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Administration (1): PRs Flashcards

1
Q

What is administration?

A

This is the legal process for managing the distribution of a deceased person’s estate, payment of debts, taxes, estate expenses and the beneficiaries.

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2
Q

What is a Personal Representative (PR)?

A

The people permitted by law to administer a deceased’s estate are the PRs.

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3
Q

What is a Personal Representative (PR) appointed by will called?

A

executor (you may come across the female forms executrix).

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4
Q

What is a Personal Representative (PR) appointed by statute called?

A

administrator (you may come across the female forms administratrix).

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5
Q

summary of PRs

A

executor and adminsitrators are sub-types of PRs.

executor is a person is a person who is PR for a dead person who left a will and appointed the executor as executor.

administrator is a person who is PR for a a dead person who didn’t leave a valid will/no mention of executor in their Will.

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6
Q

What is a grant of representation?

A

The court order confirming the authority of the PRs to act (in particular, their right to collect in the deceased’s assets and distribute the estate).

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7
Q

Which court orders a grant of representation?

A

the High Court.

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8
Q

Why is a grant of representation necessary?

A

It is necessary because it establishes the authority of the PRs to act and the validity of the deceased’s will, or that the deceased died intestate.

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9
Q

The power conferred by the grant is limited to what assets?

A

The power conferred by the grant is limited to the assets passing under the will or intestacy i.e. the succession estate.

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10
Q

An executor derives authority from where?

A

An executor derives authority from the will and they may act from the date of death. The grant confirms this authority.

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11
Q

An administrator derives authority from where?

A

An administrator derives authority from the grant. They have no authority to act until the grant is issued.

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12
Q

The role of the PR is what in nature?

A

The role of a PR is fiduciary in nature. All duties of a PR must be performed in accordance with their duty of care.

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13
Q

When the estate administration is complete the role of the PR ends, will their duty continue?

A

Their duties may continue.

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14
Q

Where there is a will, but no executor appointed who is willing or able to act, how will a PR be appointed?

A

A PR will be appointed under the NCPR (Non-Contentious Probate Rules 1987) and is referred to as an administrator.

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15
Q

Who does the legal title to a deceased person estate lie with?

A

with the PRs by virtue of their appointment.

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16
Q

When the estate administration is complete and the role of the PR ends, if any continuing trusts are created, what happens?

A

the property which makes up the trust fund should be transferred to the trustees as part of the administration process.

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17
Q

can a PR also be a trustee of the estate they administer?

A

yes

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18
Q

A PR will be a trustee of some/all of the estate property where what three things happen?

A
  • the will expressly appoints the executors to act as trustees of any trust arising.
  • there is an intestacy; the PRs hold the estate generally ‘on trust with a power to sell’.
  • a statutory trust arises under an intestacy; the PRs will be the trustees of that trust on behalf of the minor beneficiary.
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19
Q

can a beneficiary be a PR?

A

yes.

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20
Q

What are the three ways that a solicitor will become involved in the administration of an estate?

A

(a) The solicitor has been instructed by the PRs for advice on the administration.
(b) The solicitor has been appointed as executor under the deceased’s will.
(c) The solicitor has been instructed to act on behalf of a party to a contentious probate matter.

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21
Q

If a firm is instructed by PRs the firm’s client is who?

A

the PRs are the client.
not the beneficiaries.

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22
Q

The cost of providing legal advice is paid from where?

A

may be paid using the estate assets rather than the PR’s personal funds because it is an administration expense.

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23
Q

Where the solicitor is advising PRs, most formal documentation required for the administration will be signed by who?

A

the clients even if it is prepared/drafted by the solicitor.

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24
Q

If a solicitor acts as executor (appointed by will) what will they be called?

A

Professional PR.

