Statutory wills, gifts & legacies

Obtain a comprehensive medical report confirming the individual’s lack of capacity to create or update a will. Consult with legal professionals to draft a proposed will that aligns with the individual’s best interests and any previously expressed wishes.

Compile supporting documentation, including details of the person’s estate, their known relationships, and any prior wills or estate plans. Identify all relevant parties (e.g., potential beneficiaries under intestacy or existing wills).

Submit the application to the Court of Protection, including the proposed will, medical evidence, and a detailed explanation of why the statutory will is necessary.

The court requires notification of all individuals who may have an interest in the estate, such as potential beneficiaries. Interested parties have the opportunity to raise objections or provide input on the proposed arrangements.

The Court of Protection evaluates the application, considering the individual’s best interests and the fairness of the proposed distribution. In straightforward cases, where all parties agree, the court may issue a decision quickly. In disputed cases, further evidence or hearings may be required.

Once approved, the statutory will is formalised and becomes legally binding.

Making gifts on behalf of someone who lacks mental capacity can be a thoughtful way to support loved ones or manage inheritance tax, but it must be done carefully within the legal framework.

The law protects vulnerable individuals by strictly regulating gifts made on their behalf. At Anthony Gold Solicitors, we ensure that any gifts comply with the law, are in the person’s best interests, and avoid unintended financial or legal consequences.

Under the Mental Capacity Act 2005, attorneys and deputies are limited in the types of gifts they can make without court approval. This includes:

• Customary Gifts: Gifts made on special occasions such as birthdays, weddings, or anniversaries, provided they are modest and in line with the person’s previous gifting habits.
• Charitable Donations: Reasonable donations to charities that the person supported in the past.

Anything beyond these modest, routine gifts requires authorisation from the Court of Protection.

If an attorney or deputy wishes to make a substantial gift, they must apply to the Court of Protection. This ensures that:

• The gift is affordable and does not jeopardise the individual’s financial security.
• It is in the best interests of the person lacking capacity.
• It complies with tax laws and avoids creating issues with inheritance tax or care funding assessments.

• Inheritance Tax Planning: Making lifetime gifts to reduce the value of an estate for inheritance tax purposes.
• Supporting Family Members: Helping family members with financial needs, such as educational expenses or purchasing a home.
• Charitable Donations: Continuing the person’s philanthropic legacy by supporting causes they valued.

Gifts can have implications for social care funding. The Care Act 2014 and associated regulations address deprivation of assets, where gifting money or property may be deemed an attempt to reduce financial contributions toward care. Local authorities can challenge such gifts and treat the value as still belonging to the individual, potentially leading to financial penalties.

Gifts may have tax consequences, including:

• Inheritance Tax (IHT): Gifts above the annual allowance (£3,000 per tax year) could be subject to IHT if the individual passes away within seven years of making the gift.
• Capital Gains Tax (CGT): Gifts of certain assets, such as property or shares, may trigger a CGT liability.

It is vital to seek professional advice to minimise tax liabilities and ensure compliance with relevant laws.

A trust can provide financial support while safeguarding access to benefits and care services. The most commonly used trusts for these purposes include:

• Discretionary trusts: These give trustees the flexibility to manage and distribute funds based on the individual’s needs, without the funds being treated as part of their personal assets for benefits or care calculations.
• Vulnerable person trusts: Specifically designed for disabled beneficiaries, these trusts offer tax advantages while ensuring funds are managed responsibly.

By placing an inheritance into a trust, you can avoid the risk of disqualification from support while ensuring the money is used effectively.

If a will does not make reasonable financial provision for a dependent family member, an application can be made under the Inheritance (Provision for Family and Dependants) Act 1975 to rectify the situation.

While many solicitors offer no-win-no-fee options for such claims, the real value lies in ensuring the corrected will or settlement includes the right structures, such as trusts, to maximise the legacy’s impact.

Trusts also offer significant advantages in terms of inheritance tax (IHT) planning:

• Assets held in a qualifying trust may not be included in the individual’s estate for IHT purposes.
• Distributions can be managed to minimise overall tax liability for the beneficiaries.

Our team has deep expertise in managing legacies and creating bespoke trusts tailored to the unique needs of vulnerable individuals and their families. We provide:

• Guidance on selecting the right type of trust.
• Drafting and implementing trusts that meet legal requirements and optimise tax benefits.
• Support in resolving disputes over wills or legacies.
• Assistance with applications to correct or update wills under court supervision.