SQE 2 Will Advice (Interview/Writing/C&M) Flashcards
(Possible Topics)
What happens if I die without a will?
Intestacy Rules Will Apply:
- Spouse and No Issue: Spouse inherits entire estate absolutely.
- Issue and No Spouse: Issue inherits the entire estate on the statutory trust.
- Both Spouse and Issue: Spouse receives all personal chattel absolutely, statutory legacy of £322,000 free of tax and costs and one half of the residue absolutely. Issue receives the other half of the residue on statutory trust
- No Spouse or Issue: The whole estate passes in accordance with the statutory order
If someone dies intestate, and the administrators come for advice, what should you consider regarding issue?
Does the substitution limb apply?
If a beneficiary dies before the deceased, the share they would have inherited passes by substitution to the beneficiary’s own issue.
If there are no issue, the contingent share is re-distributed with reference to the surviving family members of the original intestate
If someone dies intestate and the administrators request advice about the spcific distribution of specific assets, what should you explain?
- Money in a joint current account automatically passes by survivorship, not intestacy rules.
- Assets held in trust are distributed in accordance with the terms of the trust deed
- PRs can choose which assets to appropriate to a beneficiary in satisfaction of their entitlement.
A husband comes to you for advice about the family home following his wife’s death. She died intestate.
What advice should you give?
A surviving spouse has a right to receive the intestate’s share of the family home (Appropriation of Marital Home) in or towards the satisfaction of their inheritance,
Note…
- It only applies if the home was held as tenants in common (not joint tenants)
- It must be exercised within 12 months of the grant.
- Where entitlment is lower than the share value, the spouse must pay the different from personal funds
An executor has asked whether a will is valid. What factors are relevant when giving advice?
- Was the testator over 18 (or subject to exception)?
- Did they have testementary capacity ?
- Did they satsfy knowledge and approval?
- Does it comply with s.9 formalities?
When taking instructions, you are concernred that the tetstor may lack capacity. What is the best course of action?
If they have capacity, how can you explain the possible consequences of capacity at the date of execution should it worsen?
A medical practitioner should be instructed to make an assessment of capacity, and a record should be made as best practice.
In relation to capacity at execution, advise on Felgate - that a testator who lacks capacity at the time of execution can still make a valid will if they: (a) had capacity at the time they gave instructions for preparing the will; and (b) the will was prepared in accordance with the instructions; and (c) at execution, they understand they are signing a will for which they previously gave instruction.
What should you do if a testator from whom you are taking instructions is blind, illiterate or the will is to be signed by someone else (e.g. due to poor health)?
There is no presumption of knowledge and approval in this situation.
An attestation clause should address the issue.
If it doesn’t address it, an affidavit of knowledge and approval would be needed when submitting to probate.
An executor is concerned that the deceased’s will is invalid due to formalities.
What are you looking for?
- Signed by Testator; or by other person in his presence and by his direction - any ‘mark’ if it is intended. Both Witnesses Must Be Present when the testator signs..
- Two witnesses must sign (attest or acknowledge).
- Witnesses Must sign in the Testators Presence. They do not need to sign in the presence of the other witness
What advice would you give to a beneficiary who witnessed the will?
Any gifts to an attesting witness or their spouses are void per s.15. The will remains valid apart from the gifts to those individuals.
However, if there are at least two other witnesses not caught by s.15, the will is executed properly without the beneficiary or their spouse witnessing the will. .
When drafting a will, how many executors can be appointed?
A maximum of 4 can apply for the grant of representation.
If more than 4 are named in the will (this is possible), power is ‘reserved’ for those who do not apply initially.
When drafting a guardianship clause in a will, what must be included in relation to when it takes effect?
It should state that it only takes effect after the death of the surviving parent. You could also include a substitute appointment.
For example:
“If my wife dies before me, I appoint as the guardian of any of my children who are under 18 at my death [FULL NAME OF GUARDIAN] of [ADDRESS].
If [FULL NAME OF GUARDIAN] dies before me or her appointment does not take effect for any other reason, then I appoint [FULL NAME OF SUBSTITUTE GUARDIAN] of [ADDRESS] instead.]
How should you incorporate funeral wishes into a will?
Whislt not legally binding, a clause is often added.
For example:
“I would [not] like my body to be [cremated OR buried].”
An executor wants advice on identifying beneficiaries and gifts in the will. What are the key points to make when it comes to interpretation?
- Specific Gifts: Will speaks from the date of death when identifying subject matters. If ‘my’ ‘now’ or ‘at present’ are used, the will speaks from the date of execution.
- A collection such as ‘ Stamps ’ grows and is read at the date of death despite the use of the term ‘my.’
