers automatic endorsement (subject to immigration checks). Any person, of any nationality would be able to apply under the Global Talent scheme “fast-track” category.

Simplified

It is difficult to predict the full potential impact of the Global Talent visa. However, it does appear to be simpler than the Tier 1 (Exceptional Talent) scheme and should result in growth in the number of applicants. However, Britain’s scientific leaders are generally not in favour of Brexit and they are unlikely to feel that the Global Talent scheme sufficiently compensates for the post-Brexit ‘brain drain’ they anticipate.

Immigration solicitors in London and the South East

The Wellers Law Group can provide expert legal advice on immigration visas, appeals and more. UK immigration law is complex and ever-changing, so having a legal team of experts behind you during an immigration application or appeal hearing is crucial.

Contact Wellers today for an initial discussion of your situation, so that we can help you move forward with your immigration issues.

Immigration Update – The Shortage Occupation List

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In what may well turn out to be one of its last meaningful acts before a possible snap election, the government has announced that it has accepted the recommendations of the Migration Advisory Committee (MAC) which called for an expansion of the Shortage Occupation List (SOL). Here, Wellers’ immigration solicitors in London take a look at the recommendations and what they mean for employers in the UK.

What is the Shortage Occupation List?

The shortage occupation list is the government’s official list of occupations that cannot be sufficiently staffed by UK residents. In order to appear on the list there are three key requirements of a job:

  • there is a level of skill required for the job
  • there is a shortage of people employed at the job in the UK
  • there is sense in reducing the shortage through immigration

The Migration Advisory Committee carries out regular evidence-based reviews of the list and then makes recommendations which the government examines before deciding whether to ratify any suggestions for addition.

UK employers who wish to fill a vacancy for a position featured on the SOL with a person from outside the European Economic Area (EEA) and Switzerland must issue a Tier 2 certificate of sponsorship (CoS) and this can be done without any need to demonstrate that the Resident Labour Market Test (RLMT) has been met. In contrast, employers wishing to recruit a worker from overseas for a position which does not feature on the SOL list, must ensure that the person meets the Resident Labour Market Test.

The updated list

Prior to the latest MAC recommendations being accepted, the SOL list was most recently updated in 2013. However, in their most recent review the Migration Advisory Committee looked at potential changes to the British labour market which are likely to occur after Brexit and has, against this background, now provided an updated list of SOL occupations.

This updated list adds many roles, including those in the following sectors:

  • Medicine
  • Engineering
  • Teaching
  • Technology
  • Architecture
  • Science
  • Web design

The government has also said that it will look into another important MAC recommendation to pilot a scheme in which the SOL would be extended to meet some of the challenges faced by remote communities. Currently there is a Scotland-only SOL to accompany the UK list, and a 2018 White Paper made calls for SOLs to be drawn up for Wales and Northern Island. However, Professor Alan Manning, Chair of the committee, said that while the MAC recommends keeping the option open for additional lists, most of the shortages identified appeared to be occurring across all nations of the UK.

A parting gift

On 23 July 2019, Home Secretary, Sajid Javid told the Houses of Common in a statement, “The MAC recommended a number of changes to the main UK-wide SOL, expanding the list to cover a range of high-skilled occupations, including a number of health and social care, engineering and digital technology occupations…The Government is happy to accept all of the MAC’s recommendations on the composition of the SOL and the necessary amendments will be made in the autumn immigration rules changes.”

What this means for employers

The expanded SOL list is good news for employers as it means that they will no longer need to carry out the Resident Labour Market Test (RLMT) advertisement process for Tier 2 applications for those job roles newly listed under the SOL. Furthermore, occupations on the SOL will attract lower visa and application fees. The move should also lead to reduced sponsorship timescales.

Although the SOL changes have not yet taken effect, it is likely only a matter of time before the new home secretary makes the necessary announcement of changes to Immigration Rules in this respect.

