Lawpack – Page 21

Questions you can’t ask in a job interview and why

Lawpack on March 27, 2020

It may seem like innocent small talk to ask someone whether they have children, or how old they are, but employers need to be very careful when interviewing job applicants as these seemingly innocent questions would be illegal.

There are certain dos and don’ts to remember when interviewing:

Do process all the applications in the same way.
Do only ask questions at the interview that are relevant to the job.
Do make sure all employees who come into contact with job applicants are trained about how to avoid discrimination.
Don’t keep separate lists of male and female or married and single applicants.
Don’t make jokes at the interview that are sexist or racist or otherwise biased.

Questions you should avoid asking at a job interview

You shouldn’t ask questions about personal circumstances, such as marital status, children, domestic obligations, marriage plans or family intentions.

You also can’t ask a job applicant about their trade union membership. You can’t use someone’s membership as a reason not to employ them and, equally, you can’t force someone to join a trade union as a condition of their employment.

It’s not permitted to ask about criminal convictions if they are ‘spent’. In this case you should treat the conviction as if it never happened and you can’t use it as a reason not to employ someone. Some employers are exempt from this requirement (e.g. schools).

Examples of questions you should never ask in a job interview

How old are you?

Where were you born?

Are you married?

Do you have children?

Do you plan to have children?

Have you got a disability or chronic illness?

What’s your main language?

Are you a UK citizen?

What religion are you?

How much longer do you want to work before you retire?

What are your long-term career goals?

Have you ever been arrested?

We’ve always had a man doing this job, so how do you think you’ll cope?

Questions you can ask at interview

You can ask about health, provided that it’s to do with a requirement of the job that can’t be dealt with by making reasonable adjustments. You can also ask about health to find out if someone needs help to take part in an interview or selection test.

You can ask if someone is disabled if you are using positive discrimination to recruit a disabled person.

If you want more in-depth expert information – from an employment lawyer – on how to hire someone correctly, then read our guide Employment Law Made Easy. Packed with tips and expert advice on complying with employment legislation.

Other information

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Legal requirements after company formation

Lawpack on March 27, 2020

Once you receive a Certificate of Incorporation from Companies House you have formed your limited company and the limited company directors are now free to issue shares, open bank accounts and start trading, etc.

But be aware, there are still limited company legal requirements you need to fulfil and the limited company directors need to make some company resolutions.

To discuss and agree on the fulfillment of your legal requirements you will need to hold a meeting of all the limited company directors (called a ‘board meeting’). All board meeting decisions must be recorded in writing (called ‘board minutes’). Or, alternatively, all the limited company directors can sign a written company resolution.

Limited company resolution #1 – Issue shares

The limited company directors should allot and issue one share of £1 each to each of the subscribers to the Memorandum of Association. If you have more than one director, a majority of the limited company directors must agree to do so at the board meeting.

Limited company resolution #2 – Issue share certificates

To provide the shareholders with a title document to their shares, the limited company directors will need to issue share certificates at the first board meeting.

Find out more about issuing shares and share certificates.

Limited company resolution #3 – Open a bank account

To open a company bank account, the limited company directors must pass a company resolution of approval.

Limited company resolution #4 – Appoint auditors

The limited company is obliged by law to file annual audited accounts (i.e. approved by a registered auditor). The directors must pass a company resolution appointing auditors for the limited company; the auditors must be independent, i.e. not employees of the limited company.

But there are limited companies that are exempt from having an audit. Find out if you need to appoint auditors here.

If you don’t need an audit, you must appoint accountants to prepare the limited company’s accounts.

Limited company resolution #5 – Appoint a company secretary

Appointing a company secretary is optional after 6 April 2008. If you don’t appoint a limited company secretary, make sure that one of the limited company directors is tasked with ensuring that all company secretary duties are carried out.

Download company minutes and company resolutions today.

Limited company resolution #6 – Decide which financial year end to use

In limited company terms, the financial year end is known as the ‘accounting reference date’. The accounting reference date automatically falls on the last day of the month in which the anniversary of the limited company’s incorporation falls. But it can be changed.

Find out more about how you can change your limited company’s financial year end.

Limited company resolution #7 – Decide where your limited company’s registered office will be based

Your registered office is often your limited company’s office. But you can, as an alternative, use the address of your solicitor or accountant. They will, though, make a charge for this.

