Probate Flashcards
1
Q
For a will to be valid what is required?
A
The testator must have acted with an intention to make the particular will.
A challenger may prove lack of intention by showing the testator made the will as a result of duress (that is, as a consequence of force or a threat of force), due to fraud, or because of undue influence (meaning coercion or pressure overpowered the testator’s free will)
2
Q
What is the effect of destruction in a will?
A
A testator can revoke a will by intentionally destroying it.
Destruction of part of the will may result in a partial revocation or a complete revocation if a sufficiently substantial or vital part is destroyed e.g. page of will that includes signature and those of witnesses
3
Q
When a will is destroyed at the request of the testator, the testator must be present at the destruction in order for the revocation to take effect
A
4
Q
If a beneficiary has predeceased the testator, the gift to them will lapse (fail)
A
5
Q
What is a citation to accept or refuse a grant?
A
Is used to clear off a person with a prior right to a grant who has not applied for a grant and shows no intention of doing so.
6
Q
What is a caveat?
A
Used to stop the issue of a grant of probate
7
Q
A citation to take probate is used when the named executor has already lost their right to renounce probate, having intermeddled in the estate
A
8
Q
When hearing a claim under the Inheritance (Provision for Family and Dependants) Act 1975, the court will consider whether the will or intestacy has failed to make reasonable financial provision for the applicant.
In the case of unmarried partners, the standard applied is the financial provision required for the partner’s maintenance such that they can live decently and comfortably according to their situation
A
9
Q
Executors have the power of appropriation - they can use an alternative asset to satisfy legacy or interest in the estate, provided no specific beneficiary is affected.
A
10
Q
Unless the will provides otherwise, it is not permissible for a PR to make an appropriation in their own favour to satisfy a pecuniary legacy with an asset other than cash or the equivalent of cash, such as government stocks or quoted shares
A
11
Q
Is IHT charged on property held as joint tenants?
A
Yes - the notional half share is liable to IHT
12
Q
What is the value of the IHT estate?
A
Value of estate at death
13
Q
What is the IHT rate?
A
Anything over the nil rate band is taxed at 40%
14
Q
What is included in the deceaseds estate for IHT purposes?
A
Anything owned in sole name
Notional share of property owned in joint name i.e. 50%
Interest in life interest trust
15
Q
What assets pass under own rules of succession regardless of will?
A
Assets owned as beneficial joint tenants - pass automatically (survivorship)
Trust fund/assets
Life assurance policies pass to the beneficiary named in the policy under contract law
Death in service policies
National savings bank, friendly societies or national saving certificates through statutory written nomination e.g premium bonds
16
Q
What is a grant of representation?
A
A legal document which confirms a person’s right to administer the estate of a deceased person
17
Q
What are the types of grant of representation?
A
- Grant of probate (valid will appointing executor willing to act)
- Letter of administration with will annexed (will exists but problem with appointment of executor)
- Letter of administration (no will)
18
Q
What is the pre-grant procedure in probate?
A
IHT must be paid to obtain a grant
19
Q
How can PRs pay IHT prior to a grant of probate?
A
- Request bank releases funds directly to HMRC
- Loan from bank or beneficiary
- Sell estate assets that can be sold by showing death certificate
20
Q
What is required for the application for a grant of probate etc?
A
- Two copies of will
- Death certificate
- Tax form indicating no IHT or that IHT has been paid
- Court fees
21
Q
When is a caveat lodged?
A
If a beneficiary believes a will is invalid e.g. testator lack of capacity
22
Q
What is the effect of a caveat on probate?
A
Puts administration on hold for up to 6 months
23
Q
What is the effect of a citation?
A
An interested party can apply to ask for the Probate Registry to issue a citation to accept or refuse a grant to a person with a prior right who has not applies or shows no intention of applying
24
Q
What is the preferential order for who may apply for letters of administration with will annexed?
A
- Trustee of residuary estate
- Other residuary beneficiary
- PRs of any residuary beneficiary
- Any other beneficiary or creditor of estate
- PRs of the latter
25
What is the preferential order for who may apply for letter of administration?
1. Spouse
2. Children
3. Parents
4. Siblings
5. Grandparents
PRs of someone in the above list has equal entitlement
26
A person applying for letters of administration must clear off anyone with a higher entitlement to a grant by confirming in their application that such persons have renounced
27
How many personal representatives are required if there is a minor beneficiary?
2
28
When is a grant de bonis non made?
When the sole surviving **PR dies**
BUT not required if a PR dies and leaves a PR fo their own (chain of representation)
29
Can minors take a grant of representation?
