13.8 Personal Representatives Flashcards
What do personal representatives do?
PRs handle the deceased’s estate (the process of administration). They are legally permitted to carry out this administration process.
What is the difference between an executor and an administrator?
Executor → PR appointed by a will. Cannot be a minor, person who lacks mental capacity or a former spouse.
Administrator → PR otherwise appointed where there is no valid will (intestacy) or valid executor (will failed to appoint one or the executors appointed cannot do it)
What is the difference between a PR renouncing their rights and a PR having power reserved?
Renunciation –> Person named as executor is able to renounce their rights to a grant of probate, provided they have not accepted office. Cannot apply for grant at a future date as they have renounced their position.
Power reserved –> An executor will not be involved for now but if circumstances change (e.g another executor falls ill, dies or changes their mind), they can apply for a grant of probate at a later stage. No automatic substitution.
How does the PR accept office and what is the effect of ‘intermeddling’ in the estate?
Accepting office will occur if the executor takes a grant of probate or intermeddles in the estate (does something which shows an intention to accept office). Effect: PR will then lose their right to renounce.
Intermeddling in the estate: selling assets of the deceased, paying debts, carrying on a business of the deceased.
Not intermeddling in the estate: arranging the funeral, insuring the deceased’s assets, gathering and perusing the deceased’s papers.
What is the process of administration?
Divided into 3 main stages: I.O.A
- Immediate steps after a person’s death;
- Obtaining the grant;
- Administration - administering the assets until all the estate has been distributed
What are the tasks completed by the PRs?
- Duty to arrange for the funeral and burial or cremation of the deceased;
- Pay any IHT due;
- Collect in the assets of the deceased;
- Administer those assets; pay off debts and expenses then distribute them to beneficiaries
What are the practical duties taken by PRs when someone dies?
1) Register the death online within 5 days of death. Tell the government.
2) Locate the will and codicils (if any), ensure it is the original and is valid. Identify the beneficiaries or use the intestacy rules to figure out who they are.
3) Secure any valuable or vulnerable property.
4) Obtain details of the deceased’s assets and liabilities - key to getting the grant.
5) Calculate the value of the deceased’s estate at the date of death so that you can calculate the IHT payable (taxable estate).
Registration of death (R) - Assets to value (A) - Vaildity of will (V) - Advertisement of beneficiaries (A) - Calculation of IHT (C)
What are the legal duties of a PR?
- Duty to collect assets and administer the estate (pay off debts, distribute gifts and residue to correct beneficiaries)
- Statutory duty of care (under s1 TA 2000) and a common law duty not to commit waste (preserve assets in the estate)
- Duty must be performed with due diligence and with the powers granted to PRs. PRs have (informally) 12 months from the date of death to carry it out promptly and without delay.
What are the sources of a PR’s powers?
- Statute (Trustee Acts 1925 and 2000, The Administration of Estates Act 1925)
- The deceased’s will
What is the link between PRs and trustees?
Trusts law comes into play here.
PRs have the same powers as trustees do under the Trustees Acts - powers to invest, maintenance, advancement of capital. In addition to powers under the AEA 1925 (power to appropriate).
If a PR is being a trustee (e.g over a minor’s assets), the will will likely be amended to tailor the PR’s exercise of trustee powers to the testator’s wishes as well as impose contingencies on the minor’s inheritance.
What are the powers available to a PR?
- Power to invest / manage estate assets
- Advancement of capital (if trustee)
- Power to appropriate
- Power to appoint trustees (including of a minor’s property - 2 needed)
- Power to claim expenses and power of remuneration
- Power of maintenance (if trustee for minor)
- Powers of sale
- Power to delegate
- Powers under the will
What is the power to appropriate?
Power to appropriate = Used when executors are distributing the succession estate and choose which beneficiary gets what in order to satisfy their entitlement
- Can’t apply to specific legacies (executor must gift those as instructed by the will)
- Can apply when distributing the estate under the intestacy order (.e.g determining which half of the residue the spouse gets and which half the children get)
The power allows executors to swap things in the will to satisfy a pecuniary / general or residue entitlement provided that what they are swapping in HAS NOT BEEN GIVEN to someone else specifically in the will.
E.g. if a beneficiary is entitled to £10k but really wants an old antique, the PRs can swap in the antique provided it hasn’t been given to someone else in the will. They will need to value the antique and see if it is worth £10k, if not, they will need to top it up with cash.
The beneficiary must consent to receive that asset. Value of asset must be measured at the time of transfer to that beneficiary, not death.
NOTE: Requirement of consent can be removed in the will.
What is the potential liability of a PR?
PRs are personally liable for:
- Breach of fiduciary duty (no profit, no conflict)
- Losses to the estate as a result of negligence / maladministration
- Failure to distribute assets to certain beneficiaries
PRs are personally liable for any breach of duty (e.g. distributing to the wrong beneficiaries, delaying - going over a year, losing / misappropriation of property, breach of statutory duty).
Action can be brought by a beneficiary who has personally suffered loss as a result of the PRs’ breach.
What protections are available from the court to PRs for a breach of duty?
Court guidance;
The court’s discretionary power of relief
^ Discretionary power of relief: Court can grant this to a PR if they are in breach of duty (to administer the estate and distribute assets to the correct beneficiary) but they have acted honestly and reasonably
What protections are available if there is an unknown creditor or beneficiary after the PRs have distributed the estate?
s27 Trustee Act 1925
To get this protection:
- PRs must give notice that they intend to distribute the estate’s assets to the public and ask that any claims be submitted to them within 2 months of the notice
- Notice must be published in the London Gazette and any other necessary local paper
- PRs must also do their own searches (e.g land registry, genealogist search, appoint tracers to do so)
What protections are available if there is a known but missing creditor or beneficiary after the PRs have distributed the estate?
PR can take a number of steps to ensure protection:
- Give notice and wait 2 months (under s27 Trustee Act 1925);
- Conduct their own searches or hire someone to do so.
- Obtain a Benjamin Order: order from the court allowing the estate to be distributed despite the missing beneficiary. To get this, PR must have made full enquiries to locate that missing beneficiary or creditor.
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Indemnity from the beneficiaries: beneficiaries promise to reimburse PR if the creditor / beneficiary does show up.
Insurance - Pay the amount into court, which will then keep hold of it
What other protections are available to a PR?
- Consent of the beneficiaries: Provided that they have full knowledge of the facts;
- Will: The will may permit, modify, or exclude any breach of duty by a PR.
- Limitation: 12-year time limit from date the right accrued on a beneficiary bringing a claim for a missing share in the estate. This time limit does not apply where the PR has fraudulently breached their duties or taken property from the estate for their own personal use.
NOTE: Action for negligence by the PR is a tort action - so subject to 6 year limitation.