- Identifying Beneficiaries: When deciding who inherits , the will speaks from the date of execution unless contrary wording expresses so
An executor comes to you with a will that gives a gift to the testators grandchildren.
He is unsure how this is interpreted and when ‘my grandchildren’ is to be read from.
This is a gift given to a “class” of beneficiaries
Unless express words clarify when members of the class are identified, ‘class closing’ rules apply and the class closes when the first beneficiary in the class obtains a vested interest
When identifying beneficiaries in a will, what must you remember in relation to the issue of a testator predeceasing the testator?
s.33 may apply so that there is a substitutional gift.
If the gift is to the testator’s issue (child or other lineal descendant), s.33 WA may prevent lapse to enable the gift to be shared equally between the issue of the deceased beneficiary provided no contrary intention is expressed.
An executor comes to you for advice on an alteration with a will.
What effect does an attested alteration have on an amendment?
If any alteration is executed like a will (signed by two witnesses in accordance with s.9 WA) alongside the alteration, the alteration is valid. The witnesses do not have to be the same people who witnessed the will.
An executor comes to you for advice on an alteration with a will.
What advice would you give if a blank space has been completed with no attestation?
There is a presumption this occurred before execution and it takes effect.
This can be rebutted by internal evidence from within the will or by external evidence such as an affidavit.
An executor comes to you for advice on an alteration with a will.
What advice would you give if someone has blacked out a gift with the effect that the beneficiary under that gift would receive nothing?
The effect depends on the intention of the testator since it is treated as an ‘intention to destroy the gift’:
- Intention to Revoke Gift: If original wording is not apparent with natural means, the obliteration is treated as having been made by the testator with an intention to revoke and the alteration will be effective. Other methods to decipher are not allowed (e.g. no infra red technology).
- No Intention to Revoke Gift:If the testator did not intend to revoke the gift made by the amendment, extrinsic evidence (e.g infra red) can be used to establish the original gift.
An executor comes to you for advice on an alteration with a will.
What advice would you give if the testator made the obliteration with a conditional intent to revoke the gift, altering the gift by substituting the amount, without attestation?
- Original gift naturally decipherable (e.g. Interlineation): Alteration invalid. Original gift takes effect
- Original gift extrinsically decipherable (e.g. infra red): Alteration invalid. Original gift takes effect.
- Original gift not decipherable: Gift fails. Alteration takes effect. The person named receives nothing.
A client comes to you for advice on their marriage. What impact does their new marriage have on a prior will?
When a person marries this automatically revokes in full any will and codicil prior to the marriage, even if that isn’t their intention.
A client has recently divorced and wishes to recieve advice on the effect on the will.
If a married testator divorces their spouse the court order confirming the divorce automatically operates as a limited/partial revocation of their will.
An appointment of former spouse as executor or trustee is not effective; and a gift to the former spouse fails.
This only impacts wills made prior to divorce and doesn’t affect rights to bring claim under IPFDA.
A family member comes to you for advice on the fact that they have been cut out of the will. You want to advise that a claim under IPFDA may be possible - what are tje initial gateways to consider?
- Jurisdiction: Deceased must have died domiciled in England and Wales.
- Timing: Claims must be made within made within 6 months of the grant of representation subject to the court using discretion to extend the time limits
- Applying: The application can be lodged in High or County Court.
A client comes to you for advice on IPFDA. They want to know who could bring a claim against their estate should they die.
- Spouse of deceased
- Former spouse who has not remarried
- Someone cohabited as if they were spouses for 2 years
- A child of the deceased
- Person treated as a child
- Any person who was maintained immediately before death.
You are advising a client on their claim under IPFDA. They divorced the deceased. What standard applies?
If the former spouse has not remarried and divorce, dissolution or nullity occurred within 12 months of the death, the Surviving Spouse Standard applies.
Otherwise, the maintence standard
An executor asks for advice on the preliminary steps of administration.
- Obtain official copies of death certificate.
- Notifiy banks and organisations of death
- Secure Estate Assets
- Obtain the original will and codicils - a copy will not suffice.
- Provide realistic timescale for distribution.
- Compile list of assets and liabilities and value property
- Collect details debts and pay them
- Establish whether there have been lifetime transfers within the 7 years for IHT.
When can you advise an executor that they can deal with assets without a grant?
- Assets that fall outside the succession estate.
- Sums not exceeding £5,000 payable from building societies; banks, arrears of salary & wages.
- Personal household chattel & cash found at the deceased’s home.
An executor states that they do not wish to continue to act as an executor. What advice is relevant?
Such an executor has three options:
- Renunciation: Formally give up their right to apply by signing a form of renunciation. An executor cannot renounce if they have intermeddle with the estate.
- Reserving Power: There must be at least one other executor who does take out the grant of probate. An executor who has intermeddle can still reserve power. To act later, the executor must apply for grant of double probate to run concurrently.
