SQE Wills & Administration

Question 1

Two years ago, a solicitor drew up a will for a testator in which he gave a number of pecuniary legacies, including one of £100,000 to his nephew, and the remainder of his estate to charity. The will was validly executed and there were no issues as to capacity. The solicitor retained a photocopy of the will on their file and gave the original will to the testator. The testator has now died, and the original will has been found amongst his possessions. The clause dealing with the nephew’s legacy appears as follows:

I give to my nephew the sum of £50,000

Is the nephew likely to receive the legacy of £100,000?

A. No, because the alterations invalidate the entire will.

B. No, because the original wording has been revoked by destruction.

C. No, because the testator intended that the nephew should receive only £50,000.

D. Yes, because unattested alterations are of no effect.

E. Yes, because the court will apply the conditional revocation rule.

Answer 1

Option E is correct. An exception to the requirement that to be valid an alteration must be executed is where the amendment simply obliterates the original wording. There is a revocation of the original wording by destruction. However, where the testator adds substitute wording the court is likely to find that revocation was conditional on the substitute wording taking effect. As the substitute wording here is invalid the court will look at evidence (here the photocopy) to reconstruct the original wording which will then take effect.

Option A is wrong because alterations such as these do not invalidate the will.

Option B is wrong because although the original wording has been obliterated the court will apply the conditional revocation rule (as above).

Option C is wrong because the testator has not given effect to his intentions by executing the alterations.

Option D is wrong because it is not correct to say that unattested alterations have not effect. Had the testator not added the substitute words, the original wording would have been revoked by destruction.

Question 2

A testator died last month. In his valid will the testator gave his entire estate (all the assets were in the testator’s sole name) to “such of my sons who are living at my death and if more than one in equal shares”. The testator was a widower and had one son as a result of his marriage. This son died six months before the testator, leaving a son (the grandson), now aged 13 years. For the last four years the testator has been living with his girlfriend and her son (now aged 15 years). The testator and his girlfriend also had a son together, who is now aged three years.

Which of the following best describes entitlement to the testator’s estate?

A. The girlfriend’s son and three year old son will share the estate.

B. The grandson will take the whole estate.

C. The grandson and three year old son will share the estate, provided that they each attain the age of 18.
selected.

D. The grandson and three year old son will share the estate.

E. The three year old son will take the whole estate.

Answer 2

Option D is correct. The gift to ‘my sons’ will be interpreted as meaning a gift to only his sons (whether legitimate or not), and not that of his girlfriend (option A therefore is wrong). Although the first son had predeceased, he had left a child who takes in substitution for his father (s33 Wills Act 1837).

Options B and E are wrong in that they wrongly exclude the three year old son and grandson respectively.

Option C is wrong as although the grandson and the three year old son are entitled they do not have to satisfy a condition of reaching the age of 18 years because this was not a stipulation in the will

Question 3

A testator’s valid will contains the following provisions:

• “to my eldest nephew, my Tesla car, Reg 0101 XXX”

-“to each of my other nephews and nieces, £50,000 from my HSBC bank account, number 898989”

• “to my brother, the collection of paintings I presently own”
• “to my sister, my holiday home: Sunningdale”
• “to my wife the residue of my estate.”

When the will was executed the testator had three nephews and two nieces, and his collection of paintings comprised five painted by the same artist.

On the recent death of the testator, his assets were as follows:

• Tesla car, Reg 0101 XXX
• Collection of paintings
• Sunningdale (owned as joint tenants with his wife)
• £200,000 cash in HSBC bank account, number 898989
• House (in sole name)
• Portfolio of shares

Since he made his will, the testator sold all five paintings and replaced them with a collection of painted by different artists.

The testator’s eldest nephew has predeceased him but the testator’s wife and the other nephews and nieces have survived.

What assets will the wife receive as the gift of residue under the testator’s will?

A. The car, the paintings, Sunningdale, the house and the shares.
selected

B. The car, the paintings, the house and the shares.

C. The paintings, the house and the shares.

D. The car, the bank account, the house and the shares.

E. The bank account, Sunningdale, the house and the shares.

Answer 3

Option B is correct.

The gift of the car to the eldest nephew fails because the will speaks from the date of execution for people and the “eldest nephew” at this time predeceased the testator.

The eldest surviving nephew cannot take the car as he did not fit the description at the time the will was executed, and the car passes with the residue.

The gift of the collection of paintings to the brother also fails because the will gave the brother the “collection of paintings which I presently own”.

This expressly referred to the paintings owned at the date of execution of the will and therefore rebutted the general principle that will speaks from the date of death as regards property. All of the paintings owned as at the date of execution of the will have since been sold and replaced with entirely different paintings, which pass with the residue.

The gift of cash to the other nephews and nieces does not fail (there are four of them and the £200,000 precisely funds the four gifts of £50,000) and so this does not pass with the residue. Sunningdale does not pass under the will as it was held as joint tenants with the wife, so passes to her by survivorship. The house and shares were not specifically gifted in the will and pass as part of the residue.

Option A is wrong as although it is correct that the wife takes the car, the paintings, the house and the shares, Sunningdale does not pass under the will as it was held as joint tenants with the wife, so passes to her by survivorship.

Option C is wrong as although it is correct that the wife takes the paintings, the house and the shares under the will she also takes the car as the specific gift of it has failed.

Option D is wrong as although it is correct that the wife takes the car, the house and the shares under the will she also takes the paintings as the specific gift of it has failed, and does not take the account as this gift has not failed.

Option E is wrong as although it is correct that the wife takes the house and the shares under the will she also takes the car and the paintings as these specific gifts have failed, and she does not take the account as this gift has not failed. Further, Sunningdale does not pass under the will as it was held as joint tenants with the wife, so passes to her by survivorship.

Question 4

Four years ago a woman made a valid will leaving her gold watch to her niece and the residue of her estate to her children. One year later the woman prepared a codicil to her will in which she referred to her original will and included a clause leaving her gold watch to her brother. The woman signed and dated the codicil and placed it inside an envelope with the original will.

Which of the following statements is correct in relation to who will inherit the woman’s estate?

A. The brother will inherit the gold watch in accordance with the terms of the codicil. The residue of the estate will pass to the children in accordance with the original will.

B. The niece will inherit the gold watch in accordance with the terms of the original will. The residue of the estate will pass to the children in accordance with the original will.

C. The gift of the gold watch will fail due to uncertainty and will fall into the residuary estate and pass to the children in accordance with the terms of the original will.

D. The gift of the gold watch will fail due to uncertainty and will pass outside of the will under the intestacy rules. The children will inherit the residue of the estate in accordance with the terms of the original will.

E. The existence of the codicil invalidates the original will and the whole of the woman’s estate will pass under the intestacy rules.

Answer 4

Option B is correct.

