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

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,

as opposed to a 35 per cent charge if they

died before 75.

“Most people felt compelled to take out an

annuity to avoid paying this draconian tax,”

said Matthew Braithwaite, a solicitor with

Stone King’s trusts and estates team.

“But when they died, any remaining capital

went to an insurance company rather than

their loved ones. This meant there was no

lump sum death benefit to pass on to

relatives.

“But new rules introduced in April this year

have changed all that. Under the new rules

which came into effect on 6th April there will

be just one 55 per cent income tax charge,

irrespective of a person’s age on death.

As a consequence, you no longer have to

convert your pension fund into an annuity

once you reach the age of 75 but can

continue to draw down your pension.

“Any amount left in the pension fund when

you die will now be subject to a lower tax

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

as before. This means that you can then

pass on any unused pension to a surviving

spouse or dependant children as a lump sum.

The tax-free status of pension lump sum

death benefits payable before retirement

remain unchanged under the new rules and

it is still the case that you should consider

nominating any lump sum death benefits

into a trust.

“Nominating your lump sum death benefit

to a trust would provide a managed fund to

hold assets if those you want to benefit are

either too young or are unable to look after

their own affairs; and also avoid bringing

the lump sum within the estate of a

surviving spouse or dependant, only to then

Contents

Personal Affairs News Summer 2011

real & personal

1-2 Annuity rules relaxed

2 The asbestos time bomb

3 Closing the gender pension gap

4 Traffic law team launched

Annuity rules relaxedWhat the changes mean for you

It’s the single biggest cause of work-

related deaths in the UK. Asbestos kills

a staggering 4,000 people every year -

more than die in road traffic accidents.

One could be forgiven for thinking that

the problem had gone away thanks to

better industry regulation. But the

shocking reality is that the epidemic of

asbestos related illness and death has

yet to peak.

This is because symptoms can take

decades to emerge so many workers

exposed to asbestos 20 or 30 years ago

have still to fall ill. Asbestos related

diseases range from asbestosis, which

causes damage to lung tissue and

breathlessness, to the incurable cancer

mesothelioma.

Making a successful claim for an

asbestos related disease requires

specialist legal and medical knowledge

according to David Milton, a personal

injury specialist at Stone King.

“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

must be started within three years of

the sufferer becoming aware of the

diagnosis, and that the likely cause

was a previous exposure to asbestos.

“But many sufferers believe mistakenly

that a claim must be made within three

years of exposure, rather than diagnosis,

and don’t pursue their old employers.

This means that some sufferers and their

families could be losing out on

compensation.”

David added that it is up to the claimant

to show that their former employer owed

them a duty of care and that the level of

asbestos exposure was sufficient to

constitute a breach of that duty.

“It’s vital to establish a direct causal link

between the respiratory symptoms and

the asbestos exposure,” he said. “A key

question is what symptoms, if any, would

the claimant have suffered had the

employer not been negligent in

permitting the exposure. We work closely

with experienced respiratory physicians

and engineering experts to establish this

direct causal link on behalf of our

clients.”

However, establishing just who is liable

in such cases is not always easy.

“Difficulties arise if the claimant has

worked for a number of different

employers, or if the same employer has

used different trading names, “added

David. “If the employer is not insured

then it may not be worth pursuing them.

“And given the long length of time before

people fall ill, there is the question of

whether the company responsible still

exists. However, it is possible to apply for

the restoration of a company to the

register just for the purposes of bringing

a claim.”

Stone King has access to an extensive

database containing information about

previous claims, the companies involved

and details of their insurers. This

information can prove invaluable when

pursuing cases on behalf of claimants

and their families.

But mounting a successful claim for an

asbestos related disease can take time

because witness statements have to be

gathered, employment and tax records

obtained and medical opinions sought.

“It’s therefore crucial that you seek

specialist legal advice as quickly as

possible if you, or someone close to you,

has been diagnosed with an asbestos

related disease,” said David. “Our personal

injury team represent claimants on a no

win, no fee basis and we can advise you

on the potential merits of your claim.

“We know that a diagnosis can be

devastating for sufferers and their

families and understand the need for

great sensitivity at such a difficult time.”

David concluded: “People need to be

aware that this isn’t a problem of the past

- it’s very much an ongoing issue. Sadly

for some sufferers justice comes too late

or not at all.”

The asbestos time bombIndustrial disease claims set to peak

be subject to an inheritance tax charge on

their death.

Matthew added that pensions have become

even more attractive investments to savers

who want to pass on their nest egg to family

members and at the same time avoid

inheritance tax on their death. While a 55

per cent tax charge may sound steep, it is

a great improvement for the over 75s.

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

charge” he said but can now make provision

for those you leave behind through the use

of a trust to receive any remaining lump

sum.

