Private client section

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Issue 26 – March 2008

Contents

Cases
Statutory instruments

Features

Articles
News

Events

Offers (how to claim book discounts)

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Cases

1. Organ and another v McKechie and another

Citation: [2008] All ER (D) 329 (Feb)
Hearing date: 22 February 2008
Court: Chancery Division
Judge: Judge Pelling QC sitting as a judge of the High Court
Representation: Ruth Jordan (instructed by Stevens & Bolton LLP, Guildford) for the claimants. Marcus Flavin (instructed by Morrisons) for the defendants
Summary: probate – will – validity – knowledge and approval – claimant sons alleging testatrix's will invalid for want of knowledge and approval – whether will invalid

The deceased testatrix had three sons and one daughter. The claimants were two of her sons. The first defendant was her daughter and the second defendant her remaining son. On 6 February 2002, the testatrix had a meeting with P, the managing director of a company (CLG) providing will drafting services, with the intention of creating a will. CLG's operation involved the completion of a standard form questionnaire. The information given was then entered into a computer employing software, which produced a will corresponding to the answers given in the questionnaire. During the meeting, G recorded the testatrix's answers to the questionnaire. Although G himself was not a qualified lawyer, the testatrix was given advice to the effect that the creation of a nil-band discretionary trust held potential benefits for the purposes of inheritance tax (IHT). Subsequently, the testatrix was sent a draft will. It was common ground that that will was never executed. Between 27 February and 11 March 2002, CLG received a letter, written by the first defendant purportedly at the request of the testatrix, and purportedly signed by the latter, which changed the terms of the draft will. A second will, reflecting the terms of that letter, was subsequently executed. The effect of that will was to disinherit the claimants, save for the provision of fixed pecuniary legacies. The will contained clauses relating to the intended discretionary trust. However, the manner in which those clauses were drafted was such that no such trust could properly take effect. In any event, the trust would not have conferred the intended tax benefit. The defendants were appointed executors of the will. The testatrix died on 20 March 2003. Subsequently, the claimants issued the instant proceedings alleging that the will was invalid for want of knowledge and approval on the part of the testatrix. Alternatively, they sought rectification of the clauses pertaining to the creation of the discretionary trust, thereby giving them a beneficial entitlement to the residuary estate.

Two principal issues fell to be determined, namely: (i) whether the signature, purporting to be that of the testatrix, on the letter of instruction, had been forged; and (ii) whether the failure of the discretionary trust had resulted in the will failing to reflect the testamentary wishes of the testatrix. The claim would be dismissed.

On the evidence, the claimants had failed to establish to the required standard of proof that the signature on the letter purportedly stating the testatrix's testamentary wishes had been forged. Furthermore, the purpose of the discretionary trust had been to obtain potential tax benefits, not to enable the claimants to take a beneficial interest in the residual estate. The clauses dealing with the creation of the trust had been drafted in such a way so as to fail. However, the hoped-for tax advantages had not, in fact, been available. In those circumstances, it could not be said that the will had failed properly to reflect the testamentary wishes of the testatrix, nor that the will had been executed with want of knowledge and approval on her part.

Accordingly, the will would be pronounced in solemn form. Fuller v Strum [2002] 2 All ER 87 considered; Segelman, Re [1995] 3 All ER 676 considered.
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2. Morris v Morris and others

Citation: [2008] All ER (D) 333 (Feb)
Hearing date: 22 February 2008
Court: Court of Appeal, Civil Division
Judges: Pill, May LJJ and Sir Peter Gibson
Representation: Serena Gowling (instructed by Dflp Solicitors) for the claimant; Guy Adams (instructed by Howells) for the first defendant as executor of the estate of the second defendant
Summary: trust and trustee – constructive trust – married couple – proprietary estoppel – couple separating after husband's adultery – whether wife entitled to beneficial share in farm