The codicil prepared by the woman is invalid as it was not witnessed and therefore did not comply with s.9 of the Wills Act 1837. To comply with s.9 the codicil must be in writing and signed by the testator in the joint presence of two witnesses, who must then witness the testator’s signature by signing the codicil in the testator’s presence. The codicil is invalid and therefore the terms of the original will are unaffected and the watch passes to the niece in accordance with the original will.

Option A is wrong as the codicil is invalid and so the brother inherits nothing from the estate.

Options C and D are wrong as the original will is valid and the gold watch and the residue of the estate will pass under the terms of the will.

Option E is wrong as the codicil is invalid and will have no impact upon the validity of the original will.

Question 5

A man dies leaving a valid will in which he leaves all his company shares to his sister, his motorcycle (registration number ABC 123) to his niece, his vintage comic book collection to his nephew and the residue of his estate to his wife.

At the man’s death he only owned the following assets in his sole name:

Collection of vintage comic books
Motorcycle (registration number XYZ 888)
Company shares
Money in bank accounts
The man is survived by his wife, and his niece and his nephew (who are the children of his sister who died two years before him).

Which of the following is correct in relation to the gifts of the motorcycle and the company shares?

A. The gift of the shares lapses, and the gift of the motorcycle is adeemed.

B. The gifts of the shares and the motorcycle both lapse.

C. The gift of the shares is adeemed, and the gift of the motorcycle lapses.

D. The gift of the shares passes by substitution to the niece and nephew in place of their mother, but the gift of the motorcycle is adeemed.
selected

E. The gift of the shares passes by substitution to the niece and nephew in place of their mother, but the gift of the motorcycle lapses.

Answer 5

Option A is correct, as a gift in a will is said to ‘adeem’ if the specific asset gifted is no longer owned as at the date of death. The niece was given a specific motorcycle which the testator no longer owned at the date of death. A gift in a will is said to ‘lapse’ if the intended beneficiary predeceases the testator. The testator’s sister predeceased him.

Option B is wrong as although the gift of the shares has lapsed, the gift of the motorcycle has adeemed.

Option C is wrong as the gift of shares has lapsed, not adeemed, and the gift of the motorcycle has adeemed, not lapsed.

Option D is wrong as although the gift of the motorcycle has adeemed, s33 Wills Act 1837 will not operate to automatically substitute the niece and nephew in place of their mother in order to take the gift of the shares. This is because s33 only applies in cases where a testator gives a gift in his will to his own child or remoter issue and that gift fails because the beneficiary predeceased the testator. Here the gift was given to the testator’s sister, so s33 is not applicable.

Option E is wrong as not only has the gift of the motorcycle adeemed, s33 Wills Act 1837 will not operate to automatically substitute the niece and nephew in place of their mother in order to take the gift of the shares, as the section only applies where the original gift was to the testator’s own child or remoter issue.

Question 6

A man died three months ago, intestate, leaving a net estate of £500,000 (comprising only assets in his sole name, including £1,000 personal chattels). He was married and had lived with his wife for 10 years. There is one son from that marriage. However, 20 years ago the man separated from his wife (but they took no legal steps to end the marriage). One year after this the man started a relationship with another woman, and she remained his partner until his death. They lived together in her house and had one daughter together. The partner and the daughter (now aged 19) survived the man. The man’s wife died three weeks after him in a car accident, leaving her whole estate by will to their son, who is now aged 28.

Which of the following best explains the entitlement to the man’s estate?

A. The wife takes all of the estate under the Intestacy Rules and it then passes to the son under her will.

Option b: The son takes the whole of the estate under the Intestacy Rules.

Option c: The wife, son and daughter share the estate under the Intestacy Rules and the wife’s share passes to her son under her will.

Option d: The son and daughter share the estate equally under the Intestacy Rules.

Option e: The man’s partner, the son and the daughter will share the estate under the Intestacy Rules.

Answer 6

Option D is correct. The man was still married to his wife but a spouse has to survive for 28 days in order to benefit on intestacy. The estate therefore passes to his issue on the statutory trusts. His 2 children are over 18 and therefore have a vested interest in a half share each.

Option A is wrong as not only has the wife not survived 28 days, the estate was of a size that would mean the man’s issue would take some of it.

Option B is wrong as the daughter (despite being illegitimate) shares the estate as the man’s issue.

Option C is wrong as although the estate is of a size that means spouse and issue would share, the spouse is not entitled having not survived 28 days.

Option E is wrong as the partner is not entitled under the Intestacy Rules, not being a spouse.

Question 7

Three months ago a man won £1,000,000 in the lottery. Last month the man made a correctly executed will, leaving £100,000 to his son and the remainder to charity. The man later told his son about the will, telling him that he was the main beneficiary of assets worth around £110,000. The man made no mention of the lottery winnings. The man died soon afterwards. In fact, the assets in the man’s estate are approximately £1,110,000. The son wishes to challenge the validity of his father’s will on the basis that he lacked capacity, as he seemed to have forgotten about the lottery winnings.

Which of the following best describes whether the personal representatives (PRs) can rely on the presumption that the man had capacity to make a will?

A. The man may not have understood the extent of his estate when he made his will, so his PRs cannot rely on the presumption that he had capacity to make a will.

Option b: The PRs will be able to rely on the presumption that the man had capacity to make a will at the time it was made.

Option c: The PRs will not need to prove the man had capacity when he made the will, as he showed no sign of mental confusion at the time the will was made.

Option d: The PRs will be able to prove that the man had capacity to make a will, as they will be able to rely on the presumption of knowledge and approval to show that the will is valid.

Option e: The fact that the will was correctly executed means that the PRs can rely on the presumption of capacity.

Answer 7

Option A is correct. Where a person generally showed no sign of mental confusion, it will be presumed that capacity existed at the time the will was made. If, however, there is anything to put capacity in doubt, the presumption will not apply and the personal representatives will have to prove capacity on the basis of the Banks v Goodfellow test. Under that test, the testator must understand the extent of his property. The man appears not to have understood that his lottery win meant that his property vastly exceeded the legacy to his son, leaving the charity as the main beneficiary.

Option B is wrong as the man did not appear to understand the extent of his assets and so the presumption is not available.

Option C is wrong as the evidence from the son suggests that the man did not remember his lottery winnings.

Option D is wrong as knowledge and approval can only be presumed if there is capacity (and the testator signed the will personally)

Option E is wrong as correct execution does not mean that a testator had capacity.

Question 8

A solicitor’s friend instructs the solicitor to draft a will containing a legacy of a significant amount to the solicitor.

Which of the following statements best explains the position?

A. The proposed legacy would be void due to the presumption of undue influence.

Option b: The proposed legacy does not give rise to a conflict of interest.

Option c: The solicitor can draft the will containing the legacy only if the friend obtains independent legal advice.

Option d: The solicitor can draft the will containing the legacy if the solicitor tells the friend to obtain independent legal advice but the friend refuses.

Option e: A legacy to the solicitor’s wife would not give rise to a conflict of interest.

Answer 8

Option C is the correct answer. Paragraph 6.1 SRA Code of Conduct for Solicitors, RELs and RFLs states that solicitors should not act if there is an own interest conflict or a significant risk of such a conflict.

