UNIT 4 - Administration: Obtaining the Grant Flashcards
A woman died last week. In her valid will, she appointed her solicitor as her executrix and, apart from a pecuniary legacy of £25,000 to her adult nephew, she left her estate to be divided between her brother and sister.
The solicitor predeceased the woman. Everyone else mentioned in the will survives. The woman’s husband also survived her.
Which of the following best describes who will be entitled to take a grant of representation and which type of grant is appropriate?
A) The nephew has the best right to take a grant of letters of administration with the will annexed.
B) The brother and sister will be entitled to take a grant of letters of administration with the will annexed.
C) The brother and sister will be entitled to take a grant of probate.
D) The husband can take a grant of (simple) letters of administration.
E) The husband can take a grant of letters of administration with the will annexed.
CORRECT ANSWER B - The grant will be a grant of letters of administration with the will annexed because the deceased left a will but no executor is able to act. Under NCPR 1987, Rule 20, residuary beneficiaries (the brother and sister) have the best right to the grant under category (c).
Option A is wrong. The nephew does not have the ‘best right’ because, compared with the brother and sister, he is lower down the list in Rule 20. He appears in category (e).
Option C is wrong. Only executors appointed in the will can take a grant of probate.
Option D is wrong. A grant of (simple) letters of administration is not appropriate because the woman did not die intestate; she left a valid will.
Option E is wrong because the husband does not fall into any of the categories of applicant in Rule 20.
A man died three months ago. His estate included a house worth £600,000. The rest of
his assets (comprising chattels, a bank account and small holdings of shares in quoted companies) are worth £600,000. The inheritance tax (IHT) payable on the estate is £350,000. The man’s PRs are ready to apply for the grant of representation.
How much IHT will the man’s PRs have to pay before they get the grant?
A) None of it, if they elect to pay by instalments.
B) None of it, because the deadline for payment is six months after the end of the month of death.
C) £350,000, because HMCTS will not issue the grant until all the IHT has been paid.
D) Only the IHT on the chattels and bank account if they elect to pay IHT on the house and shares by instalments.
E) £175,000 if they elect to pay the IHT on the house by instalments.
CORRECT ANSWER E - The house is instalment option property. IHT on instalment option property does not have to be paid before the grant if the PRs elect to pay by instalments. IHT on instalment option property can be paid six months after the end of the month of death. However, the IHT on the other property (the chattels, a bank account and small holdings of shares in quoted companies) must be paid before the grant because this property does not attract the instalment option. The non-instalment option property accounts for half the value of the estate and therefore, half the IHT bill.
Option A is wrong. The instalment option is available only for the land (the house). It does not apply to the other assets. IHT on the non-instalment option property must be paid before the grant.
Option B is wrong. IHT on the non-instalment option property must be paid before the grant.
Option C is wrong because, as explained above, IHT on instalment option property can be paid by 10 annual instalments.
Option D is wrong. The quoted shares do not attract the instalment option because they did not give the man a controlling interest in the companies.
A woman died four months ago. In her valid will, she left a legacy of £30,000 to a charity and the residue of her estate to her husband. She also appointed the husband to be
her executor. Before the woman died, she and her husband were divorced. The woman’s husband and her adult son survived her. The woman’s estate comprises public company shares and money in building societies. It is worth £300,000. She made no lifetime gifts and was not a beneficiary under a trust.
A newly qualified solicitor has put together the following documents to send to HMCTS in order to obtain the grant:
* The woman’s will
* APA1P
* An IHT400
* The amount required for the probate court fee.
Are these the right items to send?
A) No, because the application for the grant should be on form PA1A.
B) No, because it is an excepted estate and no IHT form is required.
C) No, because the will was revoked by the woman’s divorce and she died intestate.
D) No, because the application for the grant by a professional has to be online.
E) Yes, because the husband should apply for a grant of probate on form PA1P.
CORRECT ANSWER B - The divorce means that the husband is treated as though he predeceased. Therefore, his appointment as executor and the gift of residue to him cannot take effect. Residue will pass on intestacy to the woman’s son. The legacy to the charity is still valid.
