UK: Estate Planning Update - Latest Developments In Wills And Succession Planning

Last Updated: 29 July 2014
Article by Fay Copeland and Caroline Cook

Fay Copeland and Caroline Cook round up the latest developments in will writing, same-sex marriage and succession rights.

Material possessions such as jewellery, cars and houses are usually at the forefront of people's minds when drafting a will, but what about the less-tangible assets? As more and more people have online bank accounts, store their music, films and books online, and operate Twitter and Facebook accounts, the question of how these so-called assets should be dealt with on death should not be overlooked.

In April, the Law Society published a press release encouraging people to leave clear instructions about what should happen to their digital assets on death. The implication is that not enough people are remembering to include these types of assets in their wills, or they assume that they will pass automatically to their residuary beneficiaries, when this may not be the case.

The law on succession to digital assets is far from clear. Digital assets are not tangible property and so cannot be bequeathed to a beneficiary under a will in the same way as, say, the furniture in your home. In addition, gaining access to someone's online account brings into question issues of confidentiality and privacy.

In the UK, there is no specific case law about the release of personal data to executors or personal representatives. Whether access to online accounts will be granted to a third party usually depends on the service provider and, at present, there is no universal approach. A recent case in the US (concerning Benjamin Stassen, deceased) has illustrated the difficulties that may be encountered with Facebook accounts in particular.

The Law Society guidance states that people should keep an up-to-date list of all their online accounts. This list should stop short of recording passwords and PINs, though, as an executor accessing the deceased's account with these details could end up committing a criminal offence under the Computer Misuse Act 1990. As a will becomes a public document once a grant of probate has been issued, it is unwise to include information about online accounts.

However, a letter of wishes, a private document addressed to executors, could record the various online accounts held and the testator's wishes in respect of each, and is probably the most reliable way of ensuring access after death to what might be valuable assets.

Same-sex marriage

Another important development was the Marriage (Same Sex Couples) Act 2013 coming into force, on 13 March 2014. Under the Act, the first same-sex marriages became legal from 29 March 2014, leading private client practitioners to consider the consequences and make any necessary adjustments to practices and documents.

In the context of wills and trusts, we may now meet clients who are married to a same-sex spouse, or are set to marry in the near future, and their wills and trusts need to accommodate this.

For instance, the definition of 'spouse' in such documents may need to be changed, to ensure the same-sex spouse is able to benefit in the same way as an opposite-sex spouse or civil partner. When advising on tax planning, we can now advise that same-sex married couples can benefit from the same tax exemptions and reliefs as other married couples and civil partners.

Where the same-sex couple has foreign assets, they should also be entitled to equivalent tax exemptions and reliefs in the foreign jurisdiction concerned (although local advice should always be sought).

Sadly, it is not necessarily the case with civil partners owning foreign assets and the whole status of civil partnership has been brought into question as a result of the Act coming into force: are civil partnerships still needed? This was one of the questions posed by the Civil Partnership Review, a consultation launched by the government in January 2014. We may well see changes in this area in the near future.

Succession rights

The issue of rights for cohabiting (but unmarried) couples has been a topic of debate for some time. In December 2011, the Law Commission proposed new rights for cohabitants under the intestacy rules and extended rights under the Inheritance (Provision for Family and Dependants) Act 1975, though the government has confirmed it will not take these forward in this parliament.

However, in April, Sir James Munby, president of the Family Division, reignited the issue with a speech to his fellow judges in the Family Division saying that cohabitation reform was "desperately needed". He focused on the courts' lack of power to redistribute assets of a cohabiting couple on separation, but the issue is equally important when advising clients on wills and succession planning.

Where someone dies without a will, the intestacy rules apply, but unless a cohabitant is a spouse or civil partner of the deceased, they will receive no part of the estate. This is so, regardless of relationship length, or even where the couple have children, and can have devastating consequences.

Take the example of an unmarried couple living together in a property, jointly owned. In buying the property, they are tenants in common, thus each owning a distinct share that will pass under their will.

However, if one of the couple dies without a will (and without children), their assets would pass to their family (parents, siblings or more distant relatives, depending on the circumstances) under the intestacy rules, not the cohabiting partner.

The only option for the cohabitant is to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975, which is a costly procedure. It also risks creating a schism between the deceased's family and the cohabitant as they try to reach an agreement.

While the intestacy rules may be considered outdated and unfair, they are a sharp reminder that a will is essential in these situations.

Will writing

The regulation (or not) of will writing has been a topic of debate among private client practitioners for some time.

In May 2013, the lord chancellor announced that will writing would not become a reserved legal activity under the Legal Services Act 2007, meaning that will writers remain without any specific regulation.

In reaction to this and to assist will writers subject to professional regulation with differentiating themselves from unregulated providers, the Law Society launched its Wills and Inheritance Quality Scheme in July 2013 and, in January, the Society of Trust and Estate Practitioners introduced its Code for Will Preparation, which came into force from 1 April has been a particularly important development for private client practitioners.

The STEP code sets out the quality standards that members must adhere to in will writing, many of which echo the related requirements of the SRA code of conduct 2011 and the relevant law. Nevertheless, it will cause practitioners to review their practices and documentation, such as engagement letters and will questionnaires, to ensure that these actively demonstrate their compliance with the code.

For this reason, and because the necessity of certain requirements was queried and/or considered impractical to demonstrate, feedback on the STEP code has not been wholly positive. The requirements in particular to disclose the exact level of a firm's indemnity insurance and to make clients aware of it were unpopular – don't clients receive enough terms and conditions from their solicitors?

In March, STEP made some amendments to address members' concerns (the two above included) and the revised code is now more flexible and generally less burdensome and impractical. A 'transitional period' of six months has also been introduced to provide some flexibility in making any necessary procedural changes.

More recently, the SRA launched its own guidance on will writing, reminding practitioners of their professional duties and the relevant outcomes to be achieved under the SRA code of conduct in this area.

Will writing may not be a reserved activity, but the quality of will writing is very much under the spotlight, and there are now several means by which professionally regulated will writers can set themselves apart from their unregulated counterparts, hopefully to the ultimate benefit of consumers.

Originally published by Solicitor's Journal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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