Chapter 4 Flashcards
What’s a legal person
Examples too
Has rights, protections, priveledges, responsibilities and liabilities under law just as normal people do
Companies, sovereign states and cooperatives
Legal personality
Allows one or more natural persons o act as a single entity
What can legal personalities do
Shield an entities participants from personal liability,
Power of attorney and what two forms can it take
Legal doc that allows a person to give another person the power to make decisions about their financial affairs or welfare
Ensuring power of attorney
Lasting power of attorney
Two types of Lasting power of attorney
Property and affairs LPA - ability for person to make decisions on financial affairs
Personal welfare LPA - gives person ability to make decision on personal welfare
Who are lasting power of attorneys registered with
Office of the public guardian
Contract
Agreement creating and defining th obligations between two or more parties
What must be exist for contract to be legally bonding
Offer and acceptance
What may make a contract not enforceable
If there was no consideration
Ie . One person receives service and one person pays
Intention for contracts
When parties make agreement with no intention of the agreement becoming legally binding, not judged to be a contract
Terms and conditions for contract
If contract is brought to court, strong emphasis placed on T and Cs
Contract not complete if T and Cs not fully laid out clearly
Contracts come to an end in 4 ways
Performance - obligations complete
Agreement - to end contract by both parties
Frustration - obligations impossible to complete
Breach
Breach of contract
One parry does not fulfill their speciefed terms and conditions or if work carried out is wrong
When can financial damages be awarded
If the innocent party can prove financial loss
Two types of property ownshership in English law
Legal ownership
Beneficial ownership
What is legal ownership of property
People named on document title are the legal owners
Names listed on the registered proprietors in the proprietor register at the land registry
What is beneficial ownership of property
Have the right to live in or use the property where they may not be the legal owner
Have rights to shares in the proceeds of the sale and can control the sale of the property
Property can be held by 3
Individual with absolute ownership
By two or more co owners as tenants = each person can dispose of their share)
By two or more co owners as joint tenants
What are joint tenants
Have equal ownership of the property
Only dispose of their share if they give other tenant notice
Shares pass to other joint tenants in the event of death
Insolvency
Liabilities or debts exceed assets and cashflows
Face bankruptcy proceedings
Liquidation
Company brought to an end and its property and assets sold for the enforcement of creditors and members
Who takes control of liquidation
Liquidator
Alternatives to liquidation
Administration - administrator is appointed to run company affairs and attempts to rescue company
Voluntary arrangements - insolvency proceedings are avoided by having suitable settlement with company and creditors
Companies can be insolvent but not bankrupt why
Insolvency is a state of being and bankruptcy is a matter of law
Bankruptcy order
Persons creditors ask court to issue bankruptcy order if person owes more than 5k
Individual voluntary agreement
Acceptable if creditors representing at least 75% vote in favour of IVA = monthly repayments
If IVA accepted, creditors cannot pursue legal action
Who monitors IVA
Insolvency practitioner reviews finances annually and progress report sent out
Will?
Written document that states how the estate of a deceased person is to be split up
For will to be valid, certain conditions should be met
In writing
Signed and witnessed by two people
Person over 18 when it is made
Must have mental capacity
No pressure from others
What is probate for will
Executor will execute the will and deal with complications that rise
What if die without will called
Died intestate
What is a trust
An arrangement under which a persons (settler) transfer property to another person (trustee) who then managers the trust on behalf of certain person (the beneficiaries)
4 trust types
Bare trust
Interest in possession trust
Charitable trust
Discretionary trust
Bare trust?
Who typically for
Assets legally owned by trustees for the benefit of the beneficiary absolutely
Income and any cap gains are treated as beneficiaries for tax purposes
Usually for children
What is an interest in possession trust
Beneficiary has interest in the benefits of the assets held in the trust till death
When primary beneficiary dies, his interest die with it and assets of trust will be held for the benefit of second class beneficiary known as remainderman
Who are interest in possession estates usually used by
In wills to provide for spouse while protecting the assets for the ultimate beneficiaries from claims on the surviviros estate
What is a charitable trust
Purpose of charitable deeds
What is a discretionary trust
Trust property is held for the benefit of the beneficiaries and the trustees have discretion about how much to give to each beneficiary and when
Unique feature of discretionary trust
Amount of freedom given to the trustees to decide who and what people get
Which trust useful for mitigating inheritance tax
Discretionary trusts
Assets placed in trusts are not treated as part of theft individuals estate
Letter of wishes?
The settlor leaves this letter in will which contains guidance on how the trust assets should be divided up
Trustee act 2000
And what criteria should trustee follow
Allows a trustee to make any kind of investment, including land and property
Trustee must obtain proper advice and follow:
Suitability of investment for trust
Diversification
Main duties and powers of trustee (6)
Invest the trust fund
Act impartially
Take advice
Distribute trust property
Keep property trust secure
Keep trust records
Pensions act 1995
Increased trustees ability to act indpendtly from employer
Ability to appoint own actuary, auditor and advisors and for producing statement of investment principles
When must statement of investment principles be made and what does it include 4
All pension funds of more than 100 members
Policy on…
Investment choice
Strategy of investments ri
Risks and how managed
Realising investments
Before SIP (statement of investment principles) is drawn up, trustees must
Obtain info from prof advisors
Consult with scheme sponsor
How often is SIP reviewed
Every 3 years or when investment policy changes
What can trustee invest in if they follow trustee act 2000
Invest in most asset classes including land and property
What is mental capacity act 2005
Created LPA and replaced Enduring powers of attorney
When can trustees not follow trustee act 2000
If trust deed overrides it
Essential elements of contracts
Offer
Acceptance
Consideration
Intention
