WAE 11 - Post-grant practice Flashcards
What is the PRs’ duty to deliver an account to HMRC?
- PRs must provide an account of all property comprising the deceased’s taxable estate at death, including each item’s value and applicable exemptions/reliefs.
- Must be submitted within 12 months from end of month of death.
What form must be used unless the estate is excepted?
IHT400, along with relevant schedules (IHT401–IHT420) and always IHT421 (probate summary).
What are the types of excepted estates?
- Low value (estate value including transfers < NRB + TNRB)
- Exempt (gross estate ≤ £3M, exemptions reduce estate below NRB + TNRB)
- RNRB not included.
What prevents an estate from being excepted?
GROBs in last 7 years, trust interests >£250k or multiple trusts, foreign assets >£100k, specified transfers >£250k, or RNRB claimed.
What is the IHT payment deadline?
Within 6 months of end of month of death. Interest accrues thereafter.
What assets are eligible for IHT instalment payment?
Land/buildings, company shares/securities (with control), unquoted shares (if hardship), farms, timber. 10 annual instalments allowed.
Instalment payments help manage cash flow for large estates.
What happens to instalment payment if the asset is sold?
Outstanding tax becomes immediately due, and sale proceeds are used to meet liability.
How can PRs raise funds for IHT before grant?
Via Direct Payment Scheme (banks pay HMRC directly using IHT423), or borrowing from beneficiaries/banks.
What is a Corrective Account (C4)?
Form to correct IHT400 if incorrect. Used for new/adjusted assets or liabilities, changes in exemptions/reliefs, or variations. Tax must be recalculated.
What is required for collecting estate assets?
Official death certificate copies are sent to asset holders. Funds must be paid into a separate PR account or law firm’s client account.
How should personal possessions be handled?
Safeguarded and stored by PRs.
Who handles investment sales/transfers?
A financial advisor.
How is registered land transferred?
Can be transferred to PRs.
When should debts be paid?
Within executor’s year. PRs should act diligently or risk personal liability.
How can PRs protect against unknown creditors?
By publishing a s.27 TA 1925 notice in London Gazette/local paper. Offers protection but doesn’t protect from known but missing creditors.
This is a legal measure to mitigate risks associated with debts.
What is the priority of debt payment?
Secured debts from the asset (unless will states otherwise). Unsecured debts follow AEA statutory order.
AEA refers to the Administration of Estates Act.
What if the estate is insolvent?
Debts paid in order under the Administration of Insolvent Estates of Deceased Persons Order 1986.
Who bears secured debt unless will says otherwise?
The charged property bears primary liability. Clear will provision needed to shift liability.
What is PRs’ power of sale?
PRs may sell estate assets but must follow statutory order of debt payment. Consider CGT, speed of sale, and beneficiary wishes.
What is marshalling?
Protects beneficiaries when assets are used out of order. Beneficiaries can claim compensation from other estate parts.
How can a will override statutory debt rules?
By clearly stating how debts should be paid. For secured debts, a general direction to pay from residue is insufficient – must specify payment from residue.
