Inheritance Tax And Administration

Question 1

Describe the tax year for Inheritance Tax (IHT) in the UK.

Answer 1

The tax year for Inheritance Tax (IHT) runs from 6 April one year to 5 April the following year.

Question 2

What is the lifetime rate of Inheritance Tax (IHT)?

Answer 2

The lifetime rate of Inheritance Tax (IHT) is 20%.

Question 3

How is the death rate for Inheritance Tax (IHT) defined?

Answer 3

The death rate for Inheritance Tax (IHT) is defined as 40%, which applies to the value of an estate above the nil rate band at the time of death.

Question 4

Explain the conditions under which a Potentially Exempt Transfer becomes chargeable to IHT.

Answer 4

A Potentially Exempt Transfer becomes chargeable to IHT if the transferor dies within seven years of making the transfer.

Question 5

Define Lifetime Chargeable Transfers (LCT) and their tax implications.

Answer 5

Lifetime Chargeable Transfers (LCT) are lifetime transfers of value that are immediately chargeable to IHT at the lifetime rate, and they are reassessed if the transferor dies within seven years.

Question 6

What is the implication of selling property at an undervalue for IHT?

Answer 6

Selling property at an undervalue implies that the difference in value is considered a gift, which may be subject to IHT.

Question 7

Define the basic nil rate band (NRB) in the context of inheritance tax.

Answer 7

The basic nil rate band (NRB) is £325,000, allowing individuals to make chargeable transfers up to this amount at a rate of 0%, meaning no tax is due.

Question 8

Explain the residence nil rate band (RNRB).

Answer 8

The residence nil rate band (RNRB) is an additional nil rate band of £175,000 for individuals who leave their family home to a direct descendant upon death.

Question 9

How can a surviving spouse benefit from the nil rate bands?

Answer 9

A surviving spouse can inherit the unused portions of both the basic nil rate band (NRB) and the residence nil rate band (RNRB) from their deceased partner.

Question 10

Describe the tax treatment of Lifetime Chargeable Transfers (LCT) made into a trust after 22 March 2006.

Answer 10

“An LCT is a chargeable transfer when made, with IHT payable at a lifetime rate of “ 20%. If the transferor survives 7 years after the LCT

Question 11

When is the TNRB available

Answer 11

Only after the surviving spouse dies

Question 12

How can the TNRB be claimed from multiple spouses

Answer 12

Individuals who have survived more than one spouse can claim the TNRB in respect of all of them, subject to a cap of 100% of a full nil rate band (max £325K)

Question 13

What happens if the husband dies and wife remarries and then subsequently dies. Can the new husband’s estate claim TNRB from the first husband?

Answer 13

Yes, but it will be claimed from the wife’s estate who would have been entitled to the TNRB but didn’t claim it

Question 14

When must a claim for TNRB be made

Answer 14

Within two years of the end of the month of death

Question 15

What are the conditions to qualify for RNRB

Answer 15

The death estate included a ‘qualifying residential interest’ (‘QRI’) and The QRI was ‘closely inherited’ by a ‘direct descendent’

Question 16

What happens if the deceaseds share or interest is less than £175k

Answer 16

The RNRB is called at the value of the deceased’s interest in the property (e.g if property costs 150k RNRB will be capped at £150k)

Question 17

What happens to the RNRB if an estate’s net value (value of assets minus debts but before exemptions appply) is greater than £2 million

Answer 17

The reduction in the RNRB is £1 for every £2 (divide excess above 2 million by 2)

Question 18

When is there no RNRB available

Answer 18

for net estates worth £2,700,000 or more

Question 19

What happens where the deceased had more than one

residential property interest in their estate at death

Answer 19

The PRs must nominate one of them to qualify for RNRB

Question 20

What does RNRB not apply to

Answer 20

rental investment properties in which the deceased never lived.

Question 21

When will a child not closely inherit the property

Answer 21

When they have a contingent interest (e.g gift is contingent on them reaching 25 and they are currently 15) unless will specified otherwise

Question 22

Who qualifies as a direct descendant

Answer 22

1) The deceased’s children, grandchildren, great grandchildren and other lineal descendants,

2. Spouse or civil partner of anyone included in 1) above,
3. Widow, widower or surviving civil partner of anyone included in 1) above who has pre-deceased the deceased, provided the survivor does not re-marry or enter a new civil partnership before the deceased dies.

Question 23

Do step children qualify as direct descendants

Answer 23

Yes, if their parent was married to the deceased

Question 24

Can you transfer unused RNRB to a surviving spouse

Answer 24

Yes, provided surviving spouse leaves it to a direct descendant

Question 25

What is the max NRB amount

Answer 25

£1 million

Question 26

Define the spouse exemption in the context of IHT.

Answer 26

The spouse exemption allows transfers between spouses to be exempt from inheritance tax.

Question 27

How does the charity exemption affect IHT calculations?

Answer 27

The charity exemption allows transfers made to registered charities to be exempt from inheritance tax.

Question 28

Explain the family maintenance exemption in IHT. (Lifetime gift exemption only)

Answer 28

The family maintenance exemption allows for certain transfers made for the maintenance of family members to be exempt from inheritance tax.

Question 29

What is the annual exemption in the context of IHT? (Lifetime gift exemption only)

Answer 29

The annual exemption allows individuals to make a certain amount of gifts each year without incurring inheritance tax.

Question 30

Describe the small gifts allowance in IHT calculations.(Lifetime gift exemption only)

Answer 30

The small gifts allowance permits individuals to make small gifts up to a specified limit each year without being subject to inheritance tax.

Question 31

How does normal expenditure from income function as an exemption in IHT?

Answer 31

Normal expenditure from income allows individuals to make gifts from their income that do not affect their standard of living, exempting them from inheritance tax.

Question 32

What is the marriage exemption in IHT?

Answer 32

The marriage exemption allows gifts made in connection with a marriage to be exempt from inheritance tax up to a certain limit.

Question 33

Define business property relief in the context of IHT.

Answer 33

Business property relief allows certain business assets to be exempt from inheritance tax, promoting the continuation of businesses.

Question 34

Explain agricultural property relief in IHT.

Answer 34

Agricultural property relief provides exemptions for agricultural land and property from inheritance tax to support farming operations.

Question 35

What are the annual exemptions (AE) mentioned in the context of the gift?

Answer 35

The annual exemptions mentioned are £3,000 for the year of the gift and £3,000 for the previous year.

Question 36

What is the percentage reduction in IHT for transfers made 3 to 4 years before death?

Answer 36

80% of the IHT is payable.

Question 37

How much IHT is payable for transfers made 4 to 5 years before death?