- Appointing an Attorney: Appoint a solicitor to act on their behalf. If they have obtained a grant, they can delegate to an attorney for a maximum of 12 months. If no grant has been obtained, the attorney can make a parallel application for letters of administration (with will)
A grant of probate has been issued. However, the PR dies and no additional PRs are appointed. What can you advise?
- Chain of Representation: if the last surviving executor (E1) dies, having appointed an executor of their own estate, and this person takes out the grant of probate for E1s estate (E2). This is only available in relation o executors with a grant of probate.
- If the chain cannot operate, a second grant is issued (grant of letters of administration de bonis non) often applied for by a residual beneficiary or someone else entitled.
You represent the estate of the deceased. They left a will but no executors are willing or able to act. What it the best course of action?
NCPR 20 applies and the order will determine who applies for a Grant of Letters of Representation (with will).
Order of Priority: (i) Executor; (ii) Trustee of Residuary Estate; (iii) Any Residuary Beneficiary (or if intestacy, a beneficiary of the estate under intestacy); (iv) PRs of anyone in (iii); (v) any other beneficiary or creditor; (vi) PRs of anyone in (v).
You represent the estate of the deceased. They did not leave a will. What is the best course of action?
Appropriate grant is the Grant of
Letters of Representation where the deceased died without a valid will per Rule 22 NCPR.
The order of priority is the intestacy order of priority.
If someone with the best right to apply under NCPR 20 or 22 does not wish to act, what advice would you provide?
- Renounce: Renunciation is final and must be signed and submitted to the probate registry. A potential administrator may renounce even if they have intermeddle with the estate.
- Appointing an Attorney: The applicant is delegating the power to apply for a grant, which is permitted under Rule 33 NCPR. The power of attorney must be provided to probate registry.
Note, unlike an executor they cannot reserve power
An administrator wishes to apply for a grant. When must a peper application be used?
- Second grants (reserved powers)
- Grants to PRs under Chain of Representation
- Grants where original will is missing or with issues
- Grants to Attorneys
- Grants under NCPR 20 with life interests
The deceased did not leave a valid will. NCPR applies. You are advising the administrator that a peper application may be required (e.g. one of the conditions applies). What paper form is used?
PA1A
Deceased did not leave a will (NCPR 22 applies)
The deceased did leave a valid will. However, the NCPR applies. You are advising the administrator that a peper application may be required (e.g. one of the conditions applies). What paper form is used?
PA1P
Deceased left a valid will (executors, or administers appointed under NCPR 20)
An administrator or executor asks what is required when applying for a grant of probate. What are the key things that should be submitted?
- Form IHT 400
- Certified copy of the death certificate
- Registry Fee
- If a valid will, provide original will and codicils.
additionally, the following may be needed…
- If attorney appointed, Power of Attorney + PA11 Form.
- Form of Renunciation if executor wishes to renounce.
A PR wishes to know what their liability will be should things go wrong.
PRs are personally liable for losses resulting from breach.
A claim against a PR is called a devastavit
C may seek court order that the PR make good the loss using their personal assets, seek an account of unauthorised profits or for a transaction be set aside.
A PR concerned about personal liability wishes for you to set out the key forms of protection. They want to know about the three main proceudres relating to missing and unknown beneficiaires or creditors.
- **s.27 TA 1925 Notice **> To prevent liability to unidentified beneficiaries and creditors, PRs can publish notice of intention to distribute to known beneficiaries 2 months after the advertisement in (i) London Gazette; and (ii) if land/business forms part of the estate, in a local newspaper
- Benjamin Order: To prevent liability to known but missing beneficiaries PRs can seek a Benjamin Order permitting them to distribute the estate on the basis that the missing beneficiaries have died. The PR must first show there is no reasonable prospect of knowing the true position without disproportionate expense
- Presumption of Death: PR may apply for a court order declaring that a person thought to have died or not known to have been alive for 7 years or more has died.
A PR wants to know when should they pay expenses and debts of the estate?
As soon as assets are collected, the PR should pay the outstanding debt and funeral expenses.
All the deceased property constitutes assets which can be made available for payment of debts and liabilities.
However, note the following principles….
* Secured Debts: Paid using the secured asset.
* Unsecured Debts paid by assets taken in order
A PR wants to know what they have to do in respect of Income Tax. Provide advice.
PR must account for the deceased’s income and submit to HMRC whether income tax needs paying for the period of 6 April to date of death.
This consists of
* Untaxed income due and paid before death; and
* Income paid after death relating to a period before death.
PRs are liable to pay Income Tax if the estate assets generate income in the hands of the PR between the date of death and date of distribution. **PRs pay IT at the basic rate and do not have a personal allowance. **
A PR wants to know what they have to do in respect of cgt. Provide advice.
