UNIT 4: PROBATE

Question 1

Executors vs Administrators

Answer 1

deceased left valid will which appoints executors, one or more of whom is able and willing to act  executors obtain grant of probate (form PA1P)

deceased left valid will but no persons able or willing to act as executors  administrators will obtain grant of letters of administration with the will annexed (PA1P, r20, usually residuary beneficiary)

deceased left no will/no valid will  administrators obtain grant of (simple) letters of administration (PA1A – r22 usually main beneficiaries on intestacy).

Question 1

Numbers of PRs

Answer 1

1. One PR can obtain a grant and act alone
    even if the estate includes land which may be sold during the administration - because one PR can give the purchaser a good receipt for the sale proceeds
    cf when trustees sell land - purchaser will insist on a receipt from all the trustees being at least 2 in number, or a trust corporation.
2. Executors vs Administrators:
    2 administrators are usually required where one of the Bs is an infant (’minority’ interest) or only has a life interest.
    cf one executor can always act in these situations

Question 2

How do PRs gain authority?

Answer 2

1. Executors derive the authority to act in the administration of an estate from the will - authority is confirmed by the grant of probate
2. Authority = conclusive evidence of the executors’ title to the deceased’s assets and of the validity of the will’s contents.
3. Proof of grant is required for:
    certain transactions - e.g., sale of land
    access to the deceased’s money from banks and other institutions
4. Administrators derive their authority from the grant, which is not retrospective to the date of death - they have very limited powers before the grant.

Question 3

How to obtain information about assets for beneficiaries

Answer 3

• Solicitor will ask PRs for details of the deceased’s assets and obtain any associated documents (e.g., building society passbooks, share certificates, etc)
• Assets are valued for both IHT and probate purposes.
  o balances on the deceased’s bank and building society accounts and the amount due on any life policies can be obtained by writing to the asset holders
  o assets are usually valued at their open market value, (with special rules for related property and valuation of quoted shares)
  o an estate agent/auctioneer can be asked to value the deceased’s residence or other land and the contents of the house
  o valuation of unquoted shares should be obtained from an accountant

Question 4

Assets which may pass to PRs without grant

Answer 4

 not available if the value of the asset exceeds £5,000.
 Payments can be made in respect of, e.g.:
 money in the National Savings Bank and Trustee Savings Bank (but not other bank accounts);
 National Savings Certificates and Premium Bonds; and
 money in building societies and friendly societies.
o Chattels - moveable personal property can normally be sold without the PRs having to prove formally to the buyer that they are entitled to sell such items.
o Cash - usually the PRs do not require a grant when taking custody of any cash found in the deceased’s possession (i.e., in their home

Question 5

Assets not passing through the PRs hands (thereby making the grant irrelevant)

Answer 5

o Joint property - will pass by survivorship to the surviving joint tenant; all they have to do is produce the deceased’s death certificate to the relevant institution (e.g., Land Registry or bank)
o Insurance policies assigned or written in trust - beneficiary can obtain the proceeds simply by producing death certificate to the insurance policy.
o Pension benefits - pension benefits do not pass under the deceased employee’s will or intestacy and payments are made to the beneficiaries on production of the death certificate.

Question 6

Assessing IHT due before grant

Answer 6

1. Before applying for the grant, the PRs send the IHT account IHT400 (or IHT 401 for a person domiciled outside the UK) and pay any IHT due pre-grant to HMRC
2. HMRC emails a receipt (IHT421) to HMCTS and informs the PRs (or their solicitor) that this has been done
3. The grant will not be issued until HMCTS receives the receipt.
4. Practitioners should allow an interval of 20 working days between the submission of IHT400 to HMRC and the application for the grant
   * NB Where IHT is payable before the grant, it will be necessary to find ways of funding the IHT, given that it is not possible to gain access to most of the deceased’s assets without production of the grant

Question 7

Application for grant of probate and LoA?

Answer 7

o Applications by legal professionals for a grant of probate are usually made online
o Applications for grants of letters of administration (with or without the will) are made by post but can be made online if, among other requirements:
 there is only one applicant and
 they are the only person entitled to the estate

Question 8

Fee for grant of probate/LoA?

Answer 8

o Postal applications - made by sending a completed form:
 PA1P if there is a will (for grants of probate or LoA with will annexed); or
 PA1A where there was no will
o The same fee is payable irrespective of whether the application is made on paper or online.
 Paper - paid by cheque
 Online - paid through an ‘HMCTS Payment by Account’
o The fees:
 £273 fee - where the estate exceeds £5,000
 no fee - if estate is £5,000 or less
 extra copy of grant - cost £1.50

Question 9

Additional documents required?

