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DIPFA > Topic 16 > Flashcards

Topic 16 Flashcards

0
Q

Testator is and must be

A 
Person making the will
Must be 18
Sound of mind, memory and understanding
Intention of making that will
Must know what a will is, the prop they are leaving and to whom
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1
Q

Name 4 parties to a will

A

Testator
Executor
Beneficiary
Witness

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2
Q

Executor is and must be

A

Responsible for administering
18 and of sound mind
Can be beneficiary

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3
Q

Testators sig must be witnessed by…

A

2 people 18 or over

Witness or spouse of witness cannot be beneficiary

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4
Q

Requirement for will to be valid are..

A 
In writing
Should be dated- but not legal req
Clear statement that prev will revoked
Should be individual
If testator married- revoked
Ideally written by sol or will writer
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5
Q

Will and divorce

A

Former spouse auto eliminated, rest remain valid

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6
Q

What is a codicil?

A

Outlines changes and continuing validity of will
Signed by testator and 2 witnesses
Additional page to will

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7
Q

Interstate means?

A

Died without valid will

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8
Q

Absolutely means

A

Owns the assets

Goes in trust if under 18

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9
Q

Life interest is

A

Gets income from cap but not cap, known as life tenant

Cap is held in trust until life tenant dies- when bene gets cap absolutely

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10
Q

Spouce must survive partner by

A

28 days, otherwise deceased treated as single under laws of interstacy

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11
Q

If decease leaves both spouse and children…

A

Spouse get first £250k
Half the bal goes to children absol
Spouse gets life int in other half

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12
Q

If decease leaves a spouse but no children…

A

Spouse gets first 450k and half the remainder absolutely
Bal goes to parents
Or siblings if parents dead
If no parents, sibs or remoter issue- spouse gets all

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13
Q

Children but no spouse

A

Estate shared amongst children or their issue if dead

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14
Q

Disclaimer is

A

Beneficiary rejects bequest

Write written disc with 2 years

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15
Q

Deed of variation is

A

Can terms of will or laws of interstacy if all bene are in agreemnt
Must be within 2 yrs

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16
Q

Eg of gift with reservation

And affect of this

A

Settlor gifts house but insist on right to live there

Considered part of estate for IHT

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17
Q

Trustees duties are

A

Act in acordance with terms of trust deed
Is deed gives them discretion, the agreement of all trustees needed
Honestly and prudently
Invest trust assets in line with trust deed
Can be liable for loss if negligent
I

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18
Q

If trust deed does not confer specific powers of inv…

A

Trustee act 2000 allows them to inv as if they owned them themselves
As long as they are aware of need to diversify, obtain and consider inv advice and review investmnts

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19
Q

Discretionary trusts give trustees discretion over…

A

What to pay, when and to which bene
Trustees appnt bene from a list, to find most appropriate, inlc those not born yet.
Good if you wants assets to be for the gen benefit of family

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20
Q

Contingent benefitiary right to the property is….

A

Contingent on something happening- like if you only get assets if someone else has already died

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21
Q

3 certainties for a trust to be valid

A

Clear that settlor intentended to make trust
Subject matter- property
Object- bene

22
Q

A trust is established through…

A

A trust deed or a will

23
Q

A settlor cannot revoke a trust or change terms once assets settled into it, unless….

A

A revocable trust

24
Trust deed will specify...
Property Trustees Bene Powers conferred on trustees
25
What is meant by a testators mental competence?
Mean testator must know what a will is, the prop leaving, to whom and how distributed
26
Interest in possession trust?
Must provide an income from trust assets for a specific bene for life Assets pass to other bene on their death
27
Gift and loan trust?
Settlor makes gift-3k to use allowance Make int free loan into trust- repayable on demand, loan not gift so not a life time transfer Gift and loan into inv bonds Growth outside estate for iht Use 5% pa allowance to pay back loan to settlor
28
Life tenant?
Interest in possession trust- Bene rec income
29
Remaindermen?
Interest in possession trust- Receive the assets once the life tenent dies
30
Trust max of 80 yrs if set up prior to?
April 2010
31
After april 10, how long can trusts last?
125 yrs
32
Inv bond is arranged in a trust, so what?
Orig inv is a trfr for iht | Growth not part of estate
33
Will trusts are normall set up as
Int in possession or discretionary trusts
34
Immediate post death interest trust is
New type of trust set up through will, give bene immediate right to income Bene given life interest of settlors death Can be set up with £10
35
Bereave minors trust
Set up for child under 18 | Cannot get bene till 18
36
18-25 trust?
Same as bereaved minors only date bene can get assets absolutely can be increased to 25
37
Absolute (bare) trust is used when
To make sure assets are passed to children | Any bene over 18 can demand the assets at any time
38
Split trusts used when
Along side combines life, cic policy So cic will be paid to them while alive And life cover paid held in trust on death
39
Discounted gift trust is
Inv bond, decides w/d amount up to 5% - retained rights Bond provider calc life exp Estimated 'retained rights' 'discounted' Rest is PET If settlor live 7+ inv will be o/s estate Reduces iht immediately
40
Revert to settlor trusts
Benefit can revert back to settlor if required | Gift remains in settlors estate so no good for IHT tax
41
Statutory trusts?
Number of trusts where if no will trusts are created by statute Eg bereaved minor 18-25 Married wo prop tr
42
Married womans prop act trust
Created when life policy on own life for specific benefit of their spouse or children. Outside estate for tax and creditors Scots have similar trust Policy does not have to refer to act or trust
43
Trust are genrally subject to.....
Uk income and cgt if at least 1 trust is uk resident
44
Discretionary trust and tax
Taxed on income received- as they dont have to pay any income to a bene Trustee pays basic on 1st £1k and additional rate on bal- 50%, 42.5% If income paid, bene paid net of 50% tax
45
CGT and trust
When settlor settles asset in a trust it is a disposal Gains can be deferred until trust disposes- unless absol trust Usual exemptions apply in the trust- eg main res Same rate applies to trustee but they only have half the exemption 5300- and split across trusts held
46
Absolute and bereaved minor- cgt?
Regarded as belonging to bene | Do get annual exemption
47
Transfers into trusts on death- iht
Normal bequest and all above nil rate band subject to iht
48
Lifetime transfers into trust- iht
If it is a relevant property trust all over nil rate charged at 20% Together with similar trfr in prev 7 yrs Excess over nil rate then subject to taper relief, so no charge would be payable after 5 yrs
49
Relevant prop trust is
All trust covered by set of rules for lifetime trfrs and applies to any trust where bene interest is not: Immediate post death Disabled person Bereave minor or 18-25
50
Int in possesion trust and lifetime tfrs before mar 06
Treated as PET not lifetime tranfer | So no 20% and only IHT if die within 7 yrs
51
Relevant prop trust and periodic charges?
Trust value on 10th anniv, less nil rate- 325k | Max chrg 6% of that above nil rate
52
Relevent prop trust and exit chrge
6% charge when cap paid out from trust, less nil rate and between 10 yr annivs No charge at last anniv, no exit charge
53
IHT and bene
If lifetime trf charge applied, no IHT payble on death while assets still in trust If no charge then assets treated as belonging to bene on death

DIPFA (24 decks)

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