Answer 37

60% of the IHT is payable

Question 38

Define the taper relief for transfers made 5 to 6 years before death.

Answer 38

40% of the IHT being payable.

Question 39

What percentage of IHT remains payable for transfers made 6 to 7 years before death?

Answer 39

20% of the IHT is payable

Question 40

What is included in the taxable estate of a deceased person who owned property as joint tenants?

Answer 40

The taxable estate includes the deceased’s share of the property, which is deemed severed, along with any other assets they owned.

Question 41

What happens to a deceased person’s share of property owned as tenants in common?

Answer 41

The deceased’s share of property owned as tenants in common passes into their estate for both tax and distribution purposes.

Question 42

How does the gift with reservation of benefit (GROB) rule affect inheritance tax?

Answer 42

The GROB rule affects inheritance tax by including the value of an asset in the donor’s estate if they have reserved a benefit from that asset, such as continued use, at the time of their death.

Question 43

How does a donationes mortis causa affect inheritance tax (IHT)?

Answer 43

The subject matter of a donationes mortis causa is still considered part of the deceased’s estate for IHT purposes, and IHT will be payable on its value as of the date of death.

Question 44

Describe the process of statutory nominations regarding accounts.

Answer 44

A person can make a written nomination of monies in accounts such as Friendly Society, Industrial Society, or Provident Society, with each account’s amount not exceeding £5,000.

Question 45

Explain the relationship between statutory nominations and inheritance tax (IHT).

Answer 45

Although the monies in statutory nominated accounts pass directly to the nominee and do not enter the distribution estate, they still form part of the IHT estate.

Question 46

Will a life tenant’s interest be included for inheritance tax purposes

Answer 46

The capital value of the trust fund will be included. If trust created after 22nd march 2022, capital will be valued at time of persons death

Question 47

Describe excluded property in the context of a life interest trust.

Answer 47

Excluded property refers to assets that are not included in a person’s taxable estate. A common example is a remainder interest in a life interest trust, where the trust fund does not pass to the remainderman’s estate if they die before the life tenant.

Question 48

Define the implications of an insurance policy written in trust for another.

Answer 48

If a deceased had an insurance policy on their own life written in trust for another, the proceeds are not included in the deceased’s estate for inheritance tax (IHT) purposes.

Question 49

How does the designation of insurance policy proceeds affect the taxable estate?

Answer 49

If the insurance policy proceeds are payable to the deceased’s estate, then the amount would be included in the taxable estate for IHT purposes.

Question 50

Describe how quoted shares are valued for an estate at the date of death.

Answer 50

Quoted shares are valued by taking the lower of the two prices on the Stock Exchange Daily List and adding one-quarter of the difference between the higher and lower value.

Question 51

How is the value of jointly owned property adjusted in an estate valuation?

Answer 51

The value of the deceased’s share of co-owned land is reduced by 10% to reflect the difficulty of selling a share, unless the co-owners are married, in which case related property rules apply.

Question 52

How are assets valued when they form a set owned by spouses?

Answer 52

When assets owned by spouses are worth more when valued together, each party’s share is valued at their proportionate share of the combined total.

Question 53

How are post-death debts treated for tax purposes in relation to the estate?

Answer 53

Only reasonable funeral expenses and the cost of a tombstone can be deducted from the estate for tax purposes; other post-death expenses cannot reduce the overall tax due.

Question 54

Describe the exemptions and reliefs relevant to the death estate for IHT calculations.

Answer 54

The relevant exemptions and reliefs include Spouse exemption, Charity exemption, Business property relief (BPR), and Agricultural property relief (APR).

Question 55

Explain the role of trustees in relation to IHT for a trust.

Answer 55

Trustees are jointly liable to pay the IHT due on the assets received by the trust.

Question 56

What happens to the trust fund after IHT is paid by the trustees?

Answer 56

The trust fund left to benefit the beneficiaries is reduced after the IHT is paid.

Question 57

Describe the process of grossing-up in the context of a trust transfer.

Answer 57

Grossing-up involves calculating the total value of a transfer by adding the tax paid to the net amount transferred. For example, if a man transfers £400,000 into a trust and pays the IHT himself, the grossed-up value is £400,000 plus the tax paid.

Question 58

What happens if the trustees do not pay the IHT on a lifetime trust transfer?

Answer 58

If the trustees do not pay the IHT, the donor becomes liable for the tax.

Question 59

How does grossing-up affect the amount of tax paid to HMRC?

Answer 59

More tax is paid to HMRC when grossing-up is required because the IHT is calculated on a higher grossed-up value rather than just the net amount settled.

Question 60

Who is liable to pay inheritance tax on a LCT after donor has

Answer 60

If the trustee of a lifetime transfer does not pay the IHT due within the deadline, the deceased’s personal representatives become liable for the tax.

Question 61

What is the deadline for paying IHT after the death of an individual?

Answer 61

The deadline for paying IHT is 12 months from the end of the month of death.

Question 62

How are gifts in a will treated in relation to tax liability?

Answer 62

Gifts in a will, other than residue, are deemed to be given ‘free of tax,’ regardless of whether this phrase is explicitly stated.

Question 63

What is the preferred option for most testators regarding tax payment?

Answer 63

The preferred option for most testators is to follow the general rule that IHT is payable from the residue.

Question 64

Identify who is responsible for the payment of IHT on joint tenant property.

Answer 64

The surviving co-owner is responsible for the payment of IHT on joint tenant property.

Question 65

Explain the responsibility for IHT on statutory nominations.

Answer 65

The nominated beneficiary is responsible for the payment of IHT on statutory nominations.

Question 66

Define donationes mortis causa and their tax implications.

Answer 66

Donations mortis causa are gifts made in contemplation of death, and the lifetime donee is responsible for the payment of IHT on these donations.

Question 67

Who will be liable to pay inheritance tax in an intestacy situation

Answer 67

The proportion owed by each is calculated with reference to the value of the asset

relative to the value of the whole estate.

Question 68

What is the difference between tax avoidance and tax evasion

Answer 68

Tax avoidance is lawful and involves minimizing tax liability through planning, while tax evasion is unlawful and involves hiding income or assets to avoid tax.

Question 69

when can. GROB arise in a trust

Answer 69

A GROB will arise if the settlor (the donor) is a potential beneficiary of the trust, regardless of whether they actually obtain a benefit.

Question 70

What happens with a loan used to obtain BPR assets

Answer 70

If a loan is used to purchase assets that qualify for BPR or agricultural relief, this cost can be deducted from the taxable estate

Question 71

When are normal loans deducted from the estate

Answer 71

If they have actually be repaid from the estate

Question 72

Give an example of a POAC

Answer 72

A man makes a gift of shares to his sister. The sister immediately sells the shares and uses the proceeds to buy a car. The man uses the car to drive to work every day and parks it outside his house. This is not a GROB so there is no possibility of electing into that regime

Question 73

Describe the conditions under which maintenance payments are not treated as transfers for IHT purposes.

