IPFDA

Question 1

What is the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 1

The Inheritance (Provision for Family and Dependants) Act 1975 allows relatives to apply to the court to vary the content of a will or intestacy after the deceased has died.

Question 2

How does domicile affect eligibility under the IPFDA 1975?

Answer 2

The IPFDA 1975 only applies if the deceased died domiciled in England and Wales, making it essential to establish the deceased’s domicile at the date of death.

Question 3

Define the eligibility of a former spouse under the IPFDA 1975.

Answer 3

A former spouse or civil partner is eligible if they have not remarried or formed a subsequent civil partnership.

Question 4

Define the eligibility of under the IPFDA 1975?

Answer 4

Cohabitation are eligible it they were living together as if they were spouses or civil partners for two years prior to the deceased’s death.

Question 5

Can children of deceased apply under IPFDA

Answer 5

Yes including adopted children.

Question 6

can step children apply under IPFDA

Answer 6

Yes, any person who was treated by the deceased as a child of their family can apply

Question 7

How can any other person apply

Answer 7

Any other person who was maintained, wholly or partly, by the deceased immediately before their death qualifies.

Question 8

Describe the criteria for an applicant to be considered as being maintained by the deceased.

Answer 8

An applicant is considered maintained by the deceased only if the deceased was making a substantial financial contribution towards the applicant’s reasonable needs, excluding contributions made for full valuable consideration in a commercial arrangement.

Question 9

What is the significance of ‘substantial contribution’ in determining maintenance?

Answer 9

A substantial contribution is essential as it indicates that the deceased was providing significant financial support, which is necessary for the applicant to be classified as maintained.

Question 10

Describe the time limit for making an application under the IPFDA 1975

Answer 10

An application cannot be made more than six months after the date the grant of representation was made.

Question 11

Explain the significance of checking the online search service regularly.

Answer 11

Checking the online search service regularly is important to determine if a grant has been issued, especially if the person died within the last six months.

Question 12

Describe the Court’s discretion regarding time limits for making a claim.

Answer 12

The Court has the discretion to extend the time limit for making a claim, as established in cases like Re Salmon and Re Dennis.

Question 13

What must an applicant show to exceed the time limit for a claim?

Answer 13

The applicant must show special reasons for having exceeded the time limit.

Question 14

List the factors the Court considers when deciding to extend time limits.

Answer 14

The Court considers the circumstances surrounding the delay, whether negotiations were commenced within the time limit, if the estate had already been distributed before notification of the claim, and whether refusing the application would leave the applicant without recourse.

Question 15

Describe the types of orders that the court can make under Section 2(1) of the IPFDA 1975.

Answer 15

The court can make the following orders: periodical payments, lump sum, transfer of property, settlement of property, acquisition of property for transfer, variation of marriage settlements, variation of civil partnership settlements, and variation of the trusts on which the deceased’s estate is held.

Question 16

To what property does IPFDA apply

Answer 16

The net estate which is:

• The normal succession estate.

• Any property in respect of which the deceased held a general power of appointment which has not been exercised.

• Any property which the deceased nominated by statutory nomination or gave by donatio mortis causa (minus any inheritance tax paid by the donee)(ss 8(1) and (2)).

• The deceased’s severable share of a joint tenancy. This is only part of the net estate if so ordered by the court under s 9.

• Any other property disposed of during the deceased’s life but which is made available by the court’s anti-avoidance powers under ss 10 and 11

Question 17

Describe the two-stage test for IPFDA 1975 claims.

Answer 17

The two-stage test requires the court to first determine if the deceased failed to make reasonable financial provision for the applicant, and if so, to decide what award the court should make.

Question 18

How does the court approach the assessment of reasonable financial provision?

Answer 18

The court conducts an objective assessment and does not consider the moral implications of how the deceased disposed of their estate.

Question 19

Describe the surviving spouse standard of financial provision.

Answer 19

It refers to the reasonable financial provision that a husband, wife, or civil partner should receive, regardless of whether that provision is necessary for their maintenance.

Question 20

Describe the conditions under which the court can apply the surviving spouse standard.