Limited company resolution #8 – Decide on the frequency of future board meetings

In practice the day-to-day running of the limited company will be delegated by the board of directors to one or more of them so that it’s unnecessary to hold board meetings frequently.

If the limited company directors don’t wish to hold a board meeting, they can pass a written company resolution as long as all the directors sign that company resolution. The company resolution is dated when the last director signs it and it’s entered in the company minutes book.

Limited company resolution #9 – Decide whether to hold Annual General Meetings

AGMs are traditionally used as an opportunity to lay the limited company annual accounts and directors’ and auditor’s reports before the shareholders, and to deal with other matters (such as the re-election of any directors retiring by rotation and the annual appointment of auditors).

From 1 October 2007 there is now no longer any legal need to hold an AGM, unless your Articles of Association require you to do so. But there is nothing stopping you electing to hold AGMs, if you want to.

Limited company resolution #10 – Transfer assets to the limited company

If you’ve been operating a business prior to forming your limited company, you can transfer the assets and debts of the business to the new limited company at an agreed sum and receive shares and possibly a credit to a director’s loan account in exchange.

But you cannot burden your limited company with more debt than assets. You cannot sell your personal property to the limited company at inflated prices or exchange limited company shares for personal property that is overvalued.

If a limited company director wishes to buy a non-cash asset from the limited company or dispose of such an asset to the limited company (and that asset is above a certain statutory value) the shareholders must approve the transaction in a General Meeting, or by written company resolution. Your accountant can advise you on this. You will also need to take legal advice on how to effect the transfer of your assets to the company.

The limited company directors will also need to pass an appropriate company resolution which must be documented in the board minutes. Stamp duty may be payable on documents relating to the transfer of assets (e.g. property).

Limited company resolution #11 – Decide whether you want to introduce goodwill into the limited company

This shouldn’t be entered into lightly nor without the help of an accountant, but, with careful planning, if you incorporate an existing business (i.e. turn it into a limited company), you should be able to create a sum for goodwill.

Simply put, if you introduce a sum for goodwill from your present business as you incorporate to a limited company, as the business proprietor you will have created a sum in the company’s balance sheet – a sum that is due back to you.

Lawpack’s book 101 Ways to Pay Less Tax gives further tax guidance on how to introduce goodwill into a limited company, plus many other tax-saving tips for your business.

Limited company resolution #12 – Pay tax

You’ll need to report your new limited company to your local tax office and if you’re employing staff, including paid directors, who are employees of the limited company, you’ll need to ask them to set up a PAYE scheme.

The tax office will provide you with the documents required to operate a PAYE (pay as you earn) scheme and tell you how to make National Insurance contributions. You should also contact HM Revenue and Customs to find out whether you need to register for VAT.

Your accountant will be able to help you with queries concerning corporation tax and capital gains tax. Lawpack’s book Tax Answers at a Glance also includes tax guidance on corporation tax, capital gains tax and registering for VAT.

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The contractual rights of employees

Lawpack on March 27, 2020

When you hire someone, obviously you will express the major terms of their employment to them either orally or in writing. Of course, it’s preferable to detail their terms of employment in an employment contract in order to minimise future disputes; although oral terms may be just as binding as written ones, they are very much more difficult to prove.

But as well as these expressed terms, employment contracts also have what is known as ‘implied terms’ giving the employee contractual rights.

Why are implied terms not stated in the employment contract?

They are too obvious to be recorded
They are common practice within the particular business or industry and are precise, reasonable and well known
They are necessary to make the employment contract work
The parties to the employment contract have shown by their behaviour their acceptance of such terms of employment

What are common implied terms?

Your duties as an employer:

To pay wages
To co-operate with the employee and maintain mutual trust and confidence
To take reasonable care for the health and safety of the employee
To take reasonable steps to bring to the employee’s attention any contractual rights which are dependent on them taking action, but which the employee may be reasonably unaware of
To exercise pension rights in good faith
To deal reasonably and promptly with employees’ grievances
To give a reasonable period of notice of termination when no specific period of notice has been agreed

Employee’s duties:

To work for the employer with due diligence and care
To co-operate with the employer, including obeying lawful orders, and maintaining trust and confidence and not impeding the employer’s business
To follow a duty of fidelity, i.e. not compete with the employer and not disclose confidential information, unless in the public interest
To take reasonable care for their own safety and that of fellow employees
To give a reasonable period of notice of termination when no specific period of notice has been agreed

In addition to these implied terms, contract terms may be implied into an employment contract by legislation, for example, equality clauses which are implied by the Equal Pay Act 1970; these terms of employment automatically apply to any employment contract.

