Administration

Question 1

What form is used when applying for a grant of representation where there is a will?

Answer 1

PA1P

Question 2

In what context will the chain of representation rule not apply?

Answer 2

Where more than one executor was appointed to administer the estate, and has survived the deceased executor.

Question 3

What form is used when applying for a grant of representation where there is no will?

Answer 3

PA1A

Question 4

Who can administer an estate without an executor but a valid will?

Answer 4

NCPR 20 applies
1) Trustee of the residuary estate
3) Residuary beneficiary (including life tenant)
4) PRs of any residuary beneficiary (other than life tenant)
5) Any other beneficiary or creditor
6) PR of the above.

Question 5

Who can administer an estate where intestacy occurs?

Answer 5

1. surviving spouse
2. children
3. parents
4. siblings (full)
5. siblings (half)
6. grandparents
7. uncles and aunts (full then half)
8. the Crown
9. a creditor

Question 6

What is two extra condition for applicants under the NCPR 22?

Answer 6

• Need a beneficial entitlement in the estate;
• Spouse cannot apply until 28 days have passed following date of death.

Question 7

What is the purpose of ‘clearing off’ when applying under NCPR 22 ?

Answer 7

A person in one category cannot apply if anyone in a higher category is able and willing to act as administrator.
* applicant(s) is lower category must explain why anyone with a better right to apply is not doing so (known as “clearing off”).

Question 8

Can a minor act as a PR?

Answer 8

No, must be over 18, but power can be reserved if appointed in will as executor and apply for probate on attaining 18 years (NCPR 33(1))

Question 9

What are the four types of grant of PR?

Answer 9

Grant of probate: valid will with appointed executor intending to act.

Grant of letters of administration (with will): valid will but no executors are appointed or those appointed are unwilling or unable to act.

Grant of letters of administration: no valid will or intestacy.

Grant of administration de bonis non: allows for administration to be completed after the sole/last PR dies.
* not needed if there is a chain of representation.

Question 10

What is the process for a professional application for probate?

Answer 10

1) Mandatory online application (includes most grants of probate) for professionals

2) Online application possible but not mandatory for lay-people.
* applies to simple applications e.g. sole applicant and no minors /life interests)

3) Mandatory paper application for complicated cases.
* grant of double probate
* Original will is missing or there are issues with the will
* Attorneys
* Grant under NCPR 20 if life interest arises

Question 11

What is the content of a PA1A/P?

Answer 11

• confirms identity of the deceased and the applicants.
• justifies the type of grant requested and their entitlement to act as PR
• provides information about the value of the estate and its inheritance tax (IHT) status.
• complete the legal statement on the probate form confirming the information provided is correct and they will administer the estate properly

Question 12

What four scenerios require an affidavit to be sumbitted to the Probate Registry alongside an application for grant?

Answer 12

Where there is a problem with will, including to confirm:
a. Due execution
b. Date (if will is undated)
c. Confirm any alterations made to the will
d. Physically damaged will
e. Steps were taken to locate missing documents.

Question 13

Who must sign off on the estate accounts?

Answer 13

all PRs and any residuary beneficiary

Question 14

How many applicants can apply for a grant of probate?

Answer 14

Minimum - 1 applicant
Maximum - 4 applicants

Question 15

When will more than 1 PR be required?

Answer 15

Where an administrator is appointed (cf. executor) are there is either a minor or life interest.

Where there is only one able/willing person in the category with best entitlement to apply, that person may apply for the grant with somebody from the next category of entitlement.

Question 16

When is a professional valuation of assets needed?

Answer 16

1) Any chattels worth over £500 each
2) Land - minimum of two estate agents
3) Joint property - ascertain whether it is held jointly or as tenants in common.

Question 17

Who is excluded from acting as a personal representative of the deceased’s estate?

Answer 17

• pre-deceased D - note special rule about chain of representation
• Minor - power can be resevred, and can apply once 18 yrs old.
• Lacks capacity
• Testator’s ex-spouse, initially named in will as executor. Treated as if pre-deceasing the deceased, unless expressly overriden.

Question 18

What must an executor with ‘reserved power’ do once they wish to start administering the estate?

Answer 18

apply for a grant of double probate

Question 19

Can an executor who intermeddled in the estate still reserve power?

Answer 19

Yes, they simply cannot renounce their powers altogether.

Question 20

Can power to carry out the administration on an executor’s behalf be delegated?

Answer 20

After grant - valid for max.12 months subject to renewal.