Answer 73

Maintenance payments are not treated as transfers for IHT purposes if made to a spouse (or former spouse as part of a divorce settlement), the minor child of either party for maintenance, education, or training, or a dependent relative for reasonable care provision.

Question 74

What is the implication of a recipient being domiciled outside the UK regarding maintenance payments?

Answer 74

If the recipient is domiciled outside the UK, the maintenance exemption can still be applied even if the spouse exemption would not normally apply.

Question 75

Describe the small gifts exemption in terms of tax.

Answer 75

Small gifts of up to £250 per recipient can be made free from tax, allowing a transferor to make multiple gifts to different people without a limit on the number of recipients.

Question 76

Explain the restriction on combining the small gifts allowance with other exemptions.

Answer 76

The small gifts allowance cannot be combined with any other exemption, including the annual exemption (AE).

Question 77

How can a donor utilize both the small gifts allowance and the annual exemption effectively?

Answer 77

A donor can utilize both by giving £3,000 to one person (using the AE) and £250 to another person (using the small gifts allowance), thus claiming both reliefs.

Question 78

Describe the marriage exemption limits for gifts given by parents.

Answer 78

A parent can give a gift of up to £5,000 in consideration of a marriage.

Question 79

How much can one party of the marriage give to the other without incurring tax?

Answer 79

One party can give a gift of up to £2,500 to the other party of the marriage.

Question 80

Define the gift exemption limit for remoter ancestors in relation to marriage gifts.

Answer 80

Remoter ancestors, such as grandparents or great-grandparents, can give a gift of up to £2,500.

Question 81

What is the exemption limit for gifts made in any other case related to marriage?

Answer 81

In any other case, the exemption limit for gifts is £1,000.

Question 82

How does the term ‘child’ expand under s 22 IHTA for the purpose of marriage gifts?

Answer 82

Under s 22 IHTA, ‘child’ includes illegitimate children, adopted children, and step-children.

Question 83

How does the relief apply per donor in respect of a marriage?

Answer 83

Each donor can claim relief per marriage, allowing both parents of both parties to give £5,000 each, totaling a maximum relief of £20,000.

Question 84

Define the term ‘normal expenditure out of income’ as it relates to transfers of value.

Answer 84

Normal expenditure out of income refers to regular payments made from the donor’s income that do not affect their standard of living and are considered exempt from taxation.

Question 85

What is the importance of a settled pattern of giving in relation to tax exemptions?

Answer 85

A settled pattern of giving, such as consistent monthly payments, provides evidence to HMRC that the transfers are part of normal expenditure and thus more likely to qualify for tax relief.

Question 86

Describe the spouse exemption in relation to a life interest trust.

Answer 86

The spouse exemption applies to the value of assets transferred to a life interest trust if the surviving spouse receives a life interest, meaning they are named as the life tenant. Spouse exemption will not apply if the spouse is named the remainder man

Question 87

What factors can affect the effectiveness of a charitable gift?

Answer 87

The effectiveness of a charitable gift can be influenced by whether the gift is clearly made for charitable purposes and whether the charitable body meets the statutory requirements for IHT exemption.

Question 88

How does the reduced IHT rate apply to charitable gifts in a will?

Answer 88

The reduced IHT rate of 36% applies to chargeable assets in the estate if the deceased leaves at least 10% of their net estate to charity.

Question 89

Describe the purpose of Employee Benefit Trusts (EBTs) in relation to employee remuneration.

Answer 89

EBTs are a tax-efficient way of remunerating employees that is exempt from inheritance

Question 90

How must a gift to a charity be structured to qualify for tax exemption?

Answer 90

A gift to a charity must be immediate and not in remainder, and it must normally be absolute to qualify for tax exemption.

Question 91

Describe unquoted shares in the context of qualifying business assets.

Answer 91

Unquoted shares refer to all private company shares, such as those in a limited company (ltd), regardless of the size or value of the shareholding.

Question 92

Define quoted shares as qualifying business assets.

Answer 92

Quoted shares are shares listed on a recognized stock exchange, such as a UK PLC, but are considered business assets only if the taxpayer controls the company with a shareholding of 50% or more.

Question 93

What types of assets owned by a taxpayer can qualify as business assets?

Answer 93

Assets owned by a taxpayer that can qualify as business assets include land, buildings, and machinery, provided they are used for business purposes by a company controlled by the taxpayer or a partnership in which they are a partner.

Question 94

What is the rate of relief for quoted shares assuming no controlling interest?

Answer 94

The rate of relief for quoted shares is 50%.

Question 95

How does the rate of relief differ between unquoted and quoted shares?

Answer 95

Unquoted shares have a 100% rate of relief, while quoted shares have a 50% rate of relief.,

Question 96

Describe the types of businesses or interests that are not considered business property.

Answer 96

Businesses that consist wholly or mainly of dealing in securities, stocks or shares, land or buildings, or making or holding investments (such as rental properties) are not considered business property.

Question 97

Describe the ownership requirement for a transferor to qualify for the transfer of business assets.

Answer 97

The transferor must have owned the business assets continuously for at least 2 years immediately prior to the relevant transfer.

Question 98

Explain the flexibility in the type of business during the ownership period.

Answer 98

The type of business does not need to be the same throughout the 2-year period, but there must have been a business for all of that time.

Question 99

Identify an exception to the two-year ownership rule regarding the replacement of assets.

Answer 99

If qualifying assets are sold and replaced with new qualifying assets within a certain period of time, the taxpayer’s period of ownership is usually treated as continuous.

Question 100

what is an exception to the two year rule for BPR in relation to spouse

Answer 100

If a person inherits business assets following the death of their spouse, they are

deemed to have owned the property from the time it was originally acquired by their deceased spouse irrespective of how long they had been married

Question 101

A makes a PET of shares in a ltd trading company worth £400,000 to B. A had owned the assets for 3 years prior to making the gift. A dies 5 years later. The PET has failed and is now assessed to IHT. Can A’s estate claim BPR in respect of the failed PET?

Answer 101

BPR will only be available if B still owns the business assets transferred.

Question 102

What is a qualifying agricultural property to qualify for agricultural property relief

Answer 102

Agricultural land and buildings used for purposes connected with agricultural activity.

Question 103

Do farmhouses and cottages qualify

Answer 103

Thmay qualify if they are of a ‘character appropriate’ to the associated agricultural land and have been occupied for the purposes of agriculture e.g. farmhouse occupied by a farm worker or their surviving spouse and not someone who occupies for purely domestic reasons.