Answer 9

o Deceased’s will and codicil, if any, must be sent to HMCTS
o Evidence of the validity of any will is sometimes required, e.g.:
 affidavit sworn before a solicitor not acting for the PRs
 witness statement verified by a statement of truth

Question 10

Evidence of due execution / capacity

Answer 10

 if there is no proper attestation clause, the registrar will need evidence, preferably from an attesting witness, to establish that the will has been properly executed
 if there is doubt about the testator’s mental capacity, the affidavit of a doctor may be necessary

Question 11

o Evidence as to knowledge and approval

Answer 11

 If there appears doubt as to whether the testator was aware of the contents of the will when they executed it (e.g., signed by someone else due to incapacity, or suspicious circumstances), the attestation clause should have been suitably adapted, ideally by indicating that the will was read over to the testator or was independently explained to them
 Alternatively, evidence provided by an affidavit or witness statement will suffice

Question 12

o Evidence as to remote witnessing

Answer 12

 Where witnesses were not physically present when the testator signed or acknowledged the will but watched via a video link, unless the attestation clause has been suitably amended, evidence in the form of an affidavit or witness statement will likely be required from the witnesses or anyone else present

Question 13

o Evidence of plight and condition:

Answer 13

 Where the state of the will suggests interference, the registrar will likely require evidence by way of explanation in the form of an affidavit or witness statement of plight and condition.
 This will apply where:
 the will has been altered since its execution;
 there is some obvious mark on the will indicating a document may be been attached to it (e.g., marks of a paper clip, suggesting that some other testamentary document may have been attached); or
 the will gives the appearance of attempted revocation (e.g., torn)

Question 14

o Lost will

Answer 14

 A will known to be in the testator’s possession but which cannot be found after death is presumed to have been destroyed by the testator with the intention of revoking it.
 If the will is lost or accidentally destroyed, probate can be obtained of a copy - e.g., one kept in the solicitor’s file - or a reconstruction.
 Application should be made to the registrar, supported by appropriate evidence in the form of an affidavit or witness statement from the applicant for the grant of probate

Question 15

If the estate is not excepted

Answer 15

• If the estate is not ‘excepted’, PRs will prepare an IHT400 or IHT401 as appropriate, and whichever supporting schedules are relevant to the estate. (e.g., schedule 403 for lifetime gifts)
  o IHT400 - an inventory of the assets to which the deceased was beneficially entitled, and their liabilities; used to claim reliefs and exemptions and to calculate the IHT payable.
  o Time periods:
   Should be delivered within 12 months of the end of the month in which the death occurred.
   Usually done within 6 months of the end of the month of death (to comply with IHT time limits for payment of interest)
   Until submitted, no grant of representation can be issued.
  o Where IHT payable, necessary to apply for a reference number before submitting the IHT400 - can be made online or by post using schedule IHT422

Question 16

If estate excepted

Answer 16

• If the estate is excepted, PRs do not submit any IHT form to HMRC.
  o Information about the value is included on forms submitted to HMCTS which is passed on to HMRC.
  o HMRC has 60 days from the issue of the grant of representation to ask for additional information.
  o If no request is made, the estate receives automatic clearance.
  o If an estate which initially appears to be excepted is subsequently found not to be so, the PRs must submit the IHT400 within 6 months of the discovery

Question 17

CATEGORY 1: SMALL EXCEPTED ESTATE – PRs will not send IHT400

Answer 17

• Refers to - estates where the gross value of the estate for IHT purposes + value of any ‘specified transfers’ and ‘specified exempt transfers’ in the 7 years prior to death does not exceed the current NRB
• Gross value = value before deduction of debts and exemptions and reliefs
• NRB = currently £325,000 but can be increased if the deceased’s spouse or CP predeceased without using all or part of their NRB (NRB in force at the death of the survivor is increased by whatever percentage of the NRB of the first spouse to die was unused by them)

1. Deceased died domiciled in UK
2. Value of estate WHOLLY attributable to property passing under:
   * His will or intestacy
   * Under a nomination of an asset taking effect on death
   * Under a single settlement in which he was entitled to an interest in possession in settled property OR
   * By survivorship in beneficial JT or special destination (Scot)
3. Of that property:
   * Not more than £250,000 represents property immediately before that person’s death, was settled property; and
   * not more than £100,000 represents property situated outside the United Kingdom
4. the deceased made no chargeable transfers in the seven years before death other than
   * specified transfers where the aggregate value transferred (ignoring business or agricultural relief) did not exceed £250,000; and
   * the aggregate of:
   * the gross value of the deceased’s estate, plus
   * the value transferred by any specified transfers plus
   * the value transferred by any specified exempt transfers did not exceed the nil rate threshold for the deceased, increased to take account of any nil rate band transferred from one deceased spouse or civil partner.

Specified transfers for Categories 1 and 2: chargeable transfers of cash, personal chattels, tangible moveable property, quoted shares or securities or an interest in or over land (unless land becomes settled or is subject to a reservation of benefit) made in the seven years before death. If someone makes transfer not in this category (ie unquoted shares) CANNOT be excepted.

BRP / ARP ignored so unrelieved value applies.

