5. Post-Death Changes, Legacies, Residue, Estate Accounts, Assents, Beneficiaries Rights and Remedies, and Provision for Family and Dependents Act Flashcards

1
Q

How may a beneficiary disclaim their entitlement, and what precludes them from being able to do so?

A

Orally or in writing, unless they have already accepted benefit

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2
Q

However, for what purposes must a disclaimer be in writing?

A

Inheritance tax and capital gains tax purposes

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3
Q

Where does a disclaimed gift go?

A

Into the residue, or into partial intestacy if the gift is the residue

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4
Q

Does disclaiming a gift prevent the same person from receiving property under intestacy rules?

A

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.

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5
Q

What is the main disadvantage of a disclaimer, and what is a way to overcome this?

A

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.

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6
Q

What does it mean for a variation to be effective for tax purposes, and what are the three conditions for this?

A

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:

  1. In writing
  2. Made within two years of death
  3. Not made for monetary consideration
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7
Q

Unlike disclaimer, in what situation can a variation still be made?

A

When the original beneficiary has accepted a benefit

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8
Q

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:

  1. Chattels
  2. Company shares
  3. Land
A
  1. Chattels: Items can be delivered, in exchange for receipt, and insurance then cancelled
  2. Company shares: Stock transfer form
  3. Land: Assent in writing, and insurance then cancelled (B needs to register their interest with HMLR)
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9
Q

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

A

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

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10
Q

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

A

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

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11
Q

Does abatement also apply to legacies?

A

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

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12
Q

On to Ascertaining the residue:

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

A

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

The opposite presumption applies to non-UK property.

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13
Q

What does free of tax require in practice?

A

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

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14
Q

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

A

An excepted estate

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15
Q

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

A

35 days

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16
Q

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
  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
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17
Q

On to Estate accounts:

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

A
  1. Income account
  2. Capital account
  3. Distribution account
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18
Q

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

A

Capital account

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19
Q

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

A
  1. Identifies the gross and net values of the estate
  2. Confirms the disposition of the estate
  3. Deals with any other relevant matters
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20
Q

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

A
  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)
21
Q

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

A
  1. Ask court to approve the accounts
  2. Pay the objecting beneficiary’s share into court
22
Q

On to Assents:

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

A

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
23
Q

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

A

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

24
Q

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?

A

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

25
Q

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?

A
  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 do
26
Q

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

A

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

27
Q

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

A

An assent in the beneficiary’s favour

28
Q

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?

A

A chose in action

29
Q

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

A

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

30
Q

What right to income do specific legatees have?

A

A right to the income accruing from death

31
Q

What right to income do residuary beneficiaries have?

A

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

32
Q

Can the income rules be overridden by a will?

A

Yes

33
Q

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

A
  1. Personal action
  2. Tracing
34
Q

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

A
  1. If they acted honestly and reasonably, and ought fairly to be excused, or
  2. Beneficiaries consent
35
Q

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

A

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.

36
Q

On to Claims against estates under Inheritance (Provision for Family and Dependents) Act 1975:

What are the grounds to make a claim to the court under the 1975 Act, and what is the effect?

A

The terms of a will can be set aside or an intestacy can be varied if the deceased was domiciled in England and Wales and did not make reasonable financial provision for the applicant

37
Q

Within what time of what event must an application under the 1975 Act be made?

A

Within six months of the grant of representation to the PRs, or later with court permission

38
Q

What are the five categories of people who will qualify to make a claim under the 1975 Act?

A
  1. Surviving spouse or civil partner at the date of death
  2. Former spouse or civil partner who has not remarried
  3. Child of the deceased or person treated as a child of the family
  4. Person who was being maintained
  5. Person living with deceased as partner for entire two-year period before death
39
Q

When might a former spouse be precluded from making a claim under the 1975 Act?

A

If they agreed to a clean break divorce

40
Q

Although children are a category who can make a claim, when will adult children be unlikely to be allowed to claim?

A

If they are able-bodied and in full employment

41
Q

For a person who was being maintained to be able to make a claim, how much of a contribution must the deceased have been making?

A

A substantial contribution towards the reasonable needs of the claimant

42
Q

What is the two part process for determining what constitutes reasonable financial provision?

A
  1. Has the will or intestacy rules failed to make reasonable financial provision for the claimant?
  2. If so, what would such a provision have to be for the answer to part 1 to become no
43
Q

What is the standard for reasonable financial provision when it comes to a spouse?

A

Financial provision which is reasonable in all the circumstances, whether needed for maintenance or not

44
Q

In their discretion, in what circumstance can the court apply the spouse standard to former spouses?

A

If the death occurs within 12 months of the divorce decree and no final order has yet been made in the divorce proceedings

45
Q

For all other applicants who aren’t spouses or former spouses qualifying for the spousal standard, what is the standard?

A

Financial provision which is required for maintenance such that they can live decently and comfortably according to their situation

46
Q

Is the test for this objective?

A

Yes, although evidence of the deceased’s reasons for not providing for the claimant are admissible

47
Q

What occurs when the court approves an application under the 1975 Act?

A

The estate is administered according to the terms of the court order, and not the will or intestacy

48
Q

In the event of a successful application under the 1975 Act, what are the court’s four options under their wide discretion?

A
  1. Transfer property
  2. Payment of a lump sum
  3. Payment of income
  4. Settlement of property on trust
49
Q

Does the court have any powers under the 1975 Act regarding property disposed of by the deceased before death?

A

Yes, if that disposal was intended to avoid the provisions of the 1975 Act