Administration Flashcards
A PR appointed by will is called?
An Executor
A PR appointed by statute is called?
An Administrator
(appointed usually when there is no executor, eg if there is an intestatacy)
What is needed to confirm the authority of the PR’s to act
The grant of representation
What does the grant of representation establish
- Authority of the PR’s to act - the right to collect assets and distribute the estate
- Validity of the deceased’s will or that the deceased died intestate
What happens if the PR does not produce the appropriate grant
The PR will not usually be able to collect or release assets
What is the power conferred by the grant limited to?
It is only limited to the assets passing under the will or intestacy (the succession estate)
PR’s may ADVISE on practical steps to follow regarding assets passing outside of the succession estate
Have no legal authority to deal with these assets
Where does an Executor derive their authority from?
- Derives authority from the will
- Acts from the date of death
- The grant confirms this authority
Where does an Administrator derive their authority from?
- Derives authority from the grant
- They have no authority to act until the grant is issued
Can executors administer the estate without a grant?
Yes, they have the legal right to administer without a grant
HOWEVER, it would not be practical as most asset holders require a grant before paying the funds to the executor
Can a PR be a beneficiary of the estate?
They may, but not always will be
What type of duty does a PR have
The role of a PR is fiduciary in nature
Are PR’s also trustees of the estate?
A PR is not automatically the ‘trustee’ of the estate.
The roles are similar to a trustee however when the estate administration is complete, the role of the PR ends (although their duties may continue)
They can be a trustee in certain scenarios
When can a PR be a trustee
- The will expressly appoints the executors to act astrustees 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
What are three ways in which a solicitor would usually become involved in the administration of an estate
- The solicitor has been instructed by the PRs for advice on the administration.
- The solicitor has been appointed as executor under the deceased’s will.
- The solicitor has been instructed to act on behalf of a party to a contentious
probate matter.
Why might a solicitor be instructed by lay PRs
if the PRs are unable to carry out the administration due to e.g. time constraints or a lack of technical knowledge or confidence
to administer the estate without professional help.
If a firm is instructed by PR’s, are the clients the PR or the beneficiaries of the will
The solicitor must act on the PR’s instructions, not those of the beneficiaries.
The solicitor should
check the identity of the PRs when a file is opened in the usual manner for any new
client.
What will a solicitor be if appointed as executor in a will
If a solicitor acts as executor they will be a professional PR and their duties are owed to
the estate creditors and beneficiaries.
Can a testator appoint a firm
Yes they can or one or more of a firm’s partners
Solicitors may act alone or with another executor (normally a family member)
Solicitor will charge the estate for their services
What are the duties of a PR before the issue of a grant
Common law duty to dispose of the deceased’s body
Usually arranged by surviving family members and takes place before a solicitor becomes involved
What will happen if required information is not reported to HMRC
A grant will not be issued
Statutory duty to provide info about the estate to HMRC and pay IHT
What form is needed for PR’s when notifying HMRC about the assets and liabilities
IHT 400
Completed for any estate that is not expected,
PRs must also pay any inheritance tax due in relation to the estate assets within their control
These duties must be complied with before the grant of representation
What are the duties of a PR under the 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
- Duty of due diligence
To comply with the duties under the grant, what must PRs do?
- Identify and locate the deceased’s assets
- Identify the deceased’s liabilities and creditors
- Obtain control, possession or legal ownership of the assets
Once assets have been collected, the PRs must ‘administer’ the estate in full by?
- Keeping the assets secure
- Paying the deceased’s debts and liabilities
- Meeting administration expenses
- Paying legacies
- Distributing the residue to those legally entitled
What are ‘Estate Accounts’?
PRs must keep a list of assets and values (inventory) and a record of the steps they have taken in the administration (account)
This info is recorded in the Estates Accounts
Who may ask to see the estate accounts
- Beneficiary
- Creditor (may want to find out more info)
What happens if the PR refuses to show the estate accounts
If they refuse or have not maintained adequate records
An application to court for an order to produce an inventory and account may be made
how long is the role of a PR
- A PR must complete the administration within a reasonable time
- Role ends once the administration is finalised
- The appointment is for life.
Why is the appointment of a PR for life?
- If additional assets are discovered after the administration is complete the PRs must administer these assets
- Risk of personal liability if unknown creditors or beneficiaries come to light after the estate is fully administered and they want their share
When PRs begin administration, what sources do they use to determine what powers they have?
- Statute
- Will/Codicil
What are the fiduciary duties of a PR?
They must not:
- Place themselves in a position of conflict (PR cannot purchase an asset from the estate)
- Profit from their position. Payments for services isn’t a breach of the ‘no profit’ rule if a PR acts in a professional capacity or the payments are authorised under the will
What are the PR powers if the deceased died intestate
- Only the statutory powers will apply
- If the deceased left a will, statutory powers apply to the extent these do not conflict with express provisions
What are the PR powers if the deceased left a will
- May contain express
administrative provisions dealing with PR powers. - Express clauses may confer additional powers that go beyond statutory provisions or may exclude/modify statutory powers.
- Express provisions in a will take priority over statutory powers
What are the statutory powers of PR?
- Sell, charge or lease
- Appropriate
- Insure
- Invest
- Charge for PR services
- Delegate powers
- Appoint trustees
What is the power to seel, charge or lease
