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Wills and the Administration of Estates > Overview > Flashcards

Overview Flashcards

1
Q

How does a person’s property pass when they die ?

A

Either by will or by intestate succession

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2
Q

What is intestate succession?

A

The statutory method of distributing assets not passing under a will

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3
Q

Who settles a deceased person’s estate?

A

A personal representative

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4
Q

What are a personal representative’s responsibilities?

A

Include:
i. obtaining a grant of representation,
ii. paying all debts and liabilities (including IHT), and
iii. transferring the assets to the beneficiaries

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5
Q

What is needed for a valid will?

A

The testator must have
i. had legal and mental capacity at the time time will was made,
ii. intended to make a will, and
iii. executed the will in accordance with certain formalities, including how it was signed and witnessed

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6
Q

What is needed for a testator to have had mental capacity?

A

The testator must have understood, at the time of execution of their will:
i. the nature of the act (they were making a will and its effects),
ii. the extent of their property, and
iii. the claims to which they ought to give effect

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7
Q

What are the types of intention a testator needs for a will to be valid?

A
  1. General intention to make a will, and
  2. Specific intention to make the particular will.
    - incudes the testator having known and approved the will’s contents
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8
Q

What is the presumption re capacity, knowledge and approval?

A

There is a general rebuttable presumption that the testator had capacity, knowledge and approval.

However, a will made under force, fear, fraud or undue influence can be invalidated.

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9
Q

What formalities must a will comply with to be valid?

A

The will must be:
1. In writing,
2. Signed by the testator or by some other person in the testator’s presence and by their direction,
3. Signed or acknowledged by the testator in the presence of 2 or more witnesses present at the same time, and
4. Signed by each witness in the presence of the testator.

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10
Q

When are changes to a will valid?

A

If changes are made on a will document, they are valid if they were made before the will’s execution.

Evidence is required to prove that an alteration was made prior to execution.

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11
Q

How can a will be altered after it has been executed?

A

Through use of a brief document called a codicil

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12
Q

What does a codicil do?

A

It amends or partially revokes an existing will.

It must be executed with the same formalities as a will.

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13
Q

How can a will be revoked?

A

By law or by the act of the testator
- Marriage
- Express clause in later will
- Physical destruction

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14
Q

What effect does marriage have on a will?

A

Revokes a will by law in most circumstances.

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15
Q

What effect does divorce have on a will?

A

Doesn’t usually revoke the entire will by law, just the gifts to the former spouse.

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16
Q

What are gifts in a will called?

A

‘Legacies’

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17
Q

What are the types of ways a legacy can fail?

A

They can ‘adeem’ or ‘lapse’

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18
Q

What happens if a beneficiary fails to survive the testator?

A

Ordinarily, the gift will fail

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19
Q

What happens if a beneficiary who was issue of the testator fails to survive the testator?

A

Special rules apply.

Those gifts will not fail - instead the gift will pass down the line to the next generation.

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20
Q

When does a class close if gifts have been made to a class of beneficiaries?

A

Generally, a class closes when at least 1 beneficiary has a vested interest.

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21
Q

When does a person have a vested interest?

A

When the conditions in the will entitling the person to the gift have been met + no provision in the will can effectively take the gift away.

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22
Q

How does property owned in joint tenancy pass?

A

Automatically passes to the surviving joint tenant(s).
A provision in a will to the contrary has no effect.

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23
Q

How do life assurance proceeds pass?

A

To a beneficiary named in the life assurance policy + are unaffected by any provision in a will to the contrary.

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24
Q

When are administrators needed?

A

When there is no will or when there is a will but no executor able or willing to act.

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25
Q

When can a person appointed as ‘executor’ renounce their role?

A

They are not obliged to act.
Can renounce their role provided that they haven’t already taken any action in relation to the deceased’s estate.

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26
Q

What does it mean if an executor applies for ‘power to be reserved’?

A

They can step in at a later date, if required

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27
Q

Who deals with non-contentious probate?

A

It is overseen by His Majesty’s Court and Tribunals Service (HMCTS).

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28
Q

Who deals with the matter if the probate is contentious?

A

The Chancery Division of the High Court

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29
Q

What is a grant of representation?

A

An order of the High Court giving 1 or more persons the legal authority to administer the estate of the deceased.

