Archive for the ‘General, Trusts Wills and Probate’ Category

Pension Entitlement Depends on Social Integration

Are the conditions of entitlement to state pension credit under the 2002 State Pension Credit Regulations compatible with EU law? That is the question raised by a recent Supreme Court case in which a Latvian national attempted to claim the same pension credit rights afforded to British and Irish citizens.

 
Under the general provisions of European law, citizens of any EU member state are subject to the same obligations and enjoy the same benefits under the legislation of any member state as the nationals of that state.
 
However, the basis of entitlement under the 2002 State Pension Credit Act is whether the claimant is ‘in Great Britain’. Regulations under the Act set out the circumstances in which a person is treated as being in, or not being in, Great Britain. The test is whether or not the person is ‘habitually resident’ in the United Kingdom or elsewhere in the ‘Common Travel Area’ of Great Britain, Ireland, the Isle of Man and Channel Islands. But the rules as to when a person is or is not to be treated as ‘habitually resident’ do introduce tests that raise issues about nationality.
 
‘Habitually resident’ means that the person must be resident for the purposes of work or other prescribed purposes. Everyone, including United Kingdom nationals, must meet this requirement. But while all United Kingdom nationals have a right to reside in the United Kingdom, not all of them would be able to meet the test of habitual residence.
 
When retired factory worker Galina Patmalniece, a Latvian national of Russian origin, moved to the UK in 2000, she hoped to win refugee status. Although she failed in her applications, she became entitled to remain in Britain as a consequence of Latvia’s accession to the EU in 2004. Ms Patmalniece was not able to acquire a right to ‘habitual residence’ however, because she is no longer a worker, is not self-employed, is not self-sufficient or a member of a family of such a person.
 
Counsel for Ms Patmalniece submitted that the requirement to have a right to reside here discriminated directly between citizens of the United Kingdom and citizens of other Member States. It was argued for the Department of Work and Pensions, however, that a person would only be eligible to receive state pension credit if they could show economic integration in the United Kingdom or a sufficient degree of social integration here. What the regulations sought to do was to prevent exploitation of welfare benefits by people who came to this country simply to live off benefits, without working or having worked here.
 
The conclusion of the Supreme Court was that, although the 2002 Regulations discriminated against nationals of other EU member states, the conditions laid down are objectively justifiable on grounds independent of a claimant’s nationality.
The appeal by Ms Patmalniece was duly dismissed.
 
This area is complex, and is complicated further by the obscure language of the relevant legislation. British nationals who spend considerable time out of the UK, as much as nationals of other member states, could be in danger of falling foul of the ‘habitual residence’ requirement and should seek expert advice if concerned.

Are the conditions of entitlement to state pension credit under the 2002 State Pension Credit Regulations compatible with EU law? That is the question raised by a recent Supreme Court case in which a Latvian national attempted to claim the same pension credit rights afforded to British and Irish citizens.

Under the general provisions of European law, citizens of any EU member state are subject to the same obligations and enjoy the same benefits under the legislation of any member state as the nationals of that state.

However, the basis of entitlement under the 2002 State Pension Credit Act is whether the claimant is ‘in Great Britain’. Regulations under the Act set out the circumstances in which a person is treated as being in, or not being in, Great Britain. The test is whether or not the person is ‘habitually resident’ in the United Kingdom or elsewhere in the ‘Common Travel Area’ of Great Britain, Ireland, the Isle of Man and Channel Islands. But the rules as to when a person is or is not to be treated as ‘habitually resident’ do introduce tests that raise issues about nationality.
‘Habitually resident’ means that the person must be resident for the purposes of work or other prescribed purposes. Everyone, including United Kingdom nationals, must meet this requirement. But while all United Kingdom nationals have a right to reside in the United Kingdom, not all of them would be able to meet the test of habitual residence.

When retired factory worker Galina Patmalniece, a Latvian national of Russian origin, moved to the UK in 2000, she hoped to win refugee status. Although she failed in her applications, she became entitled to remain in Britain as a consequence of Latvia’s accession to the EU in 2004. Ms Patmalniece was not able to acquire a right to ‘habitual residence’ however, because she is no longer a worker, is not self-employed, is not self-sufficient or a member of a family of such a person.

Counsel for Ms Patmalniece submitted that the requirement to have a right to reside here discriminated directly between citizens of the United Kingdom and citizens of other Member States. It was argued for the Department of Work and Pensions, however, that a person would only be eligible to receive state pension credit if they could show economic integration in the United Kingdom or a sufficient degree of social integration here. What the regulations sought to do was to prevent exploitation of welfare benefits by people who came to this country simply to live off benefits, without working or having worked here.

The conclusion of the Supreme Court was that, although the 2002 Regulations discriminated against nationals of other EU member states, the conditions laid down are objectively justifiable on grounds independent of a claimant’s nationality.



The appeal by Ms Patmalniece was duly dismissed.



This area is complex, and is complicated further by the obscure language of the relevant legislation. British nationals who spend considerable time out of the UK, as much as nationals of other member states, could be in danger of falling foul of the ‘habitual residence’ requirement and should seek expert advice if concerned.

Will Error Sees Beneficiary Lose Out

A recent case serves as a reminder that the intestacy rules only recognise a person’s natural, adopted or illegitimate children and illustrates the need to make sure that no mistakes are made when you sign the document.
 
Because a husband and wife signed each other’s wills in error, a man they regarded as their adopted son has lost the right to inherit their estate, worth £70,000. So ruled the High Court.
 
Maureen and Alfred Rawlings began caring for Terry Marley in 1975, when he was 15 years old. They came to regard him as their son and he cared for them until they died. Each had made a will leaving their entire estate to Mr Marley, rather than to their two natural sons.
 
Unfortunately for Mr Marley, the Court ruled that the mistake meant that the couple died intestate and their estate should pass to their two natural sons, according to the laws on intestacy.

Trustees’ Tax Error Not Rectifiable – Court Says ‘Sue Advisers’

Trustees who ‘get it wrong’ have traditionally been able to go to the court to rectify a mistake they have made if they failed to take account of something which turned out to be significant. When this occurs, a beneficiary can go to court and ask for the transaction to be voided. Technically, this depends on the trustees having breached their duty of trust to the beneficiaries (through ignorance of the relevant issue).
 
Recently the Court of Appeal had to consider to applications brought where the trustees of trusts had made errors in carrying out transaction which led to avoidable tax liabilities. In these cases, professional advice had been sought by the trustees. The consequence of this was that the claims to make the transactions void were rejected.
 
The trustees had not breached their duty of care. They had acted on negligent advice.  
 
In the words of Lord Justice Lloyd, “Where matters of tax were relevant… it was likely to be part of the duties of the trustees, under their duty of skill and care, to take proper advice as to those matters. However, if the trustees, aware of the need to consider relevant matters, sought advice as to the position while considering what, if anything, to do under their discretionary powers, then …the trustees could not be said to be in breach of their duty if they proceeded to address the exercise of their discretionary power on the basis of the advice given to them as to, for example, tax consequences. Accordingly, in a case where the trustees’ act was within their powers, but was said to be vitiated by a breach of trust so as to be voidable, if the breach of trust asserted was that the trustees failed to have regard to a relevant matter, and if the reason that they did not have regard to it was that they had obtained and acted on advice from apparently competent advisers, which turned out to be incorrect, then the charge of breach of trust could not be made out.”
 
The only path open to the trustees now is to consider suing the tax advisers for negligence.
 
If you have received negligent tax or investment advice, we may be able to help you obtain redress.