Question 104

What is the qualifying period of ownership for agricultural relief

Answer 104

• occupied for agricultural purposes by the transferor throughout the two years immediately before the transfer, or, (owner occupied for two years)

• owned by the transferor and occupied by them or another for agricultural purposes throughout seven years immediately before the transfer (tenant occupier for 7 years)

Question 105

What exceptions apply to the period of ownership rule

Answer 105

Same as for business assets

Question 106

What is quick succession relief

Answer 106

beneficiary dying within five years of deceased, exempt from the second inheritance tax

Question 107

How much relief is available when beneficiary dies within one year of deceased

Answer 107

100% which is tapered down as years go by up to 5 years

Question 108

Does spouse exemption apply to discretionary trusts

Answer 108

No

Question 109

Who is a PR appointed by will

Answer 109

Executor

Question 110

Who is a PR appointed by statute

Answer 110

Administrator

Question 111

When is an executor able to act

Answer 111

An executor derives authority from the will and they may act from the date of death. The grant confirms this authority.

Question 112

When is an administrator able to act

Answer 112

An administrator derives authority from the grant. They have no authority to act until the grant is issued.

Question 113

What duties must PR’s comply with before the grant of representation is obtained

Answer 113

The PRs must notify HMRC about the assets and liabilities of the estate by completing form IHT 400

Inheritance tax must also be paid.

Question 114

What are the duties of PRs

Answer 114

• Identify and locate the deceased’s assets (including sums owed to the deceased)

• Identify the deceased’s liabilities and creditors

• Obtain control, possession or legal ownership of the assets

Question 115

What are estate accounts

Answer 115

a list of assets and values (inventory) kept by PRs and a record of the steps they have taken in the administration

Question 116

What happens if PRs have not maintained adequate estate accounts

Answer 116

an application to court is made by a beneficiary or creditor for an order to produce an inventory and account to be made.

Question 117

When should administration of the estate be done by

Answer 117

within 12 months of the date of death known as the ‘executor’s year’. If the administration takes longer than 12 months this does not necessarily mean a breach has occurred, but from this time PRs are required to justify any delay

Question 118

What are PRs prevented from doing due to their fiduciary duty

Answer 118

• Place themselves in a position of conflict e.g purchasing estate assets even if for fair value

• Profit from their position.

Question 119

What are PRs power to appropriate

Answer 119

Substitute gifts provided in will e.g gift of £100 cash provided to beneficiary to be replaced with antique chair at beneficiary’s request

Question 120

What are the conditions power of appropriation is subject to

Answer 120

• A specific beneficiary must not be prejudiced.

• Consent of the recipient beneficiary is required.

• The value of the asset must be considered at the date of transfer/appropriation rather than the date of death.

Question 121

What happens if the value of an asset exceeds beneficiary’s entitlement

Answer 121

the PRs may not appropriate.

Question 122

What happens if value of asset is less than entitlement

Answer 122

the PRs may appropriate and then make a balancing cash transfer.

Question 123

Where can PRs take insurance out of

Answer 123

Estate income or capital

Question 124

When can professional solicitors claim reasonable remuneration for their services

Answer 124

• when they are not acting alone, and

• when co-PRs give their written consent.

Question 125

How can a professional PR who is acting alone claim remuneration

Answer 125

They need to be given express power in the will to charge for their services.

Question 126

What expenses can PRs(including lay PRs) be reimbursed for

Answer 126

expenses properly incurred when acting on behalf of an estate. For example, travel costs incurred in the course of carrying out estate administration.

Question 127

Can PRs delegate their powers to a beneficiary

Answer 127

No

Question 128

What duties can PRs not delegate

Answer 128

• how and whether assets should be distributed

• whether fees or costs are payable from income or capital

• the appointment of trustees

Question 129

What must PRs do when choosing to delegate

Answer 129

• they must do so in writing to the agent and

• they must provide them with a written policy

statement which the agent must agree to comply with

Question 130

Who can give good receipt on behalf of a minor

Answer 130

Parent or guardian which PRs can appoint as trustees for the beneficiary

Question 131

When can a jointly appointed PR act alone

Answer 131

when exercising a lawful power to sell or transfer an estate asset during the administration

Question 132

How can a PR who failed to carry out their duties be removed from the role

Answer 132

• by a court order appointing a replacement

• An administration action, where the court would take over the administration itself

Question 133

What can a PR do if they foresee difficulties in the administration and are concerned about personal liability

Answer 133

They may seek court guidance

Question 134

What else can a PR do when there is a question over the construction of the will which isn’t as expensive and time consuming as applying to court

Answer 134

PRs may make an application under s 48

Administration of Justice Act 1985 to distribute in accordance with a written legal opinion

Question 135

How can PRs prevent liability to unidentified

beneficiaries and creditors,

Answer 135

the trustees may publish a s27!notice of their intention to distribute to known beneficiaries two months after the date of the advertisement.

Question 136

Where must the notice be placed

Answer 136

i) The London Gazette,

ii) A newspaper circulating in the area in which any land held on trust is situated, and

iii) Any other newspaper which is appropriate e.g. if the deceased owned a business, the relevant trade paper may be appropriate.

Question 137

What is the limitation for s27 for beneficiaries

Answer 137

It does not protect other beneficiaries who receive more than their entitlement to the estate. A disappointed creditor/ beneficiary may still claim against the beneficiaries.

Question 138

When is a Benjamin Order used

Answer 138

In the case of known but missing beneficiaries

Question 139

What must PRs demonstrate for a Benjamin Order

Answer 139

PRs must make full enquiries to attempt to establish

the true position and demonstrate there is no reasonable prospect of knowing the true position without disproportionate expense

Question 140

What is the Presumption of Death Act 2013

Answer 140

The PRs may make an application under this act for a court order declaring that a person thought to have died, or not known to have been alive, for seven years or

more has died.

Question 141

How can an indemnity protect a PR

Answer 141

The beneficiaries promise to reimburse the PRs for any loss the PRs suffer as a result of being sued by a disappointed beneficiary or creditor.

Question 142

When is a payment into court a suitable option

Answer 142

where a beneficiary can be located but is refusing to accept their inheritance

Question 143

Under what conditions will a court exonerate a PR from personal liability

Answer 143

• if they acted honestly and reasonably,
• ought fairly to be excused for:

    - the breach of trust and
  
    - omitting to obtain directions of the court in the matter

Question 144

What is a Grant of Letters of Administration (with will)

Answer 144

• the deceased left a valid will

• but the will appoints no executors who are willing/able to act.