Before grant - delegate power to apply, but for grant of letters of admin. (by will) since it is not named in will directly.

Question 21

Where an executor is unwilling to act, but has not yet renounced, what powers do the estate’s beneficiaries have?

Answer 21

Apply to court to compel executor to either act or renounce, to then allow someone else to be appointed.
* called a citation.

Question 22

What are the duties of the PRs?

Answer 22

1. Collect deceased’s interests in property within a reasonable time and taking reasonable steps.
2. Duty of care
3. To carry out inventory and prepare Estate Accounts.
4. Preserve the estate and realise investments that cannot be properly retained within a reaosnable time.
5. Distribute estate
6. Fiduciary duties
7. Dispose of the body (common law)
8. Provide info to HMRC and pay IHT (statutory)

Question 23

What must be completed before a grant to administer the estate can be obtained?

Answer 23

Required reporting to HMRC and IHT tax must be paid

Question 24

How should reporting to HMRC by PR be completed?

Answer 24

They do so by completing form IHT 400.

• An IHT 400 will be completed for any estate that is not excepted.

Question 25

When is an estate **excepted**?

Answer 25

1) **Low value** excepted - no IHT is payable as gross value of the estate falls below the NRB. 2) **Exempt** excepted estate * Gross value of the estate is *less than £3 million* **and** everything is left to spouse/charity (so below NRB amount). Even if conditions (1) or (2) are met, special exception does **not apply** if any of these is relevant: * GROB * Foreign assets in excess of £100k * Trust (not passing to spouse) exceeding £250k * Specified transfers exceeding £250k * Claim is made for RNRB

Question 26

What is the PRs duty to 'collect in'?

Answer 26

To comply with this duty PRs must: * 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

Question 27

Can a beneficiary or creditor see the estate Accounts?

Answer 27

Yes, and if PRs refuse, or have not maintained adequate records, an application to court to produce these can be made.

Question 28

When should estate **administration** be **completed** and IHT paid?

Answer 28

Administration must be completed within 12 months of the **date of death.** * If it takes longer, PRs are required to justify any delay. Inheritance tax *within 6 months* from **end of month of death.**

Question 29

How can administrators raise funds to pay for IHT?

Answer 29

1) **Bank** makes a direct payment from the deceased’s account straight to HMRC. * Procedure: PRs should indicate on form IHT 400 that they intend to use the *Direct Payment Scheme* and fill a separate schedule (IHT 423) for the bank. 2) Borrow money from a **beneficiary** – interest free. 3) **Bank loan** – interest applies.

Question 30

When does the PRs duty to administer end?

Answer 30

Duty ends once administration finished, however appointment is for life. If additional assets or creditors or beneficiaries discovered at a later date, PRs still have duty and are still liable (personally).

Question 31

Can a PR sell, charge or lease estate assets?

Answer 31

Yes. PRs may need to do this soon after the grant is issued to repay deceased’s debts and any loan taken out to meet the IHT liability. * note - special exception for land transactions.

Question 32

What duty must PRs be alert to when dealing with land?

Answer 32

Duty to consult adult beneficiaries in the trust of land, and follow their wishes.

Question 33

Can a PR appropriate an asset? What are the (5) rules?

Answer 33

Yes., but subject to five key rules: 1 - A specific beneficiary must not be prejudiced. 2 - Consent of recipient beneficiary is required. 3 - Asset is **valued at the date of appropriation** (cf. death) 4 - If the value of an asset **exceeds** the beneficiary’s entitlement the PRs *may not* appropriate. 5 - If the value of the asset is **less than** the entitlement the PRs may appropriate and then make a balancing cash transfer.

Question 34

Can PRs charge for services?

Answer 34

Yes. Professional PRs may claim reasonable remuneration for their services provided: · they are not acting alone, and · that co-PRs give their written consent. A lay PR or, a professional PR who is acting alone, needs to be given express power in will to charge.

Question 35

Can PRs delegate their duties?

Answer 35

PRs are permitted to employ agents and delegate their powers, except for the following: · how and whether assets should be **distributed** · whether fees or costs are payable from **income or capital** · the **appointment of trustees**/nominees/custodian

Question 36

Can a PR **delegate powers** to a beneficiary or other PR?

Answer 36

PRs **may not** appoint a beneficiary as their **agent** but may appoint one of the PRs *if they are sufficiently qualified.* Procedure: · do so in writing · provide them with a written policy statement that agent agrees to comply with. · periodically review policy's terms.

Question 37

Can a **parent/guardian** give **good receipt** on behalf of their underage child?

