LEGAL CORNER
Just sign here please! By Owen Hill, Consultant Solicitor Part of the fun for a solicitor in
a town like this is you never know who is about to present themselves next and for what purpose. The new Wollen Michelmore shop
front is designed to invite you to walk in and see if your needs can be met without having to wait for appointments. It is quite common to be called down to the front of house to have a quick look at some papers to see if we can help out. Sometimes it is official business certifying documents and stamping duplicates but there are occasions when the papers presented require a solicitor to sign a Certificate to a Bank or financial institution to verify that the person that has been asked to sign actually understands what is involved. This sort of thing cannot always be done on the hoof because the professional rules of conduct require a solicitor to write to a client to confirm the advice was actually given before they sign the papers. On occasion, we will ask the visitor to come upstairs where we can pen a quick email to them and then request them to sign before inviting
the client to cross our palm with silver. I met someone last week who brought in a Loan
Agreement from a high street bank and was obviously troubled by the requirement of the bank that the signatures would have to be witnessed by a solicitor. It was perceived by the client as an unnecessary inconvenience involving additional expense and it was quite clear that they just wanted to be shown where to sign so that I could then witness and stamp the signature. So I asked them to tell me what the deal was with the bank while I skimmed the papers to see what was involved. The client described the arrangement as a business loan for £100K over 20 years with a 1% penalty for early repayment. Pause . . . The small print actually said that the price for early
repayment was 1% of the amount outstanding for every whole year remaining in the 20 year term of the loan, so the cost of a change of plan and repayment in the first year would be a whopping 19% and would still be 9% of the balance after 10 years. His jaw dropped. When he recovered his composure, he shook my hand warmly and placed the top back on his pen.
Why a Second Home Needs a Second Will
By Marinella Hollies, Associate Solicitor With the glorious weather
we’ve been enjoying, thoughts of owning a property abroad may not be high on the agenda. But there is more to owning a
second home abroad than just the weather, and more and more people are taking the plunge and fulfilling a dream.
Owning a property abroad can also be a great asset, generating rental income when you’re not using it and something that can be enjoyed by generations of your family. If your dream does comes true it is important that you take expert legal advice to avoid potential problems that could arise on your death which could create a nightmare for your family. As a starting point you should take legal advice and
make a valid Will in the country in which you buy your second home. Inheritance Tax laws vary widely from country to country; some have abolished Inheritance Tax completely, but as a UK resident all your assets worldwide may be subject to UK Inheritance Tax at 40% ( current rate). You may have a clear idea of who will inherit your second home when you die but in some countries the law has other ideas. Countries such as France still have forced heirship rules as laid down under the old Napoleonic Code, although the French Inheritance
Act of 2006 has brought some freedom. These rules dictate who will inherit your property. The majority of countries in Europe are governed
by a Civil Code which contains, to a greater or lesser degree, some form of forced heirship. Countries such as Holland and South Africa have community property rights while in the United States the individual state laws operate with the Federal law which can make things complicated. Making a Will in the country where you own your
property is just the start. You should also make a Will in the UK to deal with your UK assets. It’s essential that neither Will revokes the other so careful drafting is need. It would be advisable to take advice on the impact of Inheritance Tax. The UK has reciprocal tax arrangements with most countries in the world to avoid being taxed twice on the same asset, but these provisions are not the easiest to navigate. It isn’t safe to assume that because you are leaving
your property abroad to your spouse you avoid all inheritance tax. If you are classed as a non-resident then your spouse exemption may be capped at a particular amount and not be unlimited as in the UK. The prospect of owning a home abroad should be exciting and rewarding, but to ensure that is the case a small investment in taking expert legal advice at the start can avoid disappointment and expense in the future.
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