ASCERTAINING THE RESIDUE

Question 1

3

Tax Presumptions

Answer 1

1. If a pecuniary legacy is made “subject to tax”, the PRs withhold the tax and pay the net legacy to the benefciary.
2. Succession law generally assumes that a specifc gift of UK property is deemed to be “free of tax”, unless the will states otherwise.
3. The reverse is true in relation to gifts of overseas assets. In any event, the PRs should ensure the tax is taken
   care of before vesting assets in benefciaries. This includes retaining funds to pay future instalments of inheritance tax.

Question 2

3

Certifcate of Discharge

Answer 2

1. The PRs should obtain a Certifcate of Discharge from HMRC, which avoids further inheritance tax liability.
2. HMRC will issue a limited Certifcate if the PRs have to pay future instalments of inheritance tax due to the PRs claiming the instalment option on qualifying property.
3. No Certifcate is required for an excepted estate.

Question 3

REASONABLE FUNERAL EXPENSES

Answer 3

The estate must pay reasonable funeral expenses

Question 4

LEGAL AND PROFESSIONAL COSTS

Answer 4

The estate may owe legal and other professionals’ (for exam-ple, surveyors) costs in administering the estate.

Question 5

4

cPERSONAL REPRESENTATIVES’REMUNERATION

Answer 5

1. PRs are not entitled to charge for services unless authorised in some way:
   (1) Legacy to proving executors—It is presumed that any specifc or general legacy (but not the residue) to an appointed executor is conditional upon them accepting office. However, this presumption can be rebutted by a clause in the will.

(2) Express charging clauses– are routinely included in the will for professional PRs. These typically cover sole professional trustees and also remove the need for the other trustees’ agreement to payment when the professional is one of several trustees.

(3) Agreement with benefciaries—PRs can be paid out of assets to which the beneficiaries are entitled if the beneficiaries agree.

(4) The court – can authorise remuneration for PRs for past, present, or future services.

Question 6

ESTATE ACCOUNTS

Answer 6

The PRs prepare estate accounts to show the residuary ben-efciaries what is available to them. There are no prescribed formats.

Question 7

3

Discharge

Answer 7

1. The PRs usually endorse the accounts to indicate their approval.
2. The accounts are then sent to the residuary benefciaries for them to endorse—and for them to formally discharge the PRs with an agreement to indemnify them against all claims and demands.
3. If a benefciary refuses to approve the accounts, the PRs may ask the court to approve them or may pay the benefciary’s share into court.