Administration: post-grant practice Flashcards
Where should money collected in be paid to after the grant has been obtained?
Money collected in should be paid into:
-a PR’s bank account, or
-a law firm client account
What does S32 AEA 1925 provide for in respect of the burden of debts/expenses?
All of the deceased’s property constitutes assets which can be made available for the payment of the deceased’s debts and liabilities-any clause to the contrary in a will is void (S32 AEA 1925).
What is the statutory order under Sch 1 Part II AEA 1925 regarding the application of assets towards the payment of unsecured debts and administration expenses?
-Property not disposed of by a will but subject to the retention of £ for pecuniary legacies
-Residue (subject to retention of pecuniary legacy fund)
-Property the will sets aside (or charges with) the repayment of debts
-£ in the pecuniary legacy fund (if £ is insufficient, the legacies abate proportionately according to value)
-Property specifically given e.g. chattels
What is the doctrine of marshalling?
This allows a beneficiary who is disappointed that his inheritance has been reduced to compensate himself by going against the property which ought to have been used to pay the debts.
The creditors are not bound by the rules and are under no obligation to return the money paid to them.
What is PRs responsibility in relation to income tax and CGT?
PRs have a responsibility to:
-finalise the deceased’s IT and CGT position for the tax year of death
-pay IT and CGT that becomes due during the administration period
The PRs should record information and notify HMRC by submitting a tax return on behalf of the deceased for the period 6 April to date of death.
Can PRs sell chattels without worrying about CGT?
S262 Taxation of Chargeable Gains Act 1992: PRs can sell chattels without having to worry about CGT because a gain made on the disposal of a tangible moveable asset is exempt from CGT if the disposal is for a consideration of £6,000 or less.
What is the first and last step when distributing to beneficiaries?
The PRs will make payments of legacies other than the residuary legacy first. Full distribution of the residue is the final step in the administration.
What is the general order in which legacies are paid?
-specific
-general
-residuary
If it is not possible to pay all of the legacies they abate in reverse order.
Who should the estate accounts be approved by and what do they represent?
The estate accounts should be signed/approved by all PRs and by residuary beneficiaries.
The date the accounts are signed is often considered to symbolise the ‘end’ of the administration.
What are the three main sections of the estate accounts?
-Capital Account, sets out the estate assets and liabilities at death.
-Income Account, sets out the income received in relation to the estate assets during the administration and summarises how this was spent.
-Distribution Account, this sets out the residuary beneficiaries’ entitlement.