The first defendant carried on a farming business in partnership with his mother, the second defendant. The partnership had a tenancy over a farm owned by the second defendant. The claimant and the first defendant began to cohabit on the farm and later married. She provided substantial assistance to the farming enterprise in the early years of the relationship, and later operated a horse riding school from the farm. She also made financial contributions to certain construction work on the farm. The claimant and the first defendant separated when the former discovered the adultery of the latter. She subsequently brought proceedings, claiming that there had been a common intention that she should acquire an interest in the farm such that there was a constructive trust in her favour or that she had such an interest by the operation of a proprietary estoppel. The claimant maintained that she had contributed to the enterprises on the farm in the belief that she was furthering the interests of the partnership, of which she had become an integral part. The second defendant had since died. The judge found that the tenancy and partnership agreements were authentic, but that her financial contributions and her assistance with the farming business were such that, either by constructive trust or proprietary estoppel, she had a 25 per cent beneficial interest in the farm. The first defendant, as executor of the estate of the second defendant, appealed to the Court of Appeal.

The appeal would be allowed.

Applying settled principles, the evidence was wholly inadequate to establish any common intention that the claimant was to acquire a beneficial interest in the farm. It was quite impossible to see how there could be a common intention in relation to the farm as a result of taking an active part in the farming business when the farm was owned by the second defendant. The claimant had conducted the riding school as her own business, and her financial contributions benefited that business. Further, it was also quite impossible to infer that the second defendant had said anything or had acted in any way so as to encourage the claimant to believe that she was acquiring an interest in the second defendant's land. The circumstances were such that no duty arose on the part of either the first or the second defendant to disabuse the claimant of her mistaken belief. It followed that neither a constructive trust, nor a proprietary estoppel, could be established in the instant case.

Stack v Dowden [2007] 2 All ER 929 applied; James v Thomas [2007] All ER (D) 373 (Nov) applied.
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3. Breakspear and others v Ackland and another

Citation: [2008] All ER (D) 260 (Feb)
Alternative citations: [2008] EWHC 220 (Ch)
Hearing date: 19 February 2008
Court: Chancery Division
Judge: Briggs J
Representation: John Brisby QC and John Eidinow (instructed by Paris Smith & Randall LLP, Southampton) for the claimants; Francis Barlow QC (instructed by Taylor Wessing) for the defendants
Summary: trust and trustee – discretionary trust – non-exercise of discretion – wish letters – claimant beneficiaries seeking disclosure of wish letter from defendant trustees – trustees refusing to disclose – whether claimants entitled to disclosure

The claimants were beneficiaries under a family discretionary settlement of which B was the de facto settlor. The settlement was made on 12 January 1995. By that time, B was in poor health. In February, he communicated to the first defendant trustee his wish that the second defendant should be adequately provided for if she survived him. B signed a wish letter on 9 March, the same day upon which the second defendant was appointed an additional trustee and purportedly added as a beneficiary. B died on 27 November 2002. The claimants were not made aware of the existence of the existence of the settlement until January 2005. In October, they received copies of the settlement itself and were informed of the existence of the wish letter. Subsequently, the claimants sought disclosure of the wish letter. The trustees declined. The claimants issued the instant proceedings by which they sought, inter alia, disclosure of the wish letter.

The principal issue that fell to be determined was whether and to what extent wish letters, which were subject to widespread use in connection with discretionary trusts, were to be recognised as being generally confidential.

The court ruled:

(1) The defining characteristic of a wish letter was that it contained material the settlor desired the trustees to take into account when exercising their (usually dispositive) discretionary powers. It was, therefore, brought into existence for the sole purpose of serving and facilitating an inherently confidential process. It seemed axiomatic that a document brought into existence for the sole or predominant purpose of being used in furtherance of an inherently confidential process was itself properly to be regarded as confidential to substantially the same effect as the process it was intended to serve (see [58]).

There was nothing unusual in that approach. It was routinely applied in the working out of the principles of legal professional privilege, litigation privilege, and public interest immunity, as well as in the application of the without prejudice principle. The critical difference was that confidence could be overridden by the exercise of the court's discretion, whereas privilege could not.

(2) Wish letters fell to be regarded by trustees as invested with a confidentiality designed to be maintained, relaxed, or if necessary abandoned as they judged best served the interests of the beneficiaries and the due administration of the trust. That discretion arose regardless of a request or disclosure by a beneficiary, and persisted regardless of the incapacity, death or change of heart on the part of the settlor. Where a beneficiary made a request for disclosure, that merely triggered an occasion upon which the trustees had to exercise (or reconsider the exercise of) that discretion, giving such weight to the making of and reasons for that request as they saw fit. Having made their decision, the trustees were not obliged to give reasons for it; any more than in relation to any other exercise of their discretionary powers see [66]).