‘Specified exempt transfers’ for Categories 1 and 2
These are transfers of value made during the seven years before death which are exempt under one of the following exemptions:
(a) s 18 (transfers between spouses (or civil partners));
(b) s 23 (gifts to charities);
(c) s 24 (gifts to political parties);
(d) s 24A (gifts to housing associations);
(e) s 27 (maintenance funds for historic buildings, etc); or
(f) s 28 (employee trusts).

Question 18

CATEGORY 2: EXEMPT ESTATES

Answer 18

• Category 2 - ‘exempt’ estates:
  o Refers to = estates where the bulk of the estate attracts the spouse/CP or charity exemption.
  o Where:
   the gross value of the estate (plus specified transfers and specified exempt transfers made in the 7 years before death) must not exceed £3 million; and
   the net chargeable estate after deduction of liabilities and spouse and/or charity exemption (plus specified transfers and specified exempt transfers made in the 7 years before death) must not exceed the NRB
  o As above, a transferred NRB can increase the NRB for this purpose.

Question 19

CATEGORY 3: NON-DOMICILED ESTATES

Answer 19

• Category 3 - ‘non-domiciled’ estates:
  o Refers to - estates where the deceased was never domiciled or treated as domiciled in the UK, and owned only limited assets in the UK.
• Procedure for excepted estates:
  o PRs provide no information directly to HMRC. They include the following on their applications for a grant:
  1. the deceased’s full name and date of death; and
  2. a declaration:
  1. that the estate is an excepted estate; and
  2. whether they are claiming against the estate the unused proportion of the IHT NRB of a pre-deceased spouse/CP; and
  3. the following three IHT values:
  1. the gross value of the estate for IHT plus any specified transfers and specified exempt transfers made in the 7 years before death;
  2. the net value of the estate for IHT less any allowable debts;
  3. the net qualifying value of the estate, i.e., the net value of the estate for IHT less any spouse/CP and charity exemptions.
  o HMCTS will have 1 month to pass this information to HMRC.
  o PRs of non-UK domiciliaries will have to provide more information. HMRC will select a random sample to review within 60 days of application for a grant and will ‘use other information sources to identify those estates nearer to the IHT threshold’ where it feels there is a risk that IHT may be payable.

Question 20

IHT400

Answer 20

• Must be used whenever the deceased dies domiciled in the UK and the estate is NOT ‘excepted’
• Procedure:
  o PRs send the completed IHT400 and relevant supporting schedules to HMRC
  o PRs/their solicitor use the form to calculate the amount of any IHT payable and also pay any IHT due before grant
  o HMRC will email receipted summary (From IHT421) to HMCTS and inform the PRs/their solicitor that this has been done
  o Grant will not be issued until HMCTS receives the receipt
• Application forms for the grant include a question asking when the IHT400 was submitted and the application will be blocked if insufficient time has elapsed. (leave 20 working days from sending the IHT before applying for grant)

Question 21

IHT400

Answer 21

• Must be used whenever the deceased dies domiciled in the UK and the estate is NOT ‘excepted’
• Procedure:
  o PRs send the completed IHT400 and relevant supporting schedules to HMRC
  o PRs/their solicitor use the form to calculate the amount of any IHT payable and also pay any IHT due before grant
  o HMRC will email receipted summary (From IHT421) to HMCTS and inform the PRs/their solicitor that this has been done
  o Grant will not be issued until HMCTS receives the receipt
• Application forms for the grant include a question asking when the IHT400 was submitted and the application will be blocked if insufficient time has elapsed. (leave 20 working days from sending the IHT before applying for grant)

Question 22

Paying the IHT

Answer 22

General rule - IHT is due 6 months after the end of the month in which the deceased died.
 e.g., if a person dies on 10 January, IHT is due on 31 July.
o Exceptions - certain types of property, e.g., land and some types of business property, attract the instalment option, which means there is a right to pay by 10 annual instalments.

IHT on non- instalment option
property:
IHT is due within six months of the end of the month in which the death occurred. Late payments attract interest. BUT IHT on non- instalment option property must be paid before the grant.

IHT on instalment option property If PRs do not elect for instalments:
IHT must be paid before the grant (or
within 6 months of the end of the month of death, if earlier). If PRs elect to pay by instalments: The first instalment is due within 6 months of the end of the month of death. The other nine instalments are due at
annual intervals.

Question 23

Direct payment scheme

Answer 23

 PRs must provide whatever identification the relevant banks and building societies require. They should do this in advance of applying for a grant, to avoid any unnecessary delay in the application.
 PRs complete a separate IHT423 for each bank and building society from which money is to be transferred.
 PRs send each IHT423 to the relevant bank or building society at the same time that they send the IHT400 and supporting schedules to HMRC. IHT423 includes an IHT reference number provided by HMRC to allow HMRC to match up the payment with the correct estate.
 The bank or building society will send the money direct to HMRC. Once HMRC has received the money and is satisfied that the amount is correct, it will email the IHT receipt (IHT421) to HMCTS and notify the solicitor.
 Disadvantage - time consuming, so if there is an urgent need for a grant, PRs will want to find an alternative source of funding.
 Practice note - Solicitors often make private arrangements with banks and building societies under which the bank or building society transfers funds directly to HMRC from the deceased’s accounts. This is a relatively quick and easy method of funding

Question 24

2. Life assurance:

Answer 24

 Where the proceeds of an insurance policy on the deceased’s life are payable to the estate, the life assurance company may be willing to release funds to pay the IHT directly to HMRC and not to the PRs or their solicitors.