No if minor is **only PR** - grant made to **minor's parents** until 18
Yes if there are multiple PRs, the grant will be made to the adult with **power reserved** for minor
30
What happens if a will doesn't have an attestation clause?
Affidavit of due execution required from witness or person present at time of execution of will
31
When must PRs file an inheritence account to HMRC?
Within **12 months** of death
**Interest accrues** from **6 months**
32
What is a small estate for IHT purposes?
Estate that doesn't exceed nil rate band (currently £325,000)
33
What is an exempt estate for IHT purposes?
Estate worth less than £3 million and net chargeable estate doesn't exceed nil rate band (currently £325,000)
34
What are the PRs duties?
1. Take reasonable steps to **preserve deceased's estate** and **realise investments**
2. Act in **best interests** of **beneficiaries**
3. Exercise reasonable **care and skill**
4. **Liable for losses** from **breach of duty**
5. **Not liable** for **breach** of duty of **another PR**
35
What are the PRs powers?
1. Power to **sell, mortgage or lease** property
2. Power to **invest** but it must be **suitable** for trust and investments should be **diversified**
4. Power to **appoint trustees** for **minor** beneficiaries
5. Power to **appropriate**: use an estate asset to satisfy a legacy or other interest in the estate provided **beneficiary consents**
6. Power to insure property of estate
7. Power to **apply income** for **maintenance, education or benefit** of **minor**
8. Power to **advance funds** to any beneficiary with a **vested or contingent interest** in **capital** of estate
9. Power to indemnify themselves (reimburse themselves) for expenses they incur on behalf of estate
10. Power to delegate duties to agents BUT are liable for breaches by agent if PR failed to use reasonable care in appointing agent
PRs DO NOT have power to continue carrying on deceased's sole business
36
What gifts made in the 7 years before the descendants death are exempt from IHT?
Gifts to **spouse**
Gifts to **charity**
Gifts of **£250 or less**
**Wedding gifts**
£5,000 - parents
£2,500 - grandparents/bride/groom
£1,000 - all others
**Annual exemption** of **£3,000** which can be carried forward to the next year = total £6,000
37
How to calculate IHT?
Deduct any reliefs and exemptions and then apply NRB - figure left is taxed at 40%
38
How long must a spouse survive a descendant to take under intestacy?
28 days
39
How many executors are required?
1
40
How many executors can be appointed?
Up to 4
41
If a deceased left no will, a person interested in serving as administrator applies for letters of administration
42
How is a will revoked?
1. Destruction by burning, tearing or otherwise destroying by testator or someone acting on testator's instructions in their presence
2. If a testator marries after executing a will
3. A **new will** revokes a previous will to the extent that is is **inconsistent with earlier will**
43
What is the doctrine of **dependent relative revocation**?
A **destroyed will** might be **given effect** if it's proved its destruction was **contingent on future event** that **didn't occur** e.g. the testator destroyed the old will intending to write a new one but wasn't able to
44
What is the presumption if a will is found mutilated after a testator's death?
Presumed to be mutilated by testator with intention to **revoke** unless evidence to the contrary
45
What happens if a testator divorces their spouse after executing their will?
Former spouse is treated as deceased
46
What is intestate succession?
**Statutory method** of **distributing assets** that are not disposed by will either because the deceased died without a valid will or because a valid will failed to distribute all of the deceased's estate
47
Who has the highest claim to the estate of a deceased who has died intestate?
Spouse IF the deceased left no issue
BUT they must survive deceased by 28 days to take under intestacy
48
If a deceased died intestate and left a spouse and issue what is their entitlement to the estate?
Spouse takes
1. All **tangible moveable property**, investment property e.g. stocks and property used for business BUT not money
2. **Statutory legacy** (fixed amount) of £322,000
3. **Half of remaining** estate
Issue take the remainder
BUT spouse can elect for PR to **transfer matrimonial home** in satisfaction of their entitlement BUT if it is worth more than entitlement then spouse must pay difference
49
If a deceased died intestate and had no spouse who inherits?
**Children**
BUT if child predeceases their parent but is survived by their own children, then the children taken on trust and split their parent's share i.e **grandchild if child deceased**
50
An **adopted** child is treated as a **child of whole blood** for the purposes of intestacy
51
What is the order of entitlement for intestacy?
Spouse
Children (or grandchildren if child predeceased)
Parents
Siblings of whole blood
Siblings of half blood
Grandparents
Uncles and aunts
Crown
52
If a deceased held property as a beneficial tenant in common or a beneficial sole owner how does the property pass?
