Legal Persons and Power of Attorney PDF

CZ,a;:-te, 4 - lr9.:al c_,rcep ts LEGAL PERSONS AND POWER OF ATTORNEY E:..pl.:irn 1eg.:i1 person s and power of attornE'}' _h A legal person has ng ts. protections.. privileges. responsibilities.and l...

CZ,a;:-te, 4 - lr9.:al c_,rcep ts LEGAL PERSONS AND POWER OF ATTORNEY E:..pl.:irn 1eg.:i1 person s and power of attornE'}' _h A legal person has ng ts. protections.. privileges. responsibilities.and liabilities under law.. v,.mples of 1.-.nl persons indude companies, sovereign states and,Just.as persons d o. Common '°""' ,,.- c "atur.ii 0-0P era, Legal person ~llty allows one Of m~ natural persons to act as a single entity (a composite Perso purpos es. n) for I @gal In many jurisdictions, legal personality allows such a compo site to be consid ered under law sePa its individual members or shareholders. For exam~le, they may sue ~nd be sued, enter into contra"'tel~ fr0rti debt and have ownership over property. Entities with legal person obligations., such as the requirement to pay tax. Legal personality ality may also be subjec t to a«ta~ ncu, may shield an entity"s s>artici n legal shareh olders, from ~na l lia b 1.,. ty- Pants_ !ll....L --..... as A power of attome yis a legal document that allows a person to give anothe r person or J)erSon s make decisions about their financial affairs and/or their health and person al welfar e. It can fakethe ~ t o either an endun ng power of attorne y (EPA) or a Lasting power of attorn ey (LPA). bwo Jor._ The LPA was created in 2007 under the Mental Capacity Act 2005 and replac es the Previous EPA. H create d before 2007 remain valid. There are two types of LPA: ~. 1. A proper ty and affairs LPA gives a person the ability to make decisio ns about someb ody else's financial 2. A person al welfar e LPA gives a person the ability to make decisio ns relatin g to someb ody else's s>eBonal health care and welfare, indudi ng dec.isions to give or refuse consen t to treatm ent on their behalt Unlike its predecessor, the LPA must be registered with the Office of the Public Guardian (OPG) to be An EPA establi shed before 1 October 2007 does not need to be altered effective.. THE BASIC LAW OF CONTRACT E plain b3s1c law of contra ct ano agency A contra ct is essentially an agreem ent creating and defining the obliga tions between two o.r. The elem ents of a cont ract and the offer For any contract to be consid ered legally binding, the eleme nts of offer and acceptance a contra ct or agreem ent will begin with an offer and after the offer is accep ted uno~ li1 then forme d. There are also other contra ct elemen ts that are requir ed by law, and if courts may decide there is no contra ct Accepunce Folfowing an offer, there must be a willingness from the accept ing party to enter J make the contra ct compl ete, there must also be specific terms and condit ions a terms and condit ions have been offered and accept ed, and no furthe r n can be said to be compl ete or full. Consideration A contra ct may not be deemed to be enforceable by law if there was no must be mutual consid eration on either side; one person promises to tft.Urn.  t~ Chapter 4 - Leoarconcep te nd on ment with no intention of the agreement becomIng legally binding, it w·u not be lf1. s make an.agree d th som e ca 1 "' n part1e er e eyes of the law. In ses, such as co. w,.e ed to be a co n tra ct un.. ~rcial con tra cts, there is an dg ac t is intende d to be leg ally binding. If one of th mm bring the matt t tiofl tha t th e contr e parties wants to er o ju ne ver any inten tio n of a binding tract the y w'II arg ue th at the re wa s con i nee d to hav e som e for m of assurnP d ' urt an idence. co ·tten ev crearwn an d co nd iti on s rerrn S. ht to th~ law courts, strong emphasis will be lac th ms and conditions of on tract dispute 1s broug ms nd P ed on e ter d to be complete if the ter a conditions are ot fullYlaid. If a c ct. Acontract cannot be sai. t usoally n out, and the the co ntra am biguo us. A co ntract is no n as legally binding 'fthe see 1 terms and ·t·ons must no t be vague or dif. ferent, and a judge maY try to clarify the terms and cond'ti s condi i wever, every case is ·tions are unclear.ct.Ho I on condI t of the disputed con ra pes of co nt ra ct a written cont ract. However a contract ma 1 malise all agreements with Ymost cases' it makes sense to for are certain circumstances where contracts ~ b em '... Y rn ~ ~ 1n orally. There. 