Answer 20

The court can apply the surviving spouse standard if all the below is met:

1. The applicant is a former spouse or civil partner of the deceased who has not remarried or is a spouse judicially separated from the deceased;
2. The divorce, dissolution, nullity, or judicial separation occurred within 12 months of the death;
3. No order for financial provision has been made or refused in the ancillary proceedings. ( which is the range of financial orders a court may make upon divorce)

Question 21

Define the maintenance standard

Answer 21

The maintenance standard requires an assessment of what is reasonable for an applicant to live on, rather than reflecting the actual standard of living enjoyed during the deceased’s lifetime.

Question 22

Describe the factors the court must consider under section 3(1) regarding an applicant’s financial situation.

Answer 22

The court must consider the applicant’s financial resources and needs, the financial resources and needs of other applicants, the financial resources and needs of any beneficiaries, any obligations the deceased had towards applicants or beneficiaries, the size and nature of the deceased’s net estate, any physical or mental disabilities of applicants or beneficiaries, and any other relevant matters.

Question 23

Describe the factors the court considers regarding spouses or civil partners under section 3(2).

Answer 23

The court considers the applicant’s age and the duration of the marriage or civil partnership, the contribution made by the applicant to the welfare of the family of the deceased, and the provision the applicant might reasonably have expected to receive in divorce or dissolution proceedings.

Question 24

Explain the specific guidelines for applicants who are children of the deceased under section 3(3).

Answer 24

The specific guidelines state that the court must consider the education or training expectations of the applicant.

Question 25

What must the court assess regarding the deceased’s contributions to an applicant treated as a child?

Answer 25

The court must assess the basis on which the deceased maintained the applicant and the extent of their contributions.

Question 26

What factors must the court consider regarding the deceased’s responsibility for maintenance?

Answer 26

The court must consider the length of time the deceased maintained the applicant, the basis of that maintenance, the extent of the contribution, and whether the deceased assumed responsibility for the applicant’s maintenance.

Question 27

List the types of financial awards that can be determined in a claim assessment.

Answer 27

Financial awards can include periodical payments, lump sums, transfer of property, settlement of property, acquisition of property for transfer, and variations of existing settlements.

Question 28

What might motivate an applicant to seek a life interest instead of a capital interest?

Answer 28

An applicant may seek a life interest to maintain residence in the family home owned by the deceased.

Question 29

Explain what happens if a beneficiary does not wish to keep their inheritance.

Answer 29

If a beneficiary does not wish to keep their inheritance, they can give it away as they see fit after the administration of the deceased’s estate.

Question 30

Describe the potential tax consequences for a beneficiary who gives away their inheritance.

Answer 30

The beneficiary may face adverse inheritance tax (IHT) and capital gains tax (CGT) consequences.

Question 31

Summarize the relationship between inheritance tax and the timing of a gift.

Answer 31

The timing of a gift is crucial; if the original beneficiary dies within 7 years of the gift, it triggers potential inheritance tax implications.

Question 32

Describe the process that allows changes to be made to estate distribution after death.

Answer 32

Changes can be made through variation, disclaimer, precatory trust, court order under the Inheritance (Provision for Family and Dependants) Act 1975, or capital distributions from some will trusts within 2 years of death.

Question 33

How can a disclaimer affect estate distribution after death?

Answer 33

A disclaimer allows a beneficiary to refuse their inheritance, which can lead to a redistribution of the estate.

Question 34

What is a precatory trust and how does it relate to estate distribution?

Answer 34

A precatory trust is a type of trust that expresses a wish or hope regarding the distribution of assets, which can influence how an estate is managed after death.

Question 35

Define a variation in the context of inheritance.

Answer 35

A variation is a direction from an original beneficiary to the deceased’s personal representatives to transfer property that the beneficiary is entitled to under a will or intestacy rules to another person.

Question 36

How does a variation affect the original beneficiary’s concerns regarding the seven-year rule for PETs?

Answer 36

With a variation, the original beneficiary does not need to worry about surviving seven years from the date of the gift.

Question 37

What happens to the IHT calculation on the deceased’s death estate when a gift is varied under s.142 IHTA?

Answer 37

The IHT due on the deceased’s death estate is recalculated as if the deceased had left the property directly to the new beneficiary.

Question 38

Describe the conditions required for a variation to achieve the IHT ‘writing-back’ effect.

Answer 38

A variation must be made by the original beneficiary in writing, within two years following the deceased’s death, contain an express statement confirming that s. 142 should apply, and not be made for consideration in money or money’s worth.