In accordance with their will or the rules of intestacy
53
Who pays IHT?
PRs
54
How is IHT calculated?
1. Calculate net value of the estate (funeral expenses, debts and other liabilities are deducted)
2. Consider if any **gifts** have been made in the **last 7 years**. Reduce nil rate band by amount of PETs and CLTs
3. If any nil rate band remains deduct from net value of estate
4. Any exemptions? Gifts to spouse or charities are exempt
5. Any reliefs? Business or agricultural
5. Remaining amount taxed at 40% OR 36% if more than 10% of baseline amount is given to charity (baseline amount is the value of the estate after deducting all reliefs, exemptions and NRB excluding gift to charity)
55
What is the transferable NRB?
The **unused portion of a deceased spouses NRB** may be transferred up to an **additional 100%**
If survived more than one spouse can transfer all unused portions of NRB up to maximum uplift of 100%
56
What are the conditions of the residence NRB?
1. Used as deceased's **private residence**
2. Left to **lineal descendants** or spouses of such descendants e.g. **children, grandchildren** etc.
3. Estates with a net value of £2 million, the RNRB is tapered by £1 for every £2 over the limit
57
What is the RNRB?
£175,000
58
Can any unused RNRB be transferred and to who?
Yes between spouses
59
If a descendant downsized their home during their lifetime they can claim a **dowsizing addition** which uplifts the amount of RNRB based on the value of the earlier owned home
60
IHT: Gift with reservation of benefit
If a donor gives away an asset but continues to benefit, then the gift is treated as remaining in the donor's estate when they die BUT doesn't apply if donor pays the market value for use of gifted asset
61
Quick succession relief
Given when an estate was increased by a **gift** made to in the **5 years before death**
62
When is IHT due?
6 months from end of the month the descendant died
63
Can a matrimonial home pass to the spouse on death when the deceased died intestate?
Yes in part or full satisfaction of their entitlement to the estate
If spouse is entitled to less than the value of the property then they must pay the difference - a balancing payment
**PRs appropriate property** to spouse in satisfaction/part satisfaction of entitlement
64
What happens to assets owned jointly?
**Pass outside will** or rules of intestacy by survivorship e.g. property, joint bank account etc.
65
What is a personal representative?
People who administer the estate
Executor: administer estates under wills
Administrator: administer intestate estates
66
Who can be appointed as an executor?
Any person BUT a minor cannot administer an estate
67
What is the effect of marriage on a will?
The will is revoked
68
Can an executor renounce their right to a grant of probabte?
Yes IF they haven't already accepted office
69
How does an executor accept office?
By taking a **grant of probate** or by **intermeddling** in the estate by doing something that shows they've accepted office e.g. notifying deceased's bank of death
70
The office of executor is all or nothing an executor cannot accept some and renounce some
71
If a person renounces an appointment and is also a trustee of the estate, the renunciation doesn't affect their trusteeship
72
Where must renunciations be filed?
At the Probate Registry - usually by someone else seeking a grant of probate
73
Instead of **renouncing** an executor who doesn't wish to act can have **power reserved** which means they won't be involved for now but if circumstances change they can apply for grant of probate later
74
What court handles non-contentious probate matters?
Family Division of High Court
75
Which court handles contentious probate matters?
Chancery Division of High Court
OR
County court if estate below £350,000
76
Under the non-contentious probate rules a PR may be able to **obtain funds up to £5,000** held in National Savings Bank Accounts, National Savings Certificates, Premium Bonds or building societies by producing a **death certificate** - payments are at the discretion of the institution
77
Under the non-contentious probate rules a PR may be able to sell chattel by producing a death certificate e.g. furniture, jewellery, clothing, cars
78
**Title** to all of **testator's property vests** in the **executor** usually by **showing** the **written grant**
79
When is an **affidavit of due execution** required?
If an application for grant includes a will which doesn't include an attestation clause
Affidavit of due execution must be included from a witness or other person present when the will was executed to prove due execution
80
Do PRs have the power to continue carrying on deceased's sole business?
No - power must be given be provision in deceased's will
81
A sole trustee can give a **valid receipt** for the **proceeds of sale of land** BUT if there is **more than one PR** then they **must all join** for the **transfer of land** and shares in a business
82
If a gift to **minor** which includes **right to income** the PRs may apply the income for the **maintenance, education or benefit** of the minor otherwise the income must be **accumulated** until minor reaches 18. Once the beneficiary reaches 18 the **income added to capital**. If the gift still has a contingency the income will be paid to the beneficiary until the contingency is satisfied.