Contract terms may also be incorporated into an employment contract from other sources. Prime examples are terms of employment which may be implied into an individual contract through collective agreements and work rules or staff handbooks.

Are there any contract terms that are unenforceable?

Unlawful terms of employment or terms contrary to public policy. For example, an employment contract which has the effect of being a fraud on HM Revenue & Customs or an employment contract under which a foreign employee works illegally without a work permit.
Contract terms purporting to waive an employee’s statutory rights.
Discriminatory terms of employment. For example, on the grounds of sex, race or disability.
Contract terms in restraint of trade if the main purpose is to restrain competition. Such terms of employment are enforceable, however, if their main purpose is to protect something in which you, as the employer, have a legitimate business interest worthy of protection. For any such contract clause to be enforceable it needs to be carefully drafted, taking into account the nature of the employee’s work. If the contract clause is too wide, it will be void.
Terms of employment which purport to exclude or restrict liability for death or personal injury resulting from negligence. In the case of loss or damage other than death or personal injury, a contract term may only exclude or restrict liability for negligence if it satisfies the requirement of reasonableness (Unfair Contract Terms Act 1977)

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What is a consent order?

Lawpack on March 27, 2020

Unfortunately, marriages break down and spouses are forced to make a decision over who gets what, either in a court of law or mutually without legal intervention.

The problem is, financial disputes can arise and even when things seem to have been settled, exes can return and start to claim assets that the other spouse believes are rightfully theirs, among a vast array of other issues.

That’s why it’s a good idea to invest in a consent order, otherwise known as a clean break order, and protect yourself from losing more than is justifiable in a divorce.

What is a consent order?

A consent order is the legal document by which financial matters are finalised on divorce.

Without one, you may be vulnerable to your partner making a financial claim years later.

The advantages of a consent order

One of the great benefits of a consent order is that it is a cost-effective way of getting your financial divorce settlement in writing, saving loads in legal fees.

What the order ultimately sets out to achieve is a mutual agreement between you and your spouse regarding financial matters, while ensuring the other party cannot come at you with a financial claim in later years.

They are highly reliable documents (99.9% reliable) but there are rare occasions when they can be overturned; for example, if fraud takes place.

What is included in a consent order

1. The home you once shared together

Both parties to the divorce must agree what will become of the former matrimonial home, such as whether it will be sold or left to the spouse in custody of the children (where relevant). You might also consider whether the other spouse will begin or continue to make mortgage payments.

2. Other assets

Next up is to consider what will happen to other relevant assets. These could be shares, endowment insurance policies or a family business, among others. It is necessary to determine how they will be distributed.

3. Personal property and furniture

In a similar vein, it must also be decided what will happen to personal property and furniture, such as who will preserve the fine china. Generally this involves each party taking rightful ownership of their own goods; however, discrepancies can arise over who truly owns what. Typically, a standard clause will suggest each spouse retains goods in their possession at the time the order was drawn up.

4. Pensions

Couples making the break in retirement need to decide if they will pursue pension sharing or perhaps offset their funds against other assets.

5. Maintenance

It must also be decided if one spouse will pay the other maintenance. This is particularly relevant where children are concerned, with most courts ruling the parent with child custody deserving of maintenance. You must also agree when such maintenance payments can be completed; for example, upon death or when the child reaches 17.

6. Child maintenance

It is worth pointing out that while the Child Support Agency (CSA) generally determines child maintenance, courts can also order maintenance and either spouse can apply to the CSA for an assessment.

7. Private health care, insurance and school fees

Other factors that must be taken into consideration are expenses such as insurance premiums, private health care and school fees, especially if one party receives these benefits via their employer.

8. Debts

This clause should outline who will take on the responsibility of any debts of the marriage. If they are joint debts, will the paying party compensate their ex spouse?

9. Pets

Who will takes ownership of the family pet?

10 Termination upon death

The consent order should also outline that neither party will have a claim on the other spouse’s assets after they die.

Consent orders are easy to draw up with Lawpack. Our DIY Consent Order Service can help you to make an order for the fixed price of just £100.