(3) In a difficult case the trustees could, as always, seek the direction of the court on the question whether to disclose. Where such an application was made, it was fundamental that full disclosure be made to the court. Where the determination of the disclosure issue was the sole purpose of the proceedings, the matter could be, at least in theory, presented in one of four ways: (i) the trustees could surrender their discretion to the court, in which case the court exercised its discretion afresh, rather than reviewing the negative exercise of the discretion by the trustees; (ii) the trustees could, without surrendering their discretion, seek to have the court bless their exercise of discretion; (iii) a disappointed beneficiary could bring proceedings by way of a challenge to the trustees' negative exercise of the discretion; and (iv) a beneficiary could seek to invoke an original discretion in the court, as part of its jurisdiction in the administration of trusts. Options (ii) and (iii) involved a review of the trustees' negative exercise of their discretion to disclose. If the trustees themselves applied, then, in practice, it was inevitable that they would have to disclose their reasons. If the disappointed beneficiary applied, the trustees would be entitled to decline to give reasons and to defend the challenge upon that basis. If that were the case, the disappointed beneficiary would have failed to disclose any grounds for impugning either the fairness or the honesty of the trustees' decision, their reasoning being off-limits for that purpose. Furthermore, if a disappointed beneficiary sought to invoke the court's administrative jurisdiction, it would incumbent upon him to demonstrate, by reference to whatever facts might be available to him, that an occasion had arisen that called for the interference of the court. A mere refusal to disclose a wish letter, unaccompanied by reasons or evidence of mala fides or unfairness, would not ordinarily justify such intervention. If trustees volunteered reasons for their refusal, the court was entitled to investigate those reasons and call for to call for such factual material or further explanation from the trustees as might be thought fit (see [67] - [70]).

Where disclosure was sought from the court to facilitate the determination of an issue to which the letter was alleged to be relevant, different considerations arose. If the document in question did no more than illuminate the trustee's reasons for the making of the discretionary decision, it might simply could simply be irrelevant, unless the trustees by a partial disclosure of their reasons had brought the issue of their rationality into play (see [71]).

In the instant case, but for the trustees' stated intention to subsequently seek sanction for a future scheme of distribution, their refusal to disclose the wish letter would have been upheld. However, in light of the fact that such an application would almost inevitably lead to the contents of the envelope being relevant to the court's appraisal of the scheme, and having regard to the issues of time and costs and the fact that the issue of disclosure had been fully argued, disclosure in the form sought by the claimants would be ordered. Nonetheless, because the challenge to the rationality of the trustees' own contrary decision had been dismissed, it was right that the trustees be afforded the opportunity to decide whether to persist with that intention, at the cost of the disclosure of that which they had reasonably so far considered ought not be disclosed.

Londonderry's Settlement, Re, Peat v Walsh [1964] 3 All ER 855 applied; O'Rourke v Darbishire [1920] All ER Rep 1 considered; Schmidt v Rosewood Trust Ltd [2003] 3 All ER 76 considered.
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4. Brown v Executors of the Estate of Her Majesty Queen Elizabeth the Queen Mother and others

Citation: [2008] All ER (D) 118 (Feb)
Alternative citations: [2008] EWCA Civ 56
Hearing date: 8 February 2008
Court: Court of Appeal, Civil Division
Judge: Lord Phillips of Worth Matravers CJ, Thorpe and Dyson LJJ
Representation: Geoffrey Robertson QC and Anthony Hudson (instructed by David Price & Co Solicitors & Advocates) for the claimant; Frank Hinks QC and Jonathan Adkin (instructed by Farrer & Co) for the executors. Jonathan Swift and John Lofthouse (instructed by the Treasury Solicitor) for the Attorney General
Summary: will – royal will – unsealing of will – public and private interest – claimant applying for direction to unseal wills to establish claim that he was illegitimate son of deceased member of the Royal household – executors applying to strike out claim – president of Family Division of High Court striking out claim – whether President erring

