Duties and Powers of Personal Representatives

Question 1

PRs are subject to an array of duties imposed on them by statute and common law - what are some of these key duties

Answer 1

• duty to identify and collect assets
• duty to distribute assets
• duty to apportion income
• proof of title to assets

Question 2

duty to identify and collect assets

Answer 2

the PRs must ‘collect and get in the real and personal estate of the deceased and administer it according to law’

demonstrating due diligence in doing so

Question 3

duty to distribute assets

Answer 3

the PRS are under a duty to distribute the deceaseds assets in a way that’s consistent with the terms of the will or with the intestacy rules

Question 4

duty to apportion income

Answer 4

PRs may be required to apportion income between the period before death and the administration period

Question 5

can the duty to apportion income be excluded by the will

Answer 5

yes

Question 6

proof of title to assets

Answer 6

PRs must produce the grant of rep as proof of their title when dealing with the estates assets

Question 7

when does title devolve on PRs

Answer 7

• either at death, where the deceased died testate or
• upon the issue of grant, where the deceased died intestate

Question 8

Are PRs personally liable for any breach of their duty which causes loss to a creditor or beneficiary?

Answer 8

yes

Question 9

what are the main types of breach that PRs will be liable for

Answer 9

• maladministration
• misappropriation of property
• negligence

Question 10

does the court have the power to relieve PRs of liability and if so, whn

Answer 10

yes where they have ‘acted honestly and reasonably and ought fairly to be excused for the breach

Question 11

in order to comply with their duties, PRs are granted a variety of powers - when must they act within these powers

Answer 11

at all times

Question 12

in order to comply with their duties, PRs are granted a variety of powers and they must act within these powers at all times - which two sources are these powers derived form

Answer 12

• statute
• the deceased’s will

Question 13

What are the key statutory powers

Answer 13

• power of maintenance
• power to advance capital
• power to insure
• power to appropriate
• power to invest
• remuneration for services
• use of assets to meet deceased’s liabilities
• statutory order of unsecured debts

Question 14

can the statutory powers be modified by the will

Answer 14

yes

Question 15

power of maintenance

Answer 15

PRs can apply for available income for the maintenance, education or benefit of minor beneficiaries

any income not applied for their maintenance must be reinvested

trustees are free to apply income doe maintenance as they see fit

Question 16

power to advance capital - for any beneficiary with a vested or contingent interest in the capital, do the PRs have absolute discretion to advance the whole (or any lesser amount) of their entitlement

Answer 16

yes - if the PRs believe it’s in the beneficiary’s interest

Question 17

power to advance capital - PRs must obtain the written approval of any life tenant, and if the contingent interest never vests then the advanced capital can’t be recovered - true or false

Answer 17

true

Question 18

power to insure - PRs have the authority to…

Answer 18

insure any trust property and to pay for the premiums out of the estate’s income or capital

Question 19

power to appropriate - as long as the PRs obtain the necessary consents and no specific legacies are prejudiced, the PRs may apportion estate property towards satisfying any legacies or interest in the estate - true or false

Answer 19

true

Question 20

power to invest

Answer 20

trustees are afforded a broad discretion to invest trust property - however when selecting investments they’re subject to a duty to act honestly and with reasonable prudence

Question 21

remuneration for services - professional PRs and trustees (such as trust corporations and solicitors appointed in their professional capacity) may claim reasonable remuneration for their services, provided that…

Answer 21

• they are not a sole trustee
• the co PRs or trustees give written consent
• no contrary provision about remuneration has been made by the trust instrument

Question 22

use of assts to meet deceaseds liabilities- the powers of the PR vary depending on what

Answer 22

whether the estate is solvent

Question 23

use of assets to meet deceaseds liabilities - solvent estate

Answer 23

for a solvent estate PRs are allowed to discharge reasonable funeral expenses - other debts must be paid with due diligence

Question 24

use of assets to meets deceaseds liabilties - administrative expenses

Answer 24

PRs must determine whether they are expenses properly incurred by themselves as PRs or whether they’re expenses which must be met by legatees

Question 25

is IHT generally treated as part of general testamentary expenses

Answer 25

yes

Question 26

statutory order of unsecured debts - the assets of the deceaseds must be used in a specified order to meet the deceaseds financial obligations - what is this order

Answer 26

- property not disposes of by the will - property in a residuary gift - property specifically given for the payment of debts - property charged with the payment of debts - pecuniary legacy fund - rateable deduction from each specific property gift - property under a general power of appointment

Question 27

powers granted expressly by the will - according to the principle of testamentary freedom, the deceased can give the PRs broad powers through the will - what do some of the more common clauses include

Answer 27

- charging clause - indemnity clause - carrying on a business - good receipt of a minor's legacy

Question 28

charging clause

Answer 28

a clause which allows professional PRs (lawyers or accountants) to charge the estate for the work they perform during the administration

Question 29

can people in business who don't belong to a profession whose members could properly charge for work done in the administration of an estate benefit under a charging clause

Answer 29

no

Question 30

indemnity clause

Answer 30

the will can indemnify the PRs against any claim by the beneficiaries for losses they have suffered as a result of the PRs mistake this is usually limited to mistakes made in good faith

Question 31

carrying on a business - can the PRs be granted the power to continue to run the deceased's business, allowing it to be sold as a going concern (which is especially relevant where the deceased was a sole trader)

Answer 31

yes

Question 32

good receipt of a minors legacy - can unmarried minors give good receipt for a legacy

Answer 32

no unless the will specifically provides for this an alternative approach is for the will to provide that a parent or guardian may give a valid receipt.