Distributions and Estate Accounts

Question 1

What must PR do before distributing assets?

Answer 1

Pay debts, funeral costs, and administration expenses.

Question 2

What is the order of payments in distribution of the will to beneficiaries?

Answer 2

1) Legacies (specific and general)
2) Residuary legacy.

Question 3

What are interim distributions?

Answer 3

Partial payments to residuary beneficiaries if PR confident assets cover liabilities.

Question 4

What must PR consider to ensure proper distribution?

Answer 4

1) Identity of beneficiaries

2) Nature of interest

3) Property entitlement.

Question 5

How must PR examine identity of beneficiaries?

Answer 5

Review will, apply rules of construction, consider class gifts and substitution clauses, or apply intestacy rules.

Question 6

What are the different types of interest?

Answer 6

1) Vested

2) Contingent

3) Under a trust.

Question 7

What is method of transfer for chattels?

Answer 7

Physical delivery to beneficiary.

Question 8

What is method of transfer for cash legacies?

Answer 8

Cheque or bank transfer.

Question 9

What is method of transfer for shares?

Answer 9

Stock transfer form.

Question 10

What is method of transfer for land?

Answer 10

Legal assent using Land Registry form AS1.

Question 11

Who bears the cost of transferring assets?

Answer 11

The beneficiary.

Question 12

Do beneficiaries inherit IHT?

Answer 12

No, they inherit free of IHT.

Question 13

When must PR complete administration?

Answer 13

Within a year.

Question 14

Important dates PR must consider?

Answer 14

1) Trustee Act notice (2 months)

2) IPFDA claims (6 months from grant + 4 months for service).

Question 15

Order of payment if sufficient funds?

Answer 15

1) Specific legacies

2) General legacies

3) Residuary.

Question 16

Order of payment if insufficient funds?

Answer 16

Specific legacies first, general legacies proportionally, residuary gets nothing.

Question 17

What are specific legacies?

Answer 17

Clearly identifiable items, e.g. ‘my car’.

Question 18

What are general legacies?

Answer 18

Non-specific, e.g. a sum of money.

Question 19

If will doesn’t instruct funding source for legacies, where are they paid from?

Answer 19

The residue.

Question 20

How is residue distributed?

Answer 20

According to will or intestacy rules.

Question 21

What is appropriation?

Answer 21

PR transfers assets instead of cash to beneficiaries.

Question 22

Rules of appropriation?

Answer 22

Asset value cannot exceed entitlement; PR tops up with cash if needed.

Question 23

What must PR obtain from beneficiary on distribution?

Answer 23

Confirmation of receipt.

Question 24

Who cannot provide receipt?

Answer 24

Minors, unless specific conditions met.

Question 25

When can minor provide receipt?

Answer 25

1) Expressly allowed in will 2) Parent/guardian signs 3) Held by PR until 18 4) Trustees appointed 5) Paid into court.

Question 26

What are estate accounts?

Answer 26

Records showing how estate was administered.

Question 27

Structure of estate accounts?

Answer 27

1) Capital account 2) Income account 3) Distribution account.

Question 28

What is in the capital account?

Answer 28

List of assets/liabilities, how assets were dealt with, legal fees, IHT, balance.

Question 29

What is in income account?

Answer 29

Estate income, expenses, balance of income for distribution.

Question 30

What is in distribution account?

Answer 30

How residuary estate is shared, including interim and final payments.

Question 31

Who signs estate accounts?

Answer 31

The PR and residuary beneficiaries.

Question 32

What does signing estate accounts mark?

Answer 32

End of administration.

Question 33

Can PR appropriate residue how they want?

Answer 33

Yes.