Probate and Administration Practice

Question 1

What is a grant of representation?

Answer 1

A legal document which confirms a person’s right to administer the estate of a deceased person

Question 2

Which courts deal with the grant of representation?

Answer 2

Non-contentious: usually handled in Family Division of the High Court
Contentious (e.g. dispute over if will is valid): usually handled in Chancery Division of the High Court or the County Court (if estate below £350,000).

Question 3

Effect of minors for grant of representation?

Answer 3

Minors cannot take a grant but if a minor is one of several PRs then a grant will be made to the adults with power reserved for the minor. If the minor is the only PR then a grant will be made to the minor’s parents to serve until the minor is 18.

Question 4

When is a grant of probate used?

Answer 4

Deceased left a valid will appointing an executor who is willing to act as PR.

Question 5

What are the characteristics of a grant of probate?

Answer 5

• Only one executor necessary but up to four can be appointed
• Executors power to act for estate comes from the will and grant merely confirms power.
• Title to all testator’s property included in estate vests in the executor who can deal with it as provided in the will (usually by showing written grant)

Question 6

When are letters of administration with will annexed used?

Answer 6

When deceased left a will but problem with appointment of an executor (e.g. one not appointed or person appointed predeceased testator) a person interested in being the PR for the estate will apply for this.

Question 7

What is the prescribed preferential order for who may apply for letters of administration with will annexed?

Answer 7

1. Trustee of residuary estate (if any)
2. Any other residuary beneficiary
3. PRs of any residuary beneficiary
4. Any other beneficiary or creditor of the estate
5. PRs of any other beneficiary or creditor of the estate

Question 8

What should a person applying for letters of administration confirm in their application?

Answer 8

People with higher entitlement have renounced

Question 9

How many administrators are needed?

Answer 9

If a minor child is a beneficiary at least two administrators must be appointed.

Question 10

When are letters of administration used?

Answer 10

When no will

Question 11

What do letters of administration do?

Answer 11

Give administrator authority to act for the estate from the date of the grant.

Question 12

What is the order of preference for who may apply for letters of administration?

Answer 12

Surviving spouse, children, parents, siblings, grandparents.

Note: PRs of this list have the same right to grant of letters as the actual person (ie if wife had died a few months prior)

Question 13

When must be IHT be paid?

Answer 13

Prior to obtaining a grant

Question 14

How to pay IHT?

Answer 14

Potential PR can request banks/building societies release the deceased’s funds directly to HMRC to pay inheritance tax before the grant is obtained. This is at the institution’s discretion.

Question 15

How should potential PRs pay funeral expenses?

Answer 15

Can request banks/building societies release the deceased’s funds before grant is obtained

Question 16

How should potential PRs raise funds for IHT?

Answer 16

Potential PR can seek a loan from a bank or beneficiary to pay IHT or sell estate assets that can be sold by showing a death certificate (typically chattels such as furniture, jewellery, clothing and cars).

Question 17

When must IHT be paid?

Answer 17

PRs must file an inheritance account with HMRC within 12 months of the death (unless the estate is excepted). Typically filed sooner as interest starts accruing on taxes owed after 6 months and cannot obtain a grant or letters until tax has been paid.

Question 18

When is it not necessary to account IHT to HMRC?

Answer 18

Estates below the IHT nil rate band are exempt from IHT and no formal account is necessary.

If the estate is worth less than £3 million and does not exceed the IHT nil rate band after liabilities and applying exemptions for example spouse/charity also not usually necessary to account.

Question 19

What should an application for grant of probate include?

Answer 19

• Two copies of the will
• Official copy of the death certificate
• Tax form to show either no IHT was payable or that it has been paid
• Probate court fees
  (An application for letters is similar although with/without copy of will as applicable)

Question 20

What should a party interested in applying to the court for a grant do?

Answer 20

Ask the Probate Registry to issue a citation to accept or refuse a grant to a person with a prior right to a grant who has not applied and shows no intention of applying for a grant.

Question 21

When should valuation of assets and liabilities be done?

Answer 21

Before applying to court for grant so know the value of the estate

Question 22

What estates are excepted?

Answer 22

Estate of a deceased who was non-UK domiciled is excepted if their UK estate consists solely of cash/quoted shares which total no more than £150,000.

Question 23

How soon after death does IHT become due for certain assets that can be paid in instalments?

Answer 23

None of the tax on that property is due until the expiry of six months from the end of the month the person died in, after then interest will start to be charged.

Question 24

What are the duties of personal representatives?

Answer 24

Take reasonable steps to preserve the deceased’s estate and release any investments which are not proper for the PR to retain.

Must pay off the estate’s debts using estate funds and distribute assets as set out in the will/intestacy rules as applicable.

Act in the best interests of the beneficiaries – including exercising reasonable care and skill taking into account any specialist knowledge they have.

Under statute have the power to sell, mortgage or lease estate property.

Question 25

What is the power to appropriate?