The son should take a grant of letters of administration with the will annexed. The son is entitled to this grant as the person ‘entitled to … the undisposed of residue’ under NCPR,
Rule 20, category (c). Option B is correct because the woman’s estate appears to satisfy the requirements for an excepted estate.
Option A is wrong. Form PA1A is not appropriate here. It is used where the deceased left no will and died totally intestate.
Option C is wrong because (unlike marriage) divorce does not revoke a will. Divorce has the effect of nullifying appointments of the former spouse as executor and gifts to the former spouse. The rest of the will stands.
Option D is wrong. Only applications for a grant of probate by professionals have to be online (subject to some exceptions). Applications for grants of letters of administration with the will can be made online or by paper hard copy.
Option E is wrong because the divorce has nullified the husband’s appointment as executor. As there is a will but no executor, the appropriate grant is one of letters of administration with the will annexed.
A sole executor obtained a grant of probate six months ago but has taken no further steps in the administration of the estate because the executor has had an argument with the main beneficiary (‘the beneficiary’).
What action, if any, can the beneficiary take to remove the executor?
A) The beneficiary should issue a citation.
B) The beneficiary should apply to the court to replace the executor.
C) The beneficiary can replace the executor by serving a notice on them to retire and appoint a substitute.
D) The only possible recourse is to seek a general administration order.
E) Once a PR has obtained the grant, the executor cannot be removed.
CORRECT ANSWER B - Under s 50 Administration of Justice Act 1985, the court has a discretion to replace a PR. It will exercise its discretion if it is necessary for the welfare of the beneficiaries.
Option A is wrong. A citation is not appropriate in this case because the executor has already obtained a grant.
Option C is wrong. Unlike trustees, it is not possible for beneficiaries to secure the removal of PRs by serving notice on them.
Option D is wrong. A general administration order does not remove the PR. The PR still carries out the administration but must seek the court’s consent for every act. Furthermore, it would not be the beneficiary’s ONLY recourse.
Option E is wrong. A PR can be removed/replaced by a court order.
Personal representatives (‘PRs’) wrongly paid £30,000 to the deceased’s son when this sum should have been paid to the deceased’s civil partner. The son has spent the £30,000 paying off his overdraft.
Which of the following best describes the action the civil partner could take to recover the £30,000?
A) The civil partner could sue the PRs for breach of trust or pursue a personal action against the son.
B) The civil partner could sue the PRs for breach of fiduciary duty or pursue a personal action against the son.
C) The civil partner could sue the PRs in a devastavit action and pursue a personal action against the son to recover any balance not obtained from the PRs.
D) The civil partner could sue the PRs in a devastavit action and pursue a proprietary claim against the son.
E) The civil partner could sue the PRs and the son in a devastavit action.
CORRECT ANSWER C - The PRs have been guilty of maladministration which can be the subject of a devastavit claim. In Ministry of Health v Simpson [1951] it was held that the correct beneficiary can recover compensation from the recipient who was wrongly paid. The compensation will be equal to the amount which the beneficiary cannot recover from the PRs.
Option A is wrong. The correct description of the action against PRs is devastavit.
Option B is wrong. The correct description of the action against PRs is devastavit. It was not a breach of fiduciary duty because the PRs did not make an unauthorised profit for themselves.
Option D is wrong because a proprietary action will not succeed where the defendant has dissipated the money, as is the case here.
Option E is wrong. Devastavit is a wasting of assets by the PRs, not by third parties
Personal representatives (‘PRs’) advertised for claimants and waited two months before distributing the estate to the beneficiaries. They had forgotten about a £3,000 debt which the deceased owed to a builder.
Can the builder recover the £3,000?
A) No, because all the estate has been distributed.
B) No, because the PRs are protected due to the adverts.
C) No, because PRs are not liable to pay the deceased’s debts.
D) Yes, because although the PRs are protected, the builder can recover the sum from the beneficiaries.
E) Yes, because the PRs are personally liable for devastavit.
CORRECT ANSWER E - By neglecting to pay the debt, the PRs are guilty of maladministration (or a breach of duty to pay all the debts) and the creditor can bring a claim for devastavit.
Option A is wrong. In this situation, the PRs are personally liable for breach of duty and will have to pay the creditor out of their own resources.