SRA Ethics Guidance, ‘Drafting and preparation of wills’ states that where a solicitor drafts a will where the client wishes to make a gift of significant value to the solicitor, the solicitor should be satisfied that the client has first taken independent legal advice and would usually cease acting if the client does not agree to taking independent legal advice.

Option A is wrong because there is no presumption of undue influence in wills. The person alleging undue influence must prove it.

Option B is wrong because the solicitor’s personal interest clearly conflicts with their duty to the client and might prevent them from giving impartial advice.

Option D is wrong according to the SRA Ethics Guidance set out above.

Option E is wrong because there would still be a conflict of interest if the legacy were in favour of the solicitor’s family (and according to the Ethics Guidance, the solicitor should not act unless the client has taken independent legal advice).

Question 9

A solicitor is asked to advise a client who wishes to challenge the validity of a will. The testator was the client’s uncle who at the time of his death was a widower. His will leaves everything to a younger woman he met recently on the internet. The client contends it had always been her uncle’s intention to leave his house to the client.

The will was drafted and printed off the internet by the beneficiary. It has an attestation clause and was signed by the testator and two witnesses.

Which of the following statements is most likely to be correct?

Answer 9

A. It will be presumed that the testator intended to make a will in these terms because he signed it.

Option b: The presumption that the testator knew and approved of the contents of the will does not apply because it was not prepared by a solicitor

Option c: The client will have the burden of proving that her uncle did not intend to give the whole estate to the beneficiary.

Option d: The presumption that the testator knew and approved of the contents of the will does not apply because the circumstances are suspicious.

Option e: If the testator had capacity and the will was properly executed it cannot be challenged.

Question 10

Two years ago, a solicitor drew up a will for a testator in which he gave a number of pecuniary legacies, including one of £100,000 to his nephew, and the remainder of his estate to charity. The will was validly executed and there were no issues as to capacity. The solicitor retained a photocopy of the will on their file and gave the original will to the testator. The testator has now died, and the original will has been found amongst his possessions. The clause dealing with the nephew’s legacy appears as follows:

£50,000

I give to my nephew the sum of

Is the nephew likely to receive the legacy of £100,000?

A. No, because the alterations invalidate the entire will.

Option b: No, because the original wording has been revoked by destruction.

Option c: No, because the testator intended that the nephew should receive only £50,000.

Option d: Yes, because unattested alterations are of no effect.

Option e: Yes, because the court will apply the conditional revocation rule.

Answer 10

Option E is correct. An exception to the requirement that to be valid an alteration must be executed is where the amendment simply obliterates the original wording. There is a revocation of the original wording by destruction. However, where the testator adds substitute wording the court is likely to find that revocation was conditional on the substitute wording taking effect. As the substitute wording here is invalid the court will look at evidence (here the photocopy) to reconstruct the original wording which will then take effect.

Option A is wrong because alterations such as these do not invalidate the will.

Option B is wrong because although the original wording has been obliterated the court will apply the conditional revocation rule (as above).

Option C is wrong because the testator has not given effect to his intentions by executing the alterations.

Option D is wrong because it is not correct to say that unattested alterations have not effect. Had the testator not added the substitute words, the original wording would have been revoked by destruction.

Question 11

A testator died last month. In his valid will the testator gave his entire estate (all the assets were in the testator’s sole name) to “such of my sons who are living at my death and if more than one in equal shares”. The testator was a widower and had one son as a result of his marriage. This son died six months before the testator, leaving a son (the grandson), now aged 13 years. For the last four years the testator has been living with his girlfriend and her son (now aged 15 years). The testator and his girlfriend also had a son together, who is now aged three years.

Which of the following best describes entitlement to the testator’s estate?

A. The girlfriend’s son and three year old son will share the estate.

Option b: The grandson will take the whole estate.

Option c: The grandson and three year old son will share the estate, provided that they each attain the age of 18.

Option d: The grandson and three year old son will share the estate.

Option e: The three year old son will take the whole estate.

Answer 11

Option D is correct. The gift to ‘my sons’ will be interpreted as meaning a gift to only his sons (whether legitimate or not), and not that of his girlfriend (option A therefore is wrong). Although the first son had predeceased, he had left a child who takes in substitution for his father (s33 Wills Act 1837).

Options B and E are wrong in that they wrongly exclude the three year old son and grandson respectively.

Option C is wrong as although the grandson and the three year old son are entitled they do not have to satisfy a condition of reaching the age of 18 years because this was not a stipulation in the will.

Question 12

Four years ago a woman made a valid will leaving her gold watch to her niece and the residue of her estate to her children. One year later the woman prepared a codicil to her will in which she referred to her original will and included a clause leaving her gold watch to her brother. The woman signed and dated the codicil and placed it inside an envelope with the original will.

Which of the following statements is correct in relation to who will inherit the woman’s estate?

A. The brother will inherit the gold watch in accordance with the terms of the codicil. The residue of the estate will pass to the children in accordance with the original will.

Option b: The niece will inherit the gold watch in accordance with the terms of the original will. The residue of the estate will pass to the children in accordance with the original will.

Option c: The gift of the gold watch will fail due to uncertainty and will fall into the residuary estate and pass to the children in accordance with the terms of the original will.

Option d: The gift of the gold watch will fail due to uncertainty and will pass outside of the will under the intestacy rules. The children will inherit the residue of the estate in accordance with the terms of the original will.

Option e: The existence of the codicil invalidates the original will and the whole of the woman’s estate will pass under the intestacy rules.

Answer 12

Option B is correct. The codicil prepared by the woman is invalid as it was not witnessed and therefore did not comply with s.9 of the Wills Act 1837. To comply with s.9 the codicil must be in writing and signed by the testator in the joint presence of two witnesses, who must then witness the testator’s signature by signing the codicil in the testator’s presence. The codicil is invalid and therefore the terms of the original will are unaffected and the watch passes to the niece in accordance with the original will.

Option A is wrong as the codicil is invalid and so the brother inherits nothing from the estate.

Options C and D are wrong as the original will is valid and the gold watch and the residue of the estate will pass under the terms of the will.

Option E is wrong as the codicil is invalid and will have no impact upon the validity of the original will.

Question 13

A testator’s valid will contains the following provisions:

“to my eldest nephew, my Tesla car, Reg 0101 XXX”
“to each of my other nephews and nieces, £50,000 from my HSBC bank account, number 898989”
“to my brother, the collection of paintings I presently own”
“to my sister, my holiday home: Sunningdale”
“to my wife the residue of my estate.”
When the will was executed the testator had three nephews and two nieces, and his collection of paintings comprised five painted by the same artist.

On the recent death of the testator, his assets were as follows:

Tesla car, Reg 0101 XXX
Collection of paintings
Sunningdale (owned as joint tenants with his wife)
£200,000 cash in HSBC bank account, number 898989
House (in sole name)
Portfolio of shares
Since he made his will, the testator sold all five paintings and replaced them with a collection of painted by different artists. The testator’s eldest nephew has predeceased him but the testator’s wife and the other nephews and nieces have survived.