11 be upheld if it is made nts. If a contract dispute has reached th e courts and no written ~ rty or tenan cy agreeme h as the sale of prope h th. d how services promir- a d h...... n exc anges were carried out suC t or statement ex.ists, t en.. e JU ge may look at rac cont a dec1s1on. practically in order to make co nt ra ct di sc ha rg e end in one of four ways: Acontract can come to an hed by both parties. the ob ligati ons of the contract have been accomplis 1_ Performance, where es the other party from the pa rtie s agree to en d the contract, or one party releas 2_ Agreement, where both agreement. possible, and the occu rre d tha t make the completion of the contract im have 3. Frustration , where events co ntr ac t could not be met. obligations of the Breach, which is explaine d below. 4. Breaching a contract t fulfil on e or more of the specified term s and conditions. cur if on e party do es no t they will not be Abreach of contract can oc def ect ive or if on e par ty makes the other aware tha rk carried ou t Is t dispute and can award tM It can also occur if the wo the n be bro ught to judge on this contr,c carrying out the agreed wo rk. Th e law can arded If the innocent party can pro11t flnanclal loss. da ma ges ma y onl y be aw Flnanda l awarded innocent party damages. we lsh ed up aga ins t the likelihood of any damagtS ~n a Court costs and solicitors' fees should be before proceeding with cro unas e Ip and bentflclal owntr1hlp. owners. For Mampt.. thf lt1.t d Re,iltry Of -lll'llftOlia1tJ1:Flhlp llf lffl' It tht &.an wtth the to thl proptrty llff Chapter 4 - Legal concepts -~ ;- , '··../: - - ~ 2. Beneficial ownership - beneficial owners have the right to live in or use a property where th legal owner They also have the right to share in the proceeds of any sale. Beneficial o ey lllay II to control a.sale of land or buildings. Other forms Of property may aIso have legal andwners be ha ot be 'le the~- tlit different persons. For example, client money is held in an account in the name of a fi,- (neflclal aw ~ - ~. owner the client,. orshares may be. 11 registered.ma nomin" the le°"'""'' aw11!'Ship 1.. 11 held in trust for its beneficial "' who is not the beneficial owner. ee name er) 1,._ of a cu~..J"""ls -"'lllan Most people own their property as both legal and beneficial owners. In general, property can beheld: ► by an individual with absolute ownership; ► by two or more co-owners as tenants in common (where each person holds a share and. r..... share); or IS "11:e to d' Pose Of 15 ► by two or more co-owners as joint tenants. Joint tenants have equal ownership of the pro ~- tt._ tenant can only di.spose of their interest during their lifetime by giving notice to the otherjperty 111d ii ioi11t converting to a tenancy in common. On the death of a Joint.. tenant, t h. olnt tenant alld eir share passes to the ~~ Acommon practice for a couple is to change the ownership of the property to tenants in co then owns their share of the property. The individual person can then make changes to th ml m~n. Each i.~... e r w,11 and....:_-·"'!II their half of the property to their family on dea~h. :~ov1ded the person has made prOVisions In their -i'lealli for market rent to be paid, there should be no liab1hty to pre-owned assets tax (POAT). Wilt to~ INSOLVENCY AND BANKRUPTCY Explain insolvency and bankruptcy Insolvency is a financial state in which a company can no longer pay its bills and other obligations on ti ocrurs when liabilities or debts exceed assets and cash flow. When a company becomes insolvent, It must immediate action to generate cash and settle or renegotiate current debts. Companies that cannot recover from insolvency often face bankruptcy proceedings, receivership or liquidation of all their assets. liquidation is the process by which the existence of a company is brought to an end and Its administered for the benefit of creditors and members. Aliquidator is appointed to take company, collect in all its assets, pay all its debts and distribute any surplus between mem is then dissolved and removed from the Register of Companies. The terms liquidation and describe the process by which a company ceases to exist. Alternatives to liquidation are: ► administration, where an administrator is appointed to run the company's