- Deceased’s Gains: CGT may be payable on disposals made before death. Note, death is not a disposal for CGT (e.g. passing by will or intestacy).
- Estate Gains Post-Death: PRs are potentially liable to CGT if they make a disposal sale of an estate asset during the administration period. Only post-death gains are chargeable. Any sales or transfers are acquired with a base cost of the probate value (value at date of death). Value on date of transfer is irrelevant.
A trustee of a trust created under a will requried advice in relation to replacing a trustee. Per s.36(1), when can trustees be replaced by the continuing trustees?
- On the death of a trustee;
- If a trustee is abroad for over a year;
- If an appointed trustee is a minor or lacks capacity; and
- If a trustee wishes to retire, refuses to act or is unfit
- If all trustees have died, power exercisable by personal representative of last to die.
A PR wants to recover expenses and charge for their time. What should your advice consist of?
- Professional PRs > Can claim reasonable remuneration for their service. Can reimburse themselves for expenses incurred
- Lay PR - No Express Power to Charge in Will > Cannot Charge for Services. Can reimburse themselves for expenses incurred
-
Lay PR Express Power to Charge in Will > Can claim reasonable remuneration for their service
Can reimburse themselves for expenses incurred
A trustee would live advice relating to whether they can delegate distribution, investment and appointment duties.
Trustees and PRs cannot delegate distribution, cost payment or appointment of trustee decisions.
However, they can delegate generally if done so in writing and by providing the agent with a written policy statement.
A PR is concrned about the timeframe they have to complete adminsitration.
What is the rule for this? Are there exceptions?
Administration should be completed within 1 year of the date of death.
However, this can be delayed if there is a claim against the estate. If this is the case, the PR has 10 months from the date the grant is issued.
A PR is in the process of organising the IHT 400 and IHT accounts.
He wants to know when the IHT must be paid, and when the account must be submitted?
- IHT Paid - Paid within 6 Months from the end of the month of death.
- IHT Account - Submitted within 12 months from the end of the month of death.
An adult beneficiaty with a contingent interest in capital would like you to explain what their entitlment is to income and capital.
An Adult Beneficiary with a Contingent Interest Never Has Right to Income.
However, s.32 gives trustees the power to use capital for the ‘advancement or benefit’ of a beneficiary before the beneficiary becomes absolutely entitled to the property.
- It can be used to pay to up to 100% of beneficiary’s presumptive share of capital.
- Payments can be made directly to adult beneficiaries.
- The power can only be exercised with written consent of beneficiaries with prior interest.
A minor beneficiaty with a contingent interest in capital would like you to explain what their entitlment is to income and capital.
Trustees accumulate income and capital until they turn 18. Once they turn 18, any accumulated income not paid out must be added to the capital.
The trustees can use one of the following to pay early:
- s.31 TA, Statutory Power of Maintenance (INCOME): The trustees have a statutory power of maintenance under s.31 to pay trust income for the maintenance, education or benefit of minor children. It must be paid to the minor’s parents or guardian, or applied directly to a provider of goods/services. The power cannot be used once the beneficiary is 18.
-
s.32 TA, Statutory Power of Advancement (CAPITAL): s.32 gives trustees the power to use capital for the ‘advancement or benefit’ of a beneficiary before the beneficiary becomes absolutely entitled to the property. It can be used to pay to up to 100% of beneficiary’s presumptive share of capital
Payment can be made to parent, guardian or directly to the providers for minors. The power can only be exercised with written consent of beneficiaries with prior interest.
A minor beneficiary with a vester interest in capital would like you to explain what their entitlment is to income and capital.
Right to receive capital and accumulated income at specified age - conditions have already been met (they are absolutely entitled to it)
A client would like you to explain how their house will impact their IHT if they leave it to a family member.
If the deceased leaves their family home (QRI) to a direct descendent (Children, Adopted, Grandchildren, Lineal Descendants) they have the benefit of a £175,000 RNRB.
There is tapered withdrawal of RNRB for estates with a net value of more than £2 million at £1 for every £2 above the £2 million. Therefore, no RNRB for net estates with £2,350,000 or more
A client wishes to know whether they can inherit their former spouse (deceased) RNRB he didn’t use?
An individuals can inherit the unused portion of their deceased spouse’s RNRB (e.g. did not own a QRI) if the surviving spouse leaves a QRI to direct descendant.
Note, the transferred amount is based on the percentage unused, not the actual amount of the former spouse unused RNRB since the relief rates change over time.
A client wants to know what their NRB is. Provide them with a basic answer
They have a NRB of £325,000
This will be reduced by the cumulative total of LCTs or PETS within the previous 7 years.