What assets will the wife receive as the gift of residue under the testator’s will?

A. The car, the paintings, Sunningdale, the house and the shares.

Option b: The car, the paintings, the house and the shares.

Option c: The paintings, the house and the shares.

Option d: The car, the bank account, the house and the shares.

Option e: The bank account, Sunningdale, the house and the shares.

Answer 13

Option B is correct. The gift of the car to the eldest nephew fails because the will speaks from the date of execution for people and the “eldest nephew” at this time predeceased the testator. The eldest surviving nephew cannot take the car as he did not fit the description at the time the will was executed, and the car passes with the residue. The gift of the collection of paintings to the brother also fails because the will gave the brother the “collection of paintings which I presently own”. This expressly referred to the paintings owned at the date of execution of the will and therefore rebutted the general principle that will speaks from the date of death as regards property. All of the paintings owned as at the date of execution of the will have since been sold and replaced with entirely different paintings, which pass with the residue. The gift of cash to the other nephews and nieces does not fail (there are four of them and the £200,000 precisely funds the four gifts of £50,000) and so this does not pass with the residue. Sunningdale does not pass under the will as it was held as joint tenants with the wife, so passes to her by survivorship. The house and shares were not specifically gifted in the will and pass as part of the residue.

Option A is wrong as although it is correct that the wife takes the car, the paintings, the house and the shares, Sunningdale does not pass under the will as it was held as joint tenants with the wife, so passes to her by survivorship.

Option C is wrong as although it is correct that the wife takes the paintings, the house and the shares under the will she also takes the car as the specific gift of it has failed.

Option D is wrong as although it is correct that the wife takes the car, the house and the shares under the will she also takes the paintings as the specific gift of it has failed, and does not take the account as this gift has not failed.

Option E is wrong as although it is correct that the wife takes the house and the shares under the will she also takes the car and the paintings as these specific gifts have failed, and she does not take the account as this gift has not failed. Further, Sunningdale does not pass under the will as it was held as joint tenants with the wife, so passes to her by survivorship.

Question 14

A man dies leaving a valid will in which he leaves all his company shares to his sister, his motorcycle (registration number ABC 123) to his niece, his vintage comic book collection to his nephew and the residue of his estate to his wife.

At the man’s death he only owned the following assets in his sole name:

Collection of vintage comic books
Motorcycle (registration number XYZ 888)
Company shares
Money in bank accounts
The man is survived by his wife, and his niece and his nephew (who are the children of his sister who died two years before him).

Which of the following is correct in relation to the gifts of the motorcycle and the company shares?

A. The gift of the shares lapses, and the gift of the motorcycle is adeemed.

Option b: The gifts of the shares and the motorcycle both lapse.

Option c: The gift of the shares is adeemed, and the gift of the motorcycle lapses.

Option d: The gift of the shares passes by substitution to the niece and nephew in place of their mother, but the gift of the motorcycle is adeemed.

Option e: The gift of the shares passes by substitution to the niece and nephew in place of their mother, but the gift of the motorcycle lapses.

Answer 14

Option A is correct, as a gift in a will is said to ‘adeem’ if the specific asset gifted is no longer owned as at the date of death. The niece was given a specific motorcycle which the testator no longer owned at the date of death. A gift in a will is said to ‘lapse’ if the intended beneficiary predeceases the testator. The testator’s sister predeceased him.

Option B is wrong as although the gift of the shares has lapsed, the gift of the motorcycle has adeemed.

Option C is wrong as the gift of shares has lapsed, not adeemed, and the gift of the motorcycle has adeemed, not lapsed.

Option D is wrong as although the gift of the motorcycle has adeemed, s33 Wills Act 1837 will not operate to automatically substitute the niece and nephew in place of their mother in order to take the gift of the shares. This is because s33 only applies in cases where a testator gives a gift in his will to his own child or remoter issue and that gift fails because the beneficiary predeceased the testator. Here the gift was given to the testator’s sister, so s33 is not applicable.

Option E is wrong as not only has the gift of the motorcycle adeemed, s33 Wills Act 1837 will not operate to automatically substitute the niece and nephew in place of their mother in order to take the gift of the shares, as the section only applies where the original gift was to the testator’s own child or remoter issue.

Question 15

A solicitor drew up a will for a woman; it was validly executed and there were no issues as to capacity. The will included a gift of £50,000 to the woman’s only daughter. The rest of the estate was left to other family members. The solicitor retained a photocopy of the will on their file and gave the original will to the woman. The woman has now died, and the original will has been found amongst her possessions. The clause dealing with the gift to the daughter appears as follows:

£10,000

I give to my daughter the sum of

Which of the following best explains the daughter’s entitlement under the terms of the will?

A. She is not entitled to anything, because the alterations invalidate the entire will.

Option b: She is entitled to £50,000, because the court will apply the conditional revocation rule. .

Option c: She is entitled to £10,000, because the testatrix intended that the daughter should receive that amount.

Option d: She is entitled to £50,000, because unattested alterations are of no effect.

Option e: She is not entitled to anything, because the original wording has been revoked by destruction

Answer 15

Option B is correct. An exception to the requirement that to be valid an alteration must be executed is where the amendment simply obliterates the original wording. There is a revocation of the original wording by destruction. However, where the testatrix adds substitute wording the court is likely to find that revocation was conditional on the substitute wording taking effect. As the substitute wording here is invalid the court will look at evidence (here the photocopy) to reconstruct the original wording which will then take effect.

Option A is wrong because alterations such as these do not invalidate the will.

Option E is wrong because although the original wording has been obliterated the court will apply the conditional revocation rule (as above).

Option C is wrong because the testatrix has not given effect to her intentions by executing the alterations.

Option D is wrong because it is not correct to say that unattested alterations have not effect. Had the testatrix not added the substitute words, the original wording would have been revoked by destruction.

Question 16

Ten years ago, a woman wrote out her will in which she gave £100,000 to her only sister and the rest of her estate to the woman’s son. The will was validly executed and there were no issues as to capacity. In the years that followed the woman and her sister quarrelled and became estranged. The woman told her friends that she was determined to ensure that her sister should receive nothing from her estate. The woman has now died, and the original will has been found amongst her possessions. The clause dealing with the legacy appears as follows:

I give to my sister the sum of

How much will the sister receive under the terms of the will?

A. £100,000, because the alteration has not been executed.

Option b: £100,000, because the court will look at extrinsic evidence to reconstruct the original wording.

Option c: Nothing, because the original wording has been revoked by destruction.

Option d: Nothing, because it will be presumed that the alteration was made before the will was executed.

Option e: Nothing, because the alteration invalidates the entire will.

Answer 16

Option C is correct. An exception to the requirement that to be valid an alteration must be executed is where the amendment simply obliterates the original wording. There is a revocation of the original wording by destruction (given the conversations with friends it appears that it was accompanied by an intention to revoke).