Question 145

What is a Grant of Letters of Administration

Answer 145

the deceased died without having made a valid will (i.e. died intestate)

Question 146

What is the financial limit for which a grant is not required (eg for saving accounts, bonds and building society accounts)

Answer 146

£5,000

Question 147

What do most banks require sight of as evidence recipient is entitled to to money

Answer 147

Death certificate and will

Question 148

What assets do not require a grant of probate and will only require a death certificate

Answer 148

assets passing outside the succession estate:

Property owned as joint tenants

(commonly land and bank accounts)

Donationes mortis causa (DMC)

Life policies written in trust, discretionary pension lump sums nominated for a third party, and other nominated assets.

Assets held in a trust in which the deceased had an interest

Question 149

What steps should be taken after obtaining a death certificate?

Answer 149

After obtaining a death certificate, one should locate the will or codicil, secure estate assets, and create a schedule of assets and lifetime transfers.

Question 150

Describe the process for establishing the value of bank accounts after someone’s death.

Answer 150

PRs should request a summary of the account balance on the date of death from the bank, including any accrued interest.

Question 151

What should be done for single items worth more than £500 in an estate?

Answer 151

A formal probate valuation should be obtained, often from commercial organizations that specialize in this service, with costs payable from estate funds.

Question 152

What happens if one of the appointed executors has pre-deceased?

Answer 152

The remaining executor(s) may continue with the application for probate and must explain to the probate registry why not all named executors are applying.

Question 153

Define the term ‘grant of double probate’.

Answer 153

A grant of double probate is applied for by remaining executors if a vacancy arises and the administration remains incomplete.

Question 154

How many executors can a testator appoint in their will?

Answer 154

A testator may appoint as many executors as they like in the will.

Question 155

What must happen if more than four executors are appointed in a will?

Answer 155

If more than four executors are appointed, they must decide who will take out the grant of probate.

Question 156

Do all named executors need to apply for the grant of probate?

Answer 156

No, typically one executor can apply for the grant of probate on behalf of all named executors.

Question 157

Discuss the implications of having power reserved for an executor.

Answer 157

Having power reserved means that an executor who was not initially appointed can later apply for probate if a vacancy arises, allowing them to participate in the administration of the estate.

Question 158

Define the term ‘chain of representation’ in the context of PRs.

Answer 158

The chain of representation refers to the legal principle that allows the administration of an estate to continue through the appointment of new PRs after the death of the original PRs.

Question 159

What is a grant of letters of administration de bonis non?

Answer 159

It is a legal document issued to appoint a new administrator for an estate when the original PRs are no longer available to complete the administration.

Question 160

Describe the chain of representation in the context of executors.

Answer 160

The chain of representation applies when the last surviving executor (E1) dies and has appointed another executor (E2) for their estate. E2 then takes out the grant of probate for E1’s estate and automatically becomes the executor of the original testator’s estate without needing an additional grant.

Question 161

Define the role of S.7 AEA 1925 in the chain of representation.

Answer 161

S.7 AEA 1925 provides that when the last surviving executor dies, the executor appointed by them automatically becomes the executor of both their estate and the original testator’s estate, eliminating the need for an additional grant.

Question 162

What happens if the chain of representation cannot operate?

Answer 162

If the chain of representation cannot operate, a second grant will be issued, specifically a grant of letters of administration de bonis non.

Question 163

Describe the statutory order of entitlement for appointment as administrator under a grant of letters of administration (with will)

Answer 163

The statutory order of entitlement includes:

a) executor;

b) trustee of the residuary estate;

c) any residuary beneficiary or a beneficiary under intestacy;

d) the personal representatives of anyone in (c) other than a trustee or life tenant; e) any other beneficiary or creditor;

f) personal representatives of anyone in (e).

Question 164

How does partial intestacy affect the rights of beneficiaries in applying for administration?

Answer 164

In cases of partial intestacy, a beneficiary of the estate under intestacy can apply, but only if there are no higher category individuals willing and able to act.

Question 165

Describe the statutory order of entitlement to apply for letters of administration (without will)

Answer 165

The statutory order includes:

a) surviving spouse or civil partner,

b) children of the deceased,

c) father and mother of the deceased,

d) whole blood siblings,

e) half-blood siblings,

f) grandparents,

g) uncles/aunts of whole blood,

h) uncles/aunts of half blood.

Question 166

How can the Crown apply for letters of administration?

Answer 166

The Crown may apply for letters of administration if no one from the statutory order (a-h) can apply, claiming bona vacantia.

Question 167

Explain the role of creditors in the application for letters of administration.

Answer 167

Creditors may apply for letters of administration if the Crown does not apply and they are not receiving a benefit from the estate.

Question 168

What is the significance of ‘clearing off’ in the application process?

Answer 168

Applicants must ‘clear off’ anyone with a better (but not equivalent) right to apply, ensuring that only those with the most appropriate rights proceed.

Question 169

What is the significance of the 28-day survival rule for the spouse’s entitlement?

Answer 169

The 28-day survival rule is significant because it determines whether the spouse is beneficially entitled to the estate; she must survive the deceased by this period to apply for the estate.

Question 170

How does the value of the estate affect the application rights of the children?

Answer 170

The value of the estate affects the children’s application rights because if the estate were larger, they would have shared it with the spouse, allowing them to apply for a share.

Question 171

Define the role of a minor in the context of applying for a grant.

Answer 171

A minor may not act as an administrator, but someone can apply for a grant on their behalf.

Question 172

What takes priority when applying for a grant on behalf of a minor?

Answer 172

An application by an adult with equal entitlement to apply is given priority over an application made on behalf of a minor.

Question 173

Under what circumstances may an application on behalf of a minor be appropriate?

Answer 173

An application on behalf of a minor may be appropriate if no adult with equal or greater entitlement will act, or if the minor is the only person within the category having the greatest entitlement, or if all those within the category are minors.

Question 174

Define the role of a minor executor in the probate process.

Answer 174

If an executor is a minor, probate can be issued to the other executors with power reserved to the minor, who can apply upon reaching 18.

Question 175

What options do executors have if they are unwilling to act?

Answer 175

Executors who are unwilling to act have several formal options, including renunciation, reserving power, or appointing an attorney.

Question 176

Define renunciation in the context of an executor’s role.

Answer 176

Renunciation is the formal process by which an executor declines to accept their role and responsibilities as outlined in the will.

Question 177

How can an executor reserve power if they are unwilling to act?

Answer 177

An executor can reserve power by retaining the ability to act in the future while not currently taking on the responsibilities associated with the role.

Question 178

Describe the process an executor must follow to formally renounce their right to apply for probate.

Answer 178

An executor must sign a form of renunciation and submit it to the probate registry as evidence of their decision not to apply for probate.

