Distributing The Estate

Question 1

Duty of the PRs

Answer 1

1. Assets which pass under the wills/intestacy rules devolve on the PRs
2. They are under An obligation to collect and administer the estate for the benefit of those entitled
3. To collect assets PRs generally produce their grant of representation
4. In certain circumstances a grant is not required- AEA (Small Payments) Act 1925

Question 2

Paying the testamentary expenses and debts

Answer 2

1. Preliminary considerations – as soon as money can be collected in the PR should begin to pay the deceased debts and funeral expenses
2. Repayment of loan to pay IHT – any undertaking to the bank will normally be on a first proceeds undertaking

Question 3

Deciding which assets to sell

Answer 3

1. Provisions of the deceased will may direct from which part of the estate expenses should be paid
2. Where possible the beneficiaries wishes should be respected

Question 4

Funeral, testamentary expenses and debts

Answer 4

1. Reasonable funeral expenses are payable from the deceased’s estate
2. Testamentary expenses – expenses incidental to the proper performance of the duties of the PR include:
   a) costs of obtaining the grant
   b) costs of collecting in and preserving the deceased assets
   c) costs of administering the deceased’s estate
   d) Any IHT payable on death on the deceased property in the UK which vests in the PRs

Question 5

Paying the legacies

Answer 5

1. Once the funeral, testamentary, administration expenses and debts have been paid
2. PRs can then consider paying the legacies
3. Interim distributions to residuary beneficiaries can be considered on account of their entitlement

Question 6

Specific legacies

Answer 6

1. Once PRs are satisfied that the legacy will not be needed they should arrange for its transfer to the beneficiary
2. Testing of a specific gift is retrospective to the date of death
3. Any costs of transfer of the property and the cost of insurance are the responsibility of the Legatee

Question 7

Pencuniary (general legacy)

Answer 7

1. S55 AEA includes general legacies and any general direction for the payment of money
2. PRs must decide from what part of the estate they should take the money to pay the beneficiary or to purchase the subject matter of a general legacy
3. If there is no provision in the will for payment generally the payment will be taken from the residue
4. General rule is that a pecuniary legacy is paid at the end of the executors year, the year after the testators death

Question 8

Transferring assets to residuary beneficiaries

Answer 8

1. Where the beneficiary is an adult with a vested interest in the residue that entitlement can be transferred to them
2. If the beneficiary is a minor their interest will be held on trust until they reach majority
3. Personal property passes by way of an assent
4. Freehold or leasehold land passes by assent – which then becomes the document title of the legal estate

Question 9

Estate Accounts

Answer 9

1. Final task of the PRs is to produce a set of estate accounts for the residuary beneficiaries
2. Show all the assets in the estate
3. Payment of debts, administration costs and expenses
4. Legacies paid
5. Balance due to the residuary beneficiaries
6. In the absence of fraud or failure to disclose assets this will release the PRs from further liability to the beneficiaries