Executors: what to do if there is a Will

Lawpack on March 27, 2020

How to probate an estate when someone dies and what to do if you’re nominated as executor in the Will.

Many executors may have been made aware of their duties before death and know where the Will is kept should the worst happen. But if there hasn’t been an opportunity to prepare before the death, then the Will must be located to determine who has been named its executor(s).

Locating the Will

If no Will is found at the deceased’s home, it may have been sent to the deceased’s bank, solicitor or Will storage company for safekeeping or to Lawpack’s Will Storage Service.

In England and Wales, the Will may have been deposited at the Principal Registry (formerly Somerset House), in which case a deposit certificate will have been issued on receipt of the Will; the Will can be reclaimed by sending the certificate to:

Record Keeper’s Department
Principal Registry of the Family Division
First Avenue House
42–49 High Holborn
London WC1V 6NP
Tel: 020 7947 7022

If a Will is found, it must be ascertained that it is the deceased’s last Will by making enquiries at, for example, the deceased’s bank and solicitor.

It must bear the signature of the deceased (in Scotland, it must be signed on every page) and of an appropriate witness or witnesses.

Find out more on what to do if the deceased hasn’t made a Will.

What to do if you find a copy of the Will

In England and Wales, probate may be granted on a copy of the Will so if you can’t find the original, you should notify the Probate Registry as soon as possible that the original cannot be found.

The Probate Registry will tell you what evidence is needed to prove that the original Will hadn’t been revoked by being destroyed before death.

In Scotland, if only a copy of the signed Will can be found, it may be possible for the executors to treat the estate as ‘testate’ and proceed to wind up the estate in accordance with the copy Will, but it will be necessary in the first instance to raise an action in the Court of Session in Edinburgh to ‘prove the tenor’ of the original signed Will using the copy.

If this fails, the estate must be treated as intestate and wound up accordingly.

What if there is more than one executor named in the Will?

If the Will appoints only one executor, or if only one person is able and willing to act, a grant of probate can be issued to one person.

If the Will appoints more than four executors, only four of them will be allowed to apply for the grant of probate.

In any estate, some of the executors may renounce their right to apply for probate. Or they may decide not to apply for the time being but to reserve their right to apply in the future so that if, for example, one of the acting executors dies before the estate has been fully administered, the executor with ‘power reserved’ may take his/her place. The same applies in the scenario where the deceased didn’t leave a will.

In England and Wales, if only one executor is taking out the grant of probate, it’s prudent to have ‘power reserved’ for the other executor(s), even if it’s not anticipated that they will want to apply at any stage.

The Probate Registry provides a power reserved form to be completed and signed by the executors who intend to reserve the right to apply for probate.

In Scotland, confirmation is always issued in favour of all executors who have been nominated and who haven’t declined office. An executor appointed in accordance with the terms of a Will is called an ‘executor-nominate’.

No matter how many executors are named, for practical purposes it’s usually easier if one of the executors undertakes the administrative tasks on behalf of them all.

The executors should meet to discuss the practical side of carrying out their executor duties. All official paperwork must be signed by all executors, even if they agree that one of them will deal with the day-to-day administration. This isn’t the same in Scotland where the application for confirmation (C1 Account) only needs to be signed by one executor.

Get expert help with applying for a grant of probate with our Probate Assist service.

Other information

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How to vet your prospective tenants

Lawpack on March 27, 2020

You’re a landlord who is letting out your investment property. Who is your ideal tenant?

Here are the qualities you should be looking for in the ideal tenant. They should:

not smoke, and be professional, well mannered and well presented;
pay the rent on time, not bother their landlord very often, and never complain;
never have noisy parties, never bother their neighbours, never sublet, and generally not be any trouble to their landlord.

But the most important quality in a tenant is that they are HONEST. Landlords who have honest tenants can manage their investment property effectively and simply, as an honest tenant usually pays their rent on time, communicates well, and resolves any problems concerning the tenancy efficiently.

But how can landlords spot an honest tenant? You may think that you can trust your instincts when you meet a tenant for the first time, but there are some very plausible tenants who make a profession from ‘scamming’ landlords. These tenants are usually polite, well presented and have good jobs, but once they’ve signed the tenancy agreement, they can make a landlord’s life hell!

If you’re thinking of trusting an ‘honest face’, note that research undertaken by the Residential Landlords Association has shown that where no tenant checks are undertaken; landlords are seven times as likely to end up taking court proceedings.