Answer 37

Yes, provided for under statute. * Express clause in will can also allow PRs to accept receipt from a beneficiary *16 or older.*

Question 38

Does the PR have the power to run a business?

Answer 38

If sole trader - limited common law power to enable PR to sell business as a going concern within a year of death. PRs personally liable to business creditors. * important that business contract are fullfilled, unless involve personal services.

Question 39

What can be done **without a grant**?

Answer 39

1) Apply for an order under the Small Payments Act, permitting **payments to beneficiaries** without a grant for up to **£5,000** * Payments from National Savings, premium bonds, and building society accounts. 2) Chattels 3) Assets passing outside the succession estate.

Question 40

What are **caveats** in the context of grant applications?

Answer 40

Raises a red flag at the probate registry, and **prevent the issuing of a grant of probate** until the caveat is removed, or it has lasped (6 months). * Executor can respond with a **warning** - obliges the caveator *within 8 days* to either: (1) enter an appearance - set out their contrary interest (ie. under an alternative will they claim is valid/why they are more entitled to apply for grant); or (2) if no contrary interest, then alternative response is a 'summon for directions,' asking the court to consider whether named executor is fit to act. If caveator does not respond within the 8 days, then caveat is removed.

Question 41

What is the pupose of applying to the Probate Registry for a **citation**?

Answer 41

Beneficiaries can apply to formalise the role of an executor who is unwilling to act, but who intermeddled with the estate. * Result in a Grant of Representation being sent requiring them to act.

Question 42

What is the deadline to submit the **estate accounts** to HMRC?

Answer 42

within 12 months of the end of month of date of death. * specifying all property in the deceased’s estate. * All assets/liabilities must be valued at their open market value *at the date of death* (then disclosed to HMRC).

Question 43

What are the **three** types of **estate accounts**?

Answer 43

**Income account:** records income received from the estate assets during the administration. Income expenses are then deducted. **Capital account:** sets out the estate assets at death and records what has happened to each item during the administration. * Shows the balance available for the residuary estate. **Distribution account:** sets out the *residuary beneficiaries’ entitlement,* covers distributions made during the course of the administration, and the balance due to be distributed.

Question 44

How is applying for a grant of probate *versus* for a grant administration different where an estate has a minor beneficiary?

Answer 44

**Grant of administration** - require *two applicants* to act as administrators. **Grant of probate** - no such requirement. * same rule applies where there is a life interest trust.

Question 45

What is the *statutory order* to follow for the payment of liabilities?

Answer 45

1) Property not disposed of by a will (ie. lapsed gifts) 2) Residue 3) Property will has set aside for repayment of debts. 4) Legacy or devise to any beneficiary charged with the payment of debts. 4) Money retained to pay pecuniary legacies - abate proportionately. 5) Specifically bequeathed property (ie. chattels, land) - sold off in order of value, from gratest to smallest.

Question 46

What is an **assent**?

Answer 46

refers to the transfer of a chattel or an interest in land from the ownership of the PRS to that of a beneficiary. * needs to be in writting if legal estate is transferred.

Question 47

How are PRs taxed in respect of income and capital gains made post-death?

Answer 47

Income - PR is taxed at basic taxpayer rate on any income estate generates during distribution. * no need for HMRC return if the sole source of income is saving interest of less than £500. Gains - assets sold during the period of administration are taxed, except for chattels sold for £6k or less.

Question 48

What are the main **tax-efficiency** principles to keep in mind when advising a PR on the sale of assets during admistration?

Answer 48

1) PR is taxed at the value at the sale date, whereas a beneficiary is taxed at the value at the date of death. 2) PRs cannot claim private residence relief on CGT, wheareas Bs can be transferred the property and sell it once they meet the conditions. 3) If a beneficiary has used their tax-free allowance, and would otherwise be taxed at a higher rate, then best for PRs to sell asset for them.

Question 49

What is the **order of distribution** for an estate distributed under a **will**?

Answer 49

1) Specific legacies 2) General legacies * No direction as to specific asset needed to meet them * First general gifts, and then pecuniary 3) Residue

Question 50

What is the difference between the power of an executor versus that of an administrator?

Answer 50

Executors - legal owners from point of death, and derive power the will itself. Administrators - derive their power from the grant tof adminsitration, so cannot deal with **any property** at all until then.

Question 51

What are the appropriate forms to submit to HMRC for (1) an excepted estate and (2) non- execepted estate?