Answer 25

PRs ability to use an estate asset to satisfy a legacy or other interest in the estate provided the beneficiary consents

Question 26

What three accounts do PRs usually keep for the estate?

Answer 26

1. Capital account – deals with assets in the estate
2. Distribution account – keep track of the amount each beneficiary is entitled to
3. Income account – keep track of dividends received by the PRs during administration

Question 27

What is the liability of PRs?

Answer 27

May be liable to the estate for losses resulting from their breach of duty.

Personally liable to any unpaid beneficiary or creditor even if not known when a distribution is made unless they comply with s27 Trustee Act 1925.

Question 28

How do PRs protect against personal liability for not being able to locate beneficiary?

Answer 28

• Make payment of amount owed into the court and distribute the rest of the estate
• Distribute everything with an indemnity from the beneficiaries
• Seek a Benjamin Order – court order which gives PRs leave to distribute the estate based on the assumption set out in the order eg that beneficiary died before the deceased
• Insure against risk of missing claimant appearing

Question 29

When does beneficiary gain legal or equitable interest in the estate assets?

Answer 29

When administration of the estate is complete, before only have a right to have the estate properly administered

Question 30

When will a PR not be liable to a beneficiary?

Answer 30

A beneficiary can bring a personal action against a PR but a PR will not be liable if they acted honestly, reasonably and ought fairly to be excused.

Question 31

How should PRs deal with estate debts?

Answer 31

Must pay estate creditors before distributing the estate to the beneficiaries. Shouldn’t sell any property specifically gifted in the will to pay debts unless other assets have been exhausted.

Question 32

How should chattels be distributed?

Answer 32

Delivery in return for a receipt

Question 33

How should company shares be distributed?

Answer 33

Stock transfer form completed and sent with an office copy of the grant and share certificate

Question 34

How should land be distributed?

Answer 34

Transfer requires an assent in writing and beneficiary needs to register their interest at HMLR

Question 35

Who pays for distribution of estate?

Answer 35

Costs of transfer are paid by the beneficiary unless the will states otherwise

Question 36

What happens if estate funds or assets are not sufficient to pay legacies in full?

Answer 36

Will abate in proportion unless there’s priority given specially to any particular legacy

Question 37

As minors generally cannot give a valid receipt for a gift unless the will provides otherwise what may PRs do?

Answer 37

Accept receipt from minor’s parents, hold the property until the minor is 18 or appoint a trustee to receive and hold the property until the minor is 18

Question 38

Purpose of an assent by PRs?

Answer 38

An assent by the PRs vests the legal title to the asset in the beneficiary

Question 39

When does assent date from?

Answer 39

Goes back to the date of death so the property is treated as having been the beneficiary’s since that date

Question 40

How must assent be given?

Answer 40

Assent must be given in writing, signed by the PRs and name the person in whose favour it’s given

Question 41

How do PRs protect themselves before formal discharge?

Answer 41

The PRs usually endorse accounts to indicate their approval, the residuary beneficiaries then endorse the accounts and formally discharge the PRs with an agreement to indemnify them against all claims and demands. If a beneficiary refuses to approve the accounts then the PRs may ask the court to approve them or may pay the beneficiary’s share into the court.

Question 42

What does the Inheritance (Provision for Family and Dependants) Act 1975 enable?

Answer 42

Applicant can apply to the courts to set aside the terms of a will or vary an intestacy of a person who died domiciled in England and Wales on the grounds that reasonable financial provision was not made for the applicant.

Question 43

When must claim be made under the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 43

Typically be made within 6 months from the date of the grant

Question 44

Who can make claim under the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 44

• Surviving spouse or civil partner
• Former spouse or civil partner who has not remarried (may be barred if a ‘clean break’ divorce)
• Child of the deceased or treated as a child of the family of the deceased (such as a stepchild) note: can apply at any age but caselaw suggests that applications made by able-bodied adults capable of earning their own living have not been treated sympathetically by the courts unless in full-time education.
• Person being maintained wholly or partly by the deceased before their death
• Person living with the deceased for the whole two-year period immediately before the death as spouse, civil partner or same sex-partner of deceased.

Question 45

Things the court will consider under claim under the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 45

• Financial resources and needs of the applicant, other applicants and beneficiaries
• Obligations and responsibilities of deceased towards the applicant
• Size and nature of net estate
• Physical or mental disability of the applicant
• For spouse: age, duration of marriage, contribution to marriage
• For cohabitant: age, length of cohabitation, contribution to welfare of the family
• For children: manner of education and training
• For person wholly or partially maintained: assumption of responsibility and length of time for which deceased discharged responsibility

Question 46

What is the standard of reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 46

For spouse: what would be reasonable in all the circumstances, whether or not is required for their maintenance

For other applicants: provision required for their maintenance such that they can live decently and comfortably according to their situation.

Question 47

What type of powers do the court have if a successful claim under the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 47

Court has wide discretion and powers to make the following orders:
1. Transfer of property
2. Payment of a lump sum
3. Payment of income
4. Settlement of property on trust