Make sure that you’re not duped by these tenants, by following our five essential steps to tenant checking:

1. Credit referencing

A tenant referencing agency carries out checks on a prospective tenant’s credit worthiness and verifies the tenant’s personal details. These agencies offer various levels of service, but landlords should at least opt for the basic package which will check the following:

Electoral Roll to check out the tenant’s current and previous address
County Court Judgments (CCJ), bankruptcy and any court-based voluntary financial arrangements to find out whether the tenant has a poor credit history
An affordability check to make sure that the tenant can afford the rent on their stated income
Validate the tenant’s bank sort code and address to make sure that it’s legitimate
Check the details that the tenant has given the tenant referencing agency against any relevant stored data

The most important information a tenant referencing agency gathers is whether the tenant has a County Court Judgment (CCJ). If the tenant has a County Court Judgment (CCJ), this isn’t good news as it means that a creditor has previously taken the prospective tenant to court because of their non-payment of debts. If you find out, during the tenant checks, that the tenant has a number of County Court Judgments (CCJs) against them, DON’T let them sign a tenancy agreement.

Often the tenant reference agency will provide the landlord with a score of the tenants’ suitability as a tenant and it may suggest to the landlord a course of action. If the tenant gets a really low score, it may be due to the fact that the tenant has:

never used a credit card or borrowed money
no fixed address and/or they are not listed on the Electoral Roll
lived at their current address for a period of less than six months
been in employment for less than six months
been, or is, a student, or has a low income
a history of debts, late payments or Count Court Judgments (CCJs)

The tenant referencing agency’s scores should be used as guidance, but landlords shouldn’t read them too literally. For example, students will have a bad record as they move around frequently and they have a limited credit history. If this is the case, you can use a guarantor if you want to let out your investment property to students.

The tenant verification process should also involve an identification check to prevent ID fraud. Ask your prospective tenant to show you their passport to prove their identity.

2. An employer’s reference

With tenant referencing landlords can find out whether a prospective tenant is in permanent or temporary employment. If the tenant’s contract is about to expire, can they pay rent in the future?

What is the tenant’s salary? Landlords can use an employment reference to find out if the tenant can afford to pay the rent and, as a guide, you can calculate the tenants’ affordability of the rent in respect to their income by multiplying the monthly rent by 30. This will give you a rough indication of what the tenant’s minimum salary should be to be able to pay the rent. For example, a landlord wants to charge a monthly rent of £1,000. Multiply this by 30 and it equals £30,000. If the prospective tenant’s salary is £20,000, how is the tenant going to afford the rent without receiving benefits or sub-letting the investment property?

3. A bank reference

Landlords will find these tenant references to be the most difficult and time consuming to obtain, as they need written authorisation from the prospective tenant to allow the bank to respond. The bank will then charge a fee for their services and, even then, the bank will probably respond with a non-committal answer (e.g. ‘We see no reason why the tenant will not be able the meet the rent’). As the tenant could easily delve into their huge overdraft to pay the rent, a bank reference is probably not worth the bother.

If you can and the tenant is willing to give them to you, it may be wise to ask the tenant to provide you with copies of their last six months’ bank statements. These will show you the tenant’s monthly outgoings and they will flag up any worrying habits, such as a gambling addiction.

4. A landlord’s reference

If your prospective tenant is currently in rented accommodation, obtain a reference from their current landlord. Ask the following questions:

How long has the landlord had them as a tenant?
What rent do they pay?
Did they pay the rent promptly and in full each month?
Did they ever get into, or are presently in, rent arrears?
Have they cared for the investment property and its contents?
Would the current landlord accept them as a tenant again?

To prevent a prospective tenant from falsifying their landlord’s reference, you could always check it by ringing the current landlord up to verify the details.

Also, remember that a current landlord may give a glowing reference just to get rid of a bad tenant, so it may be wise to check with the tenant’s landlord before the current landlord as they will have nothing to hide. Also, you can check the tenant’s bank statements to make sure that the rent is being paid each month.

Bear in mind, too, that letting agents are on a ‘finder’s fee’, so they may not be as thorough in their reference checks.

If your prospective tenant has not rented before and is a homeowner who has decided to sell their property and rent, you obviously won’t be able to get a landlord’s reference. In this case a landlord should ask for copies of the tenant’s last six months’ mortgage statements to check that they were not behind with their mortgage payment. If the tenant refuses, has the tenant got something to hide?

