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COVID-19 – FAQs for individuals and families

Posted on 26 March 2020

The following is a Q&A for private individuals regarding the issues families are facing as a result of the COVID-19 outbreak. 

Children
My children live with my ex. Will I be able to see them during this time?

The Government's published guidance on exceptions to the "Stay at Home" restrictions states "Where parents do not live in the same household, children under 18 can be moved between their parents’ homes."  Provided nobody in either household has symptoms of COVID-19 or is in one of the "vulnerable" categories, children should still be able to move between their parents' homes.

If anyone in either household is showing any of the symptoms of COVID-19, then the Government guidance must be followed – the person who has symptoms must stay at home for 7 days and all members of their household must stay at home for 14 days.

Practical arrangements may need to change. If you usually collect your children from their school, you may now need to collect them from the other parent's home instead. Parents will need to work together insofar as is possible to ensure that children can still see both of their parents during this time. You should avoid using public transport to facilitate children's travel from one home to another unless absolutely necessary.

Nobody in my household or my ex's is vulnerable or showing symptoms of COVID-19, yet my ex says I cannot see the children this weekend as there are "concerns for their safety". What can I do?

The President of the Family Division has suggested that, where one parent considers that complying with arrangements for children would be against Public Health advice, then they may exercise their parental responsibility and vary the arrangement to one that they consider to be safe. However, if the matter should return to Court, the Court is likely to look to see whether each parent acted sensibly and reasonably in light of the official advice. Given that the official advice currently remains that children can move between their parents' homes, we would expect to see something more than a general (albeit understandable) sense of worry about the current situation before a parent unilaterally changed the child's arrangements.

If the child's arrangements are changed such that the child doesn't get to spend time with the other parent as they usually would, the Courts will expect alternative arrangements to be made to establish and maintain regular contact between the child and the other parent, for example remotely – by Face-Time, WhatsApp, Skype, Zoom or other video connection or, if none of those are possible, by telephone.

My children usually spend the weekend with me and I then bring them back to school on a Monday morning. Given they are no longer attending school, can I keep them for the rest of the day?

Ordinarily, you would be expected to bring the children back to the other parent on a Monday morning, but, given the current circumstances, there may be more flexibility. You will need to speak to the children's other parent, to try and agree any change in their usual arrangements. If the children do remain with you during the day on Monday, you will need to consider whether and how you can home school them.  Home schooling is going to be extremely difficult for many parents, particularly those who are working. If one parent is in a position to carry out home schooling, but the other isn't, this may factor into any conversations about a change to the usual arrangements.

Financial considerations
I am in the midst of financial proceedings arising from my divorce. We had obtained a valuation of my business, but I know the value will have reduced as I have had to temporarily stop trading. Will the Judge accept that the valuation is now wrong?

The full impact of the current pandemic on businesses, investments and the domestic and international property markets is unlikely to be clear for some time. If parties to a divorce are seeking to divide capital or business assets between them (or those assets are being taken into account), there is a real risk that values attributed to those assets at the start of the year (or even now) will prove inaccurate in the coming weeks and months.

Obtaining a fresh valuation may also be difficult, depending on the type of valuation required – obtaining property valuations will be complicated where a valuer may not be able to visit the premises.

Thought will also need to be given to how any division of assets is to be given effect. Couples hoping to sell property in order to rehouse may find it difficult to sell in the short term.

One option is to seek to delay any final determination of the proceedings until the impact on business and investments is better known. However, the Courts will be reluctant to permit cases to be delayed indefinitely, particularly when it is not clear when the current restrictions on business and movement will come to an end. Another option is to consider "sharing" the risk – if a large proportion of the assets are held e.g. as shares in a business, rather than one party taking those shares and the other retaining more "copper-bottomed" assets, it may be prudent to share the risk-laden assets as well as the more stable. Careful consideration will need to be given to how best to proceed.

I have just been told that I am being made redundant due to my workplace having to close. Will the Judge take this into account?

