WAE Flashcards

Question

Review the following extracts from a valid will: Clause 1: I hereby REVOKE all former wills and testamentary dispositions and declare this to be my last will Clause 2: I APPOINT ANDREW BATES of […] and CATHY DENNIS of […] (hereinafter called “my Trustees” which expression where the context admits includes any trustee hereof for the time being) to be the executors and trustees of this my will but if either or both of them shall die in my lifetime or be unable or unwilling to act as my executor I appoint ESTHER FISHER of […] to fill any vacancy thereby arising The testator died last week. Andrew died before the testator. You may assume anyone entitled to act as executor or trustee is willing and able to do so. Which one of the following is correct? Cathy and Esther will be appointed as executors of the estate. If any trust arises following the testator’s death, Cathy and Esther will also be the trustees. Clause 1 needed to include the date the will was signed to avoid any confusion about which is the last valid will the testator made. Cathy would act as the sole executor of the estate. If any trust arises following the testator’s death Esther would need to act as trustee with Cathy so there are two trustees. Cathy and Esther will be appointed as executors of the estate. However, if any trust arises following the testator’s death, it is not clear who will act as the trustees. Clause 1 did not revoke any codicils made before this will.

Answer 1

Cathy and Esther will be appointed as executors of the estate. If any trust arises following the testator’s death, Cathy and Esther will also be the trustees. Correct. Andrew cannot act as he has pre-deceased the testator and Clause 2 appoints Esther in his place. Clause 2 also confirms that the executors should also act as trustees of any trust. The other options were incorrect because: - The revocation clause revokes any will or codicil made previously -Esther is appointed as a replacement for Andrew (there is no option for Cathy to act alone) -A will should contain a date but this can be at the end or as part of the commencement clause – it does not need to be part of the revocation clause incorrect: Clause 1 needed to include the date the will was signed to avoid any confusion about which is the last valid will the testator made. Incorrect. Refer to your materials on will drafting – in particular the drafting of the commencement clause. A date should be included in the will, but this could be part of either the commencement or attestation clause. Cathy would act as the sole executor of the estate. If any trust arises following the testator’s death Esther would need to act as trustee with Cathy so there are two trustees. Incorrect. Refer to your materials on will drafting – in particular the drafting of the executor clause. Clause 2 makes it clear that if one of the original executors is unable to act (in this case Andrew) then Esther will fill the vacancy.

Answer 2

No guardians are appointed following the testator’s death. No guardians are appointed following the testator’s death.

Answer 3

Your client cannot charge for their time as there is no express power allowing this. Correct. There is no express power to charge in the will and the statutory power to charge applies only to professionals. The other options were incorrect because: Your client cannot charge for their time Express powers take priority over the implied statutory terms in a will where there is conflict

Answer 4

Nothing Correct. The gift of the ring is a specific legacy. If the testator no longer owns the item at the date of their death then the gift in the will cannot be given effect to. In the absence of any express clause providing for an alternative gift, the clause fails and the beneficiary will receive nothing. The other options were incorrect because: · The original gift adeems because the testator does not own the item specifically left by the will -There is no cash or chattel alternative which can be given as there are no express words permitting this

Answer 5

The testator’s nephew will receive the ring. The testator’s brother will receive the £35 cash and the van. Correct. The definition of chattels excludes business assets (the van), cash (£35) and assets owned solely as an investment. The ring was not owned solely as an investment so will be included in the gift of chattels, the other items are not chattels so will pass under the gift of residue.

Answer 6

A clause giving the testator’s share of the holiday home to their sister. Correct. The holiday home is owned as tenants in common and therefore the testator’s share passes in accordance with the will and is not automatically inherited by the sister as the other co-owner. As we know the residue will not be left to the testator’s sister, an express clause giving the testator’s share of the holiday home to their sister is required. The residence owned as joint tenants will pass by survivorship to the surviving co-owner automatically. As the testator wants their civil partner to inherit in any event no express clause in the will is required to achieve the testator’s wishes. The other options were incorrect because: - No severance of the joint tenancy is required as the testator wants the surviving co-owner to inherit the residential house - No express clause within the will is needed re the residential house; the law of survivorship achieves testator’s aim - An express clause giving the share of the holiday home to the sister is required as this interest will otherwise pass as part of the gift of residue to the testator’s children.

Answer 7

The gift to the testator’s sister will fail and she will receive nothing. Correct Correct. The use of the word “my” in the specific gift overrides the general rule in s.24 Wills Act 1837 and the property is identified as at the date of the will. As the testator no longer owns the blue car then this gift adeems and the testator’s sister receives nothing. The other options were incorrect because: The identify of people is established with reference to the date of the will Gifts of collections comprise the assets that fall within the collection as at the date of the testator’s death whether acquired before or after the will was executed incorrect The testator’s cleaner at the date of the testator’s death will receive £100. Incorrect. Refer to your materials on the construction of clauses in a will. People are usually identified with reference to the date of the will.

Answer 8

The gift of the piano is made free of tax but subject to the costs of transfer. Correct. Where a will is silent, a legacy in a will is made free of tax but subject to the costs of transfer. The other options were incorrect because the general rules were incorrectly stated and the executors do not have a general discretionary power to decide where the costs fall.