The defendant executors of the estate of the late Her Royal Highness Princess Margaret, Countess of Snowden, Princess Margaret and the late Queen Elizabeth, the Queen Mother, made applications, under section 124 and rule 58 of the Non-Contentious Probate Rules 1987, for an order that Princess Margaret's and the Queen Mother's wills should not be open to inspection. The former President of the Family Division of the High Court sealed their wills, making an order in respect of each will that it “should not be opened without the consent of the President of the Family Division for the time being”. The claimant, who believed that he was the illegitimate son of the late Princess Margaret, applied to the President of the Family Division for a direction in respect of the unsealing of the wills of the Queen Mother and Princess Margaret, which was supported by a lengthy affidavit. The purpose of his application was to identify whether the wills made any provision for, or concerned, an illegitimate child. The affidavit stated, inter alia, that he had formed the conclusion that he was the son of Princess Margaret on the basis of “personal recollections, events, circumstantial evidence, conversations, reactions and extensive research”. The executors issued a summons seeking an order that the claimant's claim be struck out on the basis that the claimant could not invoke a public interest in support of his application to have the wills unsealed. The President found that, while the claim had been made in good faith and the claimant had a genuine belief that he was or might be the son of Princess Margaret, there was no rational basis for such a belief, and the right to inspect the wills as a member of the public could only be asserted by the Attorney General. The President concluded that the claimant had, in truth and reality, no interest that had been adversely affected by the former President's order, and his application was based on an asserted interest that lacked any basis or foundation. Accordingly, the President made an order striking out the claim. The claimant appealed against that decision.

He submitted that section 124 of the Supreme Court Act gave every member of the public the right to inspect a will “subject to the control of the High Court”.

The appeal would be allowed.

The former President of the Family Division's orders placed no express restriction upon the circumstances in which an application could be made to the President to vary those orders. The issues raised by the claimant's application were of public importance. The President had erred in striking out the claimant's claims, thereby preventing him from raising the issue of public importance. Until those issues had been resolved, it was impossible to say that the claimant's claim was doomed to failure. There was no reason why anyone with a private interest in inspecting the wills should have any more standing to challenge the former President's order than a member of the public who had no private interest. The claimant was entitled to have a substantive hearing of his claim to inspect the wills.

Gouriet v Union of Post Office Workers [1977] 3 All ER 70 considered.

Decision of Sir Mark Potter P [2007] All ER (D) 66 (Jul) reversed.
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5. Hoare Trustees v Jawues and others

Citation: [2008] All ER (D) 68 (Feb)
Hearing date: 6 February 2008
Court: Chancery Division
Judge: Patten  J
Representation: Ruth Holman (instructed by Lawrence Graham LLP) for the claimant; Georgia Bedworth (instructed by Dawson Cornwell) for the first defendant
Summary: will – revival – codicil reviving revoked will – testatrix executing second will revoking earlier will and codicil – testatrix subsequently executing codicil expressly stated to be codicil to first will – whether second codicil reviving first will and codicil – Wills Act 1837, section 22

On 12 August 1999, the testatrix executed a will, clause 3.1 of which provided for a tax-free pecuniary legacy of £100,000 to her daughter, the first defendant. The will further provided for a legacy of £25,000 to the second defendant, the fourth to seventh defendants receiving the residuary estate. By a codicil dated 14 January 2000, the will was varied so as to provide for a further legacy of £10,000 to the third defendant.

On 16 August, the testatrix made a second will which, by its express terms, revoked the first will and codicil. It contained the provisions of the first will as varied by the codicil, save that it left no legacy to the first defendant. On 25 November 2004, the testatrix executed a second codicil which was expressly stated to be a codicil to the 1991 will, varying clause 3.1 thereof by substituting the first defendant's legacy of £100,000 with one of £250,000. The codicil had been prepared by the testatrix's solicitors following a meeting with her at which no mention had been made of the second will. Subsequent to the testarix's death, the claimant sought pronouncement in solemn form in favour of the 1991 will and the first codicil.

The claimant submitted that the effect of the second codicil had been to revive the first will in accordance with section 22 of the Wills Act 1837.

The application would be allowed.