A surviving spouse can inherit unused portion of their spouse’s NRB equal to the unused percentage. Therefore, if this happens, they could have an NRB of £650,000.
A client wishes to reduce their tax liability by making gifts - what lifetime exemptions are applicable?
Uncapped:
- Spouse Exemption: Gifts between spouses exempt.
- Charity Exemption: Gifts to UK Charities are exempt.
- Family Maintenance Exemption: Uncapped for child maintenance, education and care of dependents.
- Normal Expenditure Allowance: Regular pattern
Capped:
- Marriage Exemption - parent, grandparent, other
- Small Gifts Allowance: £250 a tax year per person.
- Annual Exemption: £3k + £3k unused from last year
- BPR: 50% or 100% if owned for 2 years before.
- APR: 100% relief for land used for agriculture
A client wishes to recieve advice on IHT liability. They note they have a wedding coming up and would like to make a generous gift to the couple.
They could use a marriage exemption:
Gifts in anticipation of marriage are taxed at 0% up to:
* £5,000 by a parent.
* £2,500 from a grandparent.
* £1,000 from anyone else.
A client has made a transfer into trust.
They want to know what rate the transfer will be taxed at.
Apply the lifetime rate of 20%
A PR requests help with IHT.
The deceased made a transfer into trust when they were alive and he is usnure what he must do now.
The LCT must be reassessed at 40%.
Note, taper relief should be applied to reflect the time passed since payment and death.
If re-assessing an LCT, deduct amount paid (20% during lifetime) from the figure.
You are working on a case involving iHT calculation and are re-assessing a failed PET that was made 5 years ago.
What taper relief is available? How much of the total IHT bill is payable?
If the failed PET was made 5 years ago, there is a 40% deduction.
Therefore, whatever the figure of IHT payable is, only 60% will actually be payable by virtue of taper relief.
A PR is confused as to what should be deducted when calculating IHT payable on death?
Deduct:
* Debts deceased owed on the date of death
* Funeral expenses and the cost of a tombstone
Do not deduct other post-death expense
A client wants you to explain what exemptions and reliefs are available when calculating IHT when they have died. Explain.
- Spouse Exemption - Gift to spouse 100% exempt.
- Charity Exemption - Gift to charity 100% exempt. Can reduce IHT rate to 36% if at least 10% goes to charity.
- Woodland Relief If deceased owned woodland for 5 years before death, or inherited woodland, IHT is deferred.
- Quick Succession Relief - If a person dies and their estate includes assets received by gift or inheritance in the 5 years prior to their death, and they were subject to an IHT charge, the IHT is reduced by the amount previously charged.
- Business Property Relief: 100% or 50% relief for qualifiying assets owned for 2 years before death.
- Agricultural Property Relief - 100% relief for qualifying agricultrual land or buildings if owned 2 years before death.
You are advising a beneficiary recieving under the intestacy rules.
If the deceased had a lineal descendant who pre-deceased, but they had their own issue, who inherits?
If a beneficiary dies before the deceased, the share they would have inherited passes by substitution to the beneficiary’s own issue.
Your client died without a valid will.
Her husband died a week later.
Does the husband’s estate inherit the whole since everything went to him on the death of your client?
No.
The beneficiary under intestacy must survive the deceased 28 days.
Otherwise, it is treated as if they were deceased and you proceed to ‘next in line’
Your client is making a will.
You advise them that the witnesses must sign when they (the testator) is present.
They ask you whether it would be valid if the witnesses signed Alone Without Testator Present
It would be invalid.
The Witnesses Must sign in the Testators Presence.
However, they do not need to sign in the presence of the other witness
Your client is making a will.
You advise them that the witnesses must sign when they (the testator) is present.
They ask you whether it would be valid if one witness signed alone with the testator present, and the second witness signs separately (also with testator present)
It would be valid.
The Witnesses Must sign in the Testators Presence. However, they **do not **need to sign in the presence of the other witness.
If both witnesses sign in front of the testator, but do so seperately dfrom each other. That is sufficient.
Your client is making a will.
You advise them that both witnesses must be present when they (the testator) signs the will.
They ask you whether it would be valid if they both sees the testator signing will?
Witnesses both sees the signing: Valid
(Attestation)
Your client is making a will.
You advise them that both witnesses must be present when they (the testator) signs the will.
They ask you whether it would be valid if the witnesses were unaware it is a will signing but can see (same room) the testator writing a signature on a document?
Witnesses both sees the signing: Valid
(Attestation)
Your client is making a will.
You advise them that both witnesses must be present when they (the testator) signs the will.
They ask you whether it would be valid if the testator signs alone, but then both witnesses enter the room, and the testator acknowledges that the signature is their signature.
