Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

SQE2 > Probate > Flashcards

Probate Flashcards

1
Q

What 3 kinds of asset pass outside the will?

A

a) Property held as joint tenants;
b) Life interests under a trust; and
c) Life assurance policies and pension funds held on trust with a nominated beneficiary.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What does a spouse receive in an intestacy scenario when there is surviving issue?

A

a) A statutory legacy of £270,000;
b) Personal chattels; and
c) Half the remaining estate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What do the issue receive in an intestacy scenario when there is a surviving spouse?

A

Half the remaining estate after the spouse’s entitlement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What do statutory trusts mean?

A

All members of the class’s issue take their parent’s entitlement if the parent predeceases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What division of the High Court manages contentious probate?

A

The Chancery Division.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What 2 classes of assets can be dealt with before receiving a grant of probate?

A

a) Amounts up to £5,000 held in premium savings bonds etc.; and
b) Personal chattels.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the order of entitlement in a scenario where the PR must apply for letters of administration with will annexed?

A

a) Trustee of the residuary estate;
b) Any other residuary beneficiaries;
c) PRs of the above; and
d) Any other beneficiaries or creditors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is required in the event that there are minor beneficiaries or a life interest in a trust in administration?

A

At least 2 administrators.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Do potential administrators lose their right to renounce by intermeddling?

A

No.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When does property vest in executors?

A

At the moment of death.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

When does property vest in administators?

A

Upon the grant of letters of administration.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the 5 options for funding any inheritance tax for the PRs?

A

a) Certain banks may release funds directly to HMRC;
b) Chattels & quoted shares;
c) A bank loan with an undertaking to the lender;
d) A loan from a beneficiary; and
e) Insurance policy payments if they go to the estate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the three requirements for a will to be valid?

A

a) The testator must have had capacity;
b) The testator must have intended to make a will; and
c) It must be executed properly.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does it mean for a will to be executed properly?

A

It must be signed and acknowledged by the testator in the presence of two witnesses who must also sign in the presence of the testator, although not necessarily in the presence of each other.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

When does a testator have capacity?

A

If they understand:
a) The nature of the act;
b) The extent of their property; and
c) The claims to which they ought to give effect.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Is capacity presumed?

A

Yes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What should someone do if they have concerns that the testator lacked capacity?

A

Lodge a caveat before the grant is issued.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How long does a caveat delay the grant of probate?

A

6 months.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Is intention to make a will presumed?

A

Yes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What two things can a claimant show in order for the will to be declared invalid because of lack of intention?

A

a) Duress; or
b) Undue influence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is undue influence?

A

Something that overpowers the will of the testator (i.e. intolerable pressure).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What raises the presumption that a will has been executed properly?

A

A well-drafted execution clause.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is ademption?

A

When the deceased no longer owns a specific gift, the gift adeems.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

When does a gift lapse?

A

When the intended beneficiary predeceases the testator.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What happens to a gift when it lapses or adeems?

A

It falls into the residual estate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

If someone is domiciled in the UK, what assets will be liable to inheritance tax?

A

All worldwide assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

If someone is not domiciled in the UK, what assets will be liable to inheritance tax?

A

All UK assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What 6 lifetime transfers are exempt from inheritance tax?

A

a) Gifts to UK-domiciled spouses;
b) Wedding gifts (to a limit);
c) £3000 per year annual exemption;
d) Small gifts of £250;
e) Normal expenditure out of income; and
f) Gifts to charities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Who pays the inheritance tax due on a potentially exempt transfer?

A

The recipient.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What is a potentially exempt transfer?

A

A lifetime transfer that is not covered by an exemption. It only becomes liable to inheritance tax if the donor dies within 7 years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What two gifts are always chargeable lifetime transfers?

A

a) Gifts to companies; and
b) Gifts to trusts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is a chargeable lifetime transfer?

A

A gift that is immediately liable for inheritance tax.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What can minimise CLT liability?

A

The nil rate band (£325,000).

34
Q

What is the tax rate on a CLT if the trustee pays?

A

20%.

35
Q

What is the tax rate on a CLT if the donor pays?

A

25%.

36
Q

In what 2 scenarios is 100% relief available for business relief?

A

a) The transfer of a sole trader interest or partnership interest; and
b) Shares in an unlisted trading company.

37
Q

In what 2 scenarios is 50% relief available for business relief?

A

a) Shares in a quoted trading company where the donor has voting control (i.e. over 50%); and
b) Land, buildings or plant and machinery owned by an individual and used by a partnership or company over which they have control.

38
Q

What must the business be to qualify for business relief?

A

A trading company.

39
Q

How long must the donor have owned the property to qualify for business relief?

A

2 years or more.

40
Q

To what does agricultural relief apply?

A

Agricultural land and property.

41
Q

Who are the two classes of people who qualify for agricultural relief?

A

a) Resident landowners of the agricultural property who have owned the land for more than 2 years; and
b) Landowners who rent the agricultural land out who have done so for more than 7 years.

42
Q

What percentage of an estate must be left to charity in order to qualify for the lower charity rate?

A

More than 10% of the net estate.

43
Q

At what rate is an estate that qualifies for the lower charity rate taxed?

A

36%.