“Whether you want to ensure flexibility over

how your assets are used, or reduce your

tax burden, Stone King’s trusts and estates

team can help.”

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

Closing the gender pension gap New ruling could alter payouts for divorcing couples

Women are statistically safer drivers

than men and have long enjoyed lower

insurance premiums as a result.

They fare less well, however, when it

comes to pensions as women tend to live

longer than men and so receive smaller

annual payouts when they retire. Such

financial disparity can become a major

issue when a couple decide to separate.

But the European Court of Justice (ECJ)

has ruled that gender discrimination in

the pricing of insurance is to be outlawed

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

which currently exists between many

men and women, and the consequent

necessity for this to be considered when

a couple separate.

“After a long marriage, it is often the case

that, other than the family home, the most

valuable assets of the family are the

couple’s pensions. Although this is perhaps

a little stereotypical, where the husband

has been the main breadwinner through

the marriage and the wife has spent some

or much of the marriage caring for the

children, it tends to be the husband who

has accrued the largest pension.

“So, on separation, it is important to

ensure that any major differences in the

couple’s pension positions are not simply

overlooked as this would risk resulting in

one party to the marriage being

significantly worse off in retirement than

the other. “

So how can this disparity be addressed

as the law stands currently? Stone King

offers the following advice:

1. Pension sharing

It is possible for a pension fund to be

‘shared’ between a divorced couple. This

would provide a share of the (usually)

husband’s pension fund to be invested in

a separate pension in the wife’s name,

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

would provide both the husband and the

wife with equality of income on

retirement.

2. Offsetting the value of the pension fund

Where there are other assets available

to the family, it may be possible to agree

that the party with the lower pension

provision receives a larger share of the

other assets, such as the family home

or savings/investments, by way of

compensation for the difference in the

pension funds. Careful consideration

would need to be given as to the impact

which this would have in retirement and

whether the alternative distribution does

indeed compensate for the loss of

pension benefits.

3. Pension attachment

This is a relatively rarely used process

which allows for a portion of the

husband’s pension to be paid to the wife

on his retirement, direct by the pension

providers. However, the primary

disadvantage with this arrangement is

that the portion would no longer be paid

if the wife remarries or the husband dies,

which tends to be why this provision is

used only infrequently.

“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?

“The decision relates primarily to the

calculations made on assessing the

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

rates differ and this affects the

calculations accordingly.

“If annuity rates are no longer gender

specific, this could potentially result in a

noticeable difference in the calculations

made. It is therefore important that very

careful advice is obtained to ensure that

fairness is provided when looking at

pensions on separation.

“As ever, the constant changes to

financial rules and regulations do little

to assist in making informed decisions

when planning for the future. However,

it is a useful reminder that pensions are,

and indeed should remain, a central

issue for consideration when a couple

separates and expert legal advice should

be sought in such situations.”

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.

www.stoneking.co.ukBath � London � Cambridge � Melksham

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

The use of increasingly sophisticated

technology by police has resulted in an

increase in the number of people being

prosecuted for motoring offences.

But it’s often possible to reduce or even

overturn penalties and driving bans,

especially if there are procedural errors

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 new team is made up exclusively of

five experienced solicitors with more than

71 years’ courtroom experience between

them. This means there are no

paralegals, sales team or clerks.

The traffic team deals with motoring

matters ranging from speeding, parking

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.

“The number of drivers who we have

successfully defended continues to

grow,” said Emma. “Last year alone we

dealt with several hundred such cases.

Our work includes advising motorists on

the best possible outcome and agreeing

objectives. Our success rate in achieving

those objectives is 99 per cent.

“So we have decided to set up our own

dedicated traffic law team in order to

build on this success and ensure we

continue to provide a first-class legal

service to motorists.”

Working alongside Emma is Andrew

Banks, newly appointed partner and head

of the firm’s crime team, who specialises

in transport law and whose expertise is

highlighted in the prestigious Legal 500

directory.

Andrew and fellow team member

Jonathan Lewis are both higher court

advocates which means they can conduct

cases in the crown court as well as

magistrates’ court. Other members of the

team include Celia Strathdee, who has

27 years’ legal experience, and Richard

Kirby, a former court legal adviser.

Emma added: “Very few people think of

motoring offences as crime, but in fact all

motoring offences are dealt with in the

criminal courts. Thus, they are subject to

the strict rules of criminal evidence. And

that’s where our traffic team comes in.

“Whatever the driving offence, expert

advice from lawyers experienced in road

traffic law can often make the difference

between you losing your licence – and

possibly your job – and keeping it. So if

you are being prosecuted for a motoring

offence contact us for free initial advice.”

If you would like to talk to Emma Haley

or any other member of the traffic team,

please call 01225 337 500 or 0759

5491041 or email

emmahaley@stoneking.co.uk

Traffic law team launched