Question 25

3. Assets realisable without production of the grant:

Answer 25

 By applying the Administration of Estates (Small Payments) Act 1965, assets may be realised without the production of a grant.
 Maximum value that can be realised = £5,000
 Where an estate is large or complex, this discretion will often not be exercised.

Question 26

4. Loans from beneficiaries:

Answer 26

 Wealthy Bs may be prepared to fund the IHT from their own resources, on condition that they will be reimbursed from the deceased’s estate once the grant issues.
 Alternatively, Bs may already have received assets which they can use to pay IHT - e.g., money from a jointly held bank account, or proceeds from an assigned life assurance policy/one held on trust for them.

Question 27

5. Bank borrowing:

Answer 27

 Banks not part of the voluntary scheme may lend against an undertaking to repay the loan given by the PRs.
 May also require an undertaking from the solicitor to repay the loan from the proceeds of the estate.
 Whether or not the solicitor is a PR, any undertaking should be limited to ‘such proceeds as come into the solicitor’s control’ (to ensure payment is not due from the solicitor personally)
 Disadvantage - this is expensive, because the bank will charge an arrangement fee and interest on the amount borrowed.
 Practice note - Money borrowed should be repaid at the earliest opportunity so as to honour any undertaking and to stop interest running. Income tax relief is available to the PRs for interest paid on a separate loan account in respect of IHT payable on personalty vesting in them

Question 28

6. National Savings and Government stock:

Answer 28

 Payment of IHT can be made from National Savings Bank accounts or from the proceeds of National Savings Certificates, any Government stock held on the National Savings register or any other National Savings investment.

Question 29

7. Heritage property in lieu of tax:

Answer 29

 Taxpayers can offer HMRC an asset in lieu of tax (IHTA s230(1)).
 Sec of State must agree to accept such assets and the standard required of such objects is very high - must be ‘pre-eminent for its national, scientific, historic, or artistic interest’

Question 30

8. Obtaining a grant on credit:

Answer 30

 Where PRs can demonstrate that it is impossible to pay the IHT in advance, HMRC will allow the grant to be obtained on credit.

Question 31

IHT form

Answer 31

• Applicant must state whether an IHT400 and IHT421 was completed.
• If it was not because the estate was excepted, the following details must be provided:
  1. the gross value of the estate for IHT plus any specified transfers and specified exempt transfers made in the 7 years before death;
  2. the net value of the estate for IHT less any allowable debts;
  3. the net qualifying value of the estate, i.e., the net value of the estate for IHT less any spouse/CP and charity exemptions.
• PRs must also specify the gross and net figures for the estate passing under the grant. - determines the probate fee payable

Question 32

Probate value?

Answer 32

(i.e., estate passing under the grant) = comprises only the property vesting in the PRs.
o EXCLUDES:
 the deceased’s interest in joint tenancies,
 life policies assigned or written in trust,
 discretionary lump sums under pension schemes, and
 trust property in which the deceased had a life interest.
 NB probate value =/= IHT value (because property which does not pass under the grant such as ^ is included in the IHT estate, and BPR and APR may reduce the IHT value but are irrelevant for the probate value)

Question 32

gross estate?

Answer 32

value before deducting debts.
o must be given because the PRs undertake to duly administer the estate, which includes the payment of debts (so they must refer to gross figures, not merely net figures)

Question 32

Net estate?

Answer 32

• Net estate = value after deduction of debts and the funeral account

Question 33

End of form?

Answer 33

• Both PA1P and PA1A end with a statement of truth - applicants confirm that they will administer the deceased’s estate in accordance to law, and that the content of the form is truthful.
  o Criminal proceedings for fraud may be brought against the signatories if it is found that the evidence provided is deliberately untruthful or dishonest, as well as revocation of the grant.
• Signature:
  o Where the applicant is legally represented and the legal representative (usually a probate practitioner) is authorised by the applicant to sign on their behalf, the legal representative signs next to their name with either a typed or handwritten signature.
  o However, the grant will issue in the name of the applicant given within the applicant section of the form

Question 34

Executors: identification of will

Answer 34

o Original will + any codicils must be sent to HMCTS
o Details of the will and codicils entered on the form
o Details of any foreign wills in case they revoke the UK will
o Form will ask whether the deceased married or formed a civil partnership after making the will (in case of revocation) - DIVORCING WILL AUTOMATICALLY REMOVE THE DIVORCEE AS AN EXECUTOR. IF SOLE , GRANT WOULD BE LOA WITH WILL ANNEXED

Question 35

Executors: 2. Entitlement to the grant:

Answer 35

o Where executors are appointed by a valid will, they have the best right to take a grant (of probate)
o PA1P - executors confirm the date of the will and any codicils, and that they have not been revoked by a subsequent marriage or CP
o Appointment of executors is not affected by the fact that the will may fail to dispose of some or all of the deceased’s estate

Question 36

Number of executors?