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25
If a solicitor acts as executor (appointed by will), who do they owe their duties to?
their duties are owed to the estate creditors and beneficiaries.
26
Who will the solicitor charge for their services if appointed as an executor?
The solicitor will charge the estate for their services.
27
What are examples of contentious probate matters in which a solicitor may be appointed for?
• the terms of the will are disputed or the validity of the will is challenged • a disappointed beneficiary wants to make a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
28
Who is liable for loss caused by a PR breach of duty?
A PR is personally liable for loss caused by a breach of duty.
29
What is a common law duty of the PR before the issue of a grant?
Common law duty to dispose of the deceased's body.
30
What are the two statutory duties of the PR before the issue of a grant?
Statutory duty to: 1. provide information about the estate to HMRC and 2. pay IHT due.
31
For common law and statutory duties of a PR before the issue of a grant, it must be completed before what?
before the grant is obtained.
32
What are the duties of the PR under a grant?
• Collect and get in the real and personal estate of the deceased and administer it according to law • Provide an inventory and account of the estate assets.
33
For duties of the PR under a grant, who do they owe these duties to?
These duties are owed to the estate beneficiaries and creditors.
34
To comply with the duty to collect in the real and personal estate of the deceased, what must the PR specifically do?
• Identify and locate the deceased's assets (including sums owed to the deceased) • Identify the deceased's liabilities and creditors • Obtain control, possession or legal ownership of the assets.
35
To comply with the duty to administer in the real and personal estate of the deceased, what must the PR specifically do?
Once assets have been collected in, the PRs must 'administer' the estate in full by: • keeping the assets secure • paying the deceased's debts and liabilities (in accordance with statutory order) • meeting administration expenses • paying legacies • and distributing the residue to those legally entitled.
36
To comply with the duty to provide 'inventory and account' in the real and personal estate of the deceased, what must the PR specifically do?
The PRs must keep a list of assets and values (inventory) and a record of the steps they have taken in the administration (account). This information is usually recorded in the 'Estate Accounts'.
37
Where is the information for inventory and account usually recorded?
'Estate Accounts'.
38
Who may ask to see the estate accounts, and if the PRs have not provided this or have not maintained adequate records what can the person who wants to see the estate account do?
A beneficiary or creditor may ask to see the estate accounts. An application to court for an order to produce an inventory and account may be made.
39
When should PRs aim to complete the administration?
within 12 months of the date of death.
40
What if the administration takes longer than 12 months?
No breach has occurred, but PRs are required to justify any delay.
41
What happens if additional assets are discovered after the administration is complete?
the PRs have a duty to administer these assets.
42
When is there an ongoing risk of personal liability of a PR?
if creditors or beneficiaries, who were not known of at the time, come to light after the estate is fully administered and demand their entitlement.
43
What statutory duty of care are PRs subject to?
PRs are subject to the same statutory duty of care as trustees when the PRs exercise the powers under the TA 2000.
44
The s1 duty of care imposes a higher standard for which type of PRs?
professional PRs such as solicitors, those possessing special knowledge or experience, as well as those who hold themselves out as having such special knowledge or experience.
45
What are the fiduciary duties of a PR?
PRs must not, unless authorised by the court or fully informed beneficiaries: • Place themselves in a position of conflict. • Profit from their position.
46
If the deceased died intestate, which PR powers will only apply?
only statutory powers will apply.
47
If the deceased left a will, statutory powers of a PR apply to what extent?
If the deceased left a will, statutory powers apply in default of any alternative contained in the will. so the stuff in the Will take importance, but if there is no mention of certain elements, then we look towards the statutory powers.
48
What can express clauses in a will do in relation to PR powers?
Express clauses may confer additional powers that go beyond statutory provisions or may exclude/modify statutory powers.
49
In a will, which take priority?
Express provisions in a will take priority over statutory powers.
50
What statutory powers do the PR have?
• Sell, charge or lease • Appropriate • Insure • Invest • Charge for PR services • Delegate powers • Appoint trustees.
51
What rules are the PRs power to appropriate subject to?
• A specific beneficiary must not be prejudiced. • Consent of the recipient beneficiary is required. • The value of the asset must be considered at the date of transfer/appropriation.
52
When can the PR not appropriate?
If the value of an asset exceeds the beneficiary's entitlement, the PRs may not appropriate.
53
If the value of the asset is less than the beneficiary's entitlement, what can the PRs do?
the PRs may appropriate and then make a balancing cash transfer.
54
What is the PRs power to insure?
PRs have the power to take out insurance to insure estate assets comprehensively and for full value.
55
Where do the PRs pay the insurance premium from?
PRs are authorised to pay the insurance premiums out of either estate income or capital.
56
When can Professional PRs e.g. solicitors claim reasonable remuneration for their services?
• they are not acting alone, and • that co-PRs give their written consent.
57
A lay PR or, a professional PR who is acting alone will need what in order to charge for their services?
needs to be given express power in the will to charge for their services.
58
Payment as remuneration for services is not to be treated as what?
Is not to be treated as a gift under s 15 Wills Act 1837.
59
PRs are permitted to employ agents and delegate their powers, except for what three things?
• how and whether assets should be distributed • whether fees or costs are payable from income or capital • the appointment of trustees/nominees/custodians.
60
PRs may not appoint a beneficiary as their what?
their agent.
61
If delegation is required, the PRs must do what two things?
• do so in writing to the agent and • provide them with a written policy statement which the agent must agree to comply with.
62
Where a legacy is given absolutely to a minor, can they be paid the legacy?
