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real & personal Personal Affairs News Summer 2011

Contents 1-2

Annuity rules relaxed

2

The asbestos time bomb

3

Closing the gender pension gap

4

Traffic law team launched

Annuity rules relaxed What the changes mean for you

We all want to ensure our loved ones are well provided for when we shuffle off this mortal coil. But passing on our assets to the next generation is not always straightforward. Until recently it was insurance companies – not the relatives left behind – which often stood to benefit. Not any longer. Rules that effectively forced savers to convert their pensions into annuities by the age of 75, providing them with a guaranteed pension income, have been scrapped. This is good news for those of us who want to pass on any unused pension funds to family and have greater control over our pension pots. The old deadline meant that many

“But when they died, any remaining capital

charge of 55 per cent, not up to 82 per cent

went to an insurance company rather than

as before. This means that you can then

their loved ones. This meant there was no

pass on any unused pension to a surviving

lump sum death benefit to pass on to

spouse or dependant children as a lump sum.

relatives.

The tax-free status of pension lump sum

“But new rules introduced in April this year

death benefits payable before retirement

have changed all that. Under the new rules

remain unchanged under the new rules and

which came into effect on 6th April there will

it is still the case that you should consider

be just one 55 per cent income tax charge,

nominating any lump sum death benefits

irrespective of a person’s age on death.

into a trust.

as opposed to a 35 per cent charge if they

As a consequence, you no longer have to

“Nominating your lump sum death benefit

died before 75.

convert your pension fund into an annuity

to a trust would provide a managed fund to

once you reach the age of 75 but can

hold assets if those you want to benefit are

continue to draw down your pension.

either too young or are unable to look after

pensioners had to buy an annuity when rates were poor or continue to draw income from the pension fund and face a possible 82 per cent tax charge on death,

“Most people felt compelled to take out an annuity to avoid paying this draconian tax,” said Matthew Braithwaite, a solicitor with

“Any amount left in the pension fund when

Stone King’s trusts and estates team.

you die will now be subject to a lower tax

their own affairs; and also avoid bringing the lump sum within the estate of a surviving spouse or dependant, only to then


Annuity rules relaxed - What the changes mean for you (continued)

be subject to an inheritance tax charge on

inheritance tax on their death. While a 55

of a trust to receive any remaining lump

their death.

per cent tax charge may sound steep, it is

sum.

Matthew added that pensions have become

a great improvement for the over 75s.

“Whether you want to ensure flexibility over

even more attractive investments to savers

“You can’t avoid paying the 55 per cent tax

how your assets are used, or reduce your

who want to pass on their nest egg to family

charge” he said but can now make provision

tax burden, Stone King’s trusts and estates

members and at the same time avoid

for those you leave behind through the use

team can help.”

The asbestos time bomb Industrial disease claims set to peak It’s the single biggest cause of work-

and don’t pursue their old employers.

related deaths in the UK. Asbestos kills

This means that some sufferers and their

a staggering 4,000 people every year -

families could be losing out on

more than die in road traffic accidents.

compensation.”

One could be forgiven for thinking that

David added that it is up to the claimant

the problem had gone away thanks to

to show that their former employer owed

Stone King has access to an extensive

better industry regulation. But the

them a duty of care and that the level of

database containing information about

shocking reality is that the epidemic of

asbestos exposure was sufficient to

previous claims, the companies involved

asbestos related illness and death has

constitute a breach of that duty.

and details of their insurers. This

yet to peak.

information can prove invaluable when “It’s vital to establish a direct causal link

pursuing cases on behalf of claimants

This is because symptoms can take

between the respiratory symptoms and

and their families.

decades to emerge so many workers

the asbestos exposure,” he said. “A key

exposed to asbestos 20 or 30 years ago

question is what symptoms, if any, would

have still to fall ill. Asbestos related

the claimant have suffered had the

asbestos related disease can take time

diseases range from asbestosis, which

employer not been negligent in

because witness statements have to be

causes damage to lung tissue and

permitting the exposure. We work closely

gathered, employment and tax records

with experienced respiratory physicians

obtained and medical opinions sought.

