Administration: Before Obtaining a Grant - Preliminary Steps and Dealing with Assets which do not Require a Grant + Valuation of Assets and Liabilities Flashcards
what are the general steps a PR must do before obtaining the grant? (7)
1- get death certificate
2- arrange funeral
3- secure assets
4- locate original wills and codicils and satisfy themselves that it is valid + make enquiries to locate + find out what happened if will is known to exist but cannot be found
5- find out basis of distribution = read will in full or determine entitlement via intestacy rules + provide Bs with a realistic timeframe for distribution
6- make a schedule of assets and liabilities
7- value assets
Death Certificate - what must PRs do in relation to D’s death certificate before applying for the grant? (3)
(1) PRs may register death (or done by family) - death certificate provided
(2) PRs need official copies of death certificate to send to institutions holding deceased’s bank account
solicitor should keep copy of death certificate
(3) PRs must notify gov of death if death is not centrally registered
Funeral - what must PRs do in relation to the funeral before applying for the grant?
usually arranged by family but PRs/ solicitors may do this
moral not legal obligation to follow funeral wishes in will
pay funeral costs from the estate as an expense if D did not take out funeral insurance (deducted for IHT)
schedule of assets and liabilities
what must PRs do before applying for the grant?
why is this important?
PRs must compile an accurate list of deceased’s assets and liabilities
purpose:
- identify value of estate assets
- identify creditors
- identify steps needed to manage distribution
- calculate IHT
- estimate if estate is solvent
- calculate Bs entitlements
IT IS NOT POSSIBLE TO OBTAIN A GRANT OR CALCULATE IHT WITHOUT THIS INFO
do this by getting info from family members or searching the deceased’s home for evidence
what should PRs do after preparing schedule of assets and liabilities? (3)
contact any relevant organisation to:
- notify them of death and provide copy of death certificate
- request confirmation of value of assets at date of death
- request instructions for how to close an account or transfer ownership of items to PRs
what assets can be dealt with by PRs without a grant?
1) assets that fall outside succession estate (JT land, DMC, life policies written in trust, discretionary pension schemes, assets held in trust where D had interest)
and
2) assets that fall within succession estate but do not need a grant (cash and chattels)
what assets fall inside succession estate but no grant is needed to administer them? (2)
PRs gain legal title to these assets but do not need a grant to administer, sell, or distribute them (can be done before a grant is given)
- Cash / personal possessions / chattels
- Assets distributed under Administration of Estates (Small Payments) Act 1965 = max £5,000
Assets distributed under Administration of Estates (Small Payments) Act 1965
pass under succession estate but can be distributed without grant
Payments can be made to persons who appear to be beneficially entitled to them
But the entities holding the assets CAN not MUST make payments
Financial limit of £5,000 (otherwise grant is needed to establish whole sum - payment cannot be made for part)
Category of assets:
1- National Savings (inc. Bank accounts, Savings Certificates and Premium Bonds)
2- Friendly Society and Industrial and Provident Society deposit accounts.
3- Arrears of salary and wages
4- Pensions where deceased was a member of the police, fire authority, air force, or army.
5- Building society accounts
Rare in practice because each institution has its own policies (require PRs to sign things and provide grant)
Cash and personal possessions
when can PRs administer these?
pass in succession estate but can be administered by PRs without a grant (i.e., without showing formal proof of their authority)
title will pass on delivery of the assets
BUT: PRs must first check that deceased was sole owner and if items were specifically gifted in the will
PRs can also decide not to distribute and use assets to pay IHT
what are the assets that do not devolve to PRs - fall outside succession estate but can still be distributed without grant? (5)
what must PRs do in relation to such assets?
assets include =
- property owned as joint tenants = transfer by survivorship - land registry / bank will transfer title into the name of the surviving co-owner
- DMCs = the person would already have ownership or control of the asset
- life policies written in trust for a nominated person = funds can be paid to the named beneficiary on production of the death certificate
- discretionary pension lump sums nominated for a third party = funds can be paid to the named beneficiary on production of the death certificate
- assets held in a trust in which the deceased had an interest = PR must notify trustees of the death - trust deed determines what happens to the trust fund
to deal with these assets, PRs must produce =
(1) death certificate,
(2) any other docs that the asset holder requires
how to establish value of bank accounts?
sole bank accounts =
PRs must request from bank a summary of account balance on date of death + interest
joint bank accounts = establish what portion was owned by deceased - 50/50 presumed but enquiries should be made
how to value low value chattels?
usually ok to estimate value
probate value (what would fetch when sold) may be lower than value for insurance purposes (replacement cost)
how to value unusual items / high value items?
items worth more than £500 or unusual items
full market value is valued via formal probate valuation determined by a professional in writing
how to value quoted shares?
The value of shares is linked to the stock exchange prices on date of death
take ¼ of the difference between the highest and lowest valuations of the shares on the date of death added to the lowest value.
Example: Lowest value on date of death is 10 and highest value is 14 – valued at 11 per share
how to value private company shares / partnership interests / sole trader business?
a specialist valuer is instructed
if deceased held shares/investments via financial services company = the broker will provide a list of shareholdings/ investments and the date of death values