affairs, and iii rescue the company as a going concern; and ► voluntary arrangements, whereby insolvency proceedings are avoided by substltup settlement of financial difficulties between the company and its creditors. People owed money (the creditors) by a company in liquidation have to make a money. Insolvency is commonly confused with bankruptcy, and the two concepts are n bankruptcy both occur when liabilities exceed assets, but insolvency is astate e. matter of law. Companies can be insolvent but not legally bankrupt lnsolve condition may also be temporary and fixable without legal protection from Anyone can apply to the court to become bankrupt, including individuals, partnership. There are different bankruptcy procedures for companies and. can usually petition the court to use a bankruptcy order if the person owd  Chapter 4 - ten' ai c0ncepts de against a person' the official. tcy order has been ma n i. lth.. receiver administers '-- uoe bankrupt P bar,krU affairs. In the case of a bank rupt J)erso r,cial ' s1gn1fica nt assets, the off1elat.. 0 ,,ce a's r,r,a.. as a trustee. Essen tially the d r~ «w ill ·r,solver1cy pract1t1oner utyof thetrustee istose,i a11uoe Pfrson's persofl 1 ly th os e of high value) and use the' money to pay ppoir1t ar1 ets (p rimari as much as Pssil>I. to the Pfflon's 3 ·tted ass perm ,,editors.. e to bankruptcy Is for. ·d a debtor to seek an indivi ua1volunta arrangement (IVA) Tod "d. ry and · ec.r e 1 rr1at1V is ac ce pt ab le, a creditors' meeting is called a vote 1s take n. Cred1to. rs rep res enti t le Af1 a te IVA. prnn...-. ,. ng a ast ther an e who vote need to vote ,n fav. our of the IVA -- -1,orit tog0 ahead. Once the IVA isapprno....i, bt v~ e tion to recover the de. ~ are pa bl but they are included as part wh c....... 0 f thOSe ur1able to take any legal ac e, 75% is aoreed An. Ive d·t1ors ar l monthly repayment when the proposal., · 1nso ncypracti ya :-__ the debtor' na ""' !ff rfYiews s ,,e. i · is sent to credit oB. f the orig arlY and an annual progress report o ~~~ WILLS AND INTESTA CY ceased pefSOn Should be distributed. do cu m en t th at sets out how the estate of a de. a writt en A w1I1IS t: ·11 to be valid, certain conditions have to be me Fora w1 ·tI must be in writing; 1. rsons; an d witnessed by two pe _ it must be signed 2 ; er 18 when it is made the person must be ov will have; and J. y to ma ke the will and understand the effect it e mental capacit 4_ the person must have th someone else. a result of pressure from ve made it as s. the person must not ha ecute' the will, which r or ex ec uto rs. Th ese people are expected to 'ex e designated executo settling debts Awill may specify th d an d de al with any related complications, such as t the estate as specifie Where no executors are means they will share ou tri bu ted. Th is pro cess is known as 'probate~ re th e assets are dis ng ou t the same and paying any tax befo iary) wi ll ac t as an adm inistrator, effectively carryi (normally a bene fic specified, then someone ou t by the executor(s). process as th at carried circumstances, alid wit ~ is said to hav e died intestate. In these an inv set of rules that leave the A person who dies without a will, or with of int estacy, which are a statutory rding to th e law s buted acco the estate must be distri order. eir next of kin in a fixed deceased's estate to th IN TYPES OF TRUSTS AND THEIR USES THE MA : '6 Dec;c, t , person (the trustee), transfers property to another ficiaries). Atnist can be A trust is an arran spedfled persons (the bene by the of the settto, by a wiU or who then manages li'uSt deld. or on the death created during the intestacy statutory p visions of the Trustee ~ n e e d to follow the pro With regard to man Act 2000 unless Chapter 4 - legal concepts There are four main types of trust. Abare trust Under a bare trust (also known as an absolute trust), the assets are legally owned by the tru of the beneficiary absolutely. The income and any capital gains are treated as the beneficl ~tees for the ~ This type of trust is typically used when a proposedbenefjic1ary is a ch'l.. ar1esfo I d or incapable of deaun ~ tall Pur through a disability or illness. g 1th lll0ti ~ An Interest in possession trust These t.rusts are also known as life interest trusts because the beneficiary has an Interest h assets held In trust until their death. Where