breathlessness, to the incurable cancer mesothelioma. Making a successful claim for an

But mounting a successful claim for an

and engineering experts to establish this

“It’s therefore crucial that you seek

direct causal link on behalf of our

specialist legal advice as quickly as

clients.”

possible if you, or someone close to you,

specialist legal and medical knowledge

However, establishing just who is liable

has been diagnosed with an asbestos

according to David Milton, a personal

in such cases is not always easy.

related disease,” said David. “Our personal

injury specialist at Stone King.

“Difficulties arise if the claimant has

injury team represent claimants on a no

worked for a number of different

win, no fee basis and we can advise you

employers, or if the same employer has

on the potential merits of your claim.

asbestos related disease requires

“The key point to consider here is the time of diagnosis,” said David. “A claim for an asbestos related disease can be brought many years after exposure but

used different trading names, “added

“We know that a diagnosis can be

David. “If the employer is not insured

devastating for sufferers and their

then it may not be worth pursuing them.

families and understand the need for

the sufferer becoming aware of the

“And given the long length of time before

great sensitivity at such a difficult time.”

diagnosis, and that the likely cause

people fall ill, there is the question of

David concluded: “People need to be

was a previous exposure to asbestos.

whether the company responsible still

aware that this isn’t a problem of the past

must be started within three years of

“But many sufferers believe mistakenly that a claim must be made within three years of exposure, rather than diagnosis,

exists. However, it is possible to apply for

- it’s very much an ongoing issue. Sadly

the restoration of a company to the

for some sufferers justice comes too late

register just for the purposes of bringing

or not at all.”

a claim.”


Closing the gender pension gap New ruling could alter payouts for divorcing couples Women are statistically safer drivers

one party to the marriage being

than men and have long enjoyed lower

significantly worse off in retirement than

insurance premiums as a result.

the other. “

They fare less well, however, when it

So how can this disparity be addressed

comes to pensions as women tend to live

as the law stands currently? Stone King

longer than men and so receive smaller

offers the following advice:

annual payouts when they retire. Such financial disparity can become a major issue when a couple decide to separate.

1. Pension sharing It is possible for a pension fund to be ‘shared’ between a divorced couple. This

But the European Court of Justice (ECJ)

that the portion would no longer be paid

would provide a share of the (usually)

if the wife remarries or the husband dies,

has ruled that gender discrimination in

husband’s pension fund to be invested in

which tends to be why this provision is

the pricing of insurance is to be outlawed

a separate pension in the wife’s name,

used only infrequently.

from December 2012. “The effect of this will potentially range from the cost of car insurance - with women being expected to lose out on reduced premiums from which they have benefited for years - to pension annuity rates being brought in line, regardless of gender,” said Caroline Fell, a solicitor in Stone King’s family and mediation team. “It is this element which highlights the issue of the disparity in pension positions

therefore providing her with an entirely independent pension which would be unaffected by the husband’s death or either of them remarrying. The share which the wife would receive is often calculated by assessing what share

“It can therefore be seen that there are mechanisms which allow for fairness to be achieved with regard to pensions on divorce,” added Caroline. But how does the recent ECJ decision impact on this?

would provide both the husband and the

“The decision relates primarily to the

wife with equality of income on

calculations made on assessing the

retirement. 2. Offsetting the value of the pension fund Where there are other assets available

appropriate pension share which is to be paid to the wife,” said Caroline. “At present, as a woman’s life expectancy is greater than that of a man, the annuity

which currently exists between many

to the family, it may be possible to agree

rates differ and this affects the

men and women, and the consequent

that the party with the lower pension

calculations accordingly.

necessity for this to be considered when

provision receives a larger share of the

a couple separate.