Option A is wrong because this is an exception to the usual rule on execution (see above).

Option B is wrong. The original wording is not apparent. It is not permissible to ascertain the wording by extrinsic evidence.

Option D is wrong because the presumption is that alterations were made after execution.

Option E is wrong because the will remains valid but takes effect without the obliterated words.

Question 17

A man died six months ago. He owned assets in his sole name worth £1,500,000, including a cottage (worth £300,000), which was subject to a £50,000 mortgage. The man had one other debt (£10,000 owed to his credit card provider). In his valid will, the man left his cottage to his niece and the residue of his estate to his nephew. Both gifts are effective. The will was silent on the burden of inheritance tax (‘IHT’) and all debts, including the mortgage secured on the cottage.

Which of the following best describes the position in relation to the burden of the IHT and all the debts?

A. The residue will bear the burden of all debts, including the mortgage, and the IHT attributable to the cottage.

Option b: The residue will bear the burden of all the debts, including the mortgage, but not the IHT attributable to the cottage.

Option c: The residue will bear the burden of the credit card debt but not the mortgage and not the IHT attributable to the cottage.

Option d: The residue will bear the burden of the IHT on the cottage, and the credit card debt but not the mortgage.

Option e: The residue will bear the burden of the IHT on the cottage but not on any of the debts.

Answer 17

Option D is correct as if the will is silent, the beneficiary who is given charged property (the cottage with the mortgage) bears the burden of the charged debt (s35 Administration of Estates Act 1925). The residue bears the burden of other debts and of IHT on property in the UK which vests in the PRs.

Option A is wrong as although the residue will bear the IHT and credit card debt, the niece takes the cottage subject to the mortgage,

Option B is wrong as although the residue will bear the credit card debt it will not bear the mortgage, but it will also bear the IHT.

Option C is wrong as although the residue will bear the credit card debt but not mortgage, it will also bear the IHT.

Option E is wrong as although the residue will bear the IHT and not the mortgage, it will also bear the credit card debt.

Question 18

A testator died last month. His validly executed will contained the following legacy:

£40,000

‘I give £20,000 to my grandson.’

Nobody can remember when the legacy was altered, but the testator’s initials appear in the margin adjacent to it. The testator had only one grandson and he survived the testator. The will left the rest of the estate to charity.

Which of the following statements best explains the grandson’s entitlement under the legacy?

The grandson is entitled to nothing because the alteration is presumed to have been made after execution.

Option b: The grandson is entitled to £20,000 because the original wording is apparent.

Option c: The grandson is entitled to nothing because the legacy has been revoked.

Option d: The grandson is entitled to £40,000 because the alteration has been validly attested.

Option e: The grandson is entitled to nothing because the testator did not write his full signature.

Answer 18

Option B is correct. The alteration is presumed to have been made after execution. The alteration is invalid as it has not been properly attested, but as the original wording is apparent it will stand.

Option A is wrong. Although there is a presumption that an alteration was made after execution, this does not result in the beneficiary receiving nothing where, as here, the original wording is apparent.

Option C is wrong because revocation of the legacy would require obliteration of the original wording.

Option D is wrong because valid attestation requires the signatures (or initials) of two witnesses.

Option E is wrong. The use of a full signature would make no difference (initials are sufficient). The alteration has not been validly attested because of the absence of witnesses, but this does not result in the beneficiary receiving nothing – see comment on Option B above.

Question 19

Last year, a testator consulted a solicitor regarding drawing up his will. Amongst other things, the testator discussed his wish to make a gift of 20,000 shares which he owned to his nephew (“the Gift”). The solicitor sent a draft of the will, which included the Gift as discussed, to the testator. The testator confirmed to the solicitor that he was happy with the draft. When the final will was prepared for execution, the text of the clause containing the Gift referred to 2,000 shares. Neither the testator nor the solicitor noticed the discrepancy and the will was duly executed. The testator has recently died.

Which of the following best describes whether the relevant clause in the executed will is likely to be rectified by the court to give effect to the testator’s intentions regarding the Gift?

A. It is likely to be rectified because it contains a clerical error.

Option b: It is likely to be rectified because the solicitor did not understand the testator’s instructions.

Option c: It is likely to be rectified because the testator did not approve of the gift.

Option d: The court cannot rectify it as it cannot look beyond the wording of the clause.

Option e: The court cannot rectify it as there is no evidence that the testator lacked testamentary capacity.

Answer 19

Option A best describes the position. Under s.20 of the Administration of Justice Act 1982, the court has power to rectify a will if it is satisfied that it is expressed in a way which fails to carry out the testator’s instructions in consequence of (a) a clerical error or (b) a failure to understand those instructions. On the facts, the relevant clause of the executed will, by referring to 2,000 shares, failed to carry out the testator’s intention to give 20,000 shares to his nephew. Given the discussion between the testator and the solicitor and the preparation and approval of a draft will referring to the correct number of shares, there is nothing to indicate that the solicitor failed to understand the client’s instructions. The likely explanation is that there was a clerical error by the solicitor’s firm when preparing the final will for execution. The court is likely therefore to rectify the clause on that basis.

Option B is not the best description of the position as there is nothing to indicate that the solicitor failed to understand the client’s instructions.

Option C is not the best description of the position because the testator did approve of the gift of the shares. (This is not a situation where additional words were included in the will by mistake.)

Option D is wrong. Although the aim in interpreting a will is for the court to establish the testator’s intention as revealed by its wording, the court does, as noted above, have power to rectify a will in certain limited circumstances.

Option E is wrong. Although there is nothing on the facts to suggest that the testator lacked testamentary capacity, lack of such capacity is not the basis on which the court can order rectification of a will.

Question 20

A woman made a valid will seven years ago, giving:

“my car to my sister”

“£5,000 to my only nephew”

“ the rest of my estate to my son”

The will was correctly witnessed by the woman’s nephew and her neighbour.

In the last seven years the woman has sold the car she owned when she made her will and purchased a new one. She also now has a granddaughter to whom she wants to make a gift of £10,000 on her death, and so the woman is considering how to change her will.

Which of the following states the correct position in relation to changes to the woman’s will?

A. The woman cannot make an effective gift to her granddaughter unless she writes a new will.

Option b: The woman can make an effective gift to her granddaughter by making a codicil, but it must be executed by the same two witnesses as the original will.

Option c: The woman can make an effective gift to her granddaughter by making a codicil, but if she states in it that she confirms her original will the gift to the sister will fail as this car is no longer owned.

Option d: The woman can make an effective gift to her granddaughter by just writing it on her original will.

Option e: The woman can make an effective gift to her granddaughter by making a codicil and she can also ensure her nephew takes his gift of £5,000 if she signs the codicil before two witnesses who do not include the nephew.

Answer 20

Option E is correct. A codicil will allow the new gift to be made and it will validate the gift to the nephew (which has failed, under s15 Wills Act 1837) in the original will because he was a witness, but only if he (or any spouse) is not a witness.