Answer 51

(1) **Excepted** - IHT400 (2) **Non-excepted** - IHT205 HMRC then gives back IHT421 as a receipt

Question 52

What documents need to be filed to obtain a grant of probate?

Answer 52

* Death certificate * Original Will (and any other testamentary documents) * Probate fee * statement of truth

Question 53

Are PRs liable for fellow PRs/agent's breaches of duty?

Answer 53

No unless they were negligent in allowing breach to occur. * E.g. failure to properly delegate power to competent agent.

Question 54

How can PRs protect themselves from liability?

Answer 54

* Indemnity form beneficiaries * Presumption of Death Act - known B (believed to be deceased, and missing for 7 years or more) * Benjamin Order - known B * Insurance * Section 27 TA notice - unknow creditors/beneficiaries

Question 55

How long must a section 27 notice be published to afford PRs protection against unknown creditors and beneficiaries?

Answer 55

At least 2 months from date of nitce. * placed in London Gazette, local newspaper (i.e. where land is located), any other appropriate newspaper.

Question 56

What is marshalling?

Answer 56

equitable doctrine that allows beneficiary whose entitlement was wrongly used to discharge debt to ensure that debt is borne by the appropriate property (go after that Bs share) * applies ie. where PR makes payment w/ out following statutory order.

Question 57

# Post-death changes When is writing-back relevant?

Answer 57

Original beneficiary enters into a variation or disclaims their entitlement. * S.142 IHTA - inheritance tax * S. 62 CGA - capital gains tax

Question 58

# Post-death changes For the writing back provisions to apply, how must variation be made?

Answer 58

* Made by OG beneficiary in writing * within 2 years following deceased's death * contain an express stetement that s.142 should apply * not made for consideration Not necessary to make variation in writing if writing back is not relevant.

Question 59

# Post-death changes When is a PRs approval needed for a variation?

Answer 59

where additional IHT is due, PR should: * sign variation * Provide HMRC with a copy of the weitten variation and pay additional amount due.

Question 60

On what grounds may a PR refuse a variation?

Answer 60

only if the estate's assets are insufficient to discharge the additional tax payable.

Question 61

What are the limitations to varying a gift?

Answer 61

* only vary gift once * court's consent is needed if original beneficiary is a minor or lacks mental capacity.

Question 62

What is the difference between a disclaimer and variation?

Answer 62

Disclaimer - **cannot control** ultimate destination and can only made **before acceptance**

Question 63

What are precatory trusts?

Answer 63

where property is given to a beneficiary with the wish that it be passed on to someone else. * if testator's wish is complied with within 2 years of testator's death, writing back of IHT applies (cf. CGT does not). * **No written election** is needed - applies automatically.

Question 64

# [](http://) What are the capital gains implications for a precatory trust?

Answer 64

Original beneficiary is treated as making a chargeable disposal, so taxed on its value.

Question 65

What are the three options available to a PR who is unwilling/unable to act?

Answer 65

1) Renounce - form needed. 2) Reserve 3) Power of Attorney

Question 66

What is the distinction between the limitations on renounciation between executors and administrators?

Answer 66

Administrators can renounce even if they have intermeddled.

Question 67

What is the presumption applicable to specific/general legacies given to appointed executors?

Answer 67

If gift is only made to *my executor* or name (w/out reference to i.e. 'my brother X'), presumption that entitlement is contingent on acceptance of office.

Question 68

What must a PR do before paying residuary legacies?

Answer 68

finalise tax position and deal with expenses from administration. Need to make sure: * Income and CGT tax if relevant is paid. * Discharge deceased's tax liabilities * File corrective accounts if needed. * Recover tax where possible on property if i.e. to be borne by the beneficiary or property passes outside the will.

Question 69

What consequences follow where payment of a pecuniary legacy is delayed?

Answer 69

statutory interest is payable (become a form of debt)

Question 70

How long does a PR have to complete administration?

Answer 70

One year * cannot be compelled to distribute estate before end of the executor's year.

Question 71

When will a grant of administration *de bonis non* apply?

Answer 71

Where there is no chain of representation. * Occurs where the Executor or Administrator dies intestate, it breaks the chain of representation.

Question 72

Can a someone who is bankrupt act as a PR?

Answer 72

Yes, but court has discretion to pass over their entitlement. * more likely if adminstrator appointed via NCPR than executor.

Question 73

How to renounce power to act as an executor?

Answer 73

An executor can renounce their role by filing a signed statement with the Probate Registry, resulting in a permanent withholding of responsibility.