Answer 36

1 executor can obtain a grant and act alone, even if the estate includes land or there are infant Bs

Question 37

Executor lacking capacity?

Answer 37

o If a person is appointed executor but lacks capacity to make decisions at the testator’s death, they cannot apply for the grant - other executors will take it.
o If they are the only executor, their attorney appointed under an enduring or lasting power of attorney can take the grant in their place.
o Where one of several executors is a minor, the other(s) being adult(s), probate can be granted to the adult executor(s) with power reserved to the minor to take a grant at a later date.
 If administration of the estate is not complete by the time the minor attains 18 years, an application for a grant of double probate can be made to enable the former minor to act as executor alongside the other proving executor(s).
o Where the minor is the only executor, someone must take the grant on their behalf as it would be impracticable to leave the estate unadministered until they reach 18 years.
 Grant of letters of administration with will annexed for the use and benefit of the minor will be made - usually to their parent(s) or guardian(s) - until they reach 18.
 On reaching 18, the executor can apply for a cessate grant of probate if the administration has not been completed yet.

Question 38

Executors - renunciation?

Answer 38

o Persons appointed as executors can renounce their right to take the grant.
 If they do, rights as executor cease and the administration of the estate proceeds as if the executor had never been appointed.
o Executors can renounce only if they have not intermeddled in the estate.
 Intermeddling = doing tasks a PR might do, e.g., selling the deceased’s chattels.
 Intermeddling constitutes an acceptance of office as executor - they must take the grant.

Question 39

Renunciation of executor - procedure?

Answer 39

 Form PA15 signed by the person renouncing
 signature must be witnessed
 renunciation must be filed with HMCTS
 normally done by PRs who are applying for a grant when they lodge their application
o NB Executors who are also appointed as trustees will remain trustees despite renouncing the executorship. They will have to disclaim the trusteeship as well if they want to act in neither capacity

Question 40

Power reserved - executors?

Answer 40

o No limit on number of executors that can be appointed by the will
 BUT probate will be granted to MAX 4 executors in respect of the same property
 Power may be reserved to the other(s) to take out a grant in the future if a vacancy arises. Can apply for a grant - not an automatic substitution.

Question 41

A person appointed as one of two or more executors may not wish to act initially but may not want to take the irrevocable step of renouncing their right to a grant of probate?

Answer 41

When Dennis dies, Bella is working in Germany but is due to return to England in 12 months’ time. Bella does not feel that she should act as executor whilst abroad and is happy to let Charles act alone initially, but she does want to help in the administration if it has not been completed by the time she returns to England.
Charles should apply for the grant ‘with power reserved’ to Bella to prove at a later stage. In the PA1P Charles will confirm that he has notified Bella of the application for the grant

Question 42

Executors - limited grant?

Answer 42

o It is possible to obtain a grant limited to part of the estate
 usually done where particular expertise is required (e.g., an author might appoint literary executors to deal with their books and general executors to deal with everything else)

Question 43

Administrators: lower category?

Answer 43

o A person in a lower-ranked category may apply only if there is nobody in a higher category willing and able to take on the grant
o Applicant must explain the basis of their own entitlement to the grant by explaining:
 why nobody in a higher category is applying (this is called ‘clearing off’) and
 why they are entitled.

Question 44

If there is a valid will but no executor willing to act?

Answer 44

• If there is a valid will but no executor able and willing to act, the appropriate grant is letters of administration with will annexed
• Where a grant of letters of administration with the will annexed is appropriate:
  o where the will does not appoint executors
  o where all executors have predeceased or renounced
  o where the will appointed the deceased’s spouse as the sole executor but they divorced before the deceased’s death

Question 45

Administrators applying for a grant of letters of administration with the will annexed: residuary legatees

Answer 45

 In the application, they will have to explain that ‘no executor was appointed in the will’ and they are ‘the residuary legatees holding on trust named in the will.’

o Example - Amanda has died leaving a will appointing Boris as her executor and trustee and giving the residuary estate on trust for Carol absolutely, ie Carol is the residuary legatee and devisee.
 Carol can apply for a grant only if Boris is unable or unwilling to act. She must explain why Boris is not taking a grant of probate, eg by saying, ‘the executor and trustee named in the will has predeceased the deceased’ and state that she is the residuary legatee and devisee named in the will.