Option A is wrong as it is not necessary to write a new will to make changes to it.

Option B is wrong as although a codicil will allow the new gift to be made, and to be valid the codicil must be executed in accordance with the same formalities as a will (under s9 Wills Act 1837), it does not mean that it has to be the same witnesses as for the will.

Option C is wrong as although a codicil will allow the new gift to be made, the effect will be to republish the will as at the date of the codicil and so the gift of the car will mean the new one owned at this point.

Option D is wrong as writing changes on the will must be also executed in the same way as the will to be effective.

Question 21

A husband and wife own their house as beneficial joint tenants. They both make a will in which each left their entire estate to the other. Sometime later, the husband is convicted of the wife’s murder.

Which of the following best describes the husband’s entitlement to the wife’s estate?

A. The house passes to the husband by survivorship; the gift in the will is forfeit.

Option b: The husband will receive the whole estate if the court decides to modify the effect of the forfeiture rule in that way.

Option c: The house passes to the husband by survivorship; the gift in the will lapses.

Option d: The husband is not entitled to anything from the estate.

Option e: The house passes to the husband by survivorship; the rest of the estate passes under the intestacy rules.

Answer 21

Option D is correct. The husband is responsible for the wife’s unlawful killing and therefore he cannot benefit from the wife’s estate under the forfeiture rule. The forfeiture rule applies to both the wife’s interest in the house (which ordinarily would pass by survivorship) and to the gift in a will. As a result, options A, C and E are wrong.

Option B is wrong because the court is not able to modify the effect of the forfeiture rule as the conviction is for murder.

Question 22

A testator’s will contains a legacy of ‘my diamond necklace to my daughter’ and gives the residuary estate to the testator’s son. At the time of the testator’s death, the testator owns two diamond necklaces, and there is no further evidence as to what the testator intended.

Is the daughter likely to inherit anything under the testator’s will?

A. Yes, the daughter will inherit both diamond necklaces as these both fit the description in the will.

Option b: Yes, the daughter will inherit whichever one of the diamond necklaces the personal representatives select on her behalf.

Option c: Yes, the daughter will receive a monetary gift in place of the specific legacy.

Option d: No, the legacy will be void for uncertainty as there is no evidence which one was intended to be left to the daughter.

Option e: No, the legacy will be void as it has adeemed.

Answer 22

Option D is correct as where there is no evidence of which necklace was intended to be gifted the legacy will be void for uncertainty. Option A is wrong as the gift in the will refers to only one, not both necklaces.

Option B is wrong as the personal representatives do not have power to do select.

Option C is wrong as the will does not provide for this substitution.

Option E is wrong as the testator still owned the necklace so the gift has not adeemed.

Question 23

A woman died last week, together with her son and daughter, in an accident. The son died immediately; the woman died a few hours later and her daughter died the following day. The woman had no surviving spouse. Each of her children was married, and each had one child (who have survived). The woman made a valid will in which she stated that she gave her estate to her two children in equal shares. Both son and daughter had left valid wills leaving everything they owned to their respective spouses (who have survived).

Which of the following best describes who will inherit the woman’s estate?

A. The daughter’s husband will take the whole of it.

Option b: The daughter’s child will take the whole of it.

Option c: The daughter’s husband and the son’s child will each take one half of it.

Option d: The son’s wife and the daughter’s child will each take one half of it.

Option e: The son’s wife and the daughter’s husband will each take one half of it.

Answer 23

Option C is correct as the will contains words of severance, therefore, the estate is split into two shares, rather than the daughter taking the son’s share. The son has not survived to take a vested interest but s33 Wills Act 1837 applies to this gift as the woman left a gift to her child, he has pre-deceased, but left a surviving child who takes instead. The daughter did survive to take a vested interest in her half of the estate and this therefore passes under her will to her husband.

Option A is wrong as the will clearly splits the estate into two halves.

Option B is wrong as not only is the estate split but also the daughter got a vested interest and so s33 Wills Act does not apply.

Option D is wrong as the son did not get a vested interest in his half of the estate and so could not pass this to his wife, but the daughter was in this position so her share passed to her husband, not her child.

Option E is wrong as although the daughter’s husband does take a half share the other half goes to the son’s child under s33 Wills Act 1837.

Question 24

Jemima, who is single, dies in September 2024 and leaves everything to her daughter. Her estate for IHT is £300,000 and there are no exemptions and reliefs. The estate does not include any qualifying residential interest.
Three years before her death she gave her daughter £146,000. Apart from this, she has made no lifetime transfers.

Which of the following is the correct amount of IHT payable on Jemima’s death estate?

A. £120,000.

B. £48,400.

C. £46,000.

D. £6,000.

E. Nil.

Answer 24

C is correct. The value of her death estate is £300,000 and there are no exemptions and reliefs. The residence nil rate band is not available as the estate did not include any qualifying residential interest.

The first £6,000 of the lifetime gift was exempt (two years’ annual exemptions). The remaining £140,000 was a potentially exempt transfer which has become chargeable. Therefore, only the first £185,000 of Jemima’s death estate is taxed at 0% and the remaining £115,000 is taxed at 40%.

Question 25

In the same day in June 2024 Wisan gives £600,000 to his grandson and pays £100,000 to a discretionary trust.

Apart from making gifts on 6 April each tax year to use his annual exemption Wisan has never made any other lifetime transfers.

Which of the following statements is CORRECT?

A. No IHT is payable on the two gifts.

B. £120,000 IHT is payable on the gift to the grandson.

C. No IHT is payable on the gift to the grandson, but £20,000 IHT is payable on the payment to the discretionary trust.

D. £110,000 IHT is payable on the gift to the grandson.

E. £40,000 IHT is payable on the payment to the discretionary trust.

Answer 25

A is correct.

The gift of £600,000 to his grandson is a PET and is not yet chargeable. The gift of £100,000 into a discretionary trust is a LCT. This is chargeable at the date of the gift. However, there are no other chargeable lifetime transfers in the seven years before the date of this gift so Wisan’s full nil rate band is available. The gift into the discretionary trust will fall within Wisan’s nil rate band. No inheritance tax is payable at the date of these gifts.

Question 26

In July 2024, Fred gives his son his shares in Abacus Bathroom Co Ltd worth £340,000. The company manufactures bathroom fittings. Fred has owned the shares for 10 years.

On the following day Fred gives his daughter his portfolio of small shareholdings in various quoted shares worth £350,000.

Fred dies in December 2024. His son and daughter still own the shares he gave them.

Fred made no other lifetime transfers.

Which of the following statements is correct?

A. Business property relief will be available on both transfers.

B. IHT will be payable at 40% on the whole of the transfer of quoted shares because the earlier transfer to the son has exhausted Fred’s nil rate band.

C. Business property relief at 50% will be available on the transfer of quoted shares.

D. Business property relief at 100% will be available on the transfer of unquoted shares.

E. Business property relief is not available for either transfer.

Answer 26

D is correct. There is no BPR on transfers of quoted shares unless the transferor had a controlling interest. Fred could not have had a controlling interest in a quoted company with shares of such a low value.