When considering the financial position of parties on divorce, the Court will look not only at a spouse's current income, but also their income capacity. If it seems likely that a party will be able to return to the same or a similar job once the current restrictions end, the Court might consider that party to retain a similar earning capacity to that they previously had (albeit with a gap in earnings). However, where the future of a business or industry looks to be in doubt, greater care will need to be taken to ascertain what the financial picture may look like in future and what other income opportunities might reasonably be available.

Family Court proceedings
I am supposed to have a final hearing in my case in a few weeks' time. Will it happen?

The current expectation is that the Family Courts will continue to function, albeit hearings are to take place remotely. Parties are being encouraged to consider whether they might move forwards outside the Court system, e.g. by mediation or a private financial dispute resolution hearing. For those cases that continue within the Court system, video conferencing technology is being used by Judges, solicitors, barristers and parties. Paperwork traditionally used by the court and parties is being sent and accessed digitally.

A final financial order was recently made by agreement in my case. The agreement was reached on the basis that my investments and pension held significant value and that I would continue to receive a high income. As a result of the pandemic I have lost my job and my investments and pension have lost significant value. Is there anything that I can do?

The Courts have been at pains to stress the finality of orders, whether reached by agreement or imposed by the court. Ordinarily, a change in market conditions would not be enough to allow a party to reopen a final order. Whether the current crisis would be considered sufficiently extreme and unforeseeable to merit a departure from that approach remains to be seen.

Where a party has been paying (or receiving) child or spousal periodical payments, thought will need to be given to whether the ability to pay will be impacted.  Ordinarily, payments should not be varied without either agreement between the spouses, or an order of the court (or a varied assessment, where the Child Maintenance Service is involved).

My children's school closed on Friday 20 March and I have been home schooling them for a week. The school is providing a timetable and materials but I am still having to supervise their learning at all times. The school has now requested the fees for the summer term in full, payable within the next month. Am I obliged to pay the fees being requested?

Every school will be dealing with this differently and on the basis of the individual terms and conditions parents will have signed up to. Their overheads should have reduced i.e. utilities, catering costs, and they may also be eligible for assistance from the government to pay 80% of staff costs. However, subject to their terms and conditions, in order to secure you child's place for next term, you are likely to have to pay the fees in full within the time frame requested. It may be worth asking the school to confirm that if they do receive payment from the government for staff costs, that these savings will be passed on to parents.

Wills
I cannot recall what's in my current will. Can you access a copy if the office is closed?

If you prepared your will with us in the past few years, we will have a copy of it stored electronically.  Please let us know if you would like us to send you a copy for your records. 

I want to prepare or update my will. How can I do that under the current self-distancing / self-isolation measures?

We can prepare or update your will and tell you how to execute it properly, even during this period of lockdown.  We will send you our will questionnaire by email which you can use to provide as much information about your requirements as possible.  We can then discuss any further details on the telephone or using a remote conference facility.  When we have finalised the content we will email the will to you for execution, together with clear instructions for signing during this period of self-distancing and self-isolation.  Wills in England and Wales require two independent adults to act as witnesses to your signature to ensure the will is valid. It should be possible to find two people who meet the requirements and can witness your signature, even if at a safe distance.  We can advise you on acceptable measures.

 

Powers of attorney
I want to make sure my affairs are managed by someone I trust in the event that I am unable to do this for myself. What can I do to arrange this?

If you want to ensure continuity of your personal affairs, whether relating to financial and business or health and welfare, it is possible to authorise a trusted individual (or individuals) to make decisions on your behalf in the event that you are unable to do so. 

There are two options. First, you can prepare a Lasting Power of Attorney (LPA) which ensures that, if you were unable to make decisions for yourself as a result of loss of mental capacity, those decisions can be made by your chosen attorney.  Second, you could prepare a General Power of Attorney which would enable a trusted individual (or individuals) to make financial decisions on your behalf if you cannot do so due to circumstances other than a loss of mental capacity, for example being unable to leave your home or being in hospital. We can help you decide which option is best for you in the circumstances.

Tax year-end round up
I mainly live abroad but have not been able to return home due to global travel restrictions and self-distancing / self-isolating requirements. I am concerned that I have spent too much time in the UK. Will there be any impact on my residence or domicile status?  What about the impact on the tax status of my business?