Wellers Lawyers’ Immigration Services

Wellers Law Group can help you ensure that you are fully compliant with all the immigration rules that affect your business and your ability to employ foreign workers. Please call Rosalind Nunoo on 020 8290 7982.

We provide an immigration service UK wide and our immigration solicitors in London offer pragmatic assistance with the Points Based System (PBS), Tier 1 visas, Tier 2 visas, the Resident Labour Market Test (RLMT) and more.

For more information, contact our immigration lawyer team today.

Why Legal Advice is Essential to a BOMAD Property Transaction

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Acting as the Bank of Mum and Dad (BoMaD) in order to help a son or daughter meet the cost of buying a property or undertaking any other significant capital expense may seem like the most natural thing in the world to do. However, unless the terms, detail and conditions of the parental monetary assistance are laid out to a professional standard, any vagueness or ambiguity risks placing the parties concerned at risk of acrimony and, potentially, financial insecurity.

This is why it makes sense to take legal advice when committing to any Bank of Mum and Dad transaction. In fact, it is precisely because the assistance is so deeply personal and familial that contractual terms should be laid out as they would in any other financial agreement; the potential for traumatic financial and relationship fallout is simply too high in the event that anything goes awry.

Perhaps the biggest question facing those engaged in a BOMAD transaction is whether the sum constitutes a gift or a loan. All too often, the parties involved neglect to clarify this simply because they do not want to have to negotiate the difficult details involved.

Sadly, an act of generosity in offering financial assistance to a loved one may, at the time, be carried out amidst tears of gratitude and vague promises of “I’ll pay you back as soon as I can”, but once the house is bought and the For Sale sign comes down, the legal position of the parties may not be clear.

How NOT to do it – a case study

In 2019 the UK courts heard the case of a woman, Mrs A, who sought to reclaim money from her deceased son’s £815,000 estate, claiming that she had loaned £130,000, her life savings, to help him purchase his home.

However, the court hearing the case accepted arguments presented by the deceased man’s widow that the money was a gift rather than a loan, holding that there is a presumption that payment from parent to child constitutes a gift unless otherwise stated; in common law this is known as the Presumption of Advancement.

Mrs A, informed the court she had possessed material proof that she had been providing a loan rather than a gift but that it had “now disappeared”. Had the mother been able to present such documentation to the court it is likely that the judge would have reached a different decision in the case; however, as it was incumbent upon her to prove the monies were a loan, her case failed.

The judge stated: “This is little more than a blatant attempt by [Mrs A] to reduce the residue of [her son’s] estate, which would otherwise go to [his] widow…which is something [Mrs A] clearly finds hard to cope with.”

Conclusions

In an era when BOMAD assistance is increasingly the only way for the children of baby boomers to get a foothold on the property ladder, legal advice from an experienced solicitor should be considered the only prudent course of action when undertaking such a transaction and, if the worst comes to the worst, when a BoMaD dispute ensues.

There is no substitute for having the terms and conditions of the financial transaction laid out in writing, usually in the form of a “Deed” signed by all the parties involved, so that proof is visible at a later date. This is likely to include details of the following:

  • The amount of the gift or loan
  • How much, if any, is to be repaid
  • How and when any money due will be repaid
  • Whether any interest will apply
  • What will happen in the event of the death of the child
  • If the sum is a gift whether it might become a loan in the event certain conditions are met

However, BoMaD lenders should know that many banks and building societies require the buyer of a property to provide written proof that a mortgage deposit sum is non-refundable and unconditional, so if you wish to help your child buy a home there may be alternative structures to consider, such as becoming a guarantor or making a joint purchase, although these have risks associated with them, and the latter option mayhave Stamp Duty Land Tax, and Capital Gains Tax implications. The impact on Inheritance Tax (IHT) also has to be considered, and parents, and children, should review their Will, for instance, if the child being assisted has siblings, who may need to be treated differently.

Wellers – BOMAD solicitors

Wellers is a multi-disciplined legal firm which brings together its expertise on property law, family law and private client services such as Wills and trusts so that you can have the level of confidence and clarity you need when proceeding with a BOMAD transaction.

