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Wills and Estates > Administration: Introduction and PRs > Flashcards

Administration: Introduction and PRs Flashcards

1
Q

What does the grant of representation establish?

A
  • authority of the PRs to act
  • validity of the deceased’s will, or, that the deceased died intestate.
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2
Q

What is a PR’s power limited to?

A

The succession estate

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3
Q

Who holds the legal title of a deceased’s estate?

A

PR

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4
Q

What type of role is a PR and what do they owe?

A

Fiduciary, duty of care

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5
Q

What should a PR do when assets are transferred to trustees?

A

Record the date

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6
Q

When will a personal representative be a trustee?

A
  • Will expressly appoints the executors to act as trustees of any trust arising.
  • Intestacy - PRs hold the estate generally “on trust with a power to sell” (s 33 AEA)
  • Statutory trust (intestacy) - PRs = trustees on behalf of minor beneficiary (s.46 AEA)
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7
Q

What are potential contentious matters?

A
  • terms of will disputed / validity challenged
  • disappointed beneficiary wants to make a claim under IPFDA 1975
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8
Q

Who does a professional PR owe duties to?

A

estate, creditors and beneficiaries

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9
Q

When is best to appoint a professional PR?

A

Complex estates/family disputes

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10
Q

What are the PR duties before a grant is obtained?

A

Common law - duty to dispose of the deceased’s body
S216 - notify HMRC about the assets and liabilities of the estate
S226 – Pay IHT on assets in their control (succession estate)

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11
Q

what does a PR do in order to Collect and get in the real and personal estate of the deceased?

A
  • Identify and locate assets (inc sums owed to dec’d)
  • Identify liabilities and creditors
  • Obtain control, possession or legal ownership of the assets
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12
Q

what does a PR do in order to Administer the estate according to law?

A
  • keeping the assets secure
  • paying debts and liabilities
  • meeting administration expenses
  • paying legacies
  • distributing the residue to those legally entitled
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13
Q

what does a PR do in order to Provide an inventory and account of the estate assets

A

list of assets + values and record of administration (Estate Accounts)

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14
Q

Who may ask to see estate accounts?

A

beneficiary or creditor

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15
Q

What happens if PRs refuse to show estate accounts?

A

application to court for order to produce an inventory and account may be made.

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16
Q

What are a PRs duties under the grant

A
  • Collect and get in the real and personal estate of the deceased
  • Administer it according to law (succession estate assets)
  • Provide an inventory and account of the estate assets
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17
Q

What are the consequences of the PR appointment being for life?

A

o additional assets discovered after admin complete, duty to administer these assets.
o ongoing risk of personal liability if creditors/bens, not known of at the time, appear after fully administered and demand entitlement.

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18
Q

What are duties of PRs?

A
  • Inform HMRC/pay IHT
  • Duties under the grant
  • due diligence
  • reasonable time
  • Statutory duty of care
  • Fiduciary duty
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19
Q

What is reasonable time?

A

executor’s year - complete admin within 12 months from DOD. Longer = justify delay.

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20
Q

Who has a higher standard for duty of care?

A
  • professional PRs
  • special knowledge or experience/hold themselves out
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21
Q

What is the statutory duty of care?

A

same duty of care as trustees exercising powers under Trustee Act

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22
Q

What is the s1 Trustee Act duty of care?

A

such care and skill as is reasonable in the circumstances

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23
Q

What must a PR not do as part of their fiduciary duty?

A
  • Place themselves in position of conflict eg purchase asset from estate
  • Profit from their position
24
Q

What are the statutory powers of PRs?

A

Sell, charge or lease
Appropriate
Insure
Invest
Charge for PR services
Reimburse PR expenses
Delegate powers
Appoint trustees

25
Q

What is the pwoer to appropriate?

A

appropriate an asset in satisfaction of a beneficiary’s entitlement

26
Q

What are the rules for appropriation?

A
  • specific beneficiary must not be prejudiced
  • Consent of the recipient beneficiary is required
  • value of the asset at date of transfer/appropriation not DOD
27
Q

Can a PR appropriate if the asset is not the same as the entitlement?

A

If value of asset exceeds entitlement = the PRs may not appropriate.
value less than the entitlement = may appropriate + balancing cash transfer.