the assets.in the trust are investe. Int ebe d, one party A, h nefitsofttie Income (or occupation of property if this power is given In the trust deed). Party Ahas an,'lnteas the rigtit tottie After a specified event (usually the death of A), A's interest in possession ceases. After the d ; st In PoSSeslloit. of the trust or reversionary Interest will be held for the benefit of the second. derman class of benefleal of A. the aSSets remain. c~~ n asttie This type of trust is commonly used in wills to pro~lde for a spouse or partner, while Protectin th the ultimate beneficiaries from claims on the survivor's estate (e.g. from a new spouse/partn g e 1SSets for once the spouse has died). erorfrorn tredltorj Acharitable trust This type of trust is set up for the purpose of charitable deeds. Charita ble deeds Include the relief of the advancement of religion , the advancement of education and other purposes beneficial to the P0Yerty, tommun Adiscretionary trust With a discretionary trust, the trust property Is held for the benefit of the beneficiaries and the trustees have discretion about how much to give to which beneficiaries and when. There are a number of ways to do this: ► For the benefit of the settlor's children and future grandchildren, with each becoming entitled to their share the fund at a specified age. This is the most common will trust for childre n and grandchildren, with d over payment of income until each child becomes entitled to their share in the estate at a given ap. ► Naming various beneficiaries (which may include the settlor's widow (er)) who are to benefttat~ trustees' discretion according to need. This type of trust is useful when there is a need to defer the decision about gets what and when. One unique feature of a discretionary trust is the amount of freedom given to the trustees. ;a,, ~ placed In trust become the property, in title at least, of the trust itself, and the trustees assume ~ llty for management In other trust types, how trustees can act with regard to the assets ts very strf but with a discretionary trust, the trustees use their discretion to decide which (If any) of the I should receive income or capital from the trust Discretionary trusts are particularly useful for mitigating inheritance tax (IHT) ll l>l' to establish a discretionary trust in the will of the first individual from a couple to die, the assets that would otherwise have been passed to the surviving spouse are p is made a beneficiary (or perhaps the sole beneficiary) and trustees are appoln~ have absolute entitlement to the assets. As a result, the assets placed In trust are Individual's estate for IHT purposes. ➔ IHT is discussed in more derail in Chapter 6. The settlor should leave a 'letter of wishes' attached to their wlll, which contains regarding how the trust assets should be distributed to the beneficiaries. The wishes Is normally that the beneficiary Is sufficiently provided for until their d spouse has some access to the deceased's assets but wlll potentially avoid an - -.. - - · ·-·--··.-- --- - - - -"""'!'!!  Chapter 4 - Leoai concepts duties and powers of a trustee 1t,e ,,,a 11 st the trust fund, 1o ,nve rtY in the fund is called the trust fund. A trustee is respo ib l rtie proPed f r the beneficiaries until the money is distributed If ;s le for making sure that the trust fund...,este O be no fund to invest unt11after any claim on the in · e only property i the is In · iii n trust isan insurance there yY surance plan The plan,. d to be invested until such a time as it is distributed to th b ·. money from the Insurance plan will nee e eneficlanes of the trust rnpartiallY. 10 act 1.is rn ore than one beneficiary, the trustees must not act in a way that will benefit one of them more than If there 2 another. ppropriate advice. 3. To take ashould take professionalhadvice before investing the trust fund, unless the fund.is so small that the nustees cost o e advice would outwelg. any benefit, or one or more of the trustees are qu l'fied... a II to give advice scan ask a profess1ona1person to act on their behalf in investing the fund but the r f th... Tr"'tee Id sfll lie w;th the trustee- -~"1y for the 1nvestrnent wou I ro distribute the trust propehrty. st. sed 4, The trustees should ensure t e tru property is pas to the beneficiaries at the appropriate time. the trust's property secure. 5· ~ I