Option B is wrong. Under s 27 Trustee Act 1925, the fact that the PRs advertised and waited two months before distributing the estate only protects them against claims of which they were unaware. In this case, they were aware of the builder’s claim but overlooked it.
Option C is wrong because PRs are liable to pay the deceased’s debts from the assets in the estate.
Option D is wrong. The PRs are not protected from liability (as explained above) and the builder should exhaust their claim against the PRs before seeking a personal remedy against the beneficiaries (Ministry of Health v Simpson).
George died without having made a will. George’s estate comprises his personal chattels (worth £2,000), cash in a suitcase found under George’s bed (total £50,000) and his interest in his home which he owned as beneficial joint tenants with his wife, Kate (George’s share is worth £500,000). George is survived by his wife, Kate, and his brother, Harry.
Which of the following statements is correct?
A) Kate will receive a statutory legacy of £322,000.
B) A grant of representation may not be required.
C) Harry will receive £50,000.
D) The IHT payable on George’s estate must be paid before the grant is obtained.
E) Kate must obtain a grant of probate.
CORRECT ANSWER B - Only the personal chattels and cash pass under the intestacy rules to Kate (A is wrong); the interest in the property passes by survivorship to Kate. Harry receives nothing from the estate (C is wrong). The entire estate passes to an exempt beneficiary and so no IHT is payable (D is wrong). The only assets passing through the hands of the administrator are the chattels and the cash for which a grant may not be necessary. If a grant was needed it would be a grant of letters of simple administration (E is wrong)
Javeed is the residuary beneficiary under his late brother’s will. The executor named in the will has intermeddled in the estate but has not taken any steps towards obtaining the grant of probate.
TRUE OR FALSE:
Javeed should apply for a caveat.
FALSE - A caveat is used to stop a grant being issued. Javeed wants to compel the executor to take out the grant and so should apply for a citation. As the executor has already intermeddled, a citation to take probate would be appropriate.
Wesley, who died recently, left a will which appointed his solicitor, Kalpna, to be his executrix. In the will Wesley gave a legacy of £40,000 to his only child, Charles (aged 30), and residue to Wesley’s wife, Dawn. Wesley and Dawn divorced just before Wesley died.
Wesley is survived by Dawn and Charles.
Which one of the following statements is correct?
A) Kalpna must obtain a grant of probate.
B) Kalpna and Charles must obtain a grant of letters of administration with the will annexed.
C) Kalpna must obtain a grant of letters of administration.
D) Kalpna must obtain a grant of letters of administration with the will annexed.
E) Kalpna and Charles must obtain a grant of probate.
CORRECT ANSWER A - The gift to Dawn fails as a result of the divorce – Dawn is treated as if she had died on the date of the divorce. There is a partial intestacy and the residue will pass under the intestacy rules. The residue will pass to Charles as Wesley’s only child. Executors obtain grants of probate even if part of the estate passes on intestacy. A sole executor can always act alone (E is wrong).
Belinda died last week without a will. Her only relatives are her husband Paul, and her twin sons. Belinda and Paul owned their home as beneficial joint tenants and Belinda’s half share is worth £300,000. Belinda had £80,000 in a bank account in her own name and her personal chattels were valued at £5,000. Belinda had debts of £10,000.
Which of the following statements is correct?
A) The net probate estate is £675,000.
B) The net probate estate is £380,000.
C) The net probate estate is £375,000.
D) The net probate estate is £80,000.
E) The net probate estate is £75,000.
CORRECT ANSWER E - Belinda’s share of the property passes by survivorship, rather than under the grant, and so it does not form part of the probate estate. The bank account and chattels are both in the probate estate. Debts are deducted to calculate the net probate estate - £80,000 + £5,000 - £10,000 = £75,000.
TRUE OR FALSE:
A beneficiary can insist on receiving their entitlement as soon as the grant has been obtained.
FALSE - Under s44 Administration of Estates Act 1925 ‘a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death’. Therefore, the PRs cannot be compelled to distribute the estate to the beneficiaries until the ‘executor’s year’ has expired (although PRs will often choose to distribute the estate as soon as is practicable).