83
PRs may **advance funds** to a beneficairy with a **vested or contigent interest** in **capital** of estate.
The advance may be for up to the **entire presumptive share** of the beneficairy.
Anyone with a **prior life interest** in the funds must give **consent**
84
If an advance is made of a contingent gift and the contingency fails is the beneficiary required to pay back the advance?
No
85
PRs are personally liable to any unpaid beneficiary or creditor even if not known when a distribution was made UNLESS they place a notice in the London Gazette and wait 2 months before administering estate (s27 Trustee act 1925)
86
How can PRs protect themselves from unknown claims?
Place advert in London Gazette or a newspaper local to the area in which land forming part of the estate is situated requesting any interested person to contact the PRs solicitors within a minimum of 2 months
87
How can PRs protect themselves from a beneficiary or creditor they cannot find?
1. Make payments owed into the court and then distribute the rest of the estate
2. Distribute everything with an indemnity from the beneficiaries
3. Purchase insurance against risk of missing claimant appearing
4. Seek a Benjamin Order: a court order giving PRs leave to distribute the estate based on the assumption set out in the order e.g. the beneficiary treated as deceased
88
If a PR is worried about a possible claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975 what should they do?
Wait 6 months from **DATE OF GRANT** to distribute estate because a claim cannot be made after this time.
89
What must PRs do before distributing the estate to beneficiaries?
Pay any creditors
PRs must not sell any property specifically gifted in the will to pay debts unless other assets have been exhausted
90
In what order should the estate's assets be used to pay unsecured creditors?
1. Property undisposed of by will i.e. in a partial intestacy
2. Residue UNLESS will provides debts should not be paid from the residue, then they are paid from the following in order:
a. Property that the will specifically provides should be used for the payment of debts
b. Pecuniary legacies (abate proportionately)
c. If no pecuniary legacies or they weren't sufficient to pay the debts from specifically devised (real property) or bequeathed property (personal property) proportionately
91
If a gift provides it is free of mortgage the mortgage must be paid out of the residue
92
In what order should debts be paid if an estate is insolvent?
1. Secured debts
2. Unsecured debts (abate proportionately)
a. Reasonable funeral and administration expenses
b. Preferred debts: wages/salaries of deceased's employees in the fourth months prior to death up to a maximum of £800 per day
c. Ordinary debts including money owed to HMRC
d. Interest on preferred and ordinary debts
e. Deferred debts: loans from deceased's spouse
93
What happens if a PR pays a category of debt knowing there are higher-ranking debts?
The PR is personally liable if the assets aren't sufficient to pay the higher-ranking debt
94
A beneficiary may disclaim an inheritance orally or in writing BUT it must be in writing for IHT and CGT purposes
95
If a specific legatee disclaims their legacy what happens?
It falls into the residue
96
If the last or sole beneficiary of the residue disclaims what happens?
The residue passes through the rules of intestacy
BUT if someone disclaims a gift under a will it **does not prevent them receiving** under the rules of **intestacy**
97
What is the effect of a variation post-death?
Allows a beneficiary to **change** who gets their inheritance
If a variation is **in writing** and made within **2 years of death** and not made for monetary consideration, it will be treated as if the deceased had left the property to the new beneficiary
If not then the gift is treated as transfer of value for IHT and a deemed disposal for CGT by the original beneficiary
98
How do the PRs vest gifts in beneficiaries?
Personal property: **delivery** in return for a receipt
Company shares: **stock transfer form** with copy of grant and share certificate
Land: **assent** in writing and beneficiary needs to **register interest** with HMLR
Beneficiaries are **entitled to income** from property gifted to them arising after deceased's death
**Costs of transfer** are born by **beneficiary** unless will says otherwise
99
What happens if estate funds or assets are not sufficient to pay legacies in full?
They abate (decrease) proportionately
100
What is meant by appropriation?
A beneficiary can ask the PRs to use a **particular asset** to satisfy a **pecuniary legacy**
101
A minor cannot give a valid receipt for a gift unless the will provides otherwise - what can the PRs do instead?
1. Accept receipt from minor's parents
2. Hold property until minor reaches 18
3. Appoint trustee to receive and hold property until minor reaches 18
102
Can PRs generally charge for acting as such?
No but there are exceptions
1. If the **will authorises** it
2. By **agreement of beneficiary**
103
Before distributing the residue of the estate the PRs must pay any tax owed from the residue
104
How is a PR discharged from their role?