Question 46

Administrators applying for a grant of letters of administration with the will annexed:
* ‘(e) Any other legatee or devisee … or any creditor of the deceased’

Answer 46

o Covers any other B under the will.
o Examples - a specific devisee who has been left the deceased’s house, or a pecuniary legatee who has been left money by the deceased. It also covers creditors of the deceased.
* ‘(f) The personal representative of any other legatee or devisee … or of any creditor …’
o Works on the same principles as (d) above.

2. Beneficiary with vested interest preferred:
   o Where there is more than one person of equal rank but one has a vested and one a contingent interest in the estate, the court generally prefers an application by the B with a vested interest.

Question 47

Administrators applying for a grant of letters of administration with the will annexed: … or … any person entitled to share in the undisposed of residue’

Answer 47

o If a partial intestacy arises because the will fails to dispose of all or part of the residuary estate, those people entitled to the residue by virtue of the intestacy rules may apply for a grant under NCPR 1987, r 20.
o In the application, they will explain why nobody in higher ranked categories in Rule 20 are taking the grant, why there is an intestacy and why they are entitled as beneficiaries on the intestacy

Question 48

Several people entitled to act as administrators?

Answer 48

o If there are several people entitled to act as administrators then, as with executors, the grant will not issue to more than four of them in relation to the same property (Senior Courts Act 1981, s114)
 Not possible for an administrator to have power reserved to prove at a later stage.
o Where two or more people are entitled in the same degree, a grant can be made on the application of any one of them without notice to the other or others.

Question 49

Administrators - renunciation?

Answer 49

o Any person entitled to apply for a grant of letters of admin with will annexed can renounce in the same way as an executor (Form PA16)
o HOWEVER, an administrator does not lose the right to renounce by intermeddling.
o AND, renunciation does not affect any beneficial entitlement of the administrator or any appointment as a trustee.

Question 50

LoA : minors?

Answer 50

o Minors (infants) cannot act as administrators with will annexed, nor can they apply for a grant.
o Other people entitled in the same category as the minor will apply.
o If there are no such persons, the minor’s parent(s) or guardian(s) may apply for a grant ‘for the minor’s use and benefit’ on their behalf.
o Grant is limited until the minor attains the age of 18.

Question 51

LoA: Number of administrators?

Answer 51

o Where there is a life interest, or property passes to a minor (whether the interest is vested or contingent), the court normally requires a minimum of two administrators to apply for the grant.
o A question in the application asks whether there are any minor beneficiaries, in which case two administrators will be required.

o If there are several people entitled to act as administrators then, as with executors, the grant will not issue to more than four of them in relation to the same property (Senior Courts Act 1981, s114)
 Not possible for an administrator to have power reserved to prove at a later stage.
o Where two or more people are entitled in the same degree, a grant can be made on the application of any one of them without notice to the other or others.

Question 52

LoA: power reserved?

Answer 52

 Not possible for an administrator to have power reserved to prove at a later stage.
o Where two or more people are entitled in the same degree, a grant can be made on the application of any one of them without notice to the other or others.

Question 53

Administrators applying for a grant of (simple) letters of administration (SIMPLE LOA)

Answer 53

Form PA1A is completed where the deceased died without a valid will and so is totally intestate.
1. Entitlement to the grant:
o The person/persons entitled to the grant are listed in NCPR 1987, r 22
o NB the order is the same as the order of entitlement on intestacy (so the beneficiaries on intestacy take the grant)

Question 54

Simple LOA form PA1A: establishing entitlement?

Answer 54

explaining why nobody in the higher categories in Rule 22 is taking the grant (this is called ‘clearing off’). This may simply be a case of stating that there were no relatives in the higher categories. In Form PA1A the applicant has to state as a matter of course whether the deceased left a surviving spouse or civil partner and which other relatives in the Rule 22 categories survived; and  stating the applicants’ relationship to the deceased.
o Unless the applicant is the Treasury Solicitor or a creditor, they must have a beneficial interest in the estate (or would have such an in interest if there was an accretion to the estate) by virtue of the intestacy rules - ie WOULD be entitled even if spouse takes allowance and son gets nothing

Question 55

Simple LOA: minors

Answer 55

same procedure,
o Minors cannot act as administrators, nor can they apply for a grant.

Question 56

Simple LOA - number of administrators?

Answer 56

o Maximum of 4 administrators can take the grant.
o If there are more than 4 people with an equal entitlement, it is not possible to have a ‘power reserved’ to a non-proving administrator.
o Where 2 or more people are entitled in the same degree, a grant can be made on the application of any one of them without notice to the other(s)
o Minimum of two administrators is generally required where the intestacy creates minority interests through property being held for minors on the ‘statutory trusts’
o NB the court may dispense with the need for two administrators in special circumstances

Question 57

Power reserved possible under LOA simple ?

Answer 57

o If there are more than 4 people with an equal entitlement, it is not possible to have a ‘power reserved’ to a non-proving administrator.