The express reference to the second codicil being to the 1991 will, coupled with the terms of that codicil, varying clause 3.1 of the 1991 will, constituted a clear expression of the testatrix's intention that the first will, and therefore necessarily the first codicil, were to be revived and the second will revoked.
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6. Smith and another v Springford and others

Citation: [2008] All ER (D) 59 (Feb)
Hearing date: 4 February 2008
Court: Chancery Division
Judge: Norris J
Representation: Araba Taylor (instructed by The Jolly Williams Partnership) for the claimants; John Dickinson (instructed by Battens) for the defendants
Summary: costs – contentious probate action – claim on estate – defendant alleging fraud on part of parties proposing will – whether claimants justified in proposing will – whether claimants should be liable to pay indemnity costs following discontinuance of proceedings

The testatrix died in January 2005, leaving an approximate estate of £157,000 to be dispersed pursuant to a will drafted in 1994. One of the testatrix's sons, the third defendant, and his family were the major beneficiaries under the will, to the exclusion of another brother and his family. Probate was granted in favour of the 1994 will. In August 2005, a second will was discovered. The second will, dated 1999, was purportedly in the testatrix's handwriting and witnessed by two nurses. It bequeathed the testatrix's estate equally between the third defendant and his brother, and named the claimants, two of her grandchildren, as executors. In December 2006, the claimants commenced a probate action seeking pronouncement of the will in common form and relied on witness statements of the attesting witnesses. The third defendant, on behalf of the first and second professional executors named under the 1994 will, challenged the 1999 will on the ground, inter alia, that it was a forgery. The third defendant also indicated that he would seek orders under section 51 of the Supreme Court Act 1981 and Civil Procedure Rules (CPR) 48.2, adding the witness and beneficiaries under the 1999 will as parties to proceedings for costs purposes. Despite the third defendant's solicitors urging the instruction of a joint handwriting expert, no such appointment was made until some time after the third defendant had formalised his position in respect of his allegation of forgery in his defence, dated 13 February 2007. No application was made to join individuals for costs proceedings. The evidence of the expert, on the material before her, was that the 1999 will was not genuine. By Autumn 2007, the claimants' costs were £35,000, with an estimated further £45,000 required to take the matter to trial. On 28 January 2008, the claimants applied, pursuant to CPR 57.11, for permission to discontinue proceedings and for the court to assess the costs arising out of the discontinuance. The third defendant sought the dismissal of the proceedings in order, so it was contended by the claimants, for him to bring personal costs proceedings against those involved in proposing for the 1999 will. In any event, the third defendant sought the defendants' costs on an indemnity basis.

The court ruled:

There was no question of compelling the claimants to put at risk further funds in pursuit of an action that they had no wish to pursue, nor could the third defendant continue the proceedings simply to enable him to bring personal costs proceedings against individuals other than the parties. No personal claim could be made without the determination by the court of whether the 1999 will had been a forgery.

The claimants would be given permission to discontinue their proceedings.

It was established that the costs of a contentious probate action, like those of any other civil claim, were within the discretion of the court, applying CPR parts 43 and 44. The general rule, enshrined in CPR 44.3(2)(a), was that the unsuccessful party would be ordered to pay the costs of the successful party, subject to sub-paragraph (2)(b). In contentious probate actions, however, it was a long-established exceptions to that general rule that if the circumstances led, reasonably, to an investigation of the matter, then the costs could be left to be borne by those who had incurred them.

Absent any finding that the claimants had been parties to a conspiracy to propose a will they knew to be forged, they were entitled to admit the 1999 will to proof. However, the claimants should have sought to discontinue the proceedings when they had first become aware of the strength of the third defendant's case and the likely costs of pursuing the matter to trial. It was reasonable to assume that the claimants would have had that knowledge from 1 July 2007.

There was nothing in the instant proceedings that warranted the imposition of indemnity costs. Accordingly, the claimants had to pay the costs of the defendants, on a standard basis, from 1 July 2007. Prior to that date, no order for costs would be made.

Kostic v Chaplin [2007] All ER (D) 119 (Dec) applied.
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Statutory instruments

1. The Inheritance Tax (Delivery of Accounts) (Excepted Settlements) Regulations

Number: 2008 / Draft
Enabling power: N/A
Commencement: N/A
Summary: Replace the Inheritance Tax (Delivery of Accounts) (Excepted Settlements) Regulations 2002 (statutory instrument 2002/1732) (2002 Regulations) in relation to chargeable events occurring on or after 6 April 2007. The 2002 Regulations and these Regulations make provision in relation to the delivery of accounts and other information for inheritance tax purposes. These Regulations make some new and different provisions, these are noted below.

