Malcolm Emery

malcolm.emery@legalstudio.co.uk

PRIVATE WEALTH SERVICES
 

I qualified as a chartered tax advisor with PwC in 1995 and for the first 15 years of my career provided tax advice to individuals and private trustees on all aspects of their tax affairs including those who had an overseas connection.

In 1998 I joined Dickinson Dees (now Womble Bond Dickinson) in Newcastle upon Tyne to work in their private client tax team.  Shortly after joining the firm, I realised that I needed to improve my legal knowledge to become a more rounded tax advisor. I started a Post Graduate Diploma in Law in 1998 and enjoyed it so much that I kept studying and qualified as a solicitor with Dickinson Dees in 2004.  Since then, I have advised individuals and private trustees on all aspects of their legal and tax affairs.

In 2006 my wife and I (and out three young children) decided to set off on an adventure and we relocated from the North East to Devon. Prior to joining Legal Studio in 2021, I was a partner in various law firms in the South West of England.

It is important for me to connect with my clients to build and sustain long lasting relationships.  I work with several cross-generational families on various tax and legal issues for them.

My work includes:

  • Exit and succession planning for business owners including advice on the reorganisation of the business to achieve maximum tax efficiency;
  • Preparing Wills, Trusts, Lasting Powers of Attorney and advising on other types of structures to mitigate tax and preserve wealth;
  • Advising trustees on their duties including the set-up, running and termination of all types of trusts including the associated tax consequences
  • Dealing with the administration of deceased individuals’ estates; and
  • Advising on tax residence, domicile, and offshore tax planning opportunities available to individuals and trustees.

I am an associate member of the Chartered Institute of Taxation, and a full member of the Society of Trust and Estate Practitioners (STEP). I was previously a committee member of the West of England branch of STEP and often lecture for them. I am also a former committee member of the Devon and Cornwall branch of the Institute of Directors.

When I am not busy as chief taxi driver for my children, I follow most sports and enjoy frequent visits to the cinema.

 

Specialist Areas of Interest

Tax and Trusts

Private Client

Wills, Trusts and Probate

Malcolm Emery Client Testimonials

Thank you so much for dealing with the final part of the HMRC requirements and making everything run so smoothly at this very difficult time for me. I would just like to say over the many years of dealing with solicitors as a sales advisor within the new build industry and at other times, you have been such a lovely person to deal with, your guidance and understanding has been invaluable to me. Once again thank you.
Private Wealth Services Client

Malcolm Emery Client Testimonials

Malcolm Emery "is simultaneously the most efficient and the most personable lawyer I have worked with," enthuses a market insider, who adds: "He is unwavering in his professional and courteous manner." He is a trusted adviser to high net worth individuals and family-owned businesses on private client matters including trusts, tax and succession planning. Another interviewee states that "he has a nice, easy style and can make the difficult easy to understand."
Chambers High Net Worth 2021

Malcolm's Latest Blogs

                                           Should you disclaim or vary an inheritance?

Introduction

Receiving an inheritance from a loved one can be a very emotional experience and may also give rise to tax issues.  It may be that your personal circumstances are such that receiving an inheritance increases the value of your estate to a level where you become concerned about inheritance tax (IHT).

Redirecting an Inheritance

It is possible for changes to be made to the distribution of an individual’s estate after they have died to mitigate capital gains tax (CGT) and IHT.  The changes can be made in one of two ways:
  1. A Variation; and/or
  2. A Disclaimer.
What is a Variation?

A Variation allows you to redirect the inheritance you receive under a Will or the Rules of Intestacy so that the person you are gifting your inheritance to is deemed to have received it under the terms of the deceased’s Will for IHT and/or CGT purposes.

For a Variation to be valid the following conditions must be satisfied:
  • The Variation must be evidenced in writing and signed by the beneficiary who is redirecting their inheritance. The executors of the deceased’s estate will also need to sign the Variation if it results in a larger IHT bill;
  • The Variation must be executed within two years of the deceased’s death;
  •  The Variation must not be made for any consideration in money or money’s worth. In other words, the person who is receiving the benefit of the gift should not pay anything to the individual who is making the gift.
  • The Variation must contain a statement to the effect that certain tax provisions under the IHT and CGT tax codes should be included.
What is a Disclaimer?

