Unit 5 - Dealing with Assets Flashcards
What are the duties of PRs?
To collect the assets of the estate and to administer it by law.
What are the liabilities of PRs?
They may be personally liable for loss to the estate where someone has not been paid or for a breach.
What protection can a PR take in respect of unknown relatives or creditors?
Put a notice in the London Gazette
Put a notice in a local newspaper
Provide a minimum notice period of two months
Undertake searches at the Land Registry, Land Charges Register and Local Land Charges Registry
What protection can a PR take where a beneficiary’s whereabouts are unknown?
Assets should be kept back.
Indemnities from beneficiaries.
Take out insurance.
Obtain a Benjamin order from the court which authorises PRs to distribute on the basis the beneficiary is dead.
What protection can PRs take against claims under the I(PFD)A?
Wait six months from the date of grant before distributing assets.
When do PRs receive ownership of the deceased’s assets?
Executors - upon death
Administrators - once grant is issued
What order will debts be paid?
Secured debts
Funeral and testamentary debts
Unsecured debts
What is the statutory order of the sale of assets to pay off any unsecured debts?
Property undisposed of in a will
Residue
Money set aside by the deceased
Money retained to pay pecuniary legacies
Property specifically bequeathed
Other property
What order should beneficiaries be paid after liabilities are paid?
Specific legacies (chattels etc.)
Pecuniary legacies within the will
Residue
What adjustments may be needed for IHT?
When new assets or liabilities are discovered.
e.g. loss relief when qualifying investments (shares on a stock exchange) are sold for less than their date at death value.
Who is liable for unpaid taxes from lifetime gifts?
The person receiving the gift is primarily liable, but if the tax remains unpaid within 12 months after the donor dies, the PRs become liable.
What should PRs do in respect of income tax?
A return to HMRC should be made from 6 April before the year of death until the date of death.
When does a PR need to pay CGT?
When PRs are selling the assets, not transferring them.
What are the rates for CGT?
24% for residential second properties
20% for everything else
How do you calculate CGT?
- Find sale price/market price/disposal value
- Deduct acquisition value or probate value
- Deduct incidental costs/expenses
= GAIN
- Deduct annual exemption of £3,000
- Apply rate
What is a complex estate?
Exceeds £2.5m
Tax exceeds £10,000
Value of assets exceed £500,000
