Chapter 5 Flashcards
What are the duties of the executor
Administer the estate
Determine the assets and liabilities of the estate
Obtain probate
Collect any debts
Complete an inheritance tax account for HMRC
Pay any tax
Distribute the assets in accordance with the will
What do the executors have to do to obtain the grant of probate
They have to prove the will in the probate registry
This enables them to administer the estate
Does the inheritance tax do you have to be paid before or after the grant of probate can be issued to the executors?
Before
What happens if the executor has died I was on willing or unable to act?
Administrators are appointed by the probate registry
What is a mutual will
There is a mutual arrangement to not revoke the Will without the consent of the other so post death the remaining spouse as will cannot be altered
If the remaining spouse goes on to change there will after the first death a constructive trust will arise at that time on the basis that it would be fraudulent to revoke a will when written on a mutual basis
What happens in intestacy rules
Spouse or civil partner – takes everything
Spouse and issue – spouse takes chattels and 250,000 and half of the residue Children will take the remaining half interest if under 18
No spouse – everything is taken by issue if non-grandchildren step in to choose of parents if non-parents if non-brothers sisters if non-grandparents if none on Aunts uncles
Where part of the deceased’s estate Who died intestate passes to a minor what is created
A statutory trusts created this is governed by legislation and therefore there is no express trust paperwork in existence
Who can agree and executed deed of variation
The beneficiaries provided they are all aged 18 or over and of sound mind
The deed must refer to the will or intestacy being varied and signed by all those that would have benefited
Be within two years of death
Say that the variation is to have the effect of IHT as if the deceased had made it
Signed by all the person is making a variation
Must be no consideration in money or money’s worth
Who is deemed to have made the transfer of value when I did variation is effected
The deceased provided the deed of variation contains a statement to say this
What is the tax situation on A deed of variation if a person bequeathed in favour of their infant son
It’s treated as if it had come from the deceased estate for hit
For income tax purposes the transfer will be treated as the parents gift and will be taxed at the parents rate of income tax if over £100
What happens when someone disclaims there inheritance under a will
They give it back to the deceased estate and it gets divided up amongst the other beneficiaries they don’t have a choice in who received the funds
How can a person revoke their will?
I deliberately destroying it
By making a new will
Marriage
You must have mental capacity to revoke are well if you appoint a spouse is an executor on divorce this was cancelled
Divorce cancer was any benefit under a will
It is advisable to make a new will on marriage or divorce
Does marriage or registering a civil partnership revoke a will
Yes
Under what grounds can people challenge A will
By application to the court for a reasonable financial provision from the estate under the inheritance provision for family and dependence act 1975
What makes are will valid
It must be written in form
Signed by the person making a will
Made by someone who is aged 18 or over
Must be of sound mind and Under no pressure
Must be signed and witnessed by two independent people
It is good practice for the will to be dated
What are the personal representatives responsible for paying?
Any income tax debts
Up to the date of death they can use all allowances and reliefs, tax on any income received after the death they can claim no personal allowances and will income is taxed at the basic rate 10% dividends 20% savings 20% other
Mary died on 28 February 2015 what level of personal allowance can have personal representatives claim back against income received by her estate during tax year 15/16
None as this is the tax year after her death
What percentage of capital gains tax do the personal representatives have to make during the administration period of an estate
They’re liable to capital gains tax at 28% on disposal is made by the estate during the administration period
How long after death is the estate entitled to the individual annual exemption of capital gains
They are entitled to the exemptions in the tax year of death and the following two tax years
How long do the personal representatives have to carry back any capital losses that arose in the tax year in which the person died up to the date of death
They can claim back for the three preceding tax years allocating the loss against the gains of the latter year first this could enable a refund of capital gains tax to be claimed
If somebody leaves at least 10% of the net estate ( after relieves and exemptions) is donated to charity how much will the I H T rate reduced to?
It will reduced from 40% to 36%
What do you executors need to prove their title
A grant of probate
List five duties of an executor
Determining the assets and liabilities of the estate
Obtaining probate
Collecting the assets of the estate and paying the debts of the deceased
Setting any tax liabilities income and capital gains tax
Completing the necessary accounts
Distributing assets in accordance with the will
