Efficient Wealth Update October 2018
Lasting Powers of Attorney – New Guidance Released
You may have read our article back in July suggesting some golden rules for attorneys. The governing body, the Office of the Public Guardian, has now released some very useful advice for people starting out as attorneys or for those who have recently been appointed as attorneys.
Please use the following links for further information and get in touch if you need anything clarified.
LPAs are suitable for nearly everyone (although maybe not all) as they provide valuable protection if anything happens to you during your lifetime. If you do not already have LPAs, please get in touch with us to see if they are applicable to you so we can help you put them in place.
Once a Bully, Always a Bully
In 1995, the World Trade Organisation (WTO) was established to create a fair trading environment for the world: An environment where success was based on the ability to trade wisely and flexibly. It was designed to prevent the largest economies driving through agreement just because they were the biggest.
Last month President Trump threatened to pull out of the 164-country organisation unless it “shaped up” (whatever that means!) The WTO has a tribunal system, with seven judges who hear and decide cases. Since taking office, Trump has consistently blocked the appointment of new judges, to the point that there are now only three, which is the minimum needed to hear a case. Therefore, the system is backing up, with massive delays in hearing cases.
What is Trump’s claim? That most hearings involving the USA find against the USA, and that this is unfair. Guess what? He is right. Of the 150 cases brought against the USA, 90% found against them. Is that unfair? Well you may think so, until you hear all the facts. EVERY country that has been sued in the WTO court has a losing rate of 90%! That is because a country is generally not sued in the WTO unless there is a very strong case against them. Here’s another fact that Mr Trump obviously didn’t read (he is notorious for not reading his briefing documents): The USA WINS 90% of the cases where it sues!
The hidden agenda is clear. The USA is the biggest and it wants its own way, no matter what … it seems that the ‘Bully Trump’ can just change his spots, and that’s a bad thing for everyone who lives somewhere other than the USA.
Bank Scammers – Out in Force
More than £500m has been stolen from customers of British banks so far in 2018. £358m was lost to unauthorised fraud, which means customers weren’t conned into transferring money, but rather that the scammers helped themselves to bank account contents.
These instances of unauthorised fraud come in many different guises, such as purchase scams, where we are convinced to buy goods or services that do not actually exist, card cloning or digital theft of bank details. Most victims of these types of fraud will have their money refunded by their bank. However, if you transfer money to someone and it turns out to be a scam, it is unlikely you will get any refund as you have authorised that payment.
This strikes a personal note with me this month that has added to my outrage, as my friend opened up their online banking app to find there were a number of purchases he didn’t recognise. The scammers are becoming more and more sophisticated, as these were purchases from some of the online stores that he uses quite regularly and so the scammers clearly had accessed information to suggest what his spending history would be and, in an attempt to camouflage themselves amongst his other purchases, had chosen similar outlets. My friend checks his bank account quite regularly and so was lucky to notice these quite quickly, but if you don’t check your account so often, have joint accounts or have the ideal situation of maybe not noticing money going missing each month, the scammers could make a fortune. Lucky only £100 or so went missing before he noticed, but when he contacted his bank they said that a further £1,000 had been requested to be debited from his account which had luckily been blocked!
Whilst most banks will repay these sums with no issues, my friend told me that he did get a grilling on his transactions: Where the payments had been requested from and questions that suggested he may have been trying to mislead them in some way. I understand that they must be vigilant for scammers from this angle, but for someone who is just trying to report a crime and be compensated it was a frustrating and troubling experience.
The message here is be vigilant and keep an eye on things! As technology evolves I have certainly become less concerned with where my passwords and credit card information are stored. With everyone offering to remember these details for you, why wouldn’t you jump with joy at not having to remember 87 different passwords? In an ideal world your bank will call to advise you of this type of situation – after all that is one of the reasons we use a bank, rather than keeping our money bundles stuffed underneath our mattresses, right? Maybe there are just too many scammers out there to keep up with …
Whatever Happened to Child Trust Funds?
The Child Trust Fund (CTF) was introduced in 2005 and was set up for every child born between 1st September 2002 and 2nd January 2011. It preceded the Junior ISA (JISA) and works in much the same way, originally created to encourage saving for the long term and at regular intervals. If you have an existing CTF you can still contribute to it, but these can be transferred to JISAs if you would prefer.
Recently, it has been highlighted that some CTFs were opened automatically and hold only the funds put in by the government, with no further contributions ever made. There are reportedly 1 million of these accounts sitting dormant, having been forgotten by numerous families. The good news is that these can now be tracked via the government website and the following link: https://www.gov.uk/child-trust-funds.
The 16th anniversary of the CTF has arrived, meaning those children who are now 16 can take over management and control of their fund if they wish, with full entitlement and access at age 18. If you think your child has a CTF somewhere but you aren’t sure where, now is the time to look into it before they become solely entitled to the funds. By transferring the CTF into an ISA it immediately becomes an adult ISA at the age of 18, but wouldn’t every 16- to 18-year-old want to withdraw the funds and get spending, which they would have every right to do under the rules of the CTF or ISA. Finding out if your child has a CTF is the first step and then educating them on the importance of saving is the next stage.
