News & Updates
Plan Now for the Future
Ian Macdonald, Partner and Head of Private Client at Wright, Johnston & Mackenzie specialises in private legal matters such as estate planning, wills, and powers of attorney.
Getting your affairs in order
People often use the start of a new year to plan ahead and think about their future, so it makes sense to use some of this time to review your legal affairs and get everything in order, such as a will, power of attorney, and any tax liabilities.
It’s important to have these documents in place so when the time comes, family members aren’t left with more to worry about than is necessary.
Many people think once they have their will and power of attorney in place, they don’t need to think about them ever again. However, I’d always recommend reviewing these documents regularly to ensure they remain up to date.
Power of attorneys are much more sophisticated now than they were in the past and allow greater flexibility than they once did. Nowadays, you can appoint one or more people to make decisions on your behalf should you ever become unable to make your own, allowing you to have more control over what happens to you should you ever be in a position where you lack mental capacity.
You can also appoint various people to look after individual aspects of your affairs, such as financial, care and welfare. It’s not unusual for power of attorneys to be fairly lengthy these days, so it’s particularly important to ensure yours is up to date and fit for purpose as your circumstances evolve over the years.
Given the ongoing cost of living crisis, many are under greater financial strain now than they have been for some time, so financial planning is more important than ever. It can be helpful for people to consider inheritance tax and gifts and ways in which their finances can be restructured in a tax-efficient manner.
A substantial reduction in capital gains tax allowances was announced in the last Autumn Budget, bringing the maximum amount of gains an individual can make before paying tax down to £6,000 from the current £12,300 as of April 2023. The intention is to cut this again to £3,000 from April 2024 onwards.
This reduction is likely to have an impact on investors’ behaviour and people may consider reorientating their investments in a way that will afford them more freedom. Some will need to be prepared to pay more tax than they have previously. It’s always worth seeking advice from an expert who can advise on such matters, for example, more tax-efficient ways of hosting investments such as ISAs and pensions.
Trusts and Succession
A consultation has also been launched on proposed changes to the Trusts and Succession (Scotland) Bill, which seek to modernise succession laws and the way trusts operate.
Ultimately, these will change how trusts are administered and managed, as well as changing the order of rights to inheritance when someone passes away without a will in place.
It’s been a long time since these areas of the law were last updated, and while succession law underwent some minor changes in 2016, there’s still no definitive answer to who inherits what when no will exists. Present arrangements lack clarity, and the process can often be long and drawn out for families.
Changes to the Bill will substantially increase the automatic entitlement of the surviving spouse or partner, simplifying the process and bringing the law in line with how most people believe it should be.
Changes to the way trusts operate are set to make them more flexible and will allow trustees to take account of changing circumstances and reflect these in the way their trusts are set up.
If you’re considering getting your legal affairs in order, it’s always advisable to speak to an expert who can provide bespoke advice tailored to your circumstances.
This article first appeared in The Scotsman
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at February 2023. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.