28
Q

What is the duty to invest?

A

retain assets for period of time = duty to preserve the estate and actively invest

29
Q

What are the rules on the duty to invest?

A
  • general power of investment (s3) applies.
  • permitted to acquire freehold or leasehold land (s8)
  • must carry out regular reviews of investments (commonly annually).
  • must have regard to the standard investment criteria (s4)
  • duty to obtain advice unless reasonably conclude unnecessary or inappropriate (s5)
30
Q

When can a PR charge for services?

A

Professional PRs reasonable remuneration provided:
* not acting alone, and
* co-PRs give their written consent

31
Q

When can a PR charge for services if acting alone?

A

express power in will to charge for their services

32
Q

What expenses can be reimbursed from an estate?

A

may reimburse for expenses properly incurred when acting on behalf of an estate eg travel costs

33
Q

What are the rules on delegating powers?

A

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

34
Q

What must a PR do in order to delegate powers?

A
  • do so in writing to the agent and
  • provide written policy statement which agent must agree to comply
35
Q

When should a PR appoint trustees?

A

Where absolute legacy to minor as cannot give valid receipt.

36
Q

Who has power to give valid receipt on behalf of a minor?

A

Parent/guardian

37
Q

What happens if a testator is a sole trader?

A

limited common law power to sell the business as a going concern within a year of death

38
Q

What is a devastavit?

A

claim of action against a PR for breach of their PR duties

39
Q

What is the consequence of a devastavit?

A

claimant will seek a court order that the PR makes good the loss using their personal assets.

40
Q

What is the consequence of a breach of fiduciary duty?

A

claimant may seek account of unauthorised profit and/or for a transaction to be set aside.

41
Q

What may a claim for against a PR be based on?

A

Maladministration
Misuse of assets
Negligence
Breach of fiduciary duty

42
Q

What are examples of maladministration?

A
  • Incorrectly administering by making distributions to wrong benes
  • Using residuary to meet liabilities which should have been paid from other parts of the estate
  • Paying legacies before debts without retaining sufficient funds for creditors
43
Q

What are examples of misuse of assets?

A

Making personal use of the estate assets

44
Q

What are examples of negligence?

A
  • Unreasonable delay in carrying out the administration
  • Failing to invest or making poor investment decisions in breach of the duty of care
45
Q

What are examples of breach of fiduciary duty?

A
  • Breach of the no conflict rule
  • Breach of the no profit rule
  • Self-dealing
46
Q

How may a PR be removed?

A
  • A court order under s 50 Administration of Justice Act 1950 appointing replacement
  • An administration action, where the court would take over the administration itself
47
Q

What court directions can a PR seek to protect themselves?

A
  • administration action application - administered by the court.
  • specific relief, an application for guidance on a particular matter.
48
Q

What is a s48 AJA application?

A

application to distribute in accordance with a written legal opinion

49
Q

How is a s27 TA notice done?

A

Publish notice of intention to distribute 2 months after advert in-
a) The London Gazette,
b) A newspaper in the area of land held on trust, and
c) Any other apt newspaper e.g. owned a business, relevant trade paper

50
Q

What does a s27 notice protect against?

A

Only protects against unknown beneficiaries, not missing ben/creditor
Protects claims in PR capacity, not beneficiary capacity.

51
Q

What is a benjamin order for?

A

known but missing beneficiaries on the basis that they died

52
Q

What are the requirements for a benjamin order?

A

Must make full enquiries to establish true position and demonstrate no reasonable prospect of knowing truth without disproportionate expense.

53
Q

What is a presumption of death order?

A

Person thought to dead/not known to be alive for 7 years/more has died.

54
Q

What is an indemnity from a beneficiary?

A

beneficiaries promise to reimburse the PRs for any loss the PRs suffer as a result of being sued by a disappointed beneficiary or creditor.

55
Q

What are the requirements for an exoneration order?

A
  • acted honestly and reasonably
  • ought fairly to be excused for
    o the breach of trust and
    o omitting to obtain directions of the court in the matter
56
Q

What liability cannot be exluded by express clause?

A

Fraud

Wills and Estates (13 decks)

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