Collection of Assets and Administration of the Estate Flashcards
What should PR be aware of when collecting assets for the estate?
Not to ‘waste’ them, collect them in a reasonable period of time
Which bank account should assets go into after they collect them?
PRs or solicitors client account
What problem do PR’s typically encounter when trying to pay IHT before getting the grant of probate?
Loads of institutions won’t release assets unless you have a grant of probate
How can PR’s pay IHT before they have the grant of probate?
- Apply for deceaseds bank account to make direct payment to HMRC
- Obtain amounts due up to 5k without surpassing under the small payments act
- Get a loan, subject to undertaking on part of PRs to bank out first estate proceeds (consider fees and interest)
- Savings accounts
- Wealthy beneficiary can lend
What assets can PRS sell?
No permission needed - must act in beneficiaries best interests
Don’t NEED to, can just transfer to beneficiaries and sometimes HMRC
Can PRs sell items that are subjects of specific gifts in the will?
Yes, but they should avoid it
What is a solvent estate?
An estate where the expenses and debts can be paid in full alongside the legacies
What comes first and second in line of priority for estate debts?
Secured
Testamentory/administrative expenses
What is the statutory order for unsecured debts being paid off by the estate?
Property not disposed of by will
Gift of residue
Property specifically given for debt payment
Property specifically charged for debt payment
Pecuniary legacy
Specific gifts
If insolvent, what is the statutory order for unsecured debts (order of who gets paid, not the source of the funds)
Preferred debts – wages/salaries
Ordinary debts – credit cards/loans
Interest on preferred/ordinary debts
Deferred debts – e.g., from deceaseds spouse
What happens if all creditors rank equally?
Then you apportion
Does a gift to children also include adopted or illegitimate children?
Yes – unless child has been adopted by somebody else or will contains a contrary intention
What are the class closing rules?
- Must have been alive at testators death
- Class closes when first member obtains vested interest
- Whole gift fails if no class member is alive at testators death
Explain deferred class gifts
‘to all Bernards grandchildren’
If grandchildren exist when testator dies = those ones
If no grandchildren exist at that point, class closing is deferred to when Bernard dies
Explain the contingent class closing rules
Money for every grandchild who is 18
At death – nobody is 18 = class closes when #1 turns 18
At death – #1 is 18 = class closes and includes grandchildren who were living at death
What do class closing rules not apply to?
Vivos trusts
Income
What is best practice in terms of drafting class closing?
State the rules e.g., all grandchildren currently alive at my death
How will a clause drafted ‘whenever born’ be interpreted for class closing rules?
The class will still close on the testators death
Technically, when does entitlement to asset happen for the beneficiary?
Date of death – e.g., for rental income
Who bears the costs associated with a transfer/preservation/insurance of specific gifts?
The beneficiaries
What happens if will doesn’t direct where a pecuniary legacy should come from and there is no partial intestacy?
No partial intestacy
- Personal property
- Reduce/abate gift
- Sell land (if will explicitly states)
- With residue if residue was left as a single mass
What happens if will doesn’t direct where a pecuniary legacy should come from and there is a partial intestacy?
No express trust for sale
1. Pay out of the part that would have passed under intestacy rules
2. AFTER, statutory trust for sale is imposed
With express trust for sale
1. Follow statutory order after selling
2. Use the remaining partial intestacy bit last
What is the typical deadline to pay a pecuniary legacy?
1y
When is a pecuniary beneficiary entitled to interest?
After 1 year
