Life Focus - February 2014

Published byIan Macdonald

1st February 2014

• Meet the team: Our Private Client team warmly welcomes three new members: Annie, Dara & Neil
• Legal expenses insurance can work for you by choosing WJM
• Applying for Financial Guardianship
• Owning your own business and Wealth Planning
• How will this year’s referendum on Scottish independence affect your will?

A new year can bring new concerns. This edition of Life Focus guides you through some issues that might be playing on your mind. We also take this opportunity to introduce three new members of our Private Client team to you. As always, we hope you enjoy it and find it useful. We look forward to your feedback.

Meet the team: Our Private Client team warmly welcomes three new members: Annie, Dara & Neil

Annie Pearson

Annie graduated from the University of Strathclyde in 2004 and completed the diploma in legal practice at GGSL in 2005 qualifying in 2007. Annie specialises in estate planning, the preparation of wills and powers of attorney, the creation and administration of trusts and administration of estates after death. 

Dara Richards

Our newest recruit is Dara Richards who joins us having studied her LLB at the University of Glasgow. During her time at university, Dara took part in the ERASMUS programme and spent a year in The Netherlands studying human rights and international law. Dara later completed her traineeship with Ledingham Chalmers in Aberdeen. She has now been qualified for 3 years and specialises in succession, estate administration, wills (including those with complex trust provisions), living wills and powers of attorney. She also assists with trust management and inheritance tax issues. Dara is currently a student member of the Society of Trusts and Estate Practitioners (STEP).

Neil Burms

As well as Annie and Dara, Neil Burns has joined the Wealth Planning Team. An experienced Paraplanner, Neil will work with the Wealth Management team to help clients make informed choices in a challenging marketplace.

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Legal expenses insurance can work for you by choosing WJM

Policyholders have a legal right to a free choice of representative in legal proceedings. However, in reality, insurers will often insist that you use a panel solicitor chosen by them or use their own in house representative - in an effort to keep their costs down and often at the expense of the service you receive.

However, a recent decision in the Court of Justice of the European Union (CJEU) has strengthened the position of legal expenses policyholders in dealing with insurers. The court held that an insurer cannot insist that you use its panel solicitors or in-house team.

The case involved Mr Sneller, from the Netherlands, who held a legal expenses policy, under which DAS was the provider of legal assistance. The insurance contract stated that Mr Sneller had the freedom to choose his own lawyer if DAS decided that the case should be dealt with by external lawyers (rather than its own staff).

Mr Sneller wished to bring a claim of unfair dismissal against his former employer by instructing his own solicitor. However, DAS’ preference was for the matter to be dealt with using their own staff, who were not legally qualified. DAS highlighted that legal representation was not compulsory for bring an unfair dismissal claim.

The dispute between the insured and the insurer progressed through the domestic courts before it was referred to the CJEU for a preliminary ruling. Ultimately, the CJEU held that the right to choose your own lawyer cannot be restricted to situations in which the insurer decides that recourse should be to an external lawyer.  Furthermore, the right to choose a representative is of general application and not affected by whether legal representation is compulsory (i.e. in employment law). The decision does suggest that an insurance company could potentially limit its exposure to the full costs of your claim - providing those limits are not so restrictive that they render the freedom to choose effectively meaningless.

This case is an important reminder that if you hold legal expenses insurance, then your claim is still in your own hands. It is perfectly competent for you to instruct your own lawyer, even if your insurance company decides that the matter should be dealt with by their own staff. If you are involved in any conflict in which you hold legal expenses insurance, but you would like to speak to a member of the WJM team to resolve the matter, then please do not hesitate to contact us.

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Applying for Financial Guardianship

A Guardianship Order is a court appointment which authorises a person to take action or make decisions on behalf of an Adult with incapacity. A Guardianship Order can be in relation to property and financial matters, personal welfare or a combination of these.

To make an application for a Guardianship Order, two independent medical reports of incapacity, completed by registered and licensed medical practitioners, require to be obtained. These are based on an examination and assessment of the adult carried out, where possible, not more than thirty days before the application is lodged with the Court.