Regulation 1 provides for citation, commencement and effect.

Regulation 2 interprets some of the terms used in the Regulations.

Regulation 3 provides that a person is not required to deliver an account for inheritance tax purposes under section 216 of the Inheritance Tax Act 1984 (clause 51) (1984 Act) of property comprised in a class of trusts where a chargeable event occurs on or after 6 April 2007. These trusts are defined as excepted settlements.

Regulation 4 defines an excepted settlement. There are five categories of excepted settlement, all requiring there to be no qualifying interest in possession subsisting in the settled property, these are as follows. The first category is a settlement where the settled property can comprise only cash, the trustees must be resident in the UK, the settlor must not have provided any additions to the settled property following the commencement of the settlement or have created any other settlements on the same day and the value of the settled property at the time of the chargeable event must not exceed £1,000.

In relation to the other categories, there are general requirements applying to all categories and a specific requirement (the condition). The general requirements are that the settlor is domiciled at the commencement of the settlement and, thereafter, until the chargeable event (or his death, if earlier), the trustees must be resident in the UK throughout the existence of the settlement and there must be no related settlements. The specific requirement is that the value transferred by the relevant notional chargeable transfer under the 1984 Act does not exceed 80 per cent of the inheritance tax threshold for the year in which the chargeable event occurs, ignoring for the purpose of determining the value any liabilities, exemptions or reliefs that would otherwise be deductible under the 1984 Act. These other categories are as follows.

The second category is a settlement with a chargeable event on or after 6 April 2007 under section 64 (charge at 10-year anniversary). The condition limits the value transferred by the notional chargeable transfer described in section 66(3).

The third category is a settlement with a chargeable event on or after 6 April 2007 under section 65 (charge at other times) preceding the first ten-year anniversary of the settlement. The condition limits the value transferred by the notional chargeable transfer described in section 68(4).

The fourth category is a settlement with a chargeable event on or after 6 April 2007 under section 65 following one or more 10-year anniversary of the settlement. The condition limits the value transferred by the notional chargeable transfer described in section 66(3), taking into account section 69.

The fifth category is a settlement where there is a chargeable event on or after 6 April 2007 under section 71E (charge to tax on property in an Age 18 to 25 trust) by reason of an event within section 71F(2). The condition limits the value transferred by the notional chargeable transfer described in section 71F(8).

Regulations 5 and 6 provide for the discharge of trustees and property from tax in relation to property comprised in an excepted settlement in the first category.

Regulation 7 makes provision for excepted settlements in relation to transfers reported late under section 264 of the 1984 Act.

Regulation  8  revokes the  Inheritance Tax  (Delivery of  Accounts)  (Excepted Settlements) Regulations 2002 (S.I. 2002/1732) in relation to chargeable events occurring on or after 6th April 2007.

These Regulations do not impose new costs on business or charities.
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Features

1. Inheritance in Europe

In light of the European case of Theodor Jager v Finanzamt Kusel-Landstuhl (Case 256/06), Golding indicates how it is not only aspects of British society who consider the area of law concerning inheritance tax uncertain, as he states "Our European cousins also consider their inheritance tax rules questionable!".

In Theodor Jager v Finanzamt Kusel-Landstuhl, an individual who was resident in France was the sole heir of his mother, whose last place of residence was in Germany. In addition to assets in Germany, the estate contained French land used for agriculture and forestry. The land was valued at a fair market value and was subject to inheritance tax in France.

In a decision on 3 January 2000, the German tax department calculated the inheritance tax payable by the applicant. The German tax was calculated to include land situated in France, as well as the assets in Germany, after a deduction of a personal tax-free amount. However, the individual was refused the benefit of a favourable assessment and other tax advantages due to the fact that he had acquired by inheritance the agricultural or forestry holding, which was not situated within the national territory. The individual entered an objection against that decision and initially brought an unsuccessful action before the national court.

The applicant appealed on a point of law. The national court decided to stay the proceedings and referred a question to the Court of Justice of the European Communities for a preliminary ruling.

