5. Legacies, Residue, Estate Accounts, Assents, Beneficiaries Rights and Remedies

Question 1

Unless the will provides otherwise, who bears the costs of transferring assets?

Answer 1

——————————————————–The recipient beneficiary

Question 2

When does the doctrine of abatement arise, and what does it provide?

Answer 2

When assets of a deceased person are not sufficient to fully satisfy all creditors, their debts abate i.e. are reduced, proportionately, and the creditor has no choice but to accept this lower value

Question 3

Does abatement also apply to legacies?

Answer 3

Yes, excluding where there is a priority given to any specific legacy

Question 4

On to Ascertaining the residue:

What is the tax presumption given to specific gifts of (1) UK property and (2) non-UK property?

Answer 4

Specific gifts of UK property are deemed free of tax, unless the will states otherwise.

The opposite presumption applies to non-UK property.

Question 5

What does free of tax require in practice?

Answer 5

That the PRs pay off any tax liabilities before vesting assets in beneficiaries

Question 6

For what type of estate is a Certificate of Discharge (document from HMRC confirming liabilities are discharged) not required?

Answer 6

An excepted estate

Question 7

How long after a grant of representation regarding an excepted estate is there an automatic discharge?

Answer 7

35 days

Question 8

What are the four ways a PR can be authorised to receive remuneration for their services, in exception to the general rule that they are not entitled to do so?

Answer 8

1. A legacy given to an executor
2. Express clause in the will (usually for professional PRs)
3. Beneficiaries (of the source of funds used to pay the PR) consent
4. Court permission

Question 9

On to Estate accounts:

What are the three accounts which generally make up the estate accounts?

Answer 9

1. Income account
2. Capital account
3. Distribution account

Question 10

Where does income that relates to the period before death but is received after death go?

Answer 10

Capital account

Question 11

What are the three purposes of the commentary document which accompanies the estate accounts?

Answer 11

1. Identifies the gross and net values of the estate
2. Confirms the disposition of the estate
3. Deals with any other relevant matters

Question 12

At this stage, how are the PRs discharged from liability?

Answer 12

1. PRs endorse the accounts and send to the residuary beneficiaries
2. Residuary Bs endorse the accounts
3. Residuary Bs formally discharge PRs with agreement to indemnify them against all claims and demands (again, can be worthless if Bs have no money)

Question 13

What are the PRs’ 2 options if a residuary beneficiary refuses to endorse the accounts?

Answer 13

1. Ask court to approve the accounts
2. Pay the objecting beneficiary’s share into court

Question 14

On to Assents:

What is an assent and what are the three requirements for one?

Answer 14

Document which vests legal title in a beneficiary.

1. In writing
2. Signed by the PRs
3. Expressly name the person in whose favour it is given

Question 15

In what situation is an assent still required, despite examiner’s attempts to trick, and why?

Answer 15

Even when the PR is the beneficiary, because the capacity in which they are holding the asset is changing from PR of the estate to beneficiary in their own capacity

Question 16

Is an assent required when a PR is to continue to hold property in a different capacity, e.g. as trustee under a trust arising out of the will or intestacy, and why?

Answer 16

Yes, because again, the capacity in which they are holding the asset is changing from PR of the estate to trustee of the trust

Question 17

Whilst in the case of unregistered land, the PRs must ensure the land is subject to first registration, what are the PRs two options in the case of registered land?

Answer 17

1. Apply to be registered as the owner in place of the deceased, producing the grant when doing so, or
2. Transfer the property by assent to a beneficiary who will then apply to be the registered owner, submitting a certified copy of the grant when doing s o

Question 18

When buying land from a PR, what should a purchaser insist on which will protect the purchaser unless they have notice to the contrary?

Answer 18

A statement in the conveyance that no previous assent has been made

Question 19

When buying land from a beneficiary, what is sufficient to prove the beneficiary has the right to sell?

Answer 19

An assent in the beneficiary’s favour

Question 20

On to Beneficiaries’ rights and remedies:

Before administration is complete, what is the term given to a beneficiary’s right to have the deceased’s estate properly administered?

Answer 20

A chose in action

Question 21

Until administration is complete, what does a beneficiary not have?

Answer 21

B does not have any legal or equitable interest in the deceased’s assets

Question 22

What right to income do specific legatees have?

Answer 22

A right to the income accruing from death

Question 23

What right to income do residuary beneficiaries have?

Answer 23

A right to intermediate income whether their interest is vested or contingent

Question 24

Can the income rules be overridden by a will?

Answer 24

Yes

Question 25

What are the two ways to recover loss from the PRs?

Answer 25

1. Personal action
2. Tracing

Question 26

What are the two ways the PRs be absolved, even if they would otherwise be personally liable?

Answer 26

1. If they acted honestly and reasonably, and ought fairly to be excused, or
2. Beneficiaries consent

Question 27

What is tracing, and in what two situations is the right to it lost?

Answer 27

The right of the beneficiaries to trace and recover property from the estate from PRs or subsequent purchasers.

The right to trace is lost if the purchaser is a bona fide purchaser for value without notice, or it would otherwise be inequitable to allow tracing.