Whatever your BOMAD issue, contact Wellers today for help.

CGT and Shares in Estates Valuation Trap

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In the UK, there are quite generous exemptions from Inheritance Tax (IHT) which apply to business assets. One problem with making use of such exemptions is the effect this may have on the subsequent value of the relevant assets for Capital Gains Tax (CGT) purposes. Under S274 of the Taxation of Chargeable Gains Act 1992, the ‘base cost’ value of such assets for future CGT purposes is the IHT value, provided that value has been ‘ascertained’.

This can be especially important when assets are aggregated for IHT purposes. For example, if a deceased person owned 15 per cent of an unquoted company’s shares in his own name and had an indirect interest (say through a trust in which he held a life interest) in another 40 per cent, the IHT valuation would be on the basis of having a controlling (greater than 50 per cent) interest. If the company is a trading company, Business Property Relief (BPR) would apply and in the case of a controlling interest, BPR is given at 100 per cent.

The Capital Taxes Office will not in such circumstances wish to enter into negotiations about the value of these shares and will simply regard the value transferred as nil. The value, therefore, will not have been ‘ascertained’, which may lead to a later dispute about the real value of the shares at the date of death, when the value may well be much harder to ascertain or at least agree.

One possible way around this dilemma is for the executors to submit a valuation of the shares, preferably with the benefit of a valuation by an appropriate professional. This is likely to be ignored by HM Revenue and Customs when dealing with the estate taxation, as 100 per cent BPR will apply. On a subsequent disposal of the shares, that valuation – probably unchallenged – can be used to help to justify the base cost in the CGT computation. […]

Divorce and Foreign Nationality

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Approximately one in six marriages in the European Union is between persons of different nationalities. Not surprisingly, approximately one in six divorces also involves spouses of different nationalities.

This can make for some complexity on divorce as to which country’s law should apply to the divorce proceedings. This is eased to some extent by the fact that some jurisdictions will apply the law of the nation of the person being divorced, rather than their own law, when appropriate. For divorce proceedings commencing in this country, UK law is applied no matter what the nationalities of the divorcing couple are.

The UK has opted out of an EU proposal that seeks to set a list of criteria for deciding which country’s law should apply on divorce, the main criterion being the country in which the couple had its last home. This will no doubt come as a relief to some, as the UK’s approach to financial settlements is among the most generous in the world. Also, prenuptial agreements are not binding in the UK, as they are in many European countries – most of which also exclude from the pool of assets to be divided on divorce any assets acquired through inheritance. However, following a decision of the Court of Appeal in 2009, ‘prenups’ now must be considered by the court where they have been entered into freely and without undue influence. Post-nuptial agreements are normally enforceable.

By and large, where there is doubt about which country’s law should apply, the divorce will be dealt with under the law of the country in which the divorce proceedings were first commenced. This explains why the UK is a favoured place to commence proceedings in ‘big money’ cases.

A 2011 case confirmed the principle that where the question of in which country the children of the marriage should be raised is concerned, the needs of each child must be considered separately: the children are not to be considered ‘as one unit’.
In recent years a number of cases have come before the courts involving foreign nationals or where there is a foreign residence element to the divorce. The British courts have been robust in their defence of their right to have jurisdiction in such cases. In 2012 the UK improved the ability of parents to enforce residence orders if their children have been taken to a foreign country, when the provisions of the 1996 Hague Convention came into effect.
A 2013 case confirmed that where a foreign court has no outstanding matters before it with regard to the residence of a child, the UK court does not need the foreign court to formally renounce jurisdiction if the child concerned has become habitually resident in the UK.
More recent cases have confirmed the UK as a jurisdiction in which a fair hearing and robust enforcement of court rulings apply: in a 2015 case, a husband who refused entirely to compy with court orders concening his worldwide assets was ordered to be imprisoned for contempt of court.
If you are facing a relationship break-up with a foreign element, contact us for advice, inlcuding revising your will to reflect your new circumstances. […]

Tax Issues for Owners of Two Homes

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Ownership of two homes in the UK is becoming more commonplace as couples who both own houses marry, houses are inherited, parents buy houses for their children to live in, or people just buy a place in the country, either to let or to escape to at weekends.

