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Trusts and Estates Law and Tax Journal: May 2011

Geoffrey Shindler explores our conflicting attitudes towards privacy

Privacy. What do we have to do with any laws relating to privacy? Dear Reader, all will be revealed, as my Victorian predecessors might have written.

Forsters LLP

Zahra Kanani charts recent developments in tax policy

The purpose of this article is to provide an update to some of the key points raised in Smith and Williamson’s Tax Update dated 16 February 2009, to see how these have been addressed by early 2011. In particular, this article concentrates on the new system of tax tribunals introduced in 2009, the extension of agricultural property relief to the European Economic Area (the EEA) and the recent amendments to the excepted estate regulations.

Brabners LLP

Duncan Bailey reviews how jointly owned property is valued for IHT purposes in light of recent case law

According to s160 of the Inheritance Tax Act 1984 (IHTA), the basic valuation principle is that assets in an estate are valued for IHT purposes at ‘the price which the property might reasonably be expected to fetch if sold in the open market’ immediately before death. That is to say, the price that would be obtained for the asset in a sale, at arm’s length, to a stranger between a willing seller and a willing buyer.

Identifying the correct tax treatment for a trust now requires a detailed knowledge of its history, as Ruth Moore reports

CGT has undergone major changes with the 2010 revision to the way that it is calculated. CGT is no longer top sliced as income, but is taxed at a fixed rate regardless of income, subject to some specific exemptions. The different rules for trust taxation depend on whether they are set up in lifetime or on death, which has added further complexity to calculating tax.

Marilyn McKeever looks at the implications for trustees and their advisers in the pivotal case Futter v Futter

In Futter & anor v Futter & ors [2011], Lord Justice Longmore declared that ‘these appeals provide examples of that competitively rare instance of the law taking a seriously wrong turn, of that wrong turn being not infrequently acted on over a twenty year period but this court being able to reverse that error and put the law back on the right course’.

John Darnton discusses Robson, which has lessons for the management of family trusts

In October 2010 the Court of Appeal handed down its judgment in Robson v Robson [2010], the lead judgment being given by Ward LJ. Much of the subsequent press commentary has focused on the relevance in this case of ‘inherited wealth’ and the extent, if any, to which the Court of Appeal judgment has added to the discussion on the treatment of such wealth on divorce. While this article touches on that subject it also seeks to examine the manner in which matrimonial proceedings can throw a harsh, and not always flattering, light on arrangements commonly put in place by land-owning families and the conflicts that these can throw up in times of strife.

Peter Nellist explains the true cost of investment funds

There are several reasons why lawyers and trustees need to have an overall understanding of investment costs; not least is the duty in s5 of the Trustee Act 2000 ‘to obtain and consider proper investment advice’ when considering investment of a trust’s assets. Apart from timing, there are two decisions that determine investment returns: asset allocation and the costs paid to implement that allocation. Most investors chase asset (often just fund) selection, but, even if they get that decision right, ongoing costs can still decimate anticipated profitable returns. This article looks at the costs of open-ended funds and not the costs of holding individual company and investment trust shares.

Jenny Arnold examines a case that clarifies the position on the appointment of deputies dealing with incapacitated adults

The Court of Protection has confirmed the position in relation to decision-making and the appointment of health and welfare deputies in connection with incapacitated adults. The Mental Capacity Act 2005 provides a statutory mechanism for decisions to be made on behalf of individuals who lack the capacity to make decisions. The case of G v E [2010] clarified the practice of the decision-making principles underpinning the Mental Capacity Act 2005 (MCA 2005) and provided a comprehensive analysis of the appointment of health and welfare deputies under the Act. The court laid down guidelines as to whether it would be appropriate for an individual to be given the authority to make health and welfare decisions and in what circumstances the views of the court and those caring for the individual should be taken.