8 minute read
Family Law
FAMILY LAW Expert help on common domestic legal issues from the team at Porter Dodson LLP.
This month: What is TOLATA?
Marriage is certainly on the decline; data from the office for national statistics shows that the latest marriage rates are the lowest on record.
Couples no longer consider it necessary to marry before they have children or buy property together; but what happens to jointly owned property in the event couples who are not married separate? Most people in this situation are surprised to find out that the legislation in England and Wales which governs this situation is completely unrelated to Family Law, and they are not protected by the Matrimonial Causes Act 1973. The issue between the separating couple would essentially be a dispute over property ownership; and, therefore, the legislation that assists is the Trusts of Land and Appointment of Trustees Act 1996 (also known as TOLATA).
What is TOLATA?
TOLATA gives Courts certain powers to resolve disputes about the ownership of property (or land). Who can make an application? An application is usually made by: • A person who is a co-owner;
or • A person who has a beneficial interest in a property. In addition, there are other parties that can make an application, such as a personal representative of a beneficiary; a trustee in bankruptcy; a judgement creditor with a charging order secured against the property; or a receiver; however, these are less common.
When can a TOLATA claim be issued?
A TOLATA claim can be issued: • To determine whether jointly owned property should be sold; • To determine the respective shares that each co-owner is entitled to; • To determine whether a party has a beneficial interest in the property, usually where that party’s name is not on the legal title and the legal owner is disputing the claim; • To determine whether property subject to a trust of land, should be sold on the application of a creditor or a beneficiary such as a parent/grandparent seeking to recover their financial interest in the property. The Court is asked to determine who are the legal and beneficial owners of a property, and in what proportions.
Limitations
TOLATA limits a court to deciding on co-ownership of property. It does not give the court the power to: • vary that co-ownership; • adjust the proportions that each person owns; • order that one party sells or transfers their share of the property to the other; • order one trustee to do something that they are not permitted to do under the terms of the trust; or • order that one party compulsory purchases the interest of the other party. If you require any assistance in relation to jointly owned property, contact Karen Watts on karen.watts@porterdodson.co.uk or 01308 555639.
What should I consider before making valuable gifts to my children?
Adam Scott from leading law firm Trethowans is being asked this question more and more, and it is not a straightforward one to answer.
Can you afford to make the gift?
The first thing to remember is not to forget about yourself. We are all living longer and before making any substantial gift it is important that you have enough set aside to cover any eventualities that life may throw at you. Sit down and make a budget, setting out all your annual expenses and your anticipated income; both now and in the future. Add a contingency and then ask can I really afford to make this gift?
Why are you making the gift?
There are of course any number of reasons that you may be considering gifting to your children, but I have outlined the two most common legal ones:
Gifting to save inheritance tax (IHT)
Before making a gift with a view to saving IHT it is vital that you obtain professional advice. You need to be prepared that having made the gift you will not have the use of that asset anymore. This is very straightforward if you are gifting away ‘cash’ but when gifting property, perhaps an investment property or a holiday home, you must be satisfied that you cannot freely benefit from that property any longer. If you do, this will be classed as ‘a gift with reservation of benefit’ and for IHT purposes you will still be treated as owning the property and the value of it will form part of your estate when you die. However, once the gift has been made and assuming that you do not reserve any benefit in it, the asset will ‘fall out’ of your estate for IHT purposes after seven years. When making a gift to save IHT it is also important to consider how you are going to make the gift; will it be an outright gift to a child? What if they become bankrupt or get divorced? What if they squander that asset? Are they old enough to hold such an asset? In these circumstances you may consider transferring the asset into trust. The advantage of using a trust rather than making an outright gift is that it is the trustees who control and own the asset and the trustees decide when the beneficiaries can utilise it. Importantly, you can be one of those trustees and therefore retain control. Trusts are often seen as being overly complicated but with the correct advice from an appropriate professional this need not be the case.
Gifting for capital protection
This is a very complex and controversial area, and there are many organisations that advertise products that promise protection against care home fees. But the simple fact is that no one can make such a promise, and you should be very careful when considering instructing an organisation who does. This is because the law states that if you deliberately deprive yourself of assets - which you would be by making a gift - with a view to avoiding the payment of care fees, then that gift can be declared void. When a financial assessment is carried out the asset which you have gifted would still be considered yours. That does not mean that there is not a place for making gifts, whether directly or in to trust, for the purposes of capital preservation but you need to be very clear on the reasons for doing this and your advisor should carefully discuss the options with you and the consequences of each of those options to enable you to make an informed decision. Gifting assets, for whatever reason, is an important part of family and wealth planning and along with making wills and lasting powers of attorney should be considered early on and reviewed regularly. The involvement of a suitably qualified and experienced professional will greatly assist in ensuring that you select the most suitable option for yourself and your family.
Will rising food and energy prices coupled with the end of the £20 Universal Credit boost lead to greater debt for those on low incomes?
Rising food and energy prices, the end of Furlough and the cut to the £20 Universal Credit payment will put many households under severe financial pressure this winter. Incomes have been hard hit since the beginning of the pandemic. For those in full time employment there was a fall in salary of 19% and for part time workers the fall was 35%. This meant that over a fifth of UK adults were unable to afford or pay for essential household items such as food, heating and lighting, as well as struggling to pay their mortgage or rent. October also saw the withdrawal of the £20 a week increase to Universal Credit. 5.8 million people who had received UC will now see their incomes fall by £1,000 per year. This combined with increasing gas, fuel and food prices could push an estimated third of households into debt.
The debt trap
Many families turn to payday loan companies to survive, paying an extortionate amount of interest on their borrowings. Interest-free offers on credit cards seem appealing, but if the borrowing is not paid in full by the end of the agreed period then interest will be applied, resulting in mounting debt. ‘Buy Now, Pay Later’ deals also exacerbate the problem.
Debt help
Before taking out credit, do your research. And ask yourself: do I really need this item? If it is an essential need, then before borrowing, speak to all of
Battens Solicitors Debt Recovery Manager Angela Loveless has some timely advice:
your creditors to see what they can do to help you – they have a duty to listen and are required to work with individuals to reach an amicable solution. If the household debt is “...incomes fall by completely out £1,000 per year... of control, with creditors not willing combined with to work with you, you may consider increasing energy and applying for a Debt Relief Order, setting up an Individual food prices could push an estimated third of households into debt” Voluntary Arrangement or petitioning for your own bankruptcy. These steps may sound extreme and are not for everyone. There are pros and cons attached to these 3 options and those need to be looked at carefully before you take any action. For further information contact angela.loveless@battens.co.uk or call 01305 216221
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