Laws And Legal Concepts Relevant To Financial Advice

Question 1

What is a sole trader

Answer 1

Self employed

Question 2

What tax is payable by a sole trader

Answer 2

Income tax and capital gains tax
NIC Class 2 and 4
Secondary Class 1 NIC for employees

Question 3

What is a partnership

Answer 3

Largely the same as a sole trader but liability reflects share of business

Question 4

What is an LLP

Answer 4

Partnership is a seperate legal person so the partners are not individually liable for debts of the LLP

Question 5

What is a limited company

Answer 5

A seperate legal entity which is registered on the Register of Companies

Question 6

What is the difference between a Plc. a Ltd.

Answer 6

Plc is publicly listed whereas ltd companies are privately owned

Question 7

Who controls takeovers of Plcs

Answer 7

The takeover panel

Question 8

What is enduring power of attorney and when was it introduced

Answer 8

Allows power of attorney to continue in the event of incapacity

Question 9

When must enduring power of attorney have been established for it to qualify

Answer 9

Before October 2007 when the giver had full mental capacity

Question 10

Does enduring power of attorney cover attitude to healthcare

Answer 10

No

Question 11

Which act introduced lasting power of attorney

Answer 11

Mental capacity act 2005

Question 12

What powers does lasting power of attorney give

Answer 12

Power to make decisions about health, welfare and property and financial affairs

Question 13

What 5 things must there be for a binding contract

Answer 13

Offer
Acceptance
Intention
Power to contract 
Consideration

Question 14

In the case of a life insurance contract, what additional things must there be for a contract to be binding

Answer 14

Utmost good faith

Insurable interest

Question 15

In a life insurance contract what constitutes N offer

Answer 15

The proposal

Question 16

What constitutes acceptance in a life insurance contract

Answer 16

First premium payment

Question 17

What is a joint tenancy

Answer 17

Equal shares and neither can sell without the others permission

Question 18

What is a tenancy in common

Answer 18

Each holds separate shares and can dispose of the shares as they wish

Question 19

What is the alternative to bankruptcy

Answer 19

Make an individual voluntary arrangement

Question 20

Who is responsible for realising and distributing an estate in individual bankruptcy

Answer 20

Trustee

Question 21

What order are debts paid in in bankruptcy

Answer 21

Costs of bankruptcy
Preferential debts
Ordinary unsecured creditors

Question 22

How is appointed to deal with corporate insolvency

Answer 22

Liquidator

Question 23

What are the alternatives to corporate insolvency

Answer 23

Administration or voluntary arrangements

Question 24

What is needed to formally create a will

Answer 24

Writing, a signature and 2 witnesses (attestation)

Question 25

How can you revoke a will

Answer 25

Write. New one,
Deliberately destroy it with intent to revoke
Get married
Divorce (revokes in part)

Question 26

Who gets what if someone dies intestate with spouse and issue

Answer 26

Spouse gets personal chattels, £250,000 and half remaining balance. Children get other half on reaching 18 or marriage

Question 27

What happens if someone dies intestate with no spouse

Answer 27

Everything goes to issue. If no issue goes to parents, siblings, grandparents hen aunts and uncles in that order

Question 28

What happens if someone dies intestate with no relatives

Answer 28

Goes to the crown unless live in Lancaster or Cornwall in which case goes to the Duchy of Lancaster/Cornwall

Question 29

What are the main uses of trusts

Answer 29

IHT planning

Pensions

Question 30

What are the 3 certainties of. Trust

Answer 30

Words must be imperative
Subject must be certain
Objects, beneficiaries of trust must be certain