PAYMENT OF LEGACIES Flashcards

1
Q

PAYMENT OF LEGACIES

A

Having paid of the debts of the deceased, plus funeral and other administrative expenses, the PRs can give effect to the various gifts made by the will.

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2
Q

SPECIFIC LEGACIES AND DEVISES

A

The methods the PRs must use to vest such gifts in the benefciaries vary depending on the type of property being transferred. The procedures are as follows:
*Chattels—Transfer is achieved by delivery, in return for a receipt. Insurance should be cancelled.
*Company shares—A stock transfer form should be com-pleted and sent with an office copy of the grant and the share certifcate.
*Land—Transfer requires an assent in writing. Insurance should be cancelled. The benefciary needs to register their interest at HM Land Registry.

Any costs of transfer are born by the benefciary unless the will says otherwise. The benefciaries are entitled to income arising since the deceased’s death.

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3
Q

PECUNIARY LEGACIES

A
  1. The will usually states the source from which pecuniary leg-acies should be paid—it is normally the residue. In practice, the procedure used for payment of unsecured debts is also used for paying pecuniary legacies. For example, the residue may be left “subject to” or “after payment of” the “debts and legacies”, or on trust for sale with payment out of the pro-ceeds of “debts and legacies” before division.
  2. Pecuniary legacies carry interest (at the basic rate allowed on funds in court) if not paid by the due date. They are normally due within 12 months after the testator’s death (‘the executors’ year’).
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4
Q

ABATEMENT

A
  1. Abatement of debts and legacies is a common law doc-trine of wills that holds that when the assets of a deceased person are not sufficient to satisfy fully all the creditors, their debts must abate (or reduce)proportionately, and the creditor must accept a lower value in satisfaction of the debt.
  2. In the case of legacies, when the funds or assets out of which they are payable are not sufficient to pay them in full, the legacies abate in proportion—unless there is a priority given specially to any particular legacy.
  3. Annuities are also subject to the same rule as general legacies. If the fund to pay pecu-niary legacies is insufcient, the legacies will abate (reduce)proportionately.
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5
Q

APPROPRIATION

A

A benefciary can ask the PRs to use a particular asset to sat-isfy a pecuniary legacy. This is ‘appropriation’

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6
Q

RECEIPTS

A
  1. The PRs will typically obtain a receipt from a benefciary to prove the PRs have satisfed their obligations.
  2. Minors (indi-viduals under age 18) cannot give a good receipt unless the will specifes otherwise.
    **
  3. In such cases, unless the PRs accept the alternative view that anyone with parental responsibility for the child can give a receipt, the PRs have the following options:
    *Hold the property until the child reaches age 18;
    *Use the power of appropriation, with the minor’s parent or guardian or the court giving any consent (this negates the need to retain the asset(s) until the child reaches age 18 and can save capital gains tax overall);
    *Appoint trustees to receive and hold the property until the child attains age 18; or
    *Obtain their discharge by payment of the legacy into court.
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7
Q
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