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Weekly news review: Autumn Statement brings bad news for trusts, divorce costs on the rise, intermediaries refuse clients on value base

6 December 2013

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TRUSTS

IHT increase: Some clients will face large tax bills, warns investment platform Skandia, when trusts no longer benefit from multiple inheritance tax nil rate bands, as announced in the Autumn Statement, reports Money Marketing. The proposal, effective from 2015, means trusts may now have a 6 per cent tax charge at the ten-year point.

DIVORCE COSTS

Courts profit: The MoJ has proposed a steep rise in uncontested divorce costs with effect from spring 2014, reports The Times. The plans for the increase from £270 for couples to £750 aim to ensure all people who use the civil courts pay the true price while providing the courts with a profit for the first time.

Court-based divorce will be "restricted to those with money to burn and encouraged by litigious lawyers unhampered by concerns about the wider wellbeing of families and their children", says Mills & Reeve partner Alison Bull as she considers alternative to litigation in The Times. Bull says her firm has seen a rise in mediation cases, renewed interest in collaborative law, and the emergence of family arbitration.

FINANCIAL ADVICE GAP

RDR impact: Intermediaries have turned away about 60,000 clients this year who they felt would not get value for money, according to a survey of investment advisers conducted on behalf of the Association of Professional Financial Advisers, reports the FT. And a recent Schroders research revealed that 14 per cent of advisers surveyed had formally asked clients to leave their practice.

ADVISER CHARGING

Contingency concerns: The Financial Conduct Authority is concerned about "contingent charging", where advisers only get paid when clients buy the recommended product, and advisers believe firms will follow suit soon, reports Money Marketing. They are predicting a broad shift away from percentage-based charging.

CHARITY COMMISSION

Status update: Margaret Hodge, Public Accounts Committee chair, has said the Charity Commission has "tough questions to answer" following a National Audit Office report that claimed it was not fully investigating abuses of charitable status, risking the sector's reputation and wasting taxpayers' money, reports BBC News.

VULNERABLE CLIENTS

Adoption claims: The Italian mother fighting for rights to the 15-month-old baby she was forced to adopt after being sectioned in the UK under the Mental Health Act has told newspaper La Repubblica that she is suffering "like an animal". The Times reports that her Italian lawyer has accused British authorities of behaving like "Hitler's regime". Adam Wagner comments in the UK Human Rights Blog of the case.

PROPERTY

Poor communication: Almost a quarter of house buyers blame poor communication between lawyers, lenders and estate agents for failed transactions, according to a survey for the Conveyancing Association. The survey also found that, of 1,500 people who had bought a house in the past five years, 47 per cent felt that lawyers, lenders and solicitors could have communicated better. A similar percentage said they believed this would have "significantly speeded up" the process. See Solicitors Journal.

REGULATION

Final curtain: In her final speech as executive director at the SRA, Samantha Barrass has described the "at times unbearable pressure" put on the regulator by a powerful ABS applicant to approve a licence - pressure that was successfully resisted. Speaking at the Managing Partner Risk Management Conference 2013, Barrass also targeted the Law Society for trying to put the clock back to the "previous millennium" on regulation and go back to the "historic 'chaps regulating chaps'". See Solicitors Journal.

HIGH NET WORTH EXPECTATIONS

Europe confidence: A private client survey by J.P. Morgan Private Bank about the expectations of UHNW and HNW investors across Europe on market conditions, risk appetite and investment sentiment, has shown that 16 per cent are concerned about a eurozone break-up, down from 36 per cent in 2012, reports Investment Europe.

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Family Tax & Wealth structuring Wills, Trusts & Probate