Question 179

How is the renunciation of an executor noted in the probate process?

Answer 179

The renunciation will be noted on the grant when it is issued.

Question 180

Define the finality of an executor’s renunciation of their role in the probate process.

Answer 180

Renunciation is final, and the executor cannot later change their mind without court approval.

Question 181

Define intermeddling in the context of estate administration.

Answer 181

Intermeddling occurs when a person takes steps indicating they have accepted their appointment as executor and are fulfilling the duty to administer the estate, such as obtaining or holding the deceased’s assets.

Question 182

Describe actions that constitute intermeddling with an estate.

Answer 182

Actions that constitute intermeddling include obtaining, receiving, or holding the deceased’s assets, forgiving debts or liabilities due to the estate, paying debts, selling assets, and disposing of personal property.

Question 183

How does intermeddling affect an executor’s ability to renounce their appointment?

Answer 183

An executor cannot renounce their appointment if they have intermeddled with the estate, as the court will not accept an attempt to renounce under such circumstances.

Question 184

What are examples of acts that do not amount to intermeddling?

Answer 184

Acts of common humanity, such as arranging a funeral or taking steps to secure the estate assets, do not amount to intermeddling.

Question 185

How can an executor who has intermeddled still reserve power?

Answer 185

An executor who has intermeddled can still reserve power by ensuring that at least one other executor applies for the original grant of probate.

Question 186

Explain the conditions under which an executor can apply for a grant of double probate.

Answer 186

An executor can apply for a grant of double probate to run concurrently with the original grant if the administration of the estate is not yet complete.

Question 187

Describe the process when an executor reserves power in a probate application.

Answer 187

When an executor reserves power, they must notify the other executors of their intention to apply for probate. The other executors will proceed with the application, and the grant of probate will note that power is reserved to the executor who did not act.

Question 188

How does the grant of probate reflect the reservation of power by an executor?

Answer 188

The grant of probate will include a note indicating that power is reserved to the executor who did not act, along with confirmation that they were notified of the application.

Question 189

What can an executor do if they do not want to be directly involved in the administration

Answer 189

An executor, who does not want to be directly involved in the administration, may appoint another person as attorney to act on their behalf.

Question 190

What does the Trustee Act 1925 state regarding the delegation of functions by a personal representative (PR)?

Answer 190

The Trustee Act 1925 confirms that a personal representative may delegate their functions to an attorney for a maximum of 12 months, which can be renewed if necessary.

Question 191

Explain the process for an attorney to act before a grant has been obtained.

Answer 191

Before a grant is obtained, the executor can delegate the power to apply for a grant, but the attorney cannot apply for a grant of probate. Instead, the other executors would apply for probate while the attorney makes a parallel application for letters of administration.

Question 192

What must be provided to the probate registry when an attorney is appointed?

Answer 192

The power of attorney must be provided to the probate registry as part of the application process.

Question 193

What should an executor do before appointing an attorney?

Answer 193

The executor should give notice to the other executors before appointing an attorney.

Question 194

How does the status of a person affect their ability to act as an administrator of an estate?

Answer 194

A person cannot act as an administrator if they pre-deceased the testator, are a minor, lack capacity, or do not have a beneficial entitlement to the estate.

Question 195

Define the role of an administrator in the context of NCPR 20 or 22.

Answer 195

An administrator is responsible for managing the estate of a deceased person, but unlike an executor, they cannot reserve power.

Question 196

How does renunciation affect the rights of a potential administrator before the grant is issued?

Answer 196

A potential administrator may renounce their right to apply at any time before the grant is issued, even if they have already intermeddled with the estate.

Question 197

What should a PR avoid doing if they choose not to act?

Answer 197

A PR should not ‘do nothing’.

Question 198

Describe the deadline for submitting the estate accounts after a death occurs.

Answer 198

The deadline for submitting the account is 12 months from the end of the month in which the death occurred.

Question 199

How is the deadline for paying IHT determined after a death?

Answer 199

The deadline for paying IHT is 6 months from the end of the month in which the death occurred.

Question 200

What happens if IHT is not paid within the 6-month deadline?

Answer 200

Interest becomes payable on the unpaid tax after the 6-month deadline.

Question 201

What is the consequence of missing the 6-month payment deadline for IHT?

Answer 201

Missing the 6-month payment deadline results in interest being charged on the unpaid tax.

Question 202

Describe the instalment option for IHT under ss. 227 - 228 IHTA.

Answer 202

The instalment option allows IHT due on certain assets to be paid in 10 equal annual instalments, with the first instalment due six months after the end of the month in which the deceased died.

Question 203

How are the remaining instalments for IHT due after the first payment?

Answer 203

The remaining instalments are due on each subsequent anniversary date after the first payment.

Question 204

Describe the types of assets eligible for the Instalment Option under IHT.

Answer 204

The Instalment Option is available for land and buildings, company shares/securities giving control, some unquoted company shares/securities, farms or interests in farming businesses, businesses or interests in businesses, and timber.

Question 205

Define the criteria for unquoted company shares to qualify for the Instalment Option.

Answer 205

Unquoted company shares qualify for the Instalment Option if they did not give control and either the tax attributable to them represents 20% or more of the total tax liability or the value of the shares is greater than £20,000 and the shareholding represents at least 10% of the nominal value of all company shares.

Question 206

Explain the relevance of shareholding percentage in the Instalment Option.

Answer 206

A shareholding must represent at least 10% of the nominal value of all company shares for the Instalment Option to apply if the value of the shares is greater than £20,000.

Question 207

Define what is meant by an ‘excepted estate’.

Answer 207

An excepted estate is one that does not require the completion of the IHT 400 form for reporting to HMRC.

Question 208

How can one determine if an estate is excepted?

Answer 208

An estate is considered excepted if it falls under the categories of low value excepted estate or exempt excepted estate, or if certain other conditions are satisfied.

Question 209

Define a low value excepted estate.

Answer 209

A low value excepted estate is one where there is no Inheritance Tax (IHT) payable because the gross value of the estate is below the Nil Rate Band (NRB) amount plus any Transferable Nil Rate Band (TNRB) from their spouse.

Question 210

What is an exception to a low value excepted estate

Answer 210

The estate cannot be excepted if the RNRB is claimed

Question 211

Define an exempt excepted estate.

Answer 211

An exempt excepted estate is one where the gross value of the estate is no more than £3 million, no Inheritance Tax (IHT) is payable, and the net value of the estate, after debts and spouse/charity exemptions, is below the Nil Rate Band (NRB).

Question 212

What types of exemptions can be considered for an exempt excepted estate?

Answer 212

Only spouse or charity exemptions can be considered for an exempt excepted estate; no other reliefs can be taken into account.