105
What accounts will PRs usually keep for an estate?
1. **Capital** account: to deal with assets in the estate
2. **Distribution** account: amount each beneficiary is entitled to
3. **Income** account: dividends received
The accounts are usually endorsed by PRs to indicate their approval and then sent to **residuary beneficiaries** to **endorse** and **discharge PRs** with an **agreement to indemnify** them against all **claims** and demands
106
What is the effect of an assent?
Vests the legal title of the asset in the beneficiary
107
What are the formalities for an assent?
- In writing
- Signed by PRs
- Name the person in whose favour it is given
108
Can a beneficiary bring a claim against a PR?
Yes BUT a PR will not be liable if they **acted honestly, reasonably and ought fairly to be excused**
109
Does a beneficiary have a legal and equitable interest in the estate assets before the administration of the estate is completed?
No they only have a **right** to have the **estate properly administered**
110
A beneficiary may use a **tracing claim** against a recipient to **recover property** which PRs have **wrongly transferred**
111
Under the Inheritance Act (Provision for Family and Dependants) 1975 on what grounds can an application for family provision claim be made to the court to set aside the terms of a will (or vary an intestacy) of a person who has died domiciled in England and Wales?
On the grounds that **reasonable financial provision** has **not made** for applicant
Standard of reasonable financial provision:
- For a **spouse** applicant: what would be reasonable in all the **circumstances**, whether or not required for their maintenance
- For **other applicants**: provisions required for their **maintenance** such that they can **live decently** and **comfortably** according to **their situation**
112
What is the time limit for a claim under the Inheritance Act (Provision for Family and Dependants) 1975?
6 months
113
Who can make a claim under the Inheritance Act (Provision for Family and Dependants) 1975?
1. Survivng **spouse**
2. **Ex-spouse** who has **not remarried** BUT may be **barred** from making a claim through a **clean break divorce**
3. **Child** of deceased or person treated as a child of the family e.g. step child
4. Person being **wholly or partly maintained** by deceased before death
5. Person **living with deceased** during whole **2 years before their death** as their **spouse**
114
If the court approves an application under the Inheritance Act (Provision for Family and Dependants) 1975 the estate devolves according to the **court order** and **not by will or rules on intestacy**
115
How do pension plans and life assurance policies written into trusts pass?
Outside of the will in accordance with the terms of the trust
116
TIP: when dealing with the division of an estate FIRST consider which assets fall outside of the will and then consider what assets fall within the will and how they are divided
116
If a property is owned as joint tenants when will it pass to the surviving tenant?
Immediately on death
116
Property owned by spouses as joint tenants that passes in accordance with the rules of survivorship is not liable for inheritance tax due to the spouse exemption
117
Unquoted shares attract business property relief for the purposes of IHT (check notes for full details)
118
If residual gifts fails then there is will be a partial intestacy
119
An attestation clause raises the presumption of due execution
120
What are four ways you can challenge the validity of a will?
1. Statutory **formalities** for execution are not complied with (if solicitor prepared then assume meets formalities)
2. Testator **didn't know and approve the contents** of the will (presumption that they did unless something to suggest not the case e.g. suspicious circumstances)
3. Testaor **didn't intend to make will** of own free will e.g. coercion or **undue influence**
4. **Testamentary capacity presumption unless evidence to contrary** e.g. Alzheimer's diagnosis then presumption is flipped and administrator must prove that testator did have capacity - doctors note would be required, query if any **earlier wills** which may be **revived** if current will is not valid
121
Is there an upper age limit for a child to apply for reasonable financial provisions under the Family Provision legislation?
No
122
Just because an individual falls within the qualifying category to apply for reasonable financial provisions under the family provision legislation doesn't mean they will be successful and a court will grant their application
Success = demonstrate that **reasonable financial provision wasn't made for them** - court follows guidelines in making decision
Courts guidelines: **financial resources** of **applicant**? any **other beneficiaries**? for **children - educational needs**?
123
Possible professional conduct issues
If two clients seek advice regarding an application under the family provisions legislation then cannot represent both
124
If client is considering challenging validity of will and making an application under the family provisions legislation what should you advise as a first next step?
**Lodge caveat** at court so client is **notified** when **administrator applies for grant of probate** so the client is aware of when **6 month period** starts for application under family provisions legislation
125
IHT may be chargeable to an estate in the following scenario: mum, dad and son die in car accident everything is inherited by only living son under intestacy as no wills. Each estate will pass in age order and so mum to dad to sons to son and unfortunately could mean the estate is subject to IHT because of the way the estates pass