Owning two houses does have significant Capital Gains Tax (CGT) implications. When house prices are rising fast, many owners face CGT liabilities. CGT on property is very complex. Here are some of the main planning points, but this is just an outline guide. Always take professional advice before going ahead with any significant transaction.

Once you have two houses, you have two years to make an election regarding which is to be your ‘principal private residence’ (PPR). This is important since PPRs are exempt from CGT. In general, it is sensible to elect for the property that is expected to rise most in value to be the PPR. A married couple can have only one PPR.

If a house is sold which has been the PPR and was actually lived in at any time, the last three years of ownership are treated as private residence (this period is being reduced to 18 months for sales after April 2015), so if a house has been owned for ten years, lived in for six years and then rented out for four years, only one tenth of the gain will be chargeable. There are a number of other exemptions which apply for periods of non-residence for various reasons.

If your residence has extensive grounds (over 0.5 hectares), a chargeable gain may arise on the land. There is an exemption, where the grounds are ‘required for the reasonable enjoyment of the property’. Where a large landholding is being divided into lots and sold for development, beware of selling the house first and retaining the land, since CGT may then arise when the land is sold.

If you rent out part of your private residence, or use it for commercial purposes, it will normally become chargeable, although (at least) the first £40,000 of the gain will be exempt if the letting was for residential purposes.

Since transfers between spouses are exempt from CGT, where a chargeable gain is expected it can, in some circumstances, make sense to transfer an interest to your spouse before sale. This will make use of both CGT exemptions.

HMRC are likely to challenge a ‘principal private residence’ election for a second property where it is sold reasonably soon after acquisition and there is a gain chargeable to CGT. In such cases, a demonstration of actual residence will be critical for a claim to succeed.

One common circumstance in which this occurs is when a home is inherited and subsequently sold.

In the 2015 Budget, measures were introduced which will adversely affect the owners of homes in the UK and abroad who are resident outside the UK and who sell their UK home at a profit.

From 2017, the allowable interest on mortgages on ‘buy to let’ properties is to be restricted to the basic rate of tax.

In addition, higher rates of Stamp Duty Land Tax (SDLT) are charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes. The additional rate is be 3 per cent more than the ‘basic’ SDLT rate.

The Government has published guidance on tax on selling property. Such decisions should always be undertaken with the benefit of professional advice.



Source: Private Client Library – Articles

Alcoholism and Mental Capacity

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In order to make a valid will, you need to know your own mind – and it helps to have a solicitor on hand to advise you. That was certainly so in a case in which a businessman left the lion’s share of his £1 million fortune to a friend and colleague a few weeks before he died from alcoholism.

Against medical advice, the man had discharged himself from hospital ten days before he signed his last will. He left his shareholding in his company – by far his largest asset – to a friend who had worked with him for over 20 years. The friend was also bequeathed 75 per cent of the residue of his estate.

The man’s widow and three sons, who received 25 per cent of the residue, challenged the validity of the will on the basis that the friend had brought undue influence to bear upon him at a time when he was extremely sick and vulnerable.

The High Court acknowledged that the friend, who had made all the arrangements for execution of the will, was in a position to exert influence. In upholding the will, however, it found that he had not overstepped the mark. The man had wished the company that bore his name to carry on after his death and had viewed his friend as presenting the best prospect of achieving that objective.

The friend may have encouraged or even persuaded him to sign the will, but the Court was satisfied that he had done so of his own volition and had not been overpowered. The evidence of the solicitor who had drafted the will – who was convinced that the businessman was of sound mind, although obviously unwell – was also a crucial factor in the case.