personal representatives and trustees in the administration of estates and consequent trusts. The rights, powers and remedies of beneficiaries of wills and consequent trusts Flashcards
What is the consequence of a beneficiary (or their spouse) acting as a witness to execution of the testator’s will?
They are no longer entitled to any gifts under the will (Wills Act)
What presumption does a properly constructed attestation clause give rise to?
Presumption of due execution in line with s.9 Wills Act
Are burial and funeral wishes legally binding on personal representatives?
NO
What pre-grant duties are owed by PRs?
1) Dispose of the deceased’s body
2) Provide information to HMRC and pay IHT
What duties does a PR owe UNDER a grant of representation?
1) Collect + administer succession estate
2) Estate account
3) Due diligence + reasonable time
4) Act within powers
5) Statutory DoC
6) Fiduciary duties
What can beneficiaries/creditors do if a PR refuses to show estate accounts or fails to maintain adequate records?
They can apply to court under NCPR for an order to produce one
How long should a PR take to administer an estate?
12 months from the date of death (‘executor’s year’)
What is the consequence of exceeding the ‘executor’s year’?
Not necessarily a breach, but PRs must justify any delay
Does a PR have any liability to unknown creditors/beneficiaries who come to light AFTER administration is completed?
YES - personal
When do PRs owe a statutory duty of care?
When exercising their powers to invest, delegate, insure and to purchase land
What fiduciary duties are owed by PRs and trustees?
1) No conflicts
2) No self-dealing
3) No profit
Which PRs owe a higher standard of care under the statutory duty of care under a grant?
Professional PRs and those with special knowledge (implied or actual)
Can PRs purchase estate assets for themselves?
NO - breach of fiduciary duty (self-dealing)
Can PRs purchase estate assets for themselves if they are paying a fair market value?
NO - still self-dealing
Can a PR’s statutory powers of administration be excluded/modified by a will?
YES
Do the powers for ‘trustees’ under the Trustee Act and TOLATA also apply to PRs?
YES
What 7 statutory powers to PRs have?
1) Sell/charge/lease
2) Appropriate
3) Insure
4) Invest
5) Charge
6) Delegate
7) Appoint trustees
Which assets can PRs choose to appropriate to beneficiaries in settlement of their entitlement?
Any residuary assets, provided their value on the date of appropriation doesn’t exceed the beneficiary’s entitlement
If the value of an asset requested by/appropriated to a beneficiary is less than the value of their entitlement, can they claim the remainder of their entitlement?
YES - a balancing cash transfer must be paid
What are the requirements for a PR to be able to appropriate a specifically requested asset to a beneficiary, e.g. a watch?
1) Consent of the receiving beneficiary
2) Not specifically gifted
3) Same/lower value on date of appropriation
How can PRs pay for insurance premiums on estate assets?
By using estate assets
When should PRs exercise their power to invest?
If it is likely that the administration will take some time
What land can PRs/trustees acquire under their power of investment?
Only freehold/leasehold land in the UK
What duties does a PR/trustee owe under the power of investment?
1) Regard to standard investment criteria
2) Regular review
3) Obtain advice
What is required for a professional PR to be able to charge for their services?
1) Reasonable remuneration
2) Not acting alone
3) Co-PRs give written consent
Which PRs require express power in a will if they are to charge for their services?
Lay PRs and professional PRs acting alone
Can PRs reimburse for expenses out of the estate?
YES (although only expenses properly incurred e.g. travel)
Can PRs claim reimbursements from the estate if they have had to turn down work to carry out their role?
NO
Which decisions can PRs NOT delegate under their statutory power to delegate?
1) How and whether assets should be distributed
2) Whether fees/costs payable out of income or capital
3) Appointment of trustees/nominees/custodians
Can PRs delegate their role to a beneficiary?
NO
What is the procedure for delegating PR powers?
1) In writing to the agent
2) Written policy statement agreed by agent
3) Regular review
When might a PR exercise their power to appoint a trustee, if at all?
If the beneficiary is a minor and the PR doesn’t want to be a trustee themselves
Can PRs ever accept receipt from a minor beneficiary?