A Disclaimer operates differently from a Variation.  It is where a beneficiary under the Will chooses not to accept the gift made to them by the deceased.  It is important that the beneficiary has not accepted the gift as it is not then possible to disclaim it.

The following should be noted to ensure a disclaimer is valid:
  • A beneficiary is unable to disclaim only part of a gift; and
  • It is advisable for a disclaimer to be made in writing to the executors of the deceased’s estate although it may be made orally.
The main differences between a Variation and a Disclaimer is:
  • The individual who is disclaiming their inheritance may seek some form of monetary consideration from the person who benefits under the Disclaimer.  This is prohibited under the rules applying to Variations; and
  • Under a Variation the beneficiary who is making the gift can decide who should receive the benefit of the gift whereas the beneficiary cannot do this with a Disclaimer because the terms of the Will to determine who will inherit it.
This can often produce some unexpected results.

Example

Mr Lucky sadly dies and leaves his estate equally between his two children, Soo and Not-Soo and if either child dies before him then the deceased child’s share passes to his or her children in equal shares on reaching the age of 25.

Soo has done very well financially and decides that she would like her brother, Not-Soo to receive her share of their late father’s estate.  Soo does some research on the internet and decides to disclaim her interest in her late father’s estate thinking that it will pass to her brother under the terms of their late father’s Will.

By entering into the Disclaimer Soo is treated as having died immediately before her father for the purposes of the Wills Act 1837. Under s33 of this Act Soo’s children will inherit her share of her late father’s estate. The Disclaimer is therefore, ineffective.

If Soo had taken legal advice she would have been advised to enter into a Variation where she could have nominated her brother, Not Soo to receive her share of their late father’s estate. 

For more information call Malcolm Emery on 07708 613 789 or email him at malcolm.emery@legalstudio.co.uk 2021 10 30
Malcolm Emery
                                                Generating Tax Free Income!
 
Introduction

You may be thinking of ways to mange your exposure to inheritance tax by making provision for your children and/or grandchildren.

One way is to gifts assets directly to family members but there is always a risk of it being spent immediately or it could be swallowed up in divorce proceedings if they are in the process of a marital break-up.

What is the Solution?

Rather than make an outright gift direct to the child or grandchild a trust could be created which would offer greater protection against the issues mentioned above.

You could appoint yourself as a trustee so that you can continue to be involved in investment decisions and decide when money should be released from the trust to a beneficiary in terms or income and/or capital.

How to generate tax-free income using a Trust

Another benefit of making gifts via a trust is that, in certain circumstances, you can generate tax-free income in the hands of the beneficiary who has received income from the trust.

The trustees of a discretionary trust pay income tax at 20% on the first £1,000 of their income (7.5% on dividend income) and 45% on the balance (38.1% on dividends).  Whilst this may be higher than your current rate of income tax do not worry as help is at hand.

If the trustees make income distributions to a beneficiary, the income tax that they have paid is credited to the beneficiary who is receiving the income. Therefore, if the beneficiary pays tax at a lower rate than 45% then they can recover the excess from HM Revenue & Customs through their self-assessment tax return.

Example

The trustees of the ABC Trust receive gross rental income of £10,000. Ignoring the £1,000 basic rate band the trustees will pay income tax of £4,500 on this income leaving a sum of £5,500 available for distribution to one or more of the beneficiaries of the trust.

The trustees decide to make an income distribution to John of £5,500. John is studying at university and has no other income.

For tax purposes John is deemed to receive gross income of £10,000 with a tax credit of £4,500. As John has no other income sources the gross trust income he has received is covered by his personal allowance which for the current tax year, 6 April 2021 to 5 April 2022, is £12,570.  John can submit a tax repayment to HM Revenue & Customs to recover the income tax of £4,500 paid by the trustees, thereby generating tax free income in his hands.

A Word of Warning!

The above planning will not work if the beneficiaries of the trust are your children and are under the age of 18. If you have created the trust and trust income is distributed to your minor children, it is treated as your income for tax purposes.  

This type of planning works very well if the beneficiaries are your children and are aged 18 or over or your grandchildren (any age). This is because the income will be treated as their own for income tax purposes.