other assets, such as the family home

“If annuity rates are no longer gender

or savings/investments, by way of

specific, this could potentially result in a

“After a long marriage, it is often the case

compensation for the difference in the

noticeable difference in the calculations

that, other than the family home, the most

pension funds. Careful consideration

made. It is therefore important that very

valuable assets of the family are the

would need to be given as to the impact

careful advice is obtained to ensure that

couple’s pensions. Although this is perhaps

which this would have in retirement and

fairness is provided when looking at

a little stereotypical, where the husband

whether the alternative distribution does

pensions on separation.

has been the main breadwinner through

indeed compensate for the loss of

the marriage and the wife has spent some

pension benefits.

or much of the marriage caring for the

“As ever, the constant changes to financial rules and regulations do little to assist in making informed decisions

children, it tends to be the husband who

3. Pension attachment

has accrued the largest pension.

This is a relatively rarely used process

when planning for the future. However,

which allows for a portion of the

it is a useful reminder that pensions are,

husband’s pension to be paid to the wife

and indeed should remain, a central

ensure that any major differences in the

on his retirement, direct by the pension

issue for consideration when a couple

couple’s pension positions are not simply

providers. However, the primary

separates and expert legal advice should

overlooked as this would risk resulting in

disadvantage with this arrangement is

be sought in such situations.”

“So, on separation, it is important to


Traffic law team launched The use of increasingly sophisticated

Andrew and fellow team member

technology by police has resulted in an

Jonathan Lewis are both higher court

increase in the number of people being

advocates which means they can conduct

prosecuted for motoring offences.

cases in the crown court as well as magistrates’ court. Other members of the

But it’s often possible to reduce or even

team include Celia Strathdee, who has

overturn penalties and driving bans,

27 years’ legal experience, and Richard

especially if there are procedural errors

Kirby, a former court legal adviser.

in the prosecution case or if equipment has been used incorrectly. Stone King has successfully defended thousands of drivers over the years with expert legal advice and has now launched its own specialist traffic law team.

“The number of drivers who we have

Emma added: “Very few people think of

successfully defended continues to

motoring offences as crime, but in fact all

grow,” said Emma. “Last year alone we

motoring offences are dealt with in the

dealt with several hundred such cases.

criminal courts. Thus, they are subject to

Our work includes advising motorists on

the strict rules of criminal evidence. And

the best possible outcome and agreeing

that’s where our traffic team comes in.

The new team is made up exclusively of

objectives. Our success rate in achieving

five experienced solicitors with more than

those objectives is 99 per cent.

71 years’ courtroom experience between them. This means there are no paralegals, sales team or clerks.

“Whatever the driving offence, expert advice from lawyers experienced in road

“So we have decided to set up our own

traffic law can often make the difference

dedicated traffic law team in order to

between you losing your licence – and

build on this success and ensure we

possibly your job – and keeping it. So if

The traffic team deals with motoring

continue to provide a first-class legal

you are being prosecuted for a motoring

matters ranging from speeding, parking

service to motorists.”

offence contact us for free initial advice.”

Working alongside Emma is Andrew

If you would like to talk to Emma Haley

tickets, and drink-driving to more serious cases of causing death by dangerous driving. It is run by Emma Haley, an experienced courtroom advocate who specialises in traffic law.

Banks, newly appointed partner and head

or any other member of the traffic team,

of the firm’s crime team, who specialises

please call 01225 337 500 or 0759

in transport law and whose expertise is

5491041 or email

highlighted in the prestigious Legal 500

emmahaley@stoneking.co.uk

directory.

www.stoneking.co.uk Bath London Cambridge

Melksham

Real and Personal deals with some current legal topics. It should not be used as an alternative to specific legal advice on the individual circumstances of a particular problem.

Stone King LLP - registered limited liability partnership no OC315280, registered office 13 Queen Square, Bath BA1 2HJ T: 01225 337599

© Stone King LLP 2011 05/2011


real_and_personal_summer_2011