Advice for life beyond lockdown – from loo-rolls to the longer term

1st June 2020

Answers to eight questions clients have been asking me, or I have been asking myself, as the COVID-19 crisis unfolds.

How does one prepare for the unforeseeable? The ‘what-ifs’ which have just come to pass? We find ourselves now in a position which was unthinkable just six months ago.

As life during COVID-19 goes on, at Blake Morgan, our role as trusted advisers is key. We want to encourage our clients with the best possible decision-making going forwards.

Here are my answers to eight questions my clients are asking at the moment.

Q1) How dependable are old certainties, like “the Conservatives never raise taxes”, when we have just overseen the biggest public spending spree since WWII?

A) Good question. The Government may need to raise £30bn through breaking the triple tax lock in order to fund a £337bn budget deficit [1] resulting from COVID-19. We recommend clients review their tax planning, considering the use of trusts where appropriate, to make the most of the tax breaks currently offered by the Government.

Q2)  Will my family trust be able to help me out financially if my income is impacted through poor health or through a downturn in the sector I work in?

A) Not necessarily. Trustees with falling dividend income and capital values will look for help to their investment manager who may well turn round and say, ‘Past returns are no guarantee of future performance’. Some trusts do not have powers for trustees to top up falling income from capital.  The key thing is to discuss your needs and wishes as early as possible with your trustees so they can plan ahead and, if necessary, de-risk the portfolio.

Q3)  What happens if a trustee lacks capacity or dies?

A) In the event of death, new trustees are appointed either by the person who set up the trust, or by the ongoing trustees. There can be real problems where a trustee lacks capacity.  COVID-19 could be the right time for a more vulnerable trustee to find peace of mind by choosing a successor and retiring.

Q4) Does it matter if I have to stay in another country during lockdown?

A) There may indeed be tax consequences under the Statutory Residence Test. Up to 60 days in the ‘wrong’ place can be ignored due to exceptional circumstances, but not if you arrive knowing you will not be able to leave.

Q5) Where are my investments or pension funds held?  In boom industries like pharmaceuticals and face-masks?  Zoom and Astra-Zeneca?  Or in struggling sectors like the airlines, the hospitality sector and the high street?

A) Your financial adviser will be able to help you understand where your money is invested. Now is a good time to review your investments and attitude to risk, but remember that you should always look at stocks and shares as long term investments.

Q6) “I don’t have a Will but have written out my wishes and signed them, and emailed them to the important people.  Isn’t that as good as doing a Will?”

A) Unfortunately not. It will not alter the legal rules which say who gets what when you die without a Will. If you do have a Will, it will not change what that Will says. A lot of people are using the extra time they have at home now to update their Will, and are finding peace of mind in the process.

Q7)  Is there something everyone else is doing which I should also be doing?

A) Stock-piling loo roll has gone out fashion, fortunately! However, something with lasting value which will be appreciated by your loved-ones (as well as making sense for you) is setting up a Power of Attorney. This will make sure that your financial and business affairs and your health and personal welfare are taken care of if you lack capacity to manage your affairs. If you don’t have a Power of Attorney, it is currently taking 47 weeks for the Court to appoint someone, which is probably 47 weeks too long.

Q8)  Wars are levellers which result in societal change.  The first world war was followed by women getting the vote.  The second world war was followed by the creation of the NHS.  What will COVID-19 be followed by?”

A) We don’t know yet, but we will be working closely with our clients to give them the advice they need as the world around changes.

Our clients value the contribution we, as trusted advisers, can make to their plans, to their security, their peace of mind and objectives.  We can add value to your future too.

If you want to discuss your legal affairs in lockdown and life after lockdown, then please get in touch.

[1] Leaked Treasury document referred to by the Daily Telegraph and the Guardian on 13 May 2020

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