Powers of a PR Flashcards
What defines the powers of a PR?
Defined by statute and will/codicil. The powers conferred in a will take prioirty over statutory powers.
How do statutory powers apply to a will?
- intestate = statutory powers only
- with a will = statutory powers apply to the extent that they do not conflict with the will’s express provisions
What statutory powers exist for PRs?
- power to sell, charge or lease
- power to appropriate
- power to insure
- power to invest
- power to charge for services
- re-imbursement of expenses
- power to delegate
- power to appoint trustees
- power to accept receipt from parent
- power to run business
What is the power to sell, charge or lease?
PRs may need to do this ASAP to repay debts and loans to meet inheritance tax liability.
What does the power to appropriate allow PRs to do?
Decide which assets are used to meet liabilities.
The value of the asset must be considered at the date of transfer.
If the value of an asset exceeds a beneficiary’s entitlement, what must PRs consider?
It may not be appropriate to use that asset.
What is required if the value is less than a beneficiary’s entitlement?
Need a balancing cash transfer.
What does the power to insure entail?
PRs can insure assets with estate income or capital.
What is the duty associated with the power to invest?
Duty to preserve and invest if retaining assets. Normal trustee duties apply (can acquire land, must seek advice, must consider standard investment criteria and review investments)
Who can charge for services as PRs?
Only professional PRs can charge for their services as long as:
- they are not acting alone
- and their co-PRs give their written consent
What can all PRs reimburse themselves for?
Expenses properly incurred when acting on behalf of an estate.
What is the power to delegate?
PRs can employ agents and delegate powers, with exceptions:
- can’t delegate how and whether assets should be distribtued
- can’t delegate appointent of trustees
- can’t delegate whether fees/costs are payable from income/capital
What must PRs do when delegating powers?
Delegate in writing and provide a written policy statement.
Who can PRs not delegate to?
Cannot appoint a beneficiary as their agent.
What power do PRs have regarding trustees?
Power to appoint trustees - might be necessary as they cannot give legacies to minors.
What does the power to accept receipt from a parent entail?
A parent can provide good receipt unless the will states otherwise.
What is involved in the power to run a business?
PRs cannot let a business fail and may need to manage it according to shareholder agreements.
What can PRs do if the estate contains a sole trader business?
In case of sole traders, PRs can sell the business as a going concern within a year of death.
What is a requirement for accessing business assets?
PRs may only access assets in the business at the date of death.
What are express powers?
Many firms incorporate the STEP provisions into wills they prepare.
Can a joint PR act alone?
If multiple PRs exist, they are required to make decisions together and should exercise discretionary powers unanimously. However, they can sell or transfer assets individually other than stocks/shares.
What is Devastavit?
A claim against PR for breach of PR duties where there is loss to the estate because of PR wrongdoing.
What are the bases for PR liabilities?
- Maladministration
- Misuse of assets
- Negligence
- Breach of Fiduciary Duty
What constitutes Maladministration?
- Making distributions to the wrong beneficiaries
- Using residuary estate to meet liabilities which should have been paid from other parts of the estate
- Paying legacies before debts.
What constitutes Misuse of assets?
Making personal use of estate assets.
What constitutes Negligence?
- Unreasonable delay in administering estate
- Failing to invest/investing poorly.
What constitutes Breach of Fiduciary Duty?
- Acting as buyer and seller of assets
- Receiving unauthorised remuneration
- Self-dealing.
How can a PR be removed?
A court order under s50 AJA 1950 for replacement PR or an administration action where the court would take over administration.