Your supervisor has been instructed by the executor of Hector’s estate. Your supervisor asks you to make enquiries of the witnesses to Hector’s will, Karen and Julie, as to the circumstances in which the will was signed. When you look at Hector’s will you see that there is no attestation clause. Karen tells you that she and Julie watched Hector sign the will together, then Julie added her signature, but by the time that Karen added her signature Julie had left the room to take a call on her mobile phone. Julie confirms this version of events.
Which of the following statements is most likely to be correct?
A) An affidavit of knowledge and approval will be required before the will can be admitted to probate.
B) An affidavit of due execution will be required before the will can be admitted to probate.
C) The will is invalid.
D) An affidavit of plight and condition will be required before the will can be admitted to probate.
E) No additional evidence will be required in order to have the will admitted to probate.
CORRECT ANSWER B - Section 9 Wills Act 1837 has been complied with (both witnesses were present when the testator signed the will and there is no requirement for a witness to be present when the other witness signs). Therefore, the will is valid. The absence of the attestation clause means that the usual presumption of due execution cannot be relied on. Further evidence will be required in the form of an affidavit of due execution (or witness statement supported by a statement of truth) from the witnesses to prove compliance with s9.
Lola, who never married or formed a civil partnership, died a month ago leaving her entire estate to her nephew. Lola owned a flat, worth £700,000, and had savings of £300,000. Lola had no debts and made no lifetime gifts. The estate is a simple one and the executors are ready to apply for the grant.
TRUE OR FALSE:
Lola’s executors must pay inheritance tax of £81,000 before they can obtain the grant.
TRUE - The IHT payable on the estate is £270,000 (The chargeable estate is £1,000,000. After deduction of the nil rate band of £325,000, this leaves £675,000 to be taxed at 40%).
In order to obtain the grant the PRs must pay the IHT on the non-instalment property. Only the house attracts the instalment option.
£300K x (270K (IHT))/(1Mil (chargeable estate))
= £81,000
The PRs can elect to pay the IHT on the house later by instalments.
A testator died last month. By his valid will, he gave a small legacy to charity and left the remainder of his estate to his son who was also appointed sole executor. The son died two months before the testator. The testator’s only surviving relatives are his brother and sister. Shortly after the testator’s death, the sister paid a debt the testator had owed to a mutual friend, intending to recoup it later from the estate. A few days later, the sister formally renounced her right to take a grant of representation.
Which of the following best describes who is entitled to take out a grant of representation and the type of grant they will need?
A. The son’s personal representatives will be entitled to take out a grant of probate.
B. The brother and sister can take a grant of letters of administration with the will annexed.
C. The brother and sister can take a grant of (simple) letters of administration.
D. The brother can take a grant of (simple) letters of administration.
E. The brother can take a grant of letters of administration with the will annexed
CORRECT ANSWER E - . A grant of letters of administration with the will annexed is required as the deceased left a valid will but there are no persons able to act as executors (Options A, C and D are wrong). NCPR 1987, r 20 determines who the administrators will be. The residue is not disposed of by will and so it will pass to the brother and sister under the intestacy rules. The brother can take the grant as a person entitled to share in the undisposed of residue. The sister has the same entitlement as the brother under the intestacy rules and under r20, however she has renounced her right to take the grant (Option B is wrong). The fact that she Intermeddled by paying the deceased’s debt is irrelevant. An administrator does not lose the right to renounce by intermeddling (as an executor would).
Despite lacking qualifications or expertise, an executor of an estate played the stock market with the estate’s investments, causing a loss to the estate.
Which of the following best describes the action the beneficiaries could take to recover the loss to the estate?
A. Take action against the executor for breach of fiduciary duty.
B. Bring administration proceedings against the executor.
C. Bring a proprietary action against the executor.
D. Bring a devastavit claim against the executor.
E. Apply to the court to have the executor removed.
CORRECT ANSWER D - The beneficiaries can bring an action for breach of duty, as the executor was negligent in his investment duties. Option A is wrong because investing is not a fiduciary duty. Option B is not the best answer because whilst the beneficiaries can bring administrative proceedings against the executor and ask the court to supervise their actions, this would not recover the loss to the estate. Option C is wrong because proprietary actions are only appropriate when following an asset in the hands of someone who was not entitled to receive it. Option E is not the best answer. The court has a discretion to remove PRs under s50 Administration of Justice Act 1985, but the action would not recover the loss to the estate.
