5. Post-Death Changes, Legacies, Residue, Estate Accounts, Assents, Beneficiaries Rights and Remedies, and Provision for Family and Dependents Act Flashcards
How may a beneficiary disclaim their entitlement, and what precludes them from being able to do so?
Orally or in writing, unless they have already accepted benefit
However, for what purposes must a disclaimer be in writing?
Inheritance tax and capital gains tax purposes
Where does a disclaimed gift go?
Into the residue, or into partial intestacy if the gift is the residue
Does disclaiming a gift prevent the same person from receiving property under intestacy rules?
No, and for confusion on the exam it could potentially be the exact same property.
Therefore consider disclaimer to be rejecting the status as beneficiary under a will, not rejecting the property.
What is the main disadvantage of a disclaimer, and what is a way to overcome this?
The disclaiming beneficiary has no control over the ultimate destination of the gift.
This can be overcome by use of a variation (allows B to change who receives the gift) instead of a disclaimer.
What does it mean for a variation to be effective for tax purposes, and what are the three conditions for this?
It means that the variation is read back to the date of death as if the new beneficiary was the original beneficiary
Variation must be:
- In writing
- Made within two years of death
- Not made for monetary consideration
Unlike disclaimer, in what situation can a variation still be made?
When the original beneficiary has accepted a benefit
On to Payment of Legacies:
What are the methods with increasing levels of formality which PRs must use to vest gifts in beneficiaries when the gift is of:
- Chattels
- Company shares
- Land
- Chattels: Items can be delivered, in exchange for receipt, and insurance then cancelled
- Company shares: Stock transfer form
- Land: Assent in writing, and insurance then cancelled (B needs to register their interest with HMLR)
Unless the will provides otherwise, who bears the costs of transferring assets?
The recipient beneficiary
When does the doctrine of abatement arise, and what does it provide?
When assets of a deceased person are not sufficient to fully satisfy all creditors, their debts abate i.e. are reduced, proportionally, and the creditor has no choice but to accept this lower value
Does abatement also apply to legacies?
Yes, excluding where there is a priority given to any specific legacy
On to Ascertaining the residue:
What is the tax presumption given to specific gifts of (1) UK property and (2) non-UK property?
Specific gifts of UK property are deemed free of tax, unless the will states otherwise.
The opposite presumption applies to non-UK property.
What does free of tax require in practice?
That the PRs pay off any tax liabilities before vesting assets in beneficiaries
For what type of estate is a Certificate of Discharge (document from HMRC confirming liabilities are discharged) not required?
An excepted estate
How long after a grant of representation regarding an excepted estate is there an automatic discharge?
35 days
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?
- A legacy given to an executor
- Express clause in the will (usually for professional PRs)
- Beneficiaries (of the source of funds used to pay the PR) consent
- Court permission
On to Estate accounts:
What are the three accounts which generally make up the estate accounts?
- Income account
- Capital account
- Distribution account
Where does income that relates to the period before death but is received after death go?
Capital account
What are the three purposes of the commentary document which accompanies the estate accounts?
- Identifies the gross and net values of the estate
- Confirms the disposition of the estate
- Deals with any other relevant matters