If the incapacity is the result of a mental disorder, one of the medical reports must be completed by a registered and licensed medical practitioner approved under Section 22 of the Mental Health (Care and Treatment) (Scotland) Act 2003.

The medical reports are then accompanied by a separate report on the suitability of the Financial Guardian. Where a proposed Financial Guardian is, for example, a solicitor who already is a Financial Guardian or who has a great deal of experience in dealing with Adults with Incapacity work, the “suitability report” will be prepared by an independent firm of solicitors.

It is also worth noting that when granting a Guardianship Order, the Sheriff would normally require a financial guardian to find caution. Caution is an insurance bond to safeguard the adult’s estate from loss caused by negligent actions or omissions by the Guardian. In addition to this, law firms are also covered by Professional Indemnity Insurance.

Tom Quail, a Partner in Wright, Johnston & Mackenzie LLP, is on the Approved Panel at Glasgow City Council in relation to appointment of Financial Guardians and has been undertaking this type of work for eight years. Tom is a Partner of the firm and is accredited by the Law Society of Scotland as a Family Law Specialist and a Family Law Mediator. 

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Owning your own business and Wealth Planning

When you own your own business you tend to spend a great deal of time and effort making sure that you take care of your customers; after all they are the best source of more business.

But have you thought about what would happen if you were unable to look after your customers? If you are a sole proprietor and were unable to work due to long-term illness or, worse still, death, who would look after your customers… and, of course,  your family? In the hurly-burly of running your business it’s easy to overlook this.

When it comes to the crunch your family is likely to be the greater concern. You need to ensure that you have arrangements in place so that

• Any borrowing can be serviced or repaid
• You and your family have sufficient income to maintain a reasonable standard of living

The last thing you want is for your family to inherit a mountain of debt and a business which they are unable or unwilling to run. Protection cover is available to repay borrowing and/or provide an income in the event of your death or long term disablement, thus providing you with the peace of mind to grow your business.

To find out more speak to your normal contact at WJM, who will be delighted to introduce you to our experts in the WJM Wealth Planning team.

PS: And while you’re thinking about this, have you considered when or how you will retire? Or whether your assets are such that Inheritance Tax will be an issue for your family? WJM Wealth Planning are independent financial advisers regulated by the Financial Conduct Authority and can help with all of these requirements.

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How will this year’s referendum on Scottish independence affect your will?

There has been great focus and debate on the impact of Scottish independence should Scots vote ‘yes’ in September’s referendum. Although Scotland has always marched to the beat of its own drum when it comes to legal matters, questions have been raised as to the impact independence would have on our wills.

The difference between the Scottish and English legal systems is quite apparent when considering wills. Firstly, in Scotland there is no automatic revocation of a will when the testator marries. This is not the case in England and new wills should be prepared to take account of the marriage. Secondly, Scottish law prevents spouses and children from being disinherited. They have legal rights which allow them to claim against the testator’s estate if the will does not sufficiently provide for them. There are no such rights in England and, if a will is challenged, the matter will be resolved at the court’s discretion.

The general rule is that an individual should draw up his will in accordance the law of the country where he is domiciled i.e. where he considers his permanent home to be or to where he has substantial links. Domicile is distinct from residency and nationality. Many Scots have crossed the border to start a new life in England and, so too, have many English people settled north of the border. While an individual can have dual residency and nationality, he can only have one domicile.  So, for example, where a Scot lives in England but believes that he will one day return to Scotland or would like to be buried in Scotland, his domicile is Scottish and should seek Scottish legal advice when preparing his will. This will continue to be the case in the event of independence.

The EU has recently introduced new rules to assist in more complicated situations. From August 2015, most EU citizens will be able to choose whether their moveable estate will be distributed in accordance with the succession laws of either the country where they live or the country of their nationality. The UK has opted out of this and the new EU rules will, therefore, not apply. This decision reinforces the importance of domicile when drawing up a will in Scotland or England and shows that the government does not intend to stray from this position in the near future.

In conclusion, while a ‘yes’ result in the referendum could trigger many changes to various aspects of life in the UK as we know it today, the way in which we draw up wills will not be affected.

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