5. The tenants’ personal reference

As with the landlord’s reference, a personal reference is very subjective. So, again, don’t worry too much about it.

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Lawpack’s range of tenancy products

9 easy steps to making a share transfer

Lawpack on March 27, 2020

This excerpt from our expert guide, How to Run a Limited Company, outlines the steps you need to take when transferring shares in a limited company.

1. Get approval from the board

First of all, you need to ensure that the person to whom you wish to transfer the shares has the board’s approval.

You may need to watch out for pre-emption rights, which means another person (existing shareholder or anyone else) has the right to buy these shares.

Lawpack publishes an Approval and Register of Transfer of Shares template, which can help the directors to record their approval and the directors’ agreement to transfer the shares.

2. Sign a contract

Before you transfer shares in a limited company that you are selling, it would be as well to get the buyer and seller to sign an agreement as to what is to happen.

A suggested form of agreement (contract) – called Contract for Sale of Shares in a Private Company – is included on our guide How to Run a Limited Company.

If only you and the buyer are shareholders in the company, you can alternatively use our solicitor-approved template form Agreement to Sell & Buy Shares in Limited Company.

3. Get a share transfer form

Once the name of the transferee has been agreed, get a blank share transfer form. Lawpack provides a solicitor-approved stock transfer form template which includes expert guidance to help you complete the legal form.

4. Fill in the stock transfer form

Complete the stock transfer form as far as you (the company secretary) are able and send it to the person transferring the shares (the transferor), who should send it to the company secretary with their old share certificate for it to be cancelled.

5. Send the transfer form to the transferee

Send the transfer form to the transferee for them to complete their section before returning the form to the company secretary.

6. Get the form stamped

The stock transfer form should be stamped by the HMRC, normally at the rate of £0.05p per pound of the value being transferred.

The transfer may be exempt if no money is being paid for the shares.

It is the purchaser of the shares that has to pay the Stamp Duty.

The address for paying Stamp Duty is:

Birmingham Stamp Office
Ninth floor
City Centre House
30 Union Street
Birmingham B2 4AR
Tel: 0845 603 0135

Find out more on transferring shares and paying Stamp Duty with our article Transferring shares in a limited company.

7. Note the transfer in the register of transfers

Once this has been completed, the company secretary should note the transfer in the register of transfers, issue the new share certificate in the name of the new owner and enter their details in the shareholders’ register.

8. Issue new shares

If the transferor is transferring only some of their shares, when you reach procedure 4. above, the company secretary will issue not one but two share certificates.

The company secretary will send one to the transferor for the balance of shares that they are retaining and one to the new holder for the shares they are acquiring.

9. Note the transfer in the next Annual Return

If the transferor is transferring their shares to more than one shareholder, separate transfer forms will be required and both will need to be stamped.

The transfer will need to be noted on the next Annual Return submitted to Companies House.

Further information

Transferring shares in a limited company

External information

HMRC: Stamp Duty on shares

Choosing someone to look after your affairs

Lawpack on March 27, 2020

If you’re worried that your affairs may be left in limbo if you get ill or have an accident, then you can use a Lasting Power of Attorney (LPA) to grant someone the power to look after your affairs.

Alternatively, if you feel that a close relative of yours is getting frail or there is a chance that they may become mentally incapable in the future, then you may think it’s wise that your relative gives you the authority to pay bills and sell assets on their behalf should they become unfit to do so.

Find out more about the different types of Power of Attorney available.

When you’re making a LPA (or a Continuing or Welfare Power of Attorney in Scotland), you need to choose who will look after you affairs in the future, if you’re not able to do so.

The person you select will be called an ‘Attorney’. But who do you choose to be an Attorney and can you choose more than one person?

How many Attorneys can I appoint?

You (called the ‘Donor’ in legal terms) can appoint one person to look after your affairs or you can choose more than one. Careful thought should be given when you’re choosing your Attorney, as they will be dealing closely with your personal affairs.

Also, do consider who would be a practical choice of Attorney. Someone living abroad, for example, wouldn’t be able to deal with your affairs that easily.

If you have more than one Attorney, you can require the Attorneys to act ‘jointly’, or ‘jointly and severally’, or jointly for some matters and jointly and severally for others.

If you appoint your Attorneys to act jointly, it means that they must all make any decisions together.