Question 213

List factors that prevent an estate from being classified as excepted.

Answer 213

Factors include: a gift with reservation of benefit, multiple trust interests or a single trust interest over £250,000, foreign assets over £100,000, specified transfers exceeding £250,000, and claims for the RNRB.

Question 214

Define loss relief in the context of IHT.

Answer 214

Loss relief is a provision that entitles the PRs to claim a partial refund of IHT due to losses on the sale of certain assets.

Question 215

How should inaccuracies in the IHT400 be addressed by the PRs?

Answer 215

If the PRs discover inaccuracies in the date of death information provided in the IHT400, they must correct it by submitting a corrective account using Form C4.

Question 216

How can PRs utilize the Direct Payment Scheme to pay IHT?

Answer 216

PRs can request banks or building societies to make a direct payment from the deceased’s account(s) to HMRC via telegraphic transfer under the Direct Payment Scheme, even before the grant is issued.

Question 217

Define the role of schedule IHT 423 in the payment of IHT.

Answer 217

Schedule IHT 423 must be completed by PRs to facilitate the direct payment of IHT from the deceased’s accounts to HMRC.

Question 218

What is the potential benefit of using life policy proceeds written in trust for IHT payment?

Answer 218

Proceeds from a life policy written in trust can be used by beneficiaries to pay IHT without needing to access the deceased’s estate, thus bypassing the grant requirement.

Question 219

What is the first step in the application process for a grant from the Probate Registry?

Answer 219

The first step is completing and posting a paper application form to the Probate Registry.

Question 220

What is the alternative to submitting a paper application to the Probate Registry?

Answer 220

The alternative is submitting an online application via HMCTs service.

Question 221

Describe the types of applications that require mandatory online submission.

Answer 221

Mandatory online applications include most grants of probate.

Question 222

What types of applications are submitted on paper and are considered non-standard?

Answer 222

Mandatory paper applications include non-standard grants and more complicated applications under NCPR 20 and 22.

Question 223

Explain the purpose of form PA1A.

Answer 223

Form PA1A is used when the deceased did not leave a will (NCPR 22 applies).

Question 224

Explain the purpose of form PA1P.

Answer 224

Form PA1P is used when the deceased left a valid will, allowing executors to act under the will or administrators to be appointed by NCPR 20.

Question 225

which form is used when a valid will has been drafted but there is partial intestacy

Answer 225

The PA1P form

Question 226

Describe the information that should be included for the deceased on a death certificate.

Answer 226

The full name of the deceased, date of birth, and date of death should be included.

Question 227

What is the significance of a ‘common name’ for the grant.

Answer 227

A common name refers to an alternative name by which the deceased is known, which should be stated to ensure the grant is issued in both names.

Question 228

What additional information about the deceased should be confirmed besides their identity?

Answer 228

The testator’s domicile, marital status, and value of foreign property should also be confirmed.

Question 229

Why is the unique code from HMRC important for the grant application?

Answer 229

The unique code and estate values are required to submit the grant application to the Probate Registry, making it impossible to proceed without them.

Question 230

What must an applicant state when applying for a grant related to a deceased’s estate?

Answer 230

An applicant must state whether the deceased had an interest in settled land.

Question 231

What is required if a deceased had an interest in settled land?

Answer 231

If the deceased had an interest in settled land, a separate grant is required to deal with the legal estate.

Question 232

Describe the probate registry fee structure.

Answer 232

The probate registry fee varies based on whether a professional is applying and the value of the estate. There is no fee for estates worth less than £5,000.

Question 233

Explain the requirement for death certificates in legal professional applications.

Answer 233

A death certificate is not required for legal professional applications.

Question 234

How many sealed copies can the Probate Registry provide?

Answer 234

The Probate Registry will provide the number of sealed copies as requested by the personal representatives when making the application.

Question 235

What is the fee associated with sealed copies?

Answer 235

There is a small fee for each sealed copy requested from the Probate Registry.

Question 236

Does revocation of a codicil reinstate the original Will

Answer 236

Codicils are amendments to the original will; however, if a codicil is revoked, it does not automatically restore the original terms of the will.

Question 237

What form is used to complete the power of attorney.

Answer 237

Form PA11 is used to complete the power of attorney, which is submitted with the application for the grant.

Question 238

Describe the role of the deponent in an affidavit.

Answer 238

The deponent is the person making the affidavit who swears or affirms that the contents of the document are true.

Question 239

What are the legal requirements for making an affidavit?

Answer 239

The legal requirements include a signed and dated jurat, completion and signature by an independent witness, and the jurat must follow immediately after the text.

Question 240

Explain the term ‘jurat’ in the context of an affidavit.

Answer 240

The jurat is the authenticating statement that must be signed by all parties and dated, confirming the affidavit’s validity.

Question 241

Who can witness the signing of an affidavit?

Answer 241

The witnessing must be done by an independent solicitor or commissioner for oaths.

Question 242

What information must be included from the witness in an affidavit?

Answer 242

The witness must provide their name, address, and qualifications in the affidavit.

Question 243

Describe the role of affidavit evidence in relation to a will.

Answer 243

Affidavit evidence is used to confirm the circumstances surrounding the drafting or execution of a will, especially when there is uncertainty about its validity or interpretation.

Question 244

Define the term ‘attestation clause’ in the context of wills.

Answer 244

An attestation clause is a statement in a will that confirms the will was signed and witnessed according to legal requirements.

Question 245

Describe the presumption raised by a properly executed will with a standard attestation clause.

Answer 245

It raises a presumption of knowledge and approval of the will’s contents by the testator.

Question 246

Define the circumstances that might necessitate an affidavit of due execution.

Answer 246

Circumstances include the testator being blind, unable to read the will, or if the signature suggests extreme frailty.

Question 247

How can the need for an affidavit be avoided when executing a will?

Answer 247

The need for an affidavit can be avoided if the original attestation clause is drafted to reflect the special circumstances under which the will was signed.

Question 248

Describe signs that may indicate a will is incomplete or has been tampered with.

Answer 248

Signs include pin holes from removed staples, paperclip indentations from attached documents, non-consecutive page or clause numbering, indications of missing pages, and evidence of attempts to revoke the will such as burning or tearing.

Question 249

How can a copy of a will or codicil be admitted to probate if the original is missing?

Answer 249

A copy can be admitted to probate with a court order, which requires evidence that the will existed after the deceased’s death, confirmation of correct execution, and that the copy accurately reflects the deceased’s wishes.

Question 250

Define a ‘first proceeds’ undertaking in the context of estate administration.

Answer 250

A ‘first proceeds’ undertaking is a promise made by PRs to a bank to use the first funds raised during the administration of the estate to repay a loan.