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30
Q

What are the common types of grant of representation?

A
  1. Grant of probate
  2. Grant of letters of administration with will annexed
  3. Grant of letters of administration
31
Q

When will an application be made for a grant of probate?

A

If the deceased left a valid will that appoints executors who are willing to act

32
Q

When will an application be made for a grant of letters of administration with will annexed?

A

If the deceased left a valid will but there are no executors willing and able to apply for a grant of probate

33
Q

When will an application be made for a grant of letters of administration?

A

If the deceased does not leave a valid will

34
Q

What is the order of entitlement for a grant of letters of administration with will annexed?

A

Order is set out by statute.

The individuals entitled to a grant include the trustee of the residuary estate + any other residuary beneficiary.

35
Q

What is the order of entitlement for a grant of letters of administration?

A

Order is set out by statute.

The order of entitlement begins with the surviving spouse and then moves on to the children of the deceased and then other relatives.

36
Q

What does a grant of representation do in addition to giving the PRs legal authority to deal with the deceased’s estate?

A

It establishes the validity of the will or whether the deceased died without making a will.

37
Q

When does authority for executors exist from?

A

Date of death when there is a grant of probate.

They can, in theory, act from that date.

38
Q

When does authority for administrators exist from?

A

Only from once the grant is obtained

39
Q

What is a grant of administration de bonis non?

A

It is a second grant made to allow the completion of the administration of the deceased’s estate after the death of the sole or last surviving personal representative.

It may also be granted when a previous grant has been revoked.

40
Q

When is a grant de bonis non not necessary?

A

When a ‘chain of representation’ exists.

41
Q

When does a chain of representation exist?

A

When a sole of last surviving executor of estate 1 dies and that executor’s executor takes a grant of probate as to estate 2.

By taking a grant of probate for estate 2, the executor automatically becomes the executor of estate 1.

42
Q

What is the circular problem that arises in pre-grant procedure?

A

Any IHT due on the estate has to be paid to obtain a grant.

However, to pay the tax, the PRs may need to access and sell assets in the estate.

But to do that, they need a grant of representation.

43
Q

What options does a PR have to pay IHT?

A

One option is a process by which bank account funds can be paid directly to HMRC.

Other options including borrowing from a bank or even from beneficiaries.

44
Q

How do you apply for a grant?

A

Application for a grant is made via the appropriate form.

Completed forms + other required papers (including any will and the death certificate) are sent to HMCTS Probate Service.

If all is in order, the grant is prepared + sealed by the court.

45
Q

If further evidence is required by the court before issuing a grant, what might this include?

A

Can include evidence of due execution of the will, or knowledge and approval of its contents, or about the condition of the will.

46
Q

How can individuals prevent the issue of a grant of representation?

A

Individuals can register a caveat - e.g., if the executor named in the will lacks mental capacity to act or the applicant believes the will to be invalid.

If the matter cannot be resolved, the court may determine the issue.

47
Q

What is a citation to take probate?

A

May be used when an executor has lost their right to renounce probate by intermeddling in the estate but hasn’t applied for a grant and doesn’t intend to do so.

Once cited by HMCTS Probate Service, the executor must proceed with an application for a grant of probate.

48
Q

What is an ‘excepted estate’?

A

An estate that owes no ITH

No formal account has to be filed unless HMRC request one.

49
Q

What duties do PRs have?

A

Statutory duty to collect the deceased’s assets + pay off debts and legacies, and then distribute the residue per the will or intestacy rules.

50
Q

When are PRs personally liable to any unpaid beneficiary or creditor?

A

They are personally liable even if not known when distribution is made, unless they place adverts in the London Gazette, a local newspaper, and any other appropriate newspaper.

51
Q

What options do PRs have if they cannot find a known beneficiary or creditor?

A

They have various options, including:
1. Payment into the court,
2. Distributing the estate with an indemnity from the beneficiaries,
3. Seeking a court order giving leave to distribute the estate, and
4. Purchasing insurance against the risk of a missing claimant appearing.

52
Q

How long should PRs wait to distribute the estate?
Why?

A

They should wait to distribute the estate until 6 months have passed from the issue of the grant to protect themselves for a claim from an applicant who claims they have not been reasonably provided for.

