By Legal Futures’ Associates Title Research
January 2020 – during the first 31 days of the year, Title Research followed three significant headlines in the legal industry that changed (or have the potential to change) the way we did things previously.
The year started with the legal recognition of a new status for heterosexual couples. Next, a new directive was transposed into UK law. And finally, Brexit.
Let’s take a closer look…
Heterosexual couples can now enter into civil partnerships
The Civil Partnerships Act 2004 first introduced the status of ‘civil partnership’, but for same-sex couples only. In 2014, Rebecca Steinfeld and Charles Keidan, a mixed-sex couple whose application for a civil partnership was originally rejected because they were not a same-sex couple, used the process of judicial review to challenge this law. After a unanimous landmark decision by the Supreme Court, the Act was found to be incompatible with Article 14 of the European Convention on Human Rights. As a result, it was amended to eliminate any insinuation of discrimination on the basis of sexual orientation. Since the 31st of December 2019, heterosexual couples in England and Wales can choose to formalise their relationship by entering into either a civil partnership as opposed to marriage only.
Why is this important?
As it relates to the process and components of estate administration, civil partners are treated the same as married couples. For instance, if a civil partner has a valid Will and passes away, the surviving partner will inherit any assets according to the terms of the Will, comparable to married couples. Similarly, any Inheritance Tax exemptions that are made available to a surviving spouse who is a beneficiary of their spouse’s assets, are available to surviving civil partners. Spouses and civil partners are also able to transfer their unused nil rate band allowance to their partner in order to reduce the potential tax payable on the second death.
The number of couples choosing civil partnership is expected to rise significantly in the coming months and years as there are currently approximately 3.3 million cohabiting couples in the UK who could benefit from this new option of adding legal recognition to their relationship.
Transposition of the 5th Anti-Money Laundering Directive
On the 10th of January 2020, the 5th Anti-Money Laundering Directive was transposed into UK law.
The directive implements a series of stricter requirements for registering Trusts and Trustees with government bodies. Consequently, all express Trusts and Trustees are required to register with HMRC for clearer identification purposes, unless they have been specified as being out of scope by HMRC.
Why is this important?
The Directive requires express Trusts to be registered. To clarify any confusion about which Trusts are affected, the government has issued a technical consultation document that outlines the types of Trusts that are out of scope for this requirement.
Out of scope Trusts include, but are not limited to:
- Statutory Trusts arising on intestacy
- Joint ownership Trusts, with the sole purpose of jointly owning an asset such as a home
- Trusts for the sole purpose of holding life insurance policies, income protection policies or policies solely for the payment of retirement death benefits
- Maintenance fund Trusts for historic buildings, charitable Trusts, approved share option and profit-sharing schemes, vulnerable beneficiary Trusts and personal injury Trusts
- Trusts that are already registered in an EU member state
It is important to note that if an out of scope Trust becomes a taxpaying Trust, the requirement to register on the Trust Registration Service will be reinstated so the Trust tax return can be issued.
Brexit
It was a long time coming, but the UK finally left the European Union on the 31st of January 2020. At Title Research, our focus is primarily on the potential impact of Brexit on the currency market which can, in turn, be disruptive to businesses and their clients.
Why is this important?
When the proceeds from a legal claim involving foreign currencies are repatriated, there is the risk of seeing lower returns than expected. While we haven’t seen any significant or worrying shifts in the currency market, we are very aware that the British Pound will be quite sensitive to the imminent announcements regarding trade negotiations between the UK and the rest of the world.
Due to our partnership with award-winning currency broker TorFX, we can offer our clients currency transfer solutions that can help mitigate some of the risks faced when making a corporate currency transfer.
TorFX and Title Research can support your practice in the following areas:
- Transferring an inheritance to overseas beneficiaries
- Repatriating an inheritance from abroad
- Transferring funds to/from overseas solicitors’ firms
- Transferring funds for foreign investments
- Repatriating proceeds from overseas sales, including properties, shareholdings and bank accounts
Some of the benefits of taking advantage of services like these include the potential savings through more competitive exchange rates, the lack of transfer fees often tacked on by banks and the extra transfer options available, such as forward contracts, market orders and limit orders.
To receive a free quote for Title Research’s international currency transfer service with TorFX, click here.