The European Court of Justice decided that the fact that the grant of tax advantages in relation to inheritance tax imposed by these governments was made subject to the condition that the asset acquired be situated in the national territory constituted a restriction on the free movement of capital contrary to EU law. Article 73b(1) EC (now 56(1) EC), read in conjunction with art 73d EC (now 58 EC), had to be interpreted as precluding legislation of a member state which provides that account be taken of the fair market value of the assets in that other member state, whereas a special valuation procedure exists for identical domestic assets (10 per cent of fair market value) and a tax-free amount (taxing 60 per cent) to domestic agricultural land and forestry in relation to those assets.

Golding says "The two governments had not demonstrated a need to refuse the benefit of a favourable assessment and other tax advantages to this heir who acquired by inheritance an agricultural or forestry holding which was not situated within German territory. Clearly in this case a 'pick and mix' attitude to tax legislation does not work."
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Articles

1. Uneasy succession

Journal: New Law Journal
Citation: 158 NLJ 245
Issue date: 15 February 2008
Author: Rupert Mead
Summary: This article investigates succession on death for cohabitants. Between 1996 and 2006 the number of cohabiting couple families in the UK increased by 65 per cent, from 1.4 million to 2.3 million. During the same period, married couple families fell by 4 per cent to 11.1 million. Given such statistics, it is hardly surprising that there has been greater interest in cohabitation both in the courts and from the government. In July 2007, the Law Commission delivered its report, Cohabitation: the Financial Consequences of Relationship Breakdown, to Parliament, which concluded that reform was needed to address various inadequacies in the current law. Much of the emphasis of the report was on the consequences of separation, but it also examined and made recommendations about the position for cohabitants following death.
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2. No case for a panic

Journal: New Law Journal
Citation: 158 NLJ 241
Issue date: 15 February 2008
Author: John Hendry
Summary: This article discusses Phizackerley v Revenue & Customs Commissioners, in which the Phizackerleys planned to offset both nil rate bands against the couple's joint assets. However, this was largely frustrated because Mrs Phizackerley died first, and the assets she had left to her husband could not be deducted for inheritance tax purposes. In the Finance Bill 2008, the government proposes a transferable nil rate band, so a married couple can offset both their nil rate bands against their joint estate


Case annotations: Phizackerley v Revenue & Customs Commissioners [2007] UKSPC SPC00591, [2007] STC (SCD) 328
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3. Where there’s a will

Journal: The Lawyer
Citation: The Lawyer, 4 February 2008, 25
Issue date: 4 February 2008
Author: Paul Hirst
Summary: This article reports the government's proposed changes to the inheritance tax threshold are seen by many as detrimental to the profession's efforts to make wills. The savings offered by the changes will affect the practice of including nil-rate band discretionary trusts in wills, on the basis that these are no longer required to give the inheritance tax savings previously only available by using this device. Since this was the main driver in encouraging people to make wills in the first place, the key reason to make a will seems to have disappeared.
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4. Question of trusts

Journal: The Lawyer
Citation: The Lawyer, 4 February 2008, 26
Issue date: 4 February 2008
Author: Toby Graham
Summary: This article discusses sharia trusts and some of their associated risks. A sharia trust replicates the rights and restrictions of the settlor's family under the sharia law of their country of domicile. This bypasses complex probate formalities.
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Books

1. How to book and claim discounts
  • Law Society Publishing: quote “Probate Section” to receive a 20 per cent discount off related titles (excluding directories) via Prolog at The Law Society, PO Box 99, Sudbury Suffolk CO10 2SN, telephone 0870 850 1422, fax 01787 313 995 or email lawsociety@prolog.uk.com.
  • LexisNexis Butterworths: quote “Law Society Section discount offer” when ordering via www.lexisnexis.co.uk, customer.services@lexisnexis.co.uk or 020 8662 2000.

This e-alert is not intended to provide comprehensive records of information concerning the probate sector. If you have any feedback or suggestions, please email probatesection@lawsociety.org.uk. This e-alert was created in conjunction with LexisNexis UK Legal Updater Service. For further information about any of the articles, please contact claire.melvin@lexisnexis.co.uk. The views expressed by the Legal Analysis interviewees are not necessarily those of the proprietor.
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