A summary of legal updates for the Private Client industry over the past week is as follows.
The Money Laundering and Terrorist Financing (Amendment) Regulations 2022 ("2022 Regulations") have been approved and will come into force on 9 March 2022. The Regulations put on a formal footing the amendment announced by HMRC last September to set the deadline for registering non-taxable trusts as 1 September 2022 (not 10 March 2022 as stated in the legislation). Other amendments in the 2022 Regulations include: i) extending the deadline for notifying HMRC of updates to registered information, from 30 days to 90 days; ii) excluding certain types of life insurance trusts that pay out only on death, serious illness or disablement; and iii) excluding bank accounts held on bare trust for minors or adults who have lost capacity. UK government explains new trust registration rules | STEP
Will dispute case: knowledge and approval
Skillett v Skillett  EWHC 233 (Ch) is a "knowledge and approval" case that reminds Will drafters to explain to clients the risks associated with fluctuating asset values. In this case, the testator's 2011 Will left a smallholding worth £50,000 to one child and cash savings of £50,000 to each of the other three children, so that the inheritances would be equal in value. At the time of the testator's death in 2017, the smallholding was worth £110,000. One of the children brought a claim for lack of knowledge and approval, on the basis that his father did not realise at the time of execution that the land's value was likely to increase before death. The judge found that the lack of mathematical equality at the time of death did not undermine the rationality of the provisions of the Will: the testator knew what was in his Will and had approved it. Change in value of testamentary gift did not undermine testator's knowledge and approval (High Court) | Practical Law (thomsonreuters.com)
Attorneys and gift-making
Chandler v Lombardi 2022 EWHC 22 Ch involves an attorney abusing their power to make gifts using the donor's funds. The transaction in this case was a transfer of the donor's property into the joint names of the donor and attorney. The attorney was the donor's daughter and the transaction was disputed by the donor's son. The court held that the transfer was void. Section 12 of the Mental Capacity Act 2005 restricts gifts of a donor's property to customary occasions and to an amount reasonable in the context of the size of the donor's overall estate, unless authorised in advance by the England and Wales Court of Protection. Chandler v Lombardi  EWHC 22 (Ch) (10 January 2022) (bailii.org)
Mandatory Disclosure Rules
The Society of Trust and Estate Practitioners ("STEP") has submitted a response to the UK government’s Mandatory Disclosure Rules ("MDR") consultation on the introduction of a new UK MDR regime (to replace the UK's "DAC6" regime) requiring taxpayers and intermediaries to disclose information on certain tax arrangements to HMRC. Under the DAC6 regime, organisations were required to review clients' historic tax arrangements from 25 June 2018, but under the government's MDR regime proposals, organisations will be required to review historic arrangements from 29 October 2014. STEP has raised concerns about the proportionality of such a review. The consultation closed on 8 February 2022 and we await the government's response. Draft regulations: Mandatory Disclosure Rules - GOV.UK (www.gov.uk)