Witnesses both sees the signing: Valid
(Acknowledgment)
Your client is making a will.
You advise them that both witnesses must be present when they (the testator) signs the will.
They ask you whether it would be valid if
only one witness is present when either the will is signed. Later, the testator acknowledges their signature to a second.
Invalid
Both Witnesses must be present together
Your client is making a will.
You advise them that both witnesses must be present when they (the testator) signs the will.
They ask you whether it would be valid if only one witness is present when either the will is signed. A second witness enters. Testaor acknowledges.
Valid
Both Witnesses are present together
Your client has children born to unmarried parents.
They ask whether they count as ‘issue’?
They are Issue
Your client has children born to married parents.
They ask whether they count as ‘issue’?
They are Issue
Your client has adopted children.
They ask whether they count as ‘issue’?
Issue of Adopted Parents
Not issue of Biological Parents
Your client has step children.
They ask whether they count as ‘issue’?
Not Issue
Unless Expressed
Your client wishes to make a will in contemplation of marriage.
Explain to them the requirments to ensure validity.
- Names the future spouse;
- Identifies the intended ceremony;
- Expressly states whether or not the testator intends the will to be revoked on the event of the marriage
It is not possible to avoid revocation in contemplation of a hypothetical marriage, or a marriage to one person but then the marries another individual.
Your client has recently married.
They ask you to explain the effect of marriage on their will.
Automatic Revocation
Will Revoked In Full
Your client has recently divorced.
They ask you to explain the effect of the divorce on their will.
Automatic Partial Revocation
- Appointment of former spouse as executor or trustee is ineffective;
- Gift to the former spouse fails.
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Deceased Interest as Beneficial Joint Tenant
For example, house or bank account owned as joint tenants.
- Succession Estate: No. Passes by Survivorship.
- Taxable to IHT: Yes. The value of the deceased’s share only is counted, not the whole value of the property (50%).
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Deceased Interest as Tenant in Common
For example, house held as tenants in common.
- Succession Estate: Yes. Their share passes under the will/intestacy rules
- Taxable to IHT: Yes. The value of the deceased’s share only is counted, not the whole value of the property.
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Life Policy Payable to Estate
(Not Written In Trust)
- Succession Estate: Yes. Where the sum assured is payable to the deceased’s estate, upon receipt the PRs will distribute the sum in accordance with the terms of the will, if there is one, or the rules of intestacy if there is no will.
- Taxable to IHT: Yes.
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Life Policy Payable to Estate
(Written In Trust)
- Succession Estate: No. The sum assured belongs to those named beneficiaries on the deceased’s death. Since the sum assured does not belong to the estate, it will not be governed by the deceased’s will or rules of intestacy.
- Taxable to IHT: No. Sums assured under such policies are not subject to inheritance tax because the sum assured belongs to the nominated beneficiary(ies) of the policy.
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Pension Benefit
Passing to Estate (Due as Right)
- Succession Estate: Yes. If the lump sum payment (on the death of a pension scheme member) is due as of right, the lump sum is added to the estate that is subject to the will/the rules of intestacy.
- Taxable to IHT: Yes
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Discretionary Pension Benefit
- Succession Estate: No. The pension scheme is, in effect, a large discretionary trust and the members (as beneficiaries) have only a mere hope that they and their estate will be benefited by the trust.
- Taxable to IHT: No. IHT free, simply because it is discretionary and not paid as of right.
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Deceased’s Life Interest in a Trust
- Succession Estate: No. This ‘interest’ ends on the death of the beneficiary. It will not form part of the life tenant’s own death estate.
- Taxable to IHT: Yes, uhe Life Interest is included in the taxable estate of the testator for IHT purposes because the life tenant has a right to benefit from the trust during their lifetime. The value of the life interest is calculated using actuarial tables, based on life expectancy
You represent PRs requiring advice on the status of various assets.
Advice whether the following asset:
(a) Form Part of the Succession Estate; and
(b) Is Taxable to IHT
Deceased’s Reversionary or Remainder Interest in a Trust
- Succession Estate: No. This is an interest that will only vest on the death of another person (e.g. life tenant of the trust). If a person with a reversionary or remainder interest dies before the life tenant dies, the remainder interest will lapse and will not form part of the deceased’s estate
- Taxable to IHT: No. The Remainder Interest is not included in the taxable estate at the time of the testator’s death, and no IHT is due on it at that time.
Your client wishes to make an IPFDA claim. It has been 12 months since the grant of representation was issued.
What should you advise?
Unless there are exceptional circumstances under which the court may grant an extension, the client is out of time.
Claims must be made within made within 6 months of the grant of representation
Your client asks you what form to submit for their application for a grant of probate
No complex issues noted. Standard Grant.