YES - if expressly provided for in the will and the minor is 16+
What additional common law power does a PR have if the deceased was a sole trader?
To sell the business as a going concern within a year of death
Where will a PR’s power to run a business be found (if at all) where the testator was a shareholder/partner?
In the shareholders’/partnership agreement
Can jointly appointed PRs usually act alone?
NO - they should act unanimously unless provided for in the will or lawfully using the power of sale/transfer
When can jointly-appointed PRs exercise powers alone?
If they are appointed by will and are lawfully using the power of sale or transfer (unless stocks and shares in PRs’ joint names)
Can PRs be liable for the breaches of co-PRs?
YES - if they didn’t make a reasonable effort to monitor their conduct
What is a devastavit?
A claim against a PR where their wrongdoing has caused loss
What claim may be available against a PR if there was no loss but they nonetheless breached a fiduciary duty?
Account of profits and/or transaction set aside
What 4 grounds can a claim against a PR be based on?
1) Maladministration
2) Misuse of assets
3) Negligence
4) Breach of fiduciary duties
What 2 ways can PRs effectively be removed for failure to carry out their duties properly?
1) Court order for replacement PR
2) Administration action
Can a PR be simultaneously liable for a breach of trust duty as well as PR duty?
YES - if they are a PR-trustee
How might a PR seek to protect themselves if they are unsure as to their obligations under a will?
1) Court direction; OR
2) s.48 AJA application (legal opinion)
What is the effect of a s.48 AJA application?
The will is distributed in accordance with a written legal opinion
What is a s.27 TA notice? When is it used?
A notice in the London Gazette/newspaper
in the relevant area/trade giving unknown creditors or beneficiaries 2 months to claim an entitlement
How might a PR seek to protect themselves against claims from unknown creditors/beneficiaries?
Seeking a s.27 TA application (2 months’ notice of distribution)
How might a PR seek to protect themselves against claims from known but missing creditors/beneficiaries?
1) Seeking a Benjamin Order
2) Presumption of Death Act (if presumed dead for 7+ years)
What is a Benjamin Order?
Protects PRs from claims against known but missing PRs, e.g. on the assumption that they have died/have no children
What must PRs do
Delegate in writing to the agent; provide them with a written policy statement which agent must agree to comply with
What must PRs do before a Benjamin Order is awarded?
1) Make full enquiries to establish the true position
2) Show there is no reasonable prospect of knowing the true position without disproportionate expense
How might a PR seek to protect themselves from claims against known beneficiaries/creditors, and/or from disappointed beneficiaries?
1) Insurance
2) Payment into court
3) Beneficiary indemnities
4) Exoneration under s.61 TA
5) Exemption clauses in the will
How might a PR seek to protect themselves against a beneficiary who has been located but refuses to accept their inheritance
1) Make a payment into court
2) Insurance
3) Beneficiary indemnities
How might a PR seek to protect themselves against claims from disappointed beneficiaries/creditors?
1) Insurance
2) Beneficiary indemnities
3) s.48 AJA(legal opinion)
4) Court directions
What is required for a PR to apply for total/partial exoneration from personal liability under s.61 Trustee Act?
1) Act honestly and reasonably
2) Ought fairly to be excused from breach and omitting to obtain court directions
What type claim might a creditor make if they are not paid, despite there being sufficient funds available to meet all debts/legacies?
Maladministration
Can a will limit PR liability for ALL/ANY type of breach?
NO - not for fraud or liability to creditors
Where should money collected in be paid into?
Either:
1) PR’s (separate) bank account
2) Law firm’s client money account
How long after death should creditors expect to be paid by?
12 months, i.e. executor’s year
What liability(ies) does a PR owe if they fail to pay any debts despite there being sufficient assets to do so?
Personal liabilities to both creditors and beneficiaries for any consequent loss
Can a PR’s liability to creditors be limited by an express provision in a will?
NO
A man has died leaving a will. Probate has been granted and, after six months, an interim distribution is made. The solicitor then notices that the will contains a clerical error which is detrimental to a beneficiary and applies for rectification.
are the PRs liable?
The personal representatives would not be personally liable, although the beneficiary may be able to recover money or property from other beneficiaries if necessary.