44
Q

What is the residence nil rate band?

A

An additional nil rate band that is available if an estate includes a home that was used as the deceased’s private residence at some point.

45
Q

To whom must the residence be left to qualify for the residence nil rate band?

A

To lineal descendants only.

46
Q

What is the residence nil rate band limit?

A

£175,000.

47
Q

At what net value of the estate does the residence nil rate band begin to taper?

A

£2 million.

48
Q

What is a gift with reservation of benefit?

A

A gift by the deceased which they continue to benefit from after having given it away.

49
Q

How are gifts with reservation of benefit treated?

A

As though they remained part of the estate.

50
Q

What are the 10 major powers PRs have?

A

a) The power to sell;
b) The power to appropriate;
c) The power to accept receipts for a minor’s property;
d) The power to insure;
e) The power to delegate;
f) The power to indemnify;
g) The power to run the deceased’s business to sell as a going concern;
h) The power to invest;
i) The power to maintain a minor; and
j) The power to advance capital.

51
Q

What is appropriation?

A

The use of an asset to satisfy a legacy or interest in the estate.

52
Q

What do the beneficiaries require to use the power of appropriation?

A

The beneficiary’s consent.

53
Q

Can the executors use the power of appropriation for themselves?

A

No, unless it is for cash.

54
Q

What can PRs do when the recipient is a minor?

A

They have the power to appoint trustees if the minor has a vested interest.

55
Q

What must PRs do if they delegate?

A

They must review the arrangements with agents.

56
Q

What does the Trustee Act 2000 allow PRs to do re investments?

A

They can make any kind of investment they could make if they were absolutely entitled to the assets.

57
Q

What are the two standard investment criteria?

A

a) The suitability of the investment; and
b) The need for diversification.

58
Q

What can PRs do in the event that a gift to a minor carries the right to intermediate income?

A

Apply the income for the maintenance, education, or benefit of the minor.

59
Q

What happens after a beneficiary with a contingent interest in an asset that carries the right to intermediate income turns 18?

A

They are entitled to the income. The accumulated income would be added to the capital.

60
Q

To whom can PRs advance capital?

A

Beneficiaries with a vested or contingent income in capital.

61
Q

Whose consent is required if the PRs want to advance capital to a beneficiary?

A

Anyone with a prior interest e.g. a life tenant.

62
Q

What kind of authority do joint PRs have?

A

Joint and several.

63
Q

For what two things must all PRs join together to sell?

A

a) Shares; and
b) Land.

64
Q

How can PRs protect themselves from unknown creditors?

A

By taking out advertisements in the London Gazette, a local newspaper and any other appropriate newspapers.

65
Q

What should the advertisement of death do when PRs are protecting themselves from unknown creditors?

A

It should invite the interested party to contact the solicitors within a minimum of two months.

66
Q

What two searches should PRs carry out?

A

a) Searches for land held for creditors; and
b) Bankruptcy search.

67
Q

What are the options if a PR cannot find a creditor?

A

a) Pay the money into court;
b) Distribute everything with an indemnity from the beneficiaries;
c) Seek a Benjamin Order; and
d) Purchase insurance.

68
Q

How long should the PRs wait from the issue of the grant before distributing the estate to protect themselves from claims under the Inheritance (Provision for Family and Dependents) Act 1975?

A

Six months from the date of the grant.

69
Q

What should the PRs’ priority be when first collecting and realising assets?

A

To realise sufficient funds to pay off any loan taken out to cover inheritance tax.

70
Q

What is a solvent estate?

A

An estate where the reasonable funeral, testamentary and administration expenses can be paid in full.

71
Q

How should a secured debt be discharged?

A

With the property against which it is secured.

72
Q

In what order should property be sold to pay creditors?

A

a) Property undisposed of by the will; and
b) Residue.

73
Q

What is the doctrine of marshalling?

A

A disappointed beneficiary can be compensated from the residue for their loss.

74
Q

What is the prescribed order of payment to creditors in an insolvent estate?

A

a) Reasonable funeral and administrative expenses;
b) Preferred debts;
c) Ordinary debts;
d) Interest on debts; and
e) Deferred debts.

75
Q

How must a beneficiary disclaim their inheritance to be effective for IHT and CGT purposes?

A

In writing.

76
Q

What is the advantage of a variation over a disclaimer?

A

A variation allows the intended beneficiary to choose the new recipient.

77
Q

What are the three requirements for a variation in order that it be effective for tax purposes i.e. as if it had been given to the new beneficiary?

A

a) In writing;
b) Made within 2 years of death; and
c) Not made for monetary consideration.

78
Q

How are costs of transfer borne when distributing land and chattels?

A

By the recipient.

79
Q

What happens to legacies when there are insufficient funds or assets to pay them to the beneficiaries?

A

They abate in proportion, unless priority is given.

80
Q

What can PRs do to get receipt when distributing assets to a minor?

A

a) Hold the property until the child reaches 18;
b) Use the power of appropriation;
c) Appoint trustees; or
d) Obtain discharge by paying legacy into court.

81
Q

What can PRs obtain from HMRC to discharge them from any inheritance tax liability?

A

A Certificate of Discharge.

SQE2 (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions