Optimise Accountants -

Who Manages Your Estate? Who Controls Your Assets?

February 11, 2017

advice on estate management and asset planning from Optimise Accountants

By Louise Misiewicz

Who works on your behalf to control your assets and manage your financial affairs?

Who will manage your property / investment estate when you die?

As a property investor, you may be creating a lot of wealth. If there has been significant capital growth, it is likely that you have amassed a lot of net worth assets.

As such you may have caused a number of issues for the people that you leave behind when you die or if you become incapacitated. Our property tax experts assist with property asset management issues.

You would have built up a property portfolio, each asset with their own insurance, mortgages/loan accounts, and utility providers. You may also have Joint Ventures or loan agreements with other people with various legal contracts in place to consider. My team of tax accountants can discuss asset planning with you.

We suggest that you build a power team to support you in the event of incapacitation or death.

Powers of Attorney

Under the Powers of Attorney Act 1971, a person can empower to another individual to act on their behalf. For example, with the operating and management of bank accounts, utilities and related matters.

For example, the operating and management of bank accounts, utilities and other related matters. You can work with your solicitor to draw up a document that specifies who the person is to become your Power of Attorney, the duration of their powers, and the specifics of their role.

The Enduring Powers of Attorney Act 1985 was introduced to enable a person to hold Power of Attorney which would continue to be in effect in the event of mental incapacity.

The Mental Capacity Act 2005 introduced Lasting Power of Attorney (LPA), which allows a person to make decisions whilst they are alive about their personal health and welfare (such as long-term care planning) and property/financial affairs.

If a person is to be given control over both matters then two separate documents are required, including Health & Welfare LPA and Property & Financial affairs LPA. Don’t worry that the person in possession of the LPA can make significant gifts to erode your valuable assets – we can advise you further on this.

Wills & executors /administration of your estate 

Typically the next of kin will act as the administrator of the Will, to ensure that your wishes are carried out correctly. They are known as the executors.

Collectively, executors and administrators of a Will are called personal representatives. They will be responsible to:

  • Administer the estate
  • Collect unpaid debts
  • Pay any tax due

Before you jump to someone’s aid as a personal representative, you need to be aware that you would be liable for any unpaid debts and tax due. Personal representatives will need to ensure that these are paid before any distributions are made in accordance

Personal representatives will need to ensure that these are paid before any distributions are made in accordance with the Will.

Grant of representation

A grant of representation needs to be obtained by the executors of the Will, which will then allow them to administer the Will if the assets left are worth more than £5,000.

This will be done after they have completed an HMRC form to show the assets and liabilities of the deceased.

Grant of letters of administration

A form needs to be obtained called ‘Grant of letters of administration’ if the deceased did not leave a Will (known as intestate). They will still need to ensure that tax and debts are paid but the remaining assets will need to be distributed.

They will still need to ensure that tax and debts are paid but the remaining assets will need to be distributed as per the laws of intestate.

Trustees

You may have had tax planning support and decided to transfer assets into a Trust. We have written about Trusts in a previous article so I shall not go into detail here. A trustee also manages the Trust in regards to its financial affairs, debts and tax liabilities.

As a rule of thumb, in order for a Trust to be in place, three components must be in existence:

  1. The words: to show how the Trust is intended
  2. The subject matter: The property/asset that is being discussed in the Trust
  3. The objects: the beneficiaries of the Trust and how the trust will transfer both income and capital to them in a specific time period

The trustees will become legal owners of the property and will, therefore, need to take possession of the legal artifacts such as a Deed of Trust, conveyance documentation, and share certificates.

They will also need to ensure that their names appear as the legal ownership at Companies House and Land Registry.

The trustee will become legally responsible for the assets in possession and may make financial decisions to buy/sell shares, properties for the benefit of the Trust.

Interestingly, Section 31 of the Trustee Act 1925 provides the trustee with powers to apply trust income to any infant beneficiary in order to provide for their maintenance/education. More on this in a later article.

The trustees will also be responsible for ensuring that the Trust submits its tax return each year.

The types of person to have in your power team

It is tempting to have family members hold the above roles in your life. I would advise against it for a number of reasons, namely:

  • Family members fall out and this can cause issues when dealing with your affairs
  • At the points of incapacity or death, emotions ride high and that person holding any position may not be thinking clearly when making difficult decisions or unwilling to make difficult decision
  • Albeit you love them, they may not have the aptitude in dealing with such important matters

This is why I suggest that you use solicitors, lawyers and/or accountants to ensure that your assets and financial affairs may be dealt with in a professional manner. You should also be in the knowledge that they will act in your best interest.

Our team of property tax experts are on hand to best advise clients on how to minimise their IHT liability.

How to engage with us

If you want to understand how to implement this strategy or to discuss other finance/tax questions then please book some time with us using the below calendar.

Please use the redeem code “Article 33” to get 33% off your next consultation call.

If you are looking for a new accountant, then please book some time with us using the below calendar. Please note that this booking is to describe our services and will not be used to discuss your personal tax affairs.



Get your FREE ebook "Property Investors Guide"
Enter your information to recieve the eBook

First Name:*
Last Name:*
Lead Source:*
Email:*
Phone:*

Telephone: 0115 939 4606
Email: simon@optimiseaccountants.co.uk