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OSCE > Probate Overview > Flashcards

Probate Overview Flashcards

1
Q

What are the different types of property

A
  1. joint
  2. trust
  3. inheritance policies held on trust
  4. pension
  5. nominiations
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2
Q

What happens for joint property

A

Bank accounts, property or shares/investments held as joint tenancy. Passes automatically to survivor without reference to probate

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3
Q

How can you identify a tenancy in common

A

Restriction on the land registry

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4
Q

What happens to a beneficiary under a trust

A

Succession will be governed by the owner of the full interest, ie. life interested is not inhereted

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5
Q

What about insurance policies

A

Ask whether they are held on trust, if so pass to trustees of trust

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6
Q

What about pensions

A

Normally include trust mechanism

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7
Q

What makes a will valid

A
  1. Compliance with formal rules - signed in the presence of 2 x witnesses who see signature of testator + attestation clause (signing in presence)
  2. Capacity
  3. Knowledge and approval
  4. Coercion
  5. Mistake
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8
Q

What happens if a beneficiary or spouse is a witness?

A

Gifts fail, will is valid

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9
Q

What happens if a beneficiary dies first?

A

Gift fails, will is valid, unless it is to issue who have issue

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10
Q

What happens if specific property has been sold/doesn’t exist

A

Gift fails, will is valid

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11
Q

What happens on divorce?

A

Divorce has the effect as if spouse is pre-deceased

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12
Q

Can a divorcee can be executors?

A

No - treated as if dead

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13
Q

What is the executor dies?

A

Adult beneficiaries - take a grant of letters in administration with will annexed

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14
Q

What if there is no executor and no will?

A

residual beneficiaries (adult) - grant of letters of administration. Child take when turn 18/marry

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15
Q

If dies intestate, what does the spouse get if there are children?

A
  1. The first 250k statutory legacy
  2. personal chattels
  3. half residue

Rest of residue to children. Automatic substitution of grandchildren to take parents share if parents dead

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16
Q

If dies intestate, where does the estate go (spouse no children)

A

All to spouse

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17
Q

What is inheritance tax paid on?

A
  1. assets in estate
  2. share in joint property
  3. assets in trust in which had interest in possession eg. life interest (as if entire capital value is yours, payable by trustees of trust)
  4. those gave away in last 7 years
  5. assets given away but benefit retained
  6. non-UK property if UK domiciled for IHT purposes
18
Q

Does the oath for executors take into account inheritance tax

A

No - just use figures for what’s part of estate for probate purposes

19
Q

What is exempt from IHT

A
  1. gifts to charity
  2. gifts to spouse
  3. more than 7 years ago gifts
  4. 325k tax free
  5. remaining allowance can be transferred to spouse
20
Q

Can a beneficiary witness save the gift?

A

Yes if there are 2 other witnesses or a subsequent codicil

21
Q

If a property is mortgaged, does that pass if a specific gift?

A

Yes - subject to contrary intention. Stating ‘residue to pay of debts’ is not sufficient to show contrary intention

22
Q

Does an unborn child inherit if ‘to my children’

A

Yes - treated as if born at time of death

23
Q

When is IHT payable?

A

IHT is due 6 months after end of month of death, payable prior to grant of probate, but it can be paid directly from a bank account. A form can be sent when everything is relevant - including solution to problem.

24
Q

What to include in letter about inheritance

A

Make it clear that inheritance is net of liabilities and subject to valuations agreed with HMRC

25
Q

Does the oath for executors include that outside of the estate?

A

No - not joint property, and not lifetime gifts

26
Q

What if jointly held property isn’t exclusive ownership ie. not spouse

A

Could be up to 15% discount as to ownership

27
Q

Passing on nil rate band to spouse

A

As long as nothing used of it, and all passes to spouse. If gifts - only a proportion would be passed

28
Q

What is the residence exemption?

A

150k per person, can be passed, person must own property in excess of the value of the exemption, directly inherited by children/grandchildren as long as no conditions (ie. grandchildren upon reaching a certain age); or estate worth more than 2m (50pin£)

29
Q

Tax on joint property

A

Tax on joint property is payable by the PRs on administration of the estate

30
Q

Instalment payments

A

10 instalments; first 6 months after end of death. Then annual. Interest at 2.75% after 6 months. Instalments stop on sale of property. Is a proportion of estate but EXCLUDING LIFETIME GIFTS

31
Q

What about Capital Gains for inheritance

A

Inherit at value at time of death

32
Q

Annual exemption for Capital Gains

A

£11,300

33
Q

How will CG be calculated

A

Will be added onto own tax system, 18% or 28% depending on amount of personal tax.
Rate for residential property is 28%, executors have CGT exemption for the tax year of death and 2 years there after of 11,700

34
Q

Summary of process

A 
Gather information
Swear oath for administrators
Pay tax as due (NB installment option)
Get grant of representation
Advert gazette - creditors
Claims - 6 months from date of grant
Then liquidate assets and distribute
35
Q

If will, no executor - how reflect in oath

A

Deal with deceased - letters of the will with will annexed.

36
Q

When need 2 executors

A

Life interests granted

One executor is a minor

37
Q

If no executor, who can apply for administration?

A
  1. Beneficiary of residue, if not
  2. Legatee
    Residuary legatee and devisee
38
Q

How to fill first option in oath (no tax)

A
  1. IHT

2. Actual estate

39
Q

How to fill in 3rd option in oath (no tax)

A

Excepted estate - ie less than 1m, ie can use short form for spouse exempt and not more than 650, or not more than 1m and no inheritance tax to pay

40
Q

How to fill in 2nd option in oath - tax

A

IHT400 - Gross estate and net estate

other form is IHT205

41
Q

What if witness to will is beneficiary

A

Can invalidate the gift

42
Q

What happens when you leave a property with a mortgage

A

General direction as to debts to be paid, does not affect specific gift of property subject to a charge

OSCE (11 decks)

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