- Citizen (Client) Application:
PA1P or Online - Probate Practicioner:
Mandatory Online Application
Your client asks you what form to submit for their application for a grant of letters of administration with will annexed per NCPR 20
No complex issues noted. Standard Grant.
- Citizen (Client) Application:
PA1P or Online - Probate Practicioner:
Mandatory Online Application
Your client asks you what form to submit for their application for a grant of probate
One of the following is noted:
* Second grants (Reserved Powers)
* Chain of Representation
* Original will has issues
* Grants to Attorneys
- Citizen (Client) Application:
PA1P - Probate Practicioner:
PA1P
Online Application Unavailable
Your client asks you what form to submit for their application for a grant of letters of administration with will annexed per NCPR 20
One of the following is noted:
* Second grants (Reserved Powers)
* Chain of Representation
* Original will has issues
* Grants to Attorneys
- Citizen (Client) Application:
PA1P - Probate Practicioner:
PA1P
Online Application Unavailable
Your client asks you what form to submit for their application for a grant of letters of administration with no will per NCPR 22
One of the following is noted:
* Second grants (Reserved Powers)
* Chain of Representation
* Original will has issues
* Grants to Attorneys
- Citizen (Client) Application:
PA1A - Probate Practicioner:
PA1A
Online Application Unavailable
Your client asks you what form to submit for their application for a grant of letters of administration with no will per NCPR 22
No complex issues noted. Standard Grant.
- Citizen (Client) Application:
PA1A or Online - Probate Practicioner:
Mandatory Online Application
Your client is applying for a grant of representation.
What must they include alongside the form?
- Statement of Truth
- Certified copy of the death certificate
- Registry Fee (if worth £5000 +)
- If a valid will, original will and codicils.
A PR approaches you for advice.
The deceased ran a business as a sole trader.
What must the PRs do with the business?
The PRs must sell the business as a going concern within a year of the death.
They can continue operations for the 1 year period.
A beneficiary wishes to bring a claim against a PR.
They ask you to explain how this would be achieved.
PRs are personally liable for losses resulting from breach.
A claim against a PR is called a devastavit
Your client, a PR, has instructed you to publish a notice of intention to distribute to unknown beneficiaries per s.27 TA 1925.
Ecplain the procedure.
Publish notice in ….
- London Gazette; and
- If land or a business forms part of the estate in a local newspaper circulated in the area where it is situated
After 2 months, the PRs are not liable to claims from unknown beneficiaries or creditors
Your client has a business interest.
To qualify for BPR for IHT purposes on a lifetime transfer, what is the requirment, and how much relief would be available?
Owned continuously for 2 years immediately prior to transfer
100% Exemption
Your client owns unquoted shares.
To qualify for BPR for IHT purposes on a lifetime transfer, what is the requirment, and how much relief would be available?
Owned continuously for 2 years immediately prior to transfer
100% Exemption
Your client owns quoted shares.
To qualify for BPR for IHT purposes on a lifetime transfer, what is the requirment, and how much relief would be available?
Owned continuously for 2 years immediately prior to transfer
50% Exemption
Your client owns assets used for businesss.
To qualify for BPR for IHT purposes on a lifetime transfer, what is the requirment, and how much relief would be available?
Owned continuously for 2 years immediately prior to transfer
50% Exemption
Your client has a business interest.
To qualify for BPR for IHT purposes on death, what is the requirment, and how much relief would be available?
It must have been owned by the transferee and qualifies for BRP at the date of death.
100% Relief
Note, the 2 year requirment is only for lifetime not death transfers.
Your client has shares in a Unquoted Company.
To qualify for BPR for IHT purposes on death, what is the requirment, and how much relief would be available?
Shares in Private Companies (LTD)
Shares in PLCs not Listed on Stock Exchange
It must have been owned by the transferee and qualifies for BRP at the date of death.
100% Relief
Note, the 2 year requirment is only for lifetime not death transfers.
Your client has shares in a quoted Company.
To qualify for BPR for IHT purposes on death, what is the requirment, and how much relief would be available?
- Voting Control Required (51%)
- Listed on Stock Exchange
It must have been owned by the transferee and qualifies for BRP at the date of death.
50% Relief
Note, the 2 year requirment is only for lifetime not death transfers.
Your client owned Land, Building, Machinery used for Business.
To qualify for BPR for IHT purposes on death, what is the requirment, and how much relief would be available?
- Owned personally but used for business
- The transferor has voting control (51%+)
It must have been owned by the transferee and qualifies for BRP at the date of death.
50% Relief
Note, the 2 year requirment is only for lifetime not death transfers.
Your client owns agricultural land and buildings used for agricultural activity.
They have it as a tenancy created prior to September 1995
To qualify for APR for IHT purposes on a lifetime transfer, what is the requirment, and how much relief would be available?