BPR is available at 100% on the transfer of the unquoted shares.

The business is trading in nature. Fred owned the shares for two years before the transfer and his son still owned the shares at the date of his death.

Because the transfer of the unquoted shares qualifies for 100% relief, Fred’s nil rate band is unaffected by the transfer and the first £325,000 of the transfer to his daughter is at 0%.

Question 27

A testator died last week. Amongst the testator’s assets is a house which the testator
and his sister owned as beneficial joint tenants. At the time of the testator’s death the
house was worth £800,000 and was not subject to any mortgage.
What is the value of the house for IHT purposes?

A. £800,000.
B. £400,000.
C. £800,000 less a discount of up to 15%.
D. Nil.
E. £400,000 less a discount of up to 15%.

Answer 27

Option E is correct. The testator was beneficially entitled to half the value of the
property immediately before death. However, the special valuation rule which applies
to land allows a small discount for IHT purposes.

Question 28

A testatrix left a valid will in which she gave her house (valued at £400,000) to her
brother and the remainder of her estate (which comprises money in various accounts
totalling £350,000) to her sister.
The testatrix had no debts. Five years before her death the testatrix put £200,000
into a discretionary trust for the benefit of her nieces and nephews. The testatrix
made no other lifetime transfers.
The testatrix never married nor entered a civil partnership.
How much IHT is payable on the estate?

A. £123,800.
B. £170,000.
C. £247,600.
D. £250,000.
E. £300,000.

Answer 28

Option C is correct.

The lifetime gift was an LCT made within seven years of death.
The LCT takes the benefit of the annual exemption for the year in which it was made
and the unused annual exemption for the previous year – a total of £6,000. The
effect of the LCT is therefore to reduce the NRB available for the death estate by
£194,000.
The death estate is £750,000
First 131,000 x 0%
Balance of £619,000 40% = £247,600

Question 29

A testator died last week. The testator lived in a house, worth £750,000, which he
owned with his wife as beneficial joint tenants. In addition, the testator had £100,000
in a deposit account in his sole name. Last month, the testator’s friend died and left
the testator and the testator’s wife a bronze sculpture each worth £5,000 individually
(the sculptures had been valued in the friend’s estate as a pair worth £20,000). At
the time of his death the testator had an income tax bill of £3,500 which he had not
yet paid. The funeral expenses are £1,500.
What is the value of the death estate for IHT purposes?

A. £885,000.
B. £480,000.
C. £475,000.
D. £475,000, less a discount of 10 – 15% on the house.
E. £480,000, less a discount of 10 – 15% on the house.

Answer 29

Option B is correct.

The death estate for IHT purposes is £480,000. The death estate
comprises the deposit account (£100,000), the testator’s share of the house
(£375,000) and the bronze sculpture (£10,000). Debts and funeral expenses
(£5,000) are deducted. The interest in the house is valued at the full half valuation as
the special rule for valuing land (which allows a small discount) does not apply to
joint owners who are married. The bronze sculpture is included at a half the value of
the pair of sculptures under the related property rule.
3

Question 30

A man died one month ago leaving a valid will in which he gave his entire estate to his niece. At the time of his death the man owned a house, worth £400,000 and had savings of £100,000. The man had no debts and made no lifetime gifts. The man never married or formed a civil partnership. The man’s only surviving relative is the niece. The executors are ready to apply for the grant.

How much inheritance tax must the executors pay before they can obtain the grant?

A. £70,000.

B. Nil.

C. £56,000.

D. £19,600.

E. £14,000.

Answer 30

Option E is correct. The IHT payable on the estate is £70,000 (the chargeable estate is £500,000. After deduction of the nil rate band of £325,000 this leaves £175,000 to be taxed at 40%). The house attracts the instalment option and so the executors can elect to pay the IHT on that asset in instalments, the first instalment being due six months after the end of the month of death. Only the IHT attributable to the £100,000 of non-instalment option has to be paid before the executors can obtain the grant. Applying the estate rate calculation:

£100,000 x £70,000 (IHT) = £14,000

£500,000 (chargeable estate)

Option A is wrong because it states the total IHT payable on the estate.

Option B is wrong because some IHT is payable in advance of obtaining the grant (see above).

Option C is wrong because it states the IHT payable on the instalment option property.

Option D is wrong because it includes the first instalment on the instalment property which is not yet due.

Question 31

A man, who never married or formed a civil partnership, died owning the following assets, which he left to his friend: a yacht (worth £500,000), bank accounts (worth £200,000), and chattels (worth £70,000). The deceased had debts and funeral expenses totalling £20,000. The only lifetime transfer made by the deceased was a 21st birthday gift of £15,000 to his niece one year before he died. At the relevant time the nil rate band was £325,000 and annual exemption £3,000.

A. £170,000.

B. £176,000.

C. £173,600.

D. £174,800.

E. £181,600.

Answer 31

Option C is correct as the chargeable estate is £750,000. The Potentially Exempt Transfer to the niece, after deducting 2 annual exemptions, is £9,000 and so there is only £316,000 Nil Rate Band available, leaving the remaining £434,000 to be taxed at 40% = £173,600.

Option A is wrong as it has not included the effect of the Potentially Exempt Transfer on the Nil Rate Band,

Option B is wrong as it has omitted the annual exemptions in relation to the Potentially Exempt Transfer.

Option D is wrong as it has included only one annual exemption.

Option E is wrong as it has not deducted debts from the value of the estate.

Question 32

A woman died recently without having made a will. The woman had never been married, nor entered into a civil partnership. She made no lifetime gifts and had no debts. At the time of death the woman owned her home (valued at £500,000). In addition to her home, the woman had jewellery worth £125,000, a life insurance policy payable to the estate (which had a maturity value of £100,000 on death) and £250,000 worth of shares in Green Ltd, a family company that manufactures ski equipment. The woman had owned the shares for the past 20 years. The woman is survived by her 2 sons (aged 45 and 42). She had no other relatives. In the tax year of death the nil rate band is £325,000 and the residence nil rate band is £175,000.

Which of the following states the correct amount of IHT payable on the estate?

A. £0.

B. £50,000.

C. £90,000.

D. £190,000.

E. £160,000

Answer 32

Option C is correct.

The estate consists of the house (£500,000) + life insurance policy (£100,000) + jewellery (£125,000) + shares in private limited company (£250,000) = £975,000. Business property relief applies to the shares (unquoted, trading company and owned for 2 years), leaving a taxable estate of £725,000. The residence is closely inherited by the 2 sons and therefore residence nil rate band will be available - so the first £175,000 is taxed at 0%. The full nil rate band of £325,000 will also be available as the woman made no lifetime gifts, leaving £225,000 x 40% = £90,000 tax.

Option A is wrong as it has incorrectly applied transferred nil rate band and residence nil rate band (the woman had never married or formed a civil partnership).

