Laws And Legal Concepts Relevant To Financial Advice Flashcards
What is a sole trader?
A self employed person who is personally liable for the debts of their business
How long does bankruptcy last?
12 months
When is a will automatically fully revoked?
On marriage
Why would a will be partially revoked?
On divorce the part of the will relating to the spouse will be revoked
What trust doesn’t allow for flexibility?
Bare trust
What is a limited liability partnership
A separate legal person with limited liability - persons have no financial liability
Self employed pay tax individually
What is a limited company?
Legal separate identity from owners of business - not liable for company’s debts
Corporation tax is liable on profits
What is a public limited company?
This company is on the London stock exchange. Must have 2 directors and 2 shareholders and a secretary
What are the main types of Powers of Attorney?
Ordinary
Enduring
Lasting
What is a ordinary power of attorney?
Used for people who leave the country
What is and enduring power of attorney?
Enables the attorney to act on behalf of someone who is mentally incapacitated - cannot be granted now only existing cases prior to 2005
What is lasting power of attorney?
Donor gives the attorney powers to make decisions about welfare and property as well as financial affairs - 2 LPA must be completed one for welfare and property and one for financial affairs
Can a attorney make gifts on behalf of donor?
Only if they were seen as customary
What would cause a POA to be revoked?
Donors bankruptcy
Death
Incapacity or
Bankruptcy of attorney
Dissolution of marriage between donor and attorney
Under the law of contract when is an offer official?
When terms from the provider have been received
Under the law on contract when is an insurance contract considered live?
When the first premium has been paid
What duty does the consumer have to an insurance company?
Declare all facts a reasonable person would think the life office underwriter would want to know - a duty to take reasonable care not to make misrepresentation
What is insurable interest?
The prosper needs to have financial interest in the life assured - full medical underwriting will be undertaken so history need to be known
What restrictions are there to have a capacity to contract a protection policy?
Under the age of 18 w
Person affected by a mental health issue
Under the influence of alcohol / drugs
What is the law of agency?
When a party (agent) agrees to do certain acts on behalf of another party (principle)
What is a joint tenancy?
Where two people purchase a house and own equal shares - cannot sell without the others agreement. Share passes on death to other party
What is tenants in common?
A couple purchase a house each party holds their share separately, and can dispose of how and when they wish. On death their share goes to their estate
What is an IVA?
Individual Voluntary arrangement - as alternative to bankruptcy where the debtor proposes a voluntary agreement to repay some or all of their debts
How long does an IVA last on a credit reference?
6 years
What amount minimum will a court consider bankruptcy for?
£5,000
How long does bankruptcy last?
12 months
What is corporate insolvency?
Where a liquidator is appointed to take control of a company, collect assets and pay debts
What are two alternatives to insolvency?
Administration - attempt to rescue a company
Voluntary arrangement - avoid insolvency but settling liabilities with creditors
What is meant by intestacy?
Someone dying without a will
What is Laws of succession?
When beneficiaries succeed on someone else’s death (inheritance law)
What are the three requirements for a valid will?
Writing - print, type or personal handwriting
Signature - by testator
Attestation - whitenessed by 2 or more people
When will a will be revoked?
In full - on marriage
Parts relating to former spouse - on divorce
What happens to someone’s estate if the die intestate?
Surviving spouse will inherit 100%
If there are children and a spouse - spouse takes chattels plus £270,000 plus half of the remainder the children get the other half
Who are the main people involved in a trust?
Settlor - creator of the trust
Beneficiary - person entitled to trusts assets
Trustees - legal owners of the property assets for beneficiaries
What certainties are needed in a valid will?
Certainty of words, subject matter and beneficiaries
What do the trustees of a trust have to provide to the life office in order to have the benefits of a life policy paid to them?
A copy of the trust deed and death certificate
Under a life assurance contract how is insurable interest defined?
The prosper is required to have some financial interest in the life assured
