News Archive for August, 2016

High Court Aids Widow by Correcting Obvious Error in Will

Wills are written in a style which many would describe as 'legalese' but, as any lawyer will tell you, absolute precision is the objective. In one case which illustrates the point, a clerical error which resulted in three crucial words being omitted from a man's will required a High Court hearing to remedy.

The missing words were 'to my wife'. The omission meant that the relevant part of the will did not identify a beneficiary and the man's widow was left at risk of losing her home. Had the Court not intervened, the error would have meant that the man died partially intestate, with part of his estate passing to his next of kin, including his son by an earlier marriage and his grandchildren.

The Court found that the error had probably come about because a typist, who had prepared the will on the direction  of the draftsperson, had misheard what had been dictated to her. The firm accepted that a mistake had been made and that the will should have been checked more thoroughly before it was executed. Coming to the widow's aid, the Court found that it was obvious from the context in which the will was made that the man had intended to leave his share of his home to his wife of almost 40 years. There was an attendance note to that effect in the man's file at the firm which drafted the will.

The will made no logical sense without the missing words and the Court effectively rewrote the document so as to
incorporate them. The firm for which the solicitor who drafted the will worked had accepted responsibility for the error and had agreed to pay the widow's legal costs.

Mistakes in drafting wills are very uncommon, but using a solicitor ensures that if a mistake has occurred, the evidence
to correct it is available. Furthermore, solicitors are required to carry indemnity insurance to compensate their clients if a loss occurs as a result of such errors.

For advice on all aspects of wills and family estate protection, contact Sarah Matthews on 01554 749144

Posted by Peter Nicholas on Wednesday, August 17, 2016 at 11:01 AM

Bank of Mum and Dad Lending Issues

A recent report that the 'bank of Mum and Dad' is one of the leading sources of finance for house purchases will come as no surprise to many – it is expected that 300,000 mortgage deposits will be provided by parents of property purchasers in 2016.

The survey, sponsored by the Centre for Economics and Business Research and Legal & General, revealed that parents now provide finance for a quarter of UK property purchases.

Assisting children to get a foot on the property ladder can have a number of consequences, both in legal and tax terms, depending on how the finance is provided.

Here are just a few of the potential issues.

Tax Issues

If finance is provided by way of a loan and interest is charged, that is potentially taxable to Income Tax. If the loan is made on the basis of 'taking a share' in the property and it is then sold at a profit, Capital Gains Tax may be payable.

Where a loan is made and not repaid, it will remain in the lender's estate for Inheritance Tax purposes.

Other Issues

If the property is being bought with the aid of mortgage finance, it is normal for any private loan to rank behind the commercial lender in terms of repayment, so if the property were sold for less than the outstanding mortgage, the parental loan would not be able to be repaid from the sale proceeds.

Where the loan is made to a couple, there is the chance that, if the relationship breaks up, repayment may be in jeopardy.  Where there is no formal documentation (or inadequate documentation) of the nature and terms of the advance, there are also risks that a dispute may arise over the precise details of the agreement.

Helping a family member to get on the property ladder can involve a number of other legal issues as well and such decisions should always be made with the benefit of professional legal advice.

If you are considering helping a family member buy a property by advancing funds or acting as guarantor for a loan, contact us for advice on the best way of doing it: planning makes perfect in these situations.

Posted by Peter Nicholas on Wednesday, August 17, 2016 at 10:55 AM

Help to Buy Aids 150,000

The Government has released statistics which show that more than 150,000 properties have been sold to
buyers who have made use of the 'Help to Buy' mortgage guarantee and equity loan schemes.

Nearly 80 per cent of those sales were to first-time buyers and the average price of houses bought by them was significantly below the national average.  The 'Help to Buy ISA', launched in December 2015, hasalso already attracted more than 250,000 subscribers.

Using the ISA enables first-time buyers to obtain up to £3,000 from the Government by way of a bonus when they use savings to purchase a property.

Posted by Peter Nicholas on Wednesday, August 17, 2016 at 10:54 AM