For more information call Malcolm Emery on 07708 613 789 or email him at malcolm.emery@legalstudio.co.uk
 
  2021 42 30
Malcolm Emery
Introduction

We all hope that throughout our life we will be able to make decisions about our affairs including those which impact on our health and wellbeing. However, recent statistics have shown that 25% of the UK population will experience issues with their mental health which may mean they are unable to do this.

How can a Lasting Power of Attorney help?

A lasting power of attorney (LPA) is a legal document in which you authorise a chosen person (an attorney) to make certain decisions on your behalf if you lose mental capacity and are unable to do this yourself.
The decisions that you authorise your attorneys to make can be either in relation to your finances, for which an LPA for property and affairs will be created, or in relation to your personal life, where an LPA for personal welfare will be created.

Perhaps you feel that an LPA is not necessary as family members can automatically step in to make these decisions for you. Unfortunately, this is not the case as family members do not have an automatic right to make decisions on your behalf.

What to do if you run a business

If you run a business as a sole trader, through a partnership or through a company you should consider putting a business LPA in place so that your business can continue to trade in the event of you losing capacity. The remainder of this article will focus on the issues facing businesses which are trading through a corporate structure.

The importance of the articles of association

The articles of association set out the rules on how your company is run and so it is important to check these first to ensure you have authority to appoint an attorney. Most companies are covered by what are known as “Table A” articles which are a default set of provisions.

For companies incorporated on or after 28th of April 2013 under Table A articles, the Mental Health Discrimination Act 2013 provides that directors who have lost capacity must be supported in their role rather than removed from it. The only exception to this rule is if a medical practitioner confirms that the director will be unable to fulfil his or her role as a director for at least three months due to losing mental capacity.
If your company was set up under an earlier version of the “Table A” articles they will contain different provisions relating to the termination of a director's role due to mental incapacity and you may wish to consider updating these.
  
Can I have more than one LPA?

You can put any number of LPAs in place providing none of them conflict with each other. You could, for example, consider making an LPA for certain attorneys to manage your personal assets (i.e. your home and personal bank accounts) and another one to cover your role as a director.

If you are considering making personal and business LPAs, they should both contain specific instructions limiting the scope of the attorneys’ powers. For example, a personal LPA should specify that your attorneys will have general powers in relation to your personal affairs except for your role as a director which is covered under a separate business LPA. Your business LPA should contain specific instructions in this respect too. Your attorneys will then be clear about their powers and will not encroach on the others attorneys’ responsibilities and decisions. You may also wish to put a separate letter of wishes in place which gives your attorneys more guidance and direction on your vision for the business and the markets in which it operates.

You could, for example, appoint your spouse to make decisions about your personal property and affairs whilst someone with suitable experience as your attorney in relation to your role as a director. If you also own shares in the company these will be dealt with under your personal LPA rather than your business LPA. Therefore, you should consider carefully who should make decisions in relation to your shareholding in the company. If appropriate you may decide to create a separate LPA relating to your shareholding in the company.

In this example you would have three LPAs. The first one would relate to your personal assets whilst the second would relate to your role as a director and the final one would relate to your shareholding in the company.

Putting separate LPAs in place for your directorship and your shareholding avoids potential conflicts of interest arising.

Who should I appoint as a suitable attorney?

An attorney should be trustworthy, competent, and reliable. They should have the skills and ability to carry out the role.

When choosing a business attorney, you should consider:
  • Does the individual have the necessary skill, ability, and experience to carry out the role? How have they demonstrated this?
  • Do any regulations prevent their appointment?
  • Are there conflicts of interest between the personal attorney and the business attorney?
What happens if I do not make a business LPA?

If you are unable to make a business decision in the future and have not made a business LPA, it may become necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. The process can be expensive and there are no guarantees that the Court of Protection will choose someone he would have chosen yourself. It could also take more than six months before a deputy is appointed, during which time your business may be vulnerable and at risk.

Summary

Whilst no one wants to think that they may not be able to make decisions for themselves or run their business due to a lack of capacity, it is important that the risk is considered as part of your risk management strategy. Putting a business LPA in place will certainly help minimise the risks of the company ceasing to trade due to a lack of management and decision making.

For further information on LPAs please contact Malcolm Emery.
  2021 01 23
Malcolm Emery