Question 251

Explain what happens if the outstanding loan is greater than the value of the secured asset.

Answer 251

If the outstanding loan exceeds the value of the secured asset, the creditor typically ranks as an unsecured creditor.

Question 252

Identify the types of debts considered unsecured in solvent estates.

Answer 252

Unsecured debts include credit card debt, utility bills, and other expenses.

Question 253

Where are unsecured debts paid from?

Answer 253

Unsecured debts are paid from the residue of the estate after any legacy funds have been allocated. This ensures that the debts are settled before the remaining assets are distributed to the beneficiaries.

Question 254

How can a disappointed beneficiary use marshalling to their advantage?

Answer 254

A disappointed beneficiary can use marshalling to claim against the assets inherited by another beneficiary if those assets should have been used to repay the debts, thereby compensating for their reduced inheritance.

Question 255

What happens to creditors in relation to marshalling?

Answer 255

Creditors are not bound by the rules of marshalling and are under no obligation to return the money paid to them, even if the assets were taken out of order.

Question 256

How can PRs avoid unnecessary CGT when selling assets?

Answer 256

PRs should consider selling assets that have not risen in value to avoid CGT or using the tax-free allowance unnecessarily.

Question 257

Define the tax treatment of assets transferred from PRs to beneficiaries.

Answer 257

The transfer of assets from a PR to a beneficiary is not treated as a disposal for CGT purposes, allowing the beneficiary to inherit the asset at its probate value.

Question 258

Describe the ease of selling different types of assets in an estate.

Answer 258

Quoted shares and financial investment products can usually be sold quickly and easily, while unquoted shares, business interests, and land typically take longer to sell. Cars and household possessions are also relatively easy to sell but may not yield the desired amount.

Question 259

How do personal representatives (PRs) consider beneficiaries’ wishes when managing an estate?

Answer 259

PRs are not legally bound to comply with beneficiaries’ wishes but should take them into account when making decisions regarding the estate.

Question 260

How should PRs account for untaxed income when calculating the deceased’s tax liability?

Answer 260

PRs should include untaxed income that was due and paid before death in the tax calculations.

Question 261

Define the tax treatment of bank interest paid before and after the deceased’s death.

Answer 261

Bank interest paid before death is taxed as the deceased’s income, while bank interest paid after death is taxed as the PRs’ income.

Question 262

Identify the types of income that do not require date apportionment according to the content.

Answer 262

Bank interest does not require date apportionment.

Question 263

What should PRs do with income paid after the deceased’s death that relates to a period before death?

Answer 263

PRs should account for this income in the deceased’s tax calculations.

Question 264

How should PRs calculate CGT due for a deceased individual?

Answer 264

PRs should utilize the deceased’s tax-free allowances and apply the tax rates that were applicable to the deceased.

Question 265

Explain the concept of ‘tax-free uplift’ in relation to a deceased’s assets.

Answer 265

Upon death, the base cost of assets in the estate is uplifted to the date of death value, effectively wiping out any gains accrued during the deceased’s lifetime.

Question 266

Describe the tax liability of PRs on estate income generated before asset distribution.

Answer 266

PRs may be liable to pay income tax if the estate assets generate income between the date of death and the date the assets are distributed.

Question 267

Are PRs entitled to claim an income tax personal allowance on estate income?

Answer 267

No, PRs are not entitled to claim an income tax personal allowance.

Question 268

How can beneficiaries who do not pay income tax utilize Form R185?

Answer 268

Beneficiaries who do not pay income tax can use Form R185 to claim a tax refund.

Question 269

What is the tax obligation for higher or additional rate taxpayers regarding estate income?

Answer 269

Higher or additional rate taxpayers must make a ‘top-up’ payment to HMRC and use Form R185 when completing their own tax return.

Question 270

Define the income threshold that triggers tax liability for estate income.

Answer 270

The income threshold that triggers tax liability for estate income is £500 per tax year of the administration. If total income exceeds this amount, income tax is payable on the whole amount.

Question 271

Describe the tax implications for gains made by the deceased during their lifetime.

Answer 271

Gains made by the deceased during their lifetime on assets they still owned at the date of death are not taxed for capital gains tax purposes.

Question 272

Explain the chattel exemption related to capital gains tax.

Answer 272

In most cases, personal representatives can sell chattels without worrying about capital gains tax if the gain from the disposal of a tangible movable asset is £6,000 or less.

Question 273

How is the probate value relevant to the transfer of an asset to a beneficiary?

Answer 273

The transfer to a beneficiary is not considered a disposal, so no chargeable gain occurs.

Question 274

How can the tax-free allowance impact the decision to sell an asset or transfer it to a beneficiary?

Answer 274

If the beneficiary has used their tax-free allowance or would pay tax at a higher rate, it may be better for the PRs to sell the asset and use the estate’s tax-free allowance.

Question 275

Under what conditions can PRs make early payments to residuary beneficiaries?

Answer 275

PRs may make early payments of part of a residuary beneficiary’s share if they are confident that sufficient assets will remain to meet any outstanding payments later.

Question 276

What is the process for transferring shares to a beneficiary?

Answer 276

Shares are transferred using a stock transfer form.

Question 277

What documentation is required for transferring land to a beneficiary?

Answer 277

An Assent for a legal estate in land must be completed using land registry form AS1.

Question 278

Who bears the cost of transferring an asset to a beneficiary?

Answer 278

Unless the will specifies otherwise, the beneficiary must bear the cost of the transfer.

Question 279

How long may PRs wish to delay distributions if a claim under the IPFDA 1975 may be brought?

Answer 279

PRs may wish to delay distributions until ten months after the grant is issued.

Question 280

What is the deadline for issuing a claim under the IPFDA 1975?

Answer 280

There is a six-month deadline for issuing a claim and a further four months to serve notice.

Question 281

When should PRs not make distributions regarding claims by unknown beneficiaries and creditors?

Answer 281

PRs should not make distributions until after the two-month deadline for being notified of claims.

Question 282

What happens to general gifts if there are insufficient funds to pay all specific legacies?

Answer 282

If there are insufficient funds to pay all specific legacies, the general beneficiaries take no benefit.

Question 283

Explain the concept of abatement in the context of legacies.

Answer 283

Abatement refers to the reduction of legacies when there are insufficient funds to pay all of them, occurring in reverse order of priority.

Question 284

What is the priority of specific gifts in the payment of legacies?

Answer 284

Specific gifts take priority over general and residuary legacies.

Question 285

How can PRs obtain valid receipt from a minor aged 16 or 17?

Answer 285

An express clause in the will can grant PRs the power to accept receipt from a minor aged 16 or 17.