Personal:

HMRC have published guidance confirming that days spent in the UK for the following reasons should be considered "exceptional circumstances", and therefore potentially ignored for the purposes of calculating the number of days spent in the UK under the UK's statutory residence test:

You are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus.

The UK Government officially advise you not to travel from the UK as a result of the virus.

You cannot leave the UK as a result of the closure of international borders.

Your employer asks you to return to the UK temporarily as a result of the virus.

Currently, the maximum number of days spent in the UK in "exceptional circumstances" is 60 – but this limit too may be subject to change in light of the pandemic. The statutory residence test rules are complicated and days spent in the UK due to exceptional circumstances may not be disregarded in all situations. If an individual is tax resident in any one tax year, it will impact the number of days he or she can safely spend in the UK in the following two tax years as well as how soon he or she will become deemed domiciled for tax purposes.

If you are non-UK domiciled and you think it is possible or likely that you may inadvertently become UK tax resident in the 2020/21 tax year that starts on 6 April, you should seek urgent advice now. That is because there are important planning steps you should take before the start of the tax year in which you become resident. Without planning for this possibility, the tax consequences could be very significant and you only have a few days to do so.

Business:

You may find yourself unable to leave the UK for a range of reasons (quarantine, closure of international borders etc.) but you will need to continue to manage and run your business.  Decisions made in the UK during this period may have an impact on the tax status of your business.  Broadly, a business is resident where its central management and control takes place rather than the day to day management of its affairs.  If senior members of the businesses are not making the usual key business decisions from their usual country of tax residence, this could have significant tax repercussions as it could expose the business to UK corporate taxes on its global profits.  If you think your business may inadvertently become UK tax resident in the 2020/21 tax year that starts on 6 April, you should seek urgent advice now . That is because there are important planning steps you should take before the start of the tax year in which you/the business become UK resident. Without planning for this possibility, the tax consequences could be very significant and you only have a few days to do so.

I would like to make gifts to my children (or other loved ones) to help them during this period. Are there any relevant tax considerations?

There are several tax issues to consider when making gifts to family members.  When giving an asset away it is possible to trigger a capital gains tax (CGT) charge on any increase in value between the date of acquisition of the asset and the date of the gift. 

Also, any gift to a flexible family trust is immediately chargeable to inheritance tax (IHT) where the value of the gift exceeds the tax-free allowance of £325,000.  With current low values, it is possible to transfer more assets in to trust now and still remain within the tax-free threshold. There can be no retrospective IHT charge if those assets subsequently increase in value to pre-Covid-19 levels.

Trustees
As trustees, what do we need to consider when thinking about making distributions to beneficiaries during this period?

Trustees will need to consider their usual fiduciary duties. They may also need to consider any adverse tax repercussions for their beneficiaries and even the settlor, who may have had to spend additional days in the UK due to the closure of international borders or quarantine and who may have accidentally acquired UK tax residence as a result.  Careful planning will be needed and decisions well documented.

What investment decisions do we need to be making in the current circumstances?

Trustees will need to consider their usual fiduciary duties when considering investments. They will also need to consider any change in circumstances that could conflict with the settlor's original wishes for the trust while meeting the beneficiaries' current priorities.  The focus for trustees may move from wealth generation to wealth preservation in these uncertain times and it will be important for trustees to remain flexible when considering their investments and making the most of opportunities whilst preserving wealth.  Good communication with the relevant parties will be vital as well as good trustee governance and taking proper specialist investment advice where appropriate.

Property
My trust portfolio includes a number of commercial and/or residential properties, what issues should we be aware of?

Where the trust portfolio contains real estate, there may be immediate issues impacting on liquidity if rental income reduces or ceases altogether (particularly in relation to commercial premises). Similarly there may be issues in relation to aborted or delayed property transactions.  It is important to maintain a dialogue with the impacted parties, including beneficiaries where appropriate to keep them informed of the situation. Specialist advice should be taken, for example on whether it would be reasonable to let a trust property now at a low rent or wait for an upturn in prices.  For further guidance on these issues from our Real Estate team, click for conveyancing guidance or landlord and tenant issues.

Practical guidance for COVID-19
Read the latest COVID-19 related updates on our hub.

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