Question 58

LOA simple - renunciation?

Answer 58

o A person entitled to a grant under NCPR 1987, r 22 can renounce their right to the grant in the same way as an administrator with the will annexed.
o Renunciation does not affect any beneficial entitlement of the administrator.

Question 59

Preventing the issue of the grant

Answer 59

• Grounds of challenge:
  o Mental capacity of the testator (validity of the will)
  o Mental capacity/capability of the executor to act
  o Formalities of execution under s9
  o Requisite knowledge and intention
  o Due execution?
  o Undue influence, duress, coercion
• Caveat application can be made online or using form PA8A
  o ‘Caveator’ = person lodging or entering the application
• Caveats last for 6 months - can be extended
• Application for a grant may issue a ‘warning’ to the caveator, requiring them to enter an appearance within 14 days of setting out their interest
  o If caveator fails to do this, the applicant for the grant can remove the caveat

Question 60

Compelling grant of probate?

Answer 60

• Typically compelled if PRs delay beneficiaries’ application for grant
• Beneficiary (’the citor’) can apply to HMCTS to issue a citation
  o citation = method of enforcing a party with a right to the grant to act
• Example
  Only executors or persons specified under NCPR 1987, r 20 or r 22 can take a grant of representation. If the person initially entitled to take the grant refuses to do so and also refuses to renounce, the estate would remain unadministered and the beneficiaries would be left waiting indefinitely for their inheritance. In such circumstances, a citation provides a remedy.

Question 61

Citation to take probate

Answer 61

o May be used where an executor has lost his right to renounce probate by intermeddling in the estate (eg by selling the deceased’s chattels) but has not applied for a grant of probate and shows no signs of so doing
o Effect: the executor must proceed with an application for grant of probate
 Failure (without good reason): the citor can apply for a court order allowing the executor to be passed over and a grant of letters of administration with will annexed to issue to the person(s) entitled under NCPR 1987, r 20

Question 62

Citation to propound will

Answer 62

o Propound a will = authenticate the will by obtaining a grant of probate
o Proves that the later will exists - forces the executors to put that will forward.
o Used where a person becomes aware that there may be a will that would diminish their entitlement under an earlier will or an intestacy; they can cite the executors named in the later will and any persons interested under that will to propound it
o Failure (for citees to enter an appearance or proceed diligently to propound): citor can apply for a court order for a grant as if the will were invalid

Question 63

3. Citation to accept or refuse a grant

Answer 63

o Standard method of clearing off a person with a prior right to any type of grant who has not applied, and shows no intention of applying, for a grant
o Failure (of citee to take steps to take out the grant): citor may issue a grant
o Example
Adam’s will appoints Bert his executor and Clare the residuary beneficiary. Bert takes no steps towards administering the estate or proving the will. Clare may cite Bert to act and, if Bert does nothing, Clare may apply by virtue of NCPR 1987, r 20 for a grant of letters of administration with will annexed.

Question 64

Passing over

Answer 64

4. Passing over
   * If a person is unwilling to act as executor in the administration of an estate, it is often preferable to apply to the Court under s 116 Senior Courts Act 1981 for an order passing over that person in favour of someone else.
   * Example – Re Biggs [1966] 1 All ER 358
   an executor had intermeddled but then refused to have anything to do with the estate. The applicants obtained an order that he be passed over.

Question 65

Beneficial entitlement in an unadministered estate?

Answer 65

• Unlike beneficiaries of trusts, beneficiaries of an unadministered estate have no equitable interest in the deceased’s property until the PRs transfer or assent the property to them
  o legal and equitable interests vest with PRs until transferred or assented
• Beneficiaries have the right to compel due administration of the estate
  o In doing so, they may want to see accounts or require information about the administration
  o also anyone else interested in the estate has this right

Question 66

Beneficiaries’ right to inspect accounts?

Answer 66

• PR Obligation: Throughout the administration, the PRs must keep accurate records of receipts and payments.
• Beneficiary Right: Beneficiaries can ask to inspect accounts
• If PRs refuse the request, or if accounts are unclear or inaccurate, anyone interested can apply for a court order compelling the PRs to provide an inventory and accounts (s.25 Administration of Estates Act 1925 (AEA))
• At the end of administration, immediately prior to the final distribution of the estate, PRs (or their legal adviser) will prepare estate accounts showing all the assets, income, and payments made
• sent to the residuary beneficiaries – they are asked to sign a receipt approving the accounts

Question 67

Beneficiaries’ rights to ask for disclosure?

Answer 67

• Disclosure of documents or information similar to trusts:
• No automatic entitlement to disclosure of reasons for PRs decisions and deliberations on a discretionary matters
• BUT if PRs refuse to disclose, beneficiaries can apply to the court
• Documents which PRs are not subject to disclose under trust law may be subject to disclosure in a subject access request under the Data Protection Act 1998, or as part of disclosure requirements in court proceedings

Question 68

Administration proceedings?