Cohabiting and Your Financial Planning
There are many things that, as a cohabiting couple, you may not be aware that you are not entitled to. The most common myth about cohabiting rights is ‘common law’, which is the belief that because you have decided to live together as a family you will get the same financial rights and benefits that you would as a married couple.
As an example, cohabiting couples are not entitled to any tax breaks or sharing of allowances (e.g. personal allowance) that married couples are. One of the most important things to remember is that if you are part of a cohabiting couple and one of you dies without a Will, your surviving partner will receive no benefit. If they are named as a beneficiary in a Will there will be no spousal exemption in relation to Inheritance Tax, so tax will be applied on both the first and second death!
Those are just a few things to be aware of; the list regarding entitlement of cohabiting couples is long and complex. We would strongly recommend you seek sturdy financial advice on your finances, including your home and the legal basis of how this is held. The advice will be unique to each couple and their circumstances. Whilst many people do not want to get married for numerous reasons, in some cases it could be the simplest and most effective solution, although this is of course something that we cannot directly recommend! For those who really abhor the idea, there are certain areas of planning that can help, but be sure to consult a professional.
Notes on Brexit
With the Prime Minister’s Chequers’ proposal being so poorly received in Salzburg, the pressure has definitely increased on the civil service to find some way to deliver an acceptable withdrawal agreement from the EU in the next few weeks. It does make you wonder how a group of diplomats and politicians could have misread the mood of their European counterparts so badly. Perhaps being so focused on the seemingly arbitrary and self-defeating red lines drawn by Mrs May, rather than focusing on delivering a workable solution, is part of the problem. Leaving the opposition with no room to negotiate feels like it defeats the purpose of a negotiation, so it is no surprise the delivery of the now infamous “Chequers plan” went down like a lead balloon.
Reports suggest that approximately 80% of the points for withdrawal have been agreed in principle. Those not yet agreed include maintaining a frictionless border in Ireland, the governance for the Withdrawal Agreement, and a range of other separation issues including data protection, geographical indications and ongoing police and judicial cooperation in criminal matters, among others. If negotiators fail to finalise the Withdrawal Agreement, the points that have been agreed will fail and the UK will withdraw from the European Union without an overarching deal – the so-called ‘Hard Brexit’ scenario – and concerns are mounting. The government are releasing a series of papers relating to all aspects of UK infrastructure potentially impacted, including trade, movement of people, and the Irish border. These are being sensationalised in the press, as ever, but if you are interested in the topic they make a good, and in some cases surprising, read.
Book of the Month
You will recall that Homo Sapiens, by Yuval Noah Harari was a book of the month earlier on in the year, in which Harari look back on our species. This month, my book recommendation is ‘Homo Deus: A Brief History of Tomorrow’, also by Harari, but this time looking forward.
As someone who is fascinated by technology, and how it can make life better, this book opens up a whole new world of dilemmas that I’d never even though of. Imagine a life where Google knows more about you than you do, thus can identify a better life partner for you. All through reading your emails, understanding what you like and how you react to certain situations. Scary, isn’t it! And this is just scratching the surface.
If you want to think more deeply about what our future might look like, this is the book for you.
Charlie’s Mini Blog
Last week I was lucky enough to be involved in Matt Hampson’s charity golf day, which was held at The Belfry. The home of the Ryder Cup on no less than 3 occasions, the Brabazon Course is a stunning challenge to any golfer. On a number of holes, you are approaching the green over water, most markedly on the famous 10th. A 230-yard tee shot over, water onto a green surrounded by more water, bunkers, rocks and banks, makes for a challenging golf hole on any day.
For those of you who don’t know, Matt Hampson was a rugby player with the Leicester Tigers. Since his accident in 2005 during an England Under 21 rugby training session, Matt has battled hard to live as normal a life as possible. Paralysed from the neck down and breathing via the aid of a ventilator with more recent complications that have continued to threaten his life, you’d forgive him for shunning public life and focusing on looking after himself. Not Matt; he goes above and beyond to help others in need.
He has just opened the Get Busy Living Centre in the Leicestershire countryside. On the site of an old barn, they have created a stunning complex for the sole purpose of aiding the rehabilitation of young injured sportsmen. The Foundation also offers assistance to hundreds of people every year in a number of ways, through direct grants, offering advice, assistance and mentoring to individuals, and also through financial assistance and input to like-minded organisations who share their aims and ethos.
On the day, it was apparent that Matt has inspired so many people around him. His enthusiasm and determination are infectious. So as challenging as life can seem, whether that be a difficult tee shot over the water, or any other test that life throws at us, seeing inspiring people like Matt really does put it into perspective.