If you appoint your Attorneys to act jointly and severally, this means that they can make their decisions together but may also make their decisions separate from one another and need not consult each other about those decisions.

If you appoint your Attorneys to act jointly in respect of some matters and jointly and severally for others, then for those matters that you said they must act jointly they must agree but for the others they can act together or separately.

Who can be my Attorney?

Many people appoint family members to be their Attorney(s). For example, you can appoint your spouse as your Attorney, together with your children, with an informal understanding that your children won’t act while your spouse is able to do so.

But, by law, your Attorney must be over 18.

Also, if you’re making a LPA Property and Financial Affairs (or a Continuing or Welfare Power of Attorney in Scotland), the Attorney cannot be an undischarged bankrupt or an interim bankrupt and if they are made bankrupt, they will cease to be an Attorney (if they are the only Attorney, the Power will be automatically revoked).

This bankruptcy restriction doesn’t apply when you’re making a LPA Health and Welfare.

Can I replace an Attorney?

You can appoint a person to replace your Attorney(s) and the replacement will occur if the following happens:

The Attorney refuses to act by ‘disclaiming’ the appointment (i.e. they have told the Office of Public Guardian that they no longer wish to act as an Attorney).
They die or are made bankrupt (bankruptcy is only applicable to a LPA Property and Financial Affairs and a Continuing or Welfare Power of Attorney in Scotland).
They are your spouse (or civil partner) and you get divorced and there are no other Attorneys (or the Attorneys can only act jointly) and no replacement Attorney.
The Attorney doesn’t have ‘capacity’ to exercise the Power. (The Attorney can only take control of a certain matter if you don’t have the capacity to make a decision).

You don’t have to appoint a replacement but if you don’t, then a LPA will end when the Attorney can no longer act or any of the above prevent them from doing so.

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Transferring shares in a limited company

Lawpack on March 27, 2020

If you need to transfer shares from one limited company shareholder to another, you will need to complete a stock transfer form, in accordance with the Stock Transfer Act 1963.

The stock transfer form must be signed by both of the parties involved in the transfer and a copy should be kept on record.

Lawpack provides a stock transfer form template that has been drafted by solicitors for straightforward completion and contains all the information required.

What is a share transfer?

A share transfer, or a stock transfer, allows you to shift the legal ownership of company shares to someone else.

There are a number of reasons why you may need to transfer shares. For example, one shareholder may be leaving the company, while another may retire.

Similarly, in the event of a shareholder’s death, their stock holdings may be transferred to another person.

How is a share transfer made?

A share transfer is made by means of a stock transfer form, which can be downloaded through Lawpack’s website.

Typically, the current shareholder will fill in the form, providing details of the shares to be transferred.

Once it is signed, it will be handed over, together with a share certificate to the transferee. Payment, if necessary, will be made at this point.

The transferee will then complete the relevant sections of the stock transfer form, including any information required on tax.

Do I need to pay stamp duty?

This depends on the circumstances involved in the transaction. If no money or value is paid for the transfer, then you will not be liable for stamp duty.

If money or value is paid, then stamp duty will apply, but only if the transfer is valued at more than £1,000.

This applies to any legal forms used on or after March 13th 2008.

If the value falls below this, then an exemption certificate must be completed.

Transfers valued above £1,000 are subject to stamp duty at 0.5 per cent of the price paid for the shares. This will be rounded up to the nearest £5.

So if you were to transfer shares for £10,000, stamp duty of £50 would need to be paid (£10,000 x 0.5 per cent = £50).

Stamp duty on share transfers has a minimum value of £5. So if the amount payable is less than this amount, then you will still have to pay £5.

What happens next?

If stamp duty is to be paid, then the stock transfer form must be sent along with the correct fee to HM Revenue and Customs, where it will be stamped.

This fee must be sent in the form of a cheque or international money order made payable to HM Revenue and Customs.

The completed and stamped form and the share certificate must then be forwarded by the transferee to the transferor. If no stamp duty is payable, the stock transfer form will be sent straight to the transferor.

Upon receipt of the documents, the company whose shares are being transferred will cancel the old share certificate and update its register of members.

It will also record the details of the transfer and issue a new certificate to the transferee within two months of the date the transfer was lodged.

There is no need to send a form or give notice to Companies House, as this will be included in the next annual return filed for the firm.

Circumstances in which a stock transfer may take place

As mentioned, a stock transfer may take place in a number of circumstances.