No - there is no general power to pay the legacy to the beneficiary until they reach 18.
63
What must the PRs do regarding paying the legacy to a minor?
The PRs need to hold the relevant assets on trust for the minor, investing these assets in accordance with the statutory powers.
64
If the PR does not want to retain the legacy for the minor until they turn 18, what can they do instead?
A PRs could instead appoint trustees of the legacy and give the legacy to the trustees.
65
Does a minor's parent or guardian have the power to give a good receipt to the PRs on behalf of a minor?
Yes - under s 3 Children Act 1989.
66
If the testator does not want the parent or guardian to receive the legacy on behalf of the minor, what can they do?
the will can be drafted expressly to give the legacy to trustees to hold until the child reaches majority.
67
Is an express clause within a will which permits PRs to accept receipt from a minor beneficiary aged 16 or older effective?
Yes.
68
If a testator ran a business as a sole trader business what power does the PR have in administering the business?
there is a limited common law power to enable PRs to sell the business as a going concern within a year of death.
69
As the default power to run the business is limited, what can the testator do?
it is common to include an express power so PRs can run/manage a sole trader business.
70
If more than one PR is appointed, then how are they required to make decisions?
They are required to make decisions together and should exercise discretionary powers unanimously.
71
When can a jointly appointed PR act alone?
when exercising a lawful power to sell or transfer an estate asset during the administration.
72
can a PR buy one of the properties in an estate?
No. PR us subject to fiduciary duties which includes the duties to avoid conflict of interest. acting as both buyer and seller of estate (without court or beneficiary authorisation) would create a conflict and breach of duty.
73
What are PRs personally liable for?
A PR is personally liable for losses that result from a breach of duty which they commit.
74
A PR may also be liable for breaches committed by who?
other PRs if they did not make a reasonable effort to monitor the co-PRs' conduct.
75
A claim of action against a PR for breach of their PR duties is called what?
a devastavit (wasting of assets).
76
What court order will the claimant seek in a devastavit?
The claimant will seek a court order that the PR makes good the loss using their personal assets.
77
A claim against a PR may be based on what four things?
• Maladministration • Misuse of assets • Negligence • Breach of fiduciary duty.
78
What does maladministration include?
This could include: • Incorrectly administering the estate by making distributions to the wrong beneficiaries.
79
What does misuse of assets include?
This could include: • Making personal use of the estate assets.
80
What does negligence include?
This could include: • Unreasonable delay in carrying out the administration.
81
What does breach of fiduciary duty include?
This could include: • Breach of the no conflict rule.
82
What does misuse of assets include?
This could include making personal use of the estate assets.
83
What does negligence include?
This could include unreasonable delay in carrying out the administration and failing to invest or making poor investment decisions in breach of the duty of care.
84
What does breach of fiduciary duty include?
This could include breach of the no conflict rule, breach of the no profit rule, and self-dealing.
85
In addition to personal liability, how may a PR be removed from their role?
A court order under s 50 Administration of Justice Act 1950 appointing a replacement PR or an administration action where the court takes over the administration itself.
86
What methods can PRs use to protect themselves?
Seeking court directions, Section 48 Administration of Justice Act 1985, Section 27 TA 1925 notice, Benjamin Order, Presumption of Death Act, Insurance, Payments into court, Indemnity from beneficiary, Section 61 TA 1925.
87
What will administration proceedings take the form of if PRs seek court direction?
An administration action application to have the estate administered by the court or specific relief, an application for guidance on a particular matter.
88
Who should give the written legal opinion in accordance with Section 48 Administration of Justice?
A person who has a 10 year High Court qualification.
89
Who remains personally liable to unpaid beneficiaries and creditors after distribution?
PRs who distribute the estate.
90
what does section 27 Trustee act protection mean?
it can help protect PRs because to prevent liability to unidentified beneficiaries and creditors, the trustees may publish a notice of their intention to distribute to known beneficiaries two months after the date of advertisement.
91
What must PRs or trustees do to prevent liability to unidentified beneficiaries and creditors?
Publish a notice of their intention to distribute to known beneficiaries within two months after the date of the advertisement.
92
Where must the notice for unidentified beneficiaries and creditors be placed?
The London Gazette, a newspaper circulating in the area in which any land held on trust is situated, and any other appropriate newspaper.
93
Who may a disappointed creditor/beneficiary still claim against?
The beneficiaries.
94
What can PRs do to relieve themselves from liability for known but missing beneficiaries?
Seek a Benjamin Order.
95
What does the Benjamin Order permit?
To distribute the estate on the basis that the missing beneficiaries have died or that the missing beneficiary had no children.
96
What must PRs do before a Benjamin order is awarded?
Make full enquiries to establish the true position and demonstrate there is no reasonable prospect of knowing the true position without disproportionate expense.
97
What is the Presumption of Death Act 2013?
PRs may apply for a court order declaring that a person thought to have died, or not known to have been alive, for seven years or more has died.
98
What risk does insurance cover if the PR purchases one?
The risk that the beneficiary or creditor returns after the administration is complete and makes a claim against the PRs.
99
Who can PRs seek indemnity from and what does it do?
PRs could seek indemnity from the beneficiaries they can trace, promising to reimburse the PRs for any loss suffered due to being sued.
100
Under s 61 TA 1925, when may a PR apply for an order exonerating them from personal liability?
If the court considers that the PR acted honestly and reasonably and ought fairly to be excused for the breach of trust.
101
Can the testator's will contain clauses which exclude or restrict liability for a PR's wrongdoing?
Yes. but not if it attempts to avoid liability for fraud.

WAE (13 decks)

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