If used when calculating a lifetime transfer it must have been owned continuously for 2 years immediately prior to transfer
50% Relief
Note, it is only 50% since it is a Tenancy Before: 1995
Your client owns agricultural land and buildings used for agricultural activity.
They own it or let it after September 1995
To qualify for APR for IHT purposes on a lifetime transfer, what is the requirment, and how much relief would be available?
If used when calculating a lifetime transfer it must have been owned continuously for 2 years immediately prior to transfer
100% Relief
Note, the 2 year requirment is only for lifetime not death transfers.
Your client owns agricultural land and buildings used for agricultural activity.
They own it or let it after September 1995
To qualify for APR for IHT purposes on death, what is the requirment, and how much relief would be available?
If used when calculating IHT as part of a deemed death transfer it must have been owned by the transferee and qualifies for APR at the date of death.
100% Relief
Note, the 2 year requirment is only for lifetime not death transfers.
Your client owns agricultural land and buildings used for agricultural activity.
They let it before September 1995
To qualify for APR for IHT purposes on death, what is the requirment, and how much relief would be available?
If used when calculating IHT as part of a deemed death transfer it must have been owned by the transferee and qualifies for APR at the date of death.
50% Relief
Note, the 2 year requirment is only for lifetime not death transfers.
The deceased’s estate has a value of below the NRB
No IHT is payable.
What type of estate is this?
Low Value Excepted Estate
An exempted estate will not have to the complete IHT 400.
Rather it will provide information as part of the grant of representation which is then sent to HMRC
The deceased’s estate has a value of no more than £3 million.
No IHT is payable, because after debts are deducted and spousal/charity exemption applied, net value is below NRB.
Assuming the estate doesn’t consist of prohibited features for this exemption, what type of estate is this?
Exempt Excepted Estate
An exempted estate will not have to the complete IHT 400.
Rather it will provide information as part of the grant of representation which is then sent to HMRC
Your client, a PR, has been told that they do not need to submit IHT 400 because the estate is an exempt excepted estate.
What features would bar an estate being classified as such, even if no IHT is payable.
- Gross value more than £3 million
- Gift made with reservation of benefit
- More than one trust interest
- Single trust worth £250,000 + not passing to spouse
- Foreign assets worth £100,000+
- Value of specified transfers £250,000 +
- A claim for RNRB is being made.
If any of these are present, IHT 400 must be submitted.
Your client believes their estate is an exempt excepted estate.
To require IHT 400 to be submitted, what value would be required for a single trust?
Single trust worth more than £250,000 not passing to spouse
Your client believes their estate is an exempt excepted estate.
To require IHT 400 to be submitted, what value of foreign assets would be required?
Worth more than £100,000
You are conducting an interview with a client.
They want to make a new will.
What key questions should you ask?
- Who would you like to include as beneficiaries in your will?
- In the unfortunate case where one of your beneficiaries predeceases you, would you like to provide for another beneficiary as a substitute?
- Are there any conditions or restrictions you would like to place on the distribution of assets to your beneficiaries, such as reaching a certain age or meeting certain milestones?
You are conducting an interview with a client.
What assets should you enquire about?
- Real Estate (sole name? Joint?)
- Joint Property
- Insurance policies
- Trusts
- Pension schemes
- Financial accounts
- Investment assets
Ascertain value, debts, expenses, whether it is a foreign asset.
You are conducting an interview with a client.
They want advice on the valitidy of a will.
What should you consider?
Attestation - Have there been any challenges or disputes regarding the validity of how the will was made?
Beneficiary witness - Can you please clarify if any of the witnesses present during the signing of the will are also named as beneficiaries in the document
Codicils - Are you aware of any documents that might have been attached to the will that have not been provided or subsequent amendments?
Alterations - Were there any significant changes made to the will?
If someone has the benefit of a full RNRB, but they do not have a transferred RNRB, what estate value means they lose the benefit of the RNRB?
£2,350,000
(£2.35 million)
RNRB is £175,000.
It is reduced by £1 for every £2 above £2million.
If someone has the benefit of a full RNRB, and they also have a 100% transferred RNRB, what estate value means they lose the benefit of the RNRB?
£2,700,000
(£2.7 million)
RNRB is £175,000. Since they have 100% TRNRB, they have £300,000
It is reduced by £1 for every £2 above £2million.
Wheen considering Distribution and IHT for CMA/Writing, what must you ensure?
Always do this!
Is there sufficient assets to pay all the gifts? Remember to deduct debts!
(1) Add up all sets
(2) Deduct Debts
(3) Amount Will Gives - Amount to be given
If there is a shortfall, consider abatement. Remember precuniary legacies will be last to be paid!!