If a shareholder dies, their shares and the associated rights must be given to a personal representative or executor.

This individual will either register themselves as a member or transfer the shares directly to the beneficiary named in the deceased’s will.

Similarly, if a shareholder is declared bankrupt, their shares will be moved to a trustee who will again register as a member or sell on the shares directly.

If a shareholder leaves the company or retires, an agreement on what to do with their shares must be reached.

Shares can be bought back by the company and redistributed among the remaining shareholders, or they could be transferred to a single individual.

What information should a stock transfer form contain?

A stock transfer form from Lawpack will contain the following information:

Consideration
Company details
Share type and value
Current shareholders
New shareholders
Stamp duty declaration

Our stock transfer form template is suitable for use by companies registered in England, Wales and Scotland.

It is not lawful for a transfer of shares to take place without the necessary paperwork and procedures.

Further information

External information

HMRC: Stamp Duty on shares

Cohabitation: how to buy property together

Lawpack on March 27, 2020

When you first decide to start living together and want to buy a property, romance is top on the agenda. The last thing on your mind is the legal aspects of living together. You can’t imagine not being together and, anyway, won’t you have automatic rights to the property?

But this isn’t always the case. You may think that couples living together have the same rights as married couples and that the law will protect you financially as you’re a ‘common law spouse’, but you have no financial rights if you separate or one of you dies.

So, when you decide to buy a property with your partner (in England and Wales), make sure that your conveyancing solicitor discusses with you, at the outset, whether you should own the property as ‘joint tenants’ or ‘tenants in common’. For cohabitees, the distinction is extremely important.

Joint tenants

If you own the property as joint tenants, this means that you will each have an equal interest in the property and if one of you dies before the other, the share of the person who has died will pass automatically to the other.

With a joint tenancy, even if you, or your partner, have made a will, the surviving partner will still receive their share of the property, whatever the will says. If neither of you have made a will and one of you dies ‘intestate’, which means that the assets will be distributed according to the ‘law of intestacy’, the surviving partner will still inherit the property.

You can find out more about the law of intestacy and making a will here.

But, apart from the property, you, as a cohabitee, will have no automatic rights to any of your partner’s other assets should they die. This is why it’s vital that you make a will.

Find out about the risk you take if you’re part of an unmarried couple and haven’t made a will or you can stop worrying and make a will today here.

Tenants in common

If you’re living together and owning the property as tenants in common, you don’t necessarily have equal shares. You may think this is appropriate if you have made unequal contributions towards the purchase price and want this to be reflected on the sale of the property.

Owning a property under a tenancy in common also means that your shares are separate from each other, which means that if one of you dies before the other, the share of the person who has died doesn’t pass automatically to the other, but instead passes according to the wishes of the Will the deceased partner made or the law of intestacy, as appropriate.

You can find out more about the law of intestacy and making a will here.

If you intend to hold the property as tenants in common, you should discuss with your conveyancer whether you should enter into a trust deed. They can draft one for you. This is a binding agreement regarding your property, valid in England and Wales, which means that you can regulate what will happen to the property in the event that you separate (e.g. on what terms one of you can be bought out).

Cohabitation in Scotland

In Scotland, the concepts of ‘joint tenants’ and ‘tenants in common’ don’t apply, although the law is similar. A couple living together can hold a property in joint names by stating in the title deed (using a survivorship clause) that each of them will leave the property to the other if one of them dies.

As with a joint tenancy in England and Wales, if the title deed includes this clause and one of you dies, the deceased’s share will pass to the other under this ‘survivorship destination’ in the title deed and not according to the will the deceased partner made, or the law of intestacy.

The survivorship clause is, in effect, a contract between you and you cannot revoke it unless you both agree, although if you are married, the survivorship clause has no effect if your marriage ends in divorce or is annulled.

But you can do so if there is a clause in the title deed which allows one of you to do this without the other’s consent. So it’s important to discuss the matter with each other and make it quite clear to a solicitor what type of survivorship clause you want.

Alternatively, cohabitees can hold a property in joint names without a survivorship clause in the title deed (similar to ‘tenants in common’ in England and Wales). You don’t have to have equal shares and if one of you dies, the deceased’s share doesn’t automatically pass to the other as survivor, but passes according to the wishes of the deceased’s Will or the law of intestacy, if your partner hasn’t made a will.