Making a will and dying intestate

Question 1

Making a valid will

Answer 1

• Aged 18 or over
• Of sound mind
• Under no pressure
• In writing
• Signed by the testator and two independent witnesses

Question 2

Duties of executors

Answer 2

• Determine the assets and liabilities of the estate
• Collect the assets of the estate and pay the debts of the deceased
• Settle any tax liabilities
• Complete the necessary accounts
• Obtain probate
• Distribute the estate in accordance with the will

Question 3

Benefits of a will v dying intestate

Answer 3

• Laws of intestacy don’t cater for deceased’s wishes
• Non-married partner has no rights in intestacy
• Not tax efficient
• No instructions for care/custody of minor children

Question 4

Deed of variation conditions

Answer 4

• The deed must refer to the will being varied and be signed by all those who might have benefited
• Must be executed within two years of death
• Must contain a statement that the variation is to have effect for IHT as if the deceased had made it
• Must be signed by all the persons making the variation
• Where the
  variation increases the IHT payable it must also be signed by the personal
  representatives
• Must be for no consideration
• Not a transfer of value from beneficiary

Question 5

Disclaimers

Answer 5

• Where a person legally renounces their entitlement to property
• Must be disclaimed in writing within 2 years of death
• No consideration
• Must contain a statement that the disclaimer is to have effect for IHT
• Not a transfer of value
• Back into estate, no choice who benefits

Question 6

Life events and wills

Answer 6

• Marriage revokes a previous will
• Appointment of a spouse as an executor is cancelled by subsequent divorce
• Divorce cancels any benefit to an ex-spouse (but the will continues)
• Death of beneficiary means their entitlement is redistributed amongst residual beneficiaries

Question 7

Challenging a will

Answer 7

• Application for reasonable provision from the estate
• Under Inheritance (Provision for Family and Dependants) Act 1975

Question 8

Income Tax on death

Answer 8

• Income received up to the date of death: taxed in usual way on deceased (allowances can be used)
• Income received after death: all income taxed at the basic rate of 8.75% or 20% (no allowances can be used)

Question 9

Capital Gains Tax on death

Answer 9

• Personal representatives liable to CGT at 20% on capital gains made by estate during administration period
• Residential property is taxed at 28%
• Only payable on post-death gains as personal representatives are deemed to acquire the asset at market value on death
• Estate entitled to £12,300 annual exemption for year of death and following 2 years