53
Q

What happens if the estate is insolvent?

A

The applicable law for payment of debts must be followed.

The law sets out the order in which debts must be paid.

In insolvent estates, secured creditors enjoy priority over unsecured creditors.
Beneficiaries will receive nothing.

54
Q

What are the 2 methods by which changes can be made to the dispositions of an estate after the deceased’s death?

A
  1. A variation
  2. A disclaimer
55
Q

What is a disclaimer?

A

Allows a beneficiary to reject a gift.
It then falls into the residue.

56
Q

What is a variation?

A

Allows a beneficiary to reject a gift and control who receives it.
It is possible to ‘read back’ the variation to the date of death for tax reasons.

57
Q

What happens if the assets of a deceased person are insufficient to fully satisfy all the creditors?

A

Their debts must ‘abate’ proportionately + the creditors must accept a lower value in satisfaction of the debt.

58
Q

What happens when the estate’s assets are insufficient to pay all the legacies in full?

A

The legacies abate in proportion

59
Q

What will PRs take account of before determining the residue to be distributed?

A

Tax issues
A corrective account (which must be filed when the initial IHT paid on the estate was incorrect)
Reasonable funeral expenses
Professional and legal costs
PRs’ own remuneration if they are acting in a professional capacity.

60
Q

How do PRs show what is available to the residuary beneficiaries?

A

They prepare estate accounts

61
Q

When does an assent occur?

A

When the PRs acknowledge they don’t require an asset for the purposes of administration + transfer it to a beneficiary.

62
Q

What is an assent?

A

It relates back to the date of death.

An assent of land must be given in writing, be signed by the PRs, and name the person in whose favour it is given.

63
Q

How do assents work in relation to land?

A

Purchasers are given protection when buying land from PRs or from beneficiaries who have been given an assent.

64
Q

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

A

An application for a family provision may be made to the court to set aside the terms of a will (or vary an intestacy) on the grounds that reasonable financial provision has not been made for the applicant.

65
Q

What is needed to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975?

A

The applicant must be a surviving spouse or civil partner,
A child of the deceased, or
A person treated as a child of the deceased,
A person who was being maintained by the deceased, or
A person who was living with the deceased during the 2 years before their death

66
Q

If a person is eligible to make a claim under the Inheritance (Provision for Family and Dependants) Act 1975, what is the process for determining what constitutes reasonable financial provisions?

A

Two-fold.

  1. Proving the will or intestacy rules failed to make reasonable financial provision for the applicant, and
  2. Proving what a reasonable financial provision would be.
67
Q

Inheritance (Provision for Family and Dependants) Act 1975 - what will the court consider when determining what is ‘reasonable’?

A

The financial resources + needs of the applicant,
The size and nature of the deceased’s estate,
Any moral obligation of the deceased to the applicant.

68
Q

If the court approves an application under the Inheritance (Provision for Family and Dependants) Act 1975, what can the court order?

A

The transfer of property
Payment of a lump sum or income, and
The settlement of property on trust for the applicant.

69
Q

What categories do lifetime transfers fall into for IHT purposes?

A
  1. Exempt transfers
  2. Potentially exempt transfers
  3. Chargeable lifetime transfers
70
Q

What are exempt transfers? (IHT)

A

Those that aren’t subject to IHT, such as:
i. gifts to spouses,
ii. charities,
iii. small gifts up to £250

71
Q

What are potentially exempt transfers? (IHT)

A

Gifts from one person to another that are exempt from IHT when made, but may become chargeable if the donor dies within 7 years of the transfer

72
Q

What are chargeable lifetime transfers? (IHT)

A

CLTs are immediately chargeable to IHT if they are in excess of the nil rate band, which is the amount that is taxed at 0% (£0 to £325,000).

73
Q

What is the tax rate on CLTs?

A

Taxed at 20% if the tax is paid out of trust funds by the trustees, or
25% if the donor pays the tax.

74
Q

In addition to IHT, what tax returns must PRs submit to HMRC>

A

Must submit a complete tax return for income tax and capital gains tax owed by the deceased for the period covering April 6 to the date of death.

Tax return for income and capital gains that accrue to them during the period of administration (e.g., rental property that generates income or profits from the sale of estate property).

Wills and the Administration of Estates (23 decks)

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