News Archive for May, 2016

Ignoring Legal Advice Proves Costly

When a woman ignored legal advice and lent more than £600,000 to her uncle without taking proper steps to protect herself, the outcome was always likely to be regrettable.  While the transaction seemed straightforward – the advancing of a mortgage on his property through a company she had set up, to replace his existing mortgage – the outcome was not as predicted. The reason for that was that the property was subject to a Crown Court restraint order, issued under the Proceeds of Crime Act 2002.

The order prevented the registration of the charge without the consent of the Director of the Serious Fraud Office or a further court order.

The mortgage could not therefore be registered, with the result that the company's loan was unsecured.  The company accused the solicitor involved of negligence, but there was copious evidence that the woman had ignored specific advice not to go ahead with the transaction.  Incredibly, she had also failed to have a valuation done on the property against which the loan was made.

Blood may be thicker than water, but failing to take basic precautions that would minimise risk is never sensible. It can often be difficult for family members to resist persuasion in circumstances like these.

We can help you ensure that where pressure is being put on you to advance loans to family or friends, your interests are properly protected.

Posted by Peter Nicholas on Friday, May 06, 2016 at 10:34 AM

Trusts and the Tax Man 10 Years On

Since 22 March 2006, most transfers into trust constitute 'transfers of relevant property' for Inheritance Tax (IHT) purposes.  Such a transfer incurs an immediate charge to IHT if the value of the assets transferred into trust exceeds the IHT nil-rate band, which is currently £325,000.

However, such trusts also incur a '10-year' charge in most cases if the value of assets remaining in the trust exceeds the nil-rate band.  Trustees are required to submit a tax return to HM Revenue and Customs (HMRC), even if there is no IHT liability, if the value of assets in the trust is 80 per cent or more of the IHT nil-rate band threshold. The return must be filed within six months of the tenth anniversary of the trust creation.

The taxation of trusts can be complex. If you have a family or other trust and are concerned about the potential

Posted by Peter Nicholas on Friday, May 06, 2016 at 10:13 AM

Businessman Fails to Regain House From Ex-Girlfriend

Cohabitation without a living together or cohabitation agreement is a common source of legal dispute when a relationship breaks up, as a recent case involving a very wealthy businessman and his ex-girlfriend shows.

When the couple split up, the businessman claimed that the house in which his ex-girlfriend lived was held on trust for him, despite the fact that his name was not on the deeds.  He had paid the £100,000 deposit on the £650,000 house, the costs of its purchase and all the instalments on the mortgage.

However, the property was in his ex-girlfriend's sole name and the First-tier Tribunal (FTT) found that he had given it to her lock, stock and barrel. She was both the legal and beneficial owner of the property and he had no interest in it.

The FTT noted that its finding was consistent with his remarkable generosity towards her during their relationship. Amongst other things, he had bought her a £160,000 Bentley, bankrolled her in a £100,000 fashion and jewellery shopping spree and paid for £8,000 worth of monogrammed sheets and towels. The FTT found that he
had assured her that, whatever happened, the property would be hers.  It accordingly rejected his claim.

The person whose name appears on the title deeds of a property is presumed to be its rightful owner in the absence of convincing evidence to the contrary.

For advice on living together agreements or pre- or post-nuptial agreements, contact us.

Posted by Peter Nicholas on Friday, May 06, 2016 at 10:09 AM

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