Answer 68

• Can be brought by anyone interested in the estate (including beneficiaries, creditors and PRs)
  Two categories:
• Applications limited to a particular issue
  o may be non-contentious
  o e.g. PRs may seek guidance from the court on the performance of a duty or the meaning of words used in a will
• Applications for a general administration order
  o less common
  o last resort (particularly because of high costs)
  o e.g. court supervises the PRs to the extent that PRs need permission from the court to exercise their powers
  o e.g. court could appoint a judicial trustee to act as PR with another person or alone

Question 69

Executor’s year?

Answer 69

• Based on the common complaint from beneficiaries that there has been undue delay in paying their entitlement
• s.44 AEA 1925: ‘a [PR] is not bound to distribute the estate of the deceased before the expiration of one year from the death’
  o PRs have at least one year, aka the ‘executor’s year’, from the date of death before they can be called on to distribute the estate
• NB. executor’s year applies to administrators too
  o The amount of time will vary depending on the extent and complexity of the assets

Question 70

Breach of fiduciary duty

Answer 70

• PRs are fiduciaries, so obliged to avoid conflicts between their duties and personal interest
• PRs must account for any unauthorised profit (whether or not the estate has suffered loss)
• If PR purchases property from the estate, the transaction is voidable by the beneficiaries within reasonable time
• Profits may be authorised by:
  o a provision in the will,
  o a court order, or
  o consent of all beneficiaries who must be aged 18 or more

Question 71

Breach of duty

Answer 71

Rather than bring administration proceedings, beneficiaries may be able to sue PRs directly for breach of duty.

Question 72

Devastatit

Answer 72

o Beneficiaries may bring where a PR has caused loss to the estate by a breach of duty
o If PR liable: pay beneficiaries out of their own [personal] resources
o Claims may be based on:
 misuse of assets,
 eg a PR takes assets for their own use
 maladministration, or
 eg distributing the estate other than in accordance with the will or the intestacy rules, failing to collect and get in the deceased’s real and personal estate, breaching any of their duties or acting outside the powers
 negligence
 eg a PR carries out their duties without taking the care which would be reasonable in the circumstances

Question 73

Defences Section 61 Trustee Act 1925

Answer 73

 court has a discretion to totally or partially relieve a PR of personal liability if they acted honestly and reasonably and ought fairly to be excused for the devastavit and for omitting to obtain the directions of the court in the matter

Question 74

Defences Exclusion clause in the will

Answer 74

 PRs may escape liability because the deceased’s will contains a clause modifying their duties or excluding liability

Question 75

Acquiescence of beneficiaries

Answer 75

 An adult beneficiary who, with full knowledge of the facts, consented to a PR’s breach of duty cannot succeed in a claim against the PR.

Question 76

Protection against unknown or missing claimants

Answer 76

 If PRs have distributed the estate not knowing of the existence of a beneficiary, PRs are personally liable if the omitted beneficiary (OB) later brings a claim
 Conditions: BUT this defence protects the PRs if they placed advertisements and followed the procedures in s.27 Trustee Act 1925
 the OB would then be able to claim their entitlement from the beneficiaries who wrongly received the estate
 This defence does not protect PRs’ personal liability to
 beneficiaries who are known but cannot be found
 solution: PRs should obtain a Benjamin order, or insurance, or an indemnity from beneficiaries
 successful family provision claimants
 solution: PRs should wait at least 6 months from the date of the grant before distributing the estate

Question 77

Limitation period

Answer 77

 Time limit for unpaid or underpaid beneficiary to bring a claim to recover a share or interest in an estate is 12 years from the date on which the right to receive the estate accrued
 No time limit to bring actions for fraudulent breaches of duty or where PR has taken property from the estate for their own use

Question 78

Procedure for excepted estates?

Answer 78

PRs must include in their applications for grant:

1. Deceased’s full name and date of death; and
2. A declaration:
   
   1. that the estate is excepted, and
   2. whether they are claiming against the estate the unused proportion of IHT NRB of a pre-deceased spouse/CP; and
3. 3 IHT values:
   - HMCTS will have 1 month to pass this information to HMRC
   - PRs of non-UK domiciliaries will have to provide more information. HMRC will select a random sample to review within 60 days of application for a grant and will ‘use other information sources to identify those estates nearer to the IHT threshold’ where it feels there is a risk that IHT may be payable.

Question 79

What qualifies as an instalment property

Answer 79

 (a) land of any description;
 (b) a business or an interest in a business;
 (c) shares (quoted or unquoted) which immediately before death gave control of the company to the deceased;
 (d) unquoted shares which do not give control if either:
 (i) the holding is sufficiently large (at least 10% of the nominal value of the company’s shares AND worth more than £20,000)
 (ii) HMRC is satisfied that the tax cannot be paid in one sum without undue hardship; or
 (iii) the IHT attributable to the shares and any other instalment option property in the estate amounts to at least 20% of the IHT payable on the estate.