Question 39

Describe the process a beneficiary must follow to vary their entitlement to estate assets.

Answer 39

A beneficiary can vary their entitlement to the estate assets without approval from the PRs of the deceased’s estate. However, if the variation results in additional IHT being due, the PRs must sign the variation, provide HMRC with a copy of the written variation, and pay the amount due.

Question 40

How can PRs refuse to sign a variation of entitlement to estate assets?

Answer 40

PRs can only refuse to sign the variation or approve the ‘writing back’ under s.142 if the assets held by them are insufficient to discharge the additional tax payable.

Question 41

Explain the tax implications when D varies their entitlement to make a charitable gift from A’s estate.

Answer 41

D’s variation to make a charitable gift of £50,000 allows A’s estate to qualify for charity exemption, reducing the IHT due and enabling A’s PRs to claim a refund.

Question 42

Define the writing-back effect in the context of CGT

Answer 42

The writing-back effect allows a gift made by an estate beneficiary to be treated as if it was made by the deceased at the date of death, thus avoiding CGT implications for the beneficiary.

Question 43

What is the CGT implication for gifts of cash in the context of variations?

Answer 43

Gifts of cash are exempt from CGT, so the CGT consequences only need to be considered where non-cash assets are the subject of the variation.

Question 44

Describe the implications of a minor or someone lacking mental capacity wanting to vary a trust.

Answer 44

They cannot make a variation without the consent of the court under the Variation of Trusts Act 1958, and such applications are expensive and time-consuming.

Question 45

How many times can a will be varied?

Answer 45

There is no limit to the number of times a will can be varied, but each asset can only be varied once.

Question 46

Identify property that cannot be varied after death.

Answer 46

Property in respect of which the deceased was a life tenant immediately before death cannot be varied.

Question 47

What happens to property with a gift with reservation of benefit after death?

Answer 47

This property cannot be varied post-death as the deceased was not the legal owner of these assets.

Question 48

Describe the limitations of disclaimers.

Answer 48

A beneficiary can only disclaim before acceptance, can only disclaim the whole gift, and a disclaimer does not affect their rights under intestacy that may arise from disclaiming their testamentary inheritance.

Question 49

How does a disclaimer affect the distribution of assets?

Answer 49

The inheritance passes as if the gift to the original beneficiary had failed, with the ultimate destination determined by provisions in the will or intestacy rules.

Question 50

What happens to the rights of a beneficiary who disclaims their inheritance?

Answer 50

The original beneficiary cannot control who receives the assets they disclaim.

Question 51

Define a precatory trust.

Answer 51

A precatory trust arises when a gift is made to a beneficiary by will, accompanied by a wish expressed on how the beneficiary should pass on those assets to others.

Question 52

Describe the nature of trust in the context of precatory trusts.

Answer 52

In the context of precatory trusts, the term ‘trust’ is misleading as no formal trust is created due to the absence of intention, meaning the testator’s wishes are not binding on the beneficiary.

Question 53

How do precatory trusts provide flexibility regarding gifts of chattels?

Answer 53

Precatory trusts allow flexibility because the testator can change their mind and update the letter of wishes without needing to amend their will.

Question 54

Provide an example of a statement that could create a precatory trust.

Answer 54

An example of a statement that could create a precatory trust is: ‘I give my gold rings stored in the safe in my bedroom to my daughter with the hope that she distributes these according to the letter of wishes I have left with this will.’

Question 55

How does section 143 of the IHTA affect distributions made by the original beneficiary under a precatory trust?

Answer 55

Section 143 of the IHTA allows distributions made by the original beneficiary within 2 years of the testator’s death to be treated as gifts made by the testator’s will, rather than by the original beneficiary.

Question 56

Explain the impact of section 143 on Potentially Exempt Transfers (PET) in the context of a precatory trust.

Answer 56

The impact of section 143 is that the original beneficiary is not considered to have made a Potentially Exempt Transfer (PET) of the items distributed under a precatory trust, which would otherwise apply.

Question 57

Describe the difference between a precatory trust and variations or disclaimers regarding written elections for IHT purposes.

Answer 57

Unlike variations and disclaimers, a precatory trust does not require a written election for the IHT treatment to apply; the writing back effect happens automatically.