Option B is wrong as it has not included the insurance policy in the calculation of the estate for tax.

Option D is wrong as it has not applied business property relief.

Option E is wrong as it has not applied the residence nil rate band.

Question 33

A man has died, survived by his wife, children, sister and brother. His valid will leaves his estate to his children. The man’s nil rate band has been exhausted during his lifetime. The man’s estate is made up of the following assets:

A house owned as joint tenants with his sister (the value of the deceased’s share after appropriate discounts is £300,000);
A Building Society Account in joint names with his wife containing £100,000;

A bank account in his sole name containing £80,000;

A life assurance policy written into trust for his children, with a maturity value of £50,000;

A life interest in a will trust worth £200,000 where the man’s children are the remaindermen;

A remainder interest in a will trust worth £20,000 where the life tenant is the man’s brother who is still alive.
There are no debts.

What is the amount of Inheritance Tax payable on this estate?

A. £32,000.

B. £112,000.

C. £232,000.

D. £252,000.

E. £260,000

Answer 33

Option C is correct as the estate for Inheritance tax purposes comprises the share of the house (£300,000), share of the building society account (£50,000), bank account (£80,000) and life interest (£200,000). The share of the building society account is spouse exempt so the taxable amount is £580,000. There is no nil rate band and so the whole amount is taxed at 40% = £232,000.

Option A is wrong as this is the tax only on the bank account, and has not included the house share and the life interest in the estate.

Option B is wrong as this is the tax only on the bank account and life interest, and has not included the house share in the estate,

Option D is wrong as this is the tax not only on the correct assets but also on the life assurance policy, which is not included as it was not beneficially owned by the man at his death.

Option E is wrong as this is the tax not only on the correct assets but also on the life insurance policy, which is not included as it was not beneficially owned by the man at his death, and on the remainder interest which was excluded property as the life tenant was still alive.

Question 34

A testator made a valid will six months ago which included the following gifts of company shares:

“I give to my nephew all my shares in AB plc”.

“I give to my niece all my shares in XY plc”.

“I give to my daughter all my shares in DEF Limited”.

The testator died last week. All of these beneficiaries survived the testator, and the testator owned all of the above-mentioned shares.

The shares in AB plc were purchased 10 years ago and represent a 25% shareholding in the company, which makes bricks and is listed on the London Stock Exchange. The shares in XY plc were purchased 18 years ago and represent a 5% shareholding in the company, which makes furniture and is also listed on the London stock exchange. The shares in DEF Limited were inherited from the testator’s father 20 years ago and represent a 40% shareholding in the testator’s family private company which makes lampshades.

A. All three gifts will attract BPR at the rate of 100%.

B. The gift of shares in AB plc and XY plc will both attract BPR at the rate of 50% and the gift of shares in DEF Limited will attract BPR at the rate of 100%.

C. The gift of shares in AB plc and the gift of shares in DEF Limited will both attract BPR at the rate of 50% but the gift of shares in XY plc does not qualify for the relief.

D. The gift of shares in AB plc and XY plc do not qualify for BPR but the gift of shares in DEF Limited will attract BPR at the rate of 100%.
selected

E. All of the three gifts will attract BPR at the rate of 50%.

Answer 34

Option D is correct as in order to qualify for BPR the shares must be owned for at least two years before death and the company must be a trading company (satisfied for all of the shares) but if the shares are in a company listed on a recognised stock exchange, the owner must have had voting control of the company, which is not the case here. This is not required for an unquoted company, where the relief is 100%.

Option A is wrong as although the unquoted shares attract 100% relief, the quoted shares only attract 50% if they give the owner control of the company.

Option B is wrong as the unquoted shares attract 100% relief, and the 25% holding does not give voting control of AB plc.

Option C is wrong as although XY plc shares do not attract any relief, neither do the AB plc shares and the unquoted shares attract 100% relief.

Option E is wrong as the unquoted shares attract relief at 100% and the quoted shares do not attract any relief as they do not give voting control.

Question 35

A testatrix died three months ago. She never married or formed a civil partnership. Under the terms of her valid will her entire estate passes to her nephew. At the time of her death the testatrix owned her home (valued at £550,000) and some small shareholdings in various public companies (together valued at £50,000). She also had £200,000 in a savings account. There are no debts or liabilities to consider, and the testatrix made no lifetime gifts. The executors are now ready to apply for a grant of probate.

At the time of the testatrix’s death the Nil Rate Band is £325,000 and the Residence Nil Rate Band is £175,000.

What is the minimum amount of IHT that the executors will have to pay now to obtain the grant?

A. £190,000.

B. £59,375.

C. £37,500.

D. £130,625.

E. £47,500.

Answer 35

Option B is correct. All the assets are in the death estate for IHT purposes – a total of £800,000. After deducting the NRB this leaves £475,000 to be taxed at 40% = £190,000. Of this sum the executors will have to pay the IHT on the non-instalment property (the shares and the money in the deposit account). The payment of the IHT on the instalment option property (the house) can wait; the first instalment is due six months after the end of the month of death. To work out how much of the total IHT bill is attributable to the non-instalment property it is necessary to apply the estate rate formula:

£250,000 x £190,000 = £59,375

£800,000

Option A is wrong because it states the total IHT bill. However, only that part attributable to the non-instalment property must be paid now in order to obtain the grant.

Option C is wrong because the RNRB has been applied before calculating the IHT and applying the estate rate formula. The RNRB is not available as the testatrix’s home is not being closely inherited.

Option D is wrong because it states the IHT attributable to the instalment option property.

Option E is wrong because it is calculated on the basis that the shareholdings qualify as instalment option property. This is not the case as the shares did not give the testatrix control of the companies.

Question 36

A woman died 15 years ago, leaving an estate valued at £235,000 for inheritance tax purposes to her husband. The nil rate band at this time was £285,000. The woman’s husband has recently died leaving his estate (valued at £825,000 for inheritance tax purposes) to his nephew. The nil rate band at the time of the husband’s death is £325,000. Neither the woman nor her husband made any lifetime gifts.

What is the amount of nil rate band that can be offset against the husband’s estate?

A. £375,000.

B. £325,000.

C. £570,000.

D. £610.000.

E. £650,000.

Answer 36

Option E is correct as the woman died without using any of her nil rate band (100% unused as her estate was all spouse exempt, and it did not matter that her estate was smaller than the then nil rate band). Her husband’s estate can apply a 100% increase to the nil rate band that applies at his death, hence £325,000 +100% of this = £650,000.

Option A is wrong as it has assumed that the unused nil rate band on the first death was £50,000 (the difference between the then nil rate band and the size of the woman’s estate).

Option B is wrong as it has not taken into account the ability to transfer nil rate band from the woman’s estate.

Option C is wrong as it has used the nil rate band figures from the first death to get the 100% increase (£285,000 + 100% of this).

Option D is wrong as it has added the amount of the earlier nil rate band to the amount of later nil rate band, and not used a % figure.