Foreword

Tales of financial woe are clearly shaking client confidence at present. At least we don’t live in Zimbabwe where 165,000% inflation has rendered pension income as valueless as shares in Northern Rock or Bear Stearns. But the Office of National Statistics has released figures showing that in recent years 62% of pensioner couples still had under £10,000 in pension income. Half of single pensioners have under £6,000. This sounds pretty depressing especially as some pensioners are being hit with the loss of the 10% income tax rate. That is assuming the Prime Minister does not decide otherwise by the time this item goes to print. (The council elections in May generate a disproportionately large vote from older people. But perhaps he forgot that?)

However, the average pensioner is still better off in real terms than they were a decade ago according to the statisticians. The average pensioner couple had state pension and benefits of just under £7,300 in 2005-6 (the latest year for available figures) which represents a post inflation increase of a third over 10 years. Only £2115 of that came from private pensions though. This must show how terrible our state pension was in the past and just how much the dreadfully creaky pension credit system has been relied upon. Better off does not mean well off of course. About 60% of pensioner couples are still below the poverty line according to the National Pensioner’s Convention. Roll on the reinstated link between earnings and the state pension in 2015? It certainly seems there is unlikely to be a great rush to pay more into private or company schemes (though expect the use of force in the not too distant future methinks).

Have probate practitioners noticed a resurgence in use of safe deposit facilities? It is on the up it seems, though it may take a few years to show up of course. I have personally found that staff in charge of bank vaults where safe deposit boxes are stored always have interesting and revealing tales to tell. I also recall reading that many years ago the bank officer responsible for a large vault in New York claimed that, during the financial panic of 1907, many local notables had placed packages of bank notes in safe deposit boxes. Of one man he said that each week he would call in and ask to see his box and would “…take out the bills and count them over a couple of times, a smile on his face during all of the procedure. When finished, he would return the box to its little space, but before actually locking its door would pull out the box about three times, lift the lid, gaze fondly at the stack of bills, and gently, even lovingly, pet them.” (The New York Times 12th June 1910). Human nature has not changed so much to this day has it? Panic and safe deposit boxes go together but after the manner of Norman Vincent Peale, I should also note that the world has still not ended despite the gloomsters and the many books pouring out from financial survivalists currently.

Their popularity stems from the fact that hard cash placed within a bank vault cannot be loaned out by the bank as it is not theirs to use. Otherwise heaven help you it seems:

“… it is neither possible, nor desirable, to ensure that no bank will ever fail in any circumstance.” (Financial Stability and Depositor Protection – Bank of England and HM Treasury – p3 January 2008).

All UK savers should be aware of the limited level of depositor protection which might be available in the worst event. But it’s actually quite complicated, so more questions are being asked of lawyers by worried clients. You might possibly be slightly daunted by the 139 pages of the relevant ‘Redress’ section of the Financial Services Authority (FSA) Handbook available from the FSA website, (www.fsa.gov.uk). It is complex and difficult to understand. It uses shorthand jargon and is cross-referenced to a glossary, which runs to a further 340 pages. It’s not an easy read.

However, there is a user-friendly ‘Consumer Guide’ available from the FSCS website (www.fscs.org.uk) which covers all the basics for the more fainthearted. But when it gets to really complex issues about foreign bank deposits – for example, with Icelandic banks owned by the Eric Bloodaxe family trust (if I am not mistaken) – then you are frankly best calling the hotline. Basically you will usually find that £35,000 deposit protection is available subject to the usual lawyerly plethora of ?ifs’ and ?buts’ and ?maybes’. It also applies to client account monies with the same issues attached. Just imagine all the fun we could have.

But there again the best rule of thumb may be just to go for size as then any problems with your bank will surely be for the

Sub Prime Minister to sort out, assuming he does not want rioting on the streets. A potential horde of aging Newcastle depositors with violent intentions was clearly pressing heavily on his mind at one key point not so long ago. And that was only the local football team.

But even the tin box may not be as safe as it seems. Dwarika Prasad, a ghee trader in Qazipur, India, fell out with his wife and children. So fearful of their depredations he resorted to putting his life savings in locker 17 at the Nayatola branch of the Central Bank of India. He stated later that he had locked away cash and fixed deposit documents, amounting to 682,000 rupees (around £8,300). He returned to the bank after a couple of years only to find an empty plastic bag and a disintegrating heap of termite dust. They had mistaken the banknotes and other papers for their usual fodder of leaf litter. (Deccan Herald April 2008)

You must excuse me for now as I am just building my underground shelter into the local granite, in which I shall be secreting my stock of gold sovereigns and a pile of back issues of The Beano. Back next issue or so I hope.

David Coldrick
Consulting Editor

Features

Asset protection and the elderly This article is for subscribers only
Asset protection for the elderly is a subject that seems to flit in and out of fashion, with far greater interest in times of uncertain economic conditions and house price stagnation/deflation. When things are good, people tend to assume that there will be plenty to go round, and that their care can be funded and an inheritance provided for their intended beneficiaries. When times are bad, there are no such assurances.

Paying the price: The cost of discontinuing probate claims This article is for subscribers only
In a legal environment where probate claims are mushrooming, it is only to be expected that a proportion of claims will fall by the wayside – and given that the chief protagonist who would have all the answers has, by definition, died, it is not surprising that many such claims fail because the initial evidence is inadequate and is never made good. With the benefit of hindsight, particularly as trial approaches, those seeking to propound a will may well find that a sober assessment of their prospects of success leads, inevitably, to the conclusion that the claim should be abandoned.

The current state of care This article is for subscribers only
The recent report from the Commission for Social Care and Inspection (CSCI) ‘State of Social Care in England 2006/07 has yet again highlighted that our care system is failing. It shows there is an increasingly sharp divide between those in the formal system and those outside it, and more are falling outside it. In many councils, only the most needy are receiving care provided or arranged by their local authority, as 62 per cent of councils raise their eligibility criteria to ‘substantial’ or ‘critical’ denying those with moderate or low care needs.

Handling the challenges of cross-border estates This article is for subscribers only
Human nature is such that it can be rather flattering to be asked to be someone’s executor and, perhaps also with the unworthy thought of the fees involved, it is tempting to accept the responsibility without too much thought. This is unwise at the best of times, and can be exceptionally so in the case of an international estate with possibly unforeseen (even unforeseeable) complexities.

Cover feature: A visitor's perspective This article is for subscribers only
Now here’s an irony. Back in July last year, when writing about a day in the life of a Lord Chancellor’s visitor, I concluded by saying, “We all await further changes following implementation of the Mental Capacity Act (MCA). However, whatever these may be, the needs of our clients will remain at the forefront and the Visitors’ dedication to their role will endure”.
Little did I know that, come October 2007, the practice of the Office of the Public Guardian (OPG) and the role of the visitor was to change so significantly that I and others felt we could not continue visiting without colluding with a system which seemed set to fail, rather than protect, clients.

Regulars

Case digest This article is for subscribers only
Case digest prepared by Caroline Bielanska, chair, Solicitors for the Elderly.

In search of beneficiaries... Free
One aspect of a probate researcher’s job, which is often overlooked, is the very sensitive nature of information that we deal with on a day-to-day basis. Death is, after all, generally not a pleasant topic of conversation, and yet it is the starting point of our work.
Once we have mapped the family tree out and located nextof kin, managers are then left with the unenviable task of informing the relatives, sometimes as close as the mother or father of the deceased, of the news – the death itself being only one part of the conversation.