Answer 9

The testator’s son will inherit the property subject to the mortgage. Correct. The general rule under s.35 Administration of Estates Act 1925, which applies here in the absence of any express wording to the contrary, states that the property charged shall bear the primary liability for repayment. The other options were incorrect because: The executors are not required to sell the property - they can transfer the property to the beneficiary subject to the charge The residue of the estate is not liable for repayment of the mortgage

Answer 10

B and C only Correct. The gift is made contingent on the children reaching the age of 21. A has satisfied this contingency by the time the testator dies so their gift vests immediately. The other two children have not satisfied the contingency so their gifts are contingent. That one is an adult and the other a minor makes no difference. The other options were incorrect as A has a vested interest, and B and C are under the age of 21 so have not satisfied the contingency

Answer 11

The testator’s two surviving children will each inherit 1/3 of the residue. The two grandchildren will each inherit 1/6 of the residue. Correct. The gift to the testator’s sister will lapse because she predeceased. S.33 Wills Act 1837 will not create an implied substitution in favour of the testator’s niece because the original gift was not made to the testator’s issue. S.33 does apply to the gift to the children. Each child would be entitled to a 1/3 share, but one child has pre-deceased the testator. Their 1/3 share will be inherited equally by their two children, who receive 1/6 each. The other options were incorrect because: - The testator’s niece does not receive anything - The testator’s grandchildren are entitled to share between them the 1/3 of the residue their parent would otherwise have inherited

Answer 12

When the first of her grandchildren reaches 18. Correct. The class closing rules mean the class of beneficiaries is identified when the first beneficiary has a vested interest. This has not yet occurred as all of the testator’s grandchildren are under the age of 18. Once the first of them reaches 18 the class will close. The other options were incorrect because: - The clause will not fail for uncertainty (the class closing rules create certainty) - No beneficiary has a vested interest at the date of her death - Without express wording to suggest otherwise, the date of the will is not the correct reference point - It is possible to close the class without having to wait for it to be impossible for further members to be born

Answer 13

Such financial provision as it would be reasonable in all the circumstances for a husband or wife or civil partner to receive whether or not that provision is required for his or her maintenance. Correct: The surviving spouse/civil partner standard does not require the court to consider whether the provision is required for the applicant’s maintenance.

Answer 14

The applicant’s age and the duration of their relationship with the deceased. Correct: Although the court is required to consider any matter that they consider relevant in the circumstances, the applicant’s age and duration of their relationship with the deceased are not expressly referred to in section 3(1) IPFDA.

Answer 15

The court must consider the applicant’s age and duration of the marriage or civil partnership, as well as any contributions made by the applicant to the welfare of the deceased (including any contributions made by looking after the home or caring for the family). The court must also take into account what the applicant might reasonably have expected to receive on divorce or dissolution of the civil partnership. Correct: The court considers all the factors above. There is no express requirement to consider whether the deceased maintained the applicant, or the length of their relationship prior to marriage/civil partnership (although these may be considered under the common guidelines if the court considers them relevant in the circumstances).

Answer 16

The client’s objectives can only be met if she varies her inheritance. Correct. A variation would achieve all of her objectives. By way of variation the client can re-distribute part of her inheritance and elect who should benefit instead. The writing back effect for both IHT and CGT will apply provided the variation is made in writing within 2 years following her brother’s death. The other options were incorrect because: A disclaimer could not be used because the client cannot disclaim part of her inheritance, neither can she nominate the alternative beneficiary (under the will any disclaimed inheritance would pass directly to her children, not the step sister) The time limit for varying the distribution is 2 years following death.

Answer 17

Your client should make an election for s 142 IHTA to apply to the variation. Correct. If the client enters a variation and claims the writing back effect for IHT under s 142 IHTA her father’s estate will be taxed as though £50,000 was given to the client’s children and the remainder to the client. There is no change to the IHT liability on her father’s estate as a result (none of the beneficiaries are exempt) therefore consent from her father’s PRs is not required. The advantage to claiming the writing back effect under s 142 is that the client will not be making PET and so avoids the risk of this failing if she died within 7 years. The other options were incorrect because: No writing back for capital gains tax purposes should be made because the subject matter of the variation is cash- which is exempt from CGT. There is an advantage to making an election under s 142 IHTA – the gift of £50,000 to the client’s children is treated as having been made from her father’s estate and will not be a PET by the client. There would be no change to the IHT liability following the variation so PR consent is not required.

Answer 18

If the client distributes the chattels to her children she would make a disposal for CGT purposes. Correct. The clause in the will is a precatory trust. The client is the beneficiary of the chattels. However, her father hoped that she would distribute them to his grandchildren. No legal trust is created so the client is not a trustee and has no obligation to comply with her father’s wishes. If she does give the chattels to the grandchildren, s 143 IHTA applies automatically to treat these gifts as if they were made by her father’s will (and not the client) for IHT purposes. There is no equivalent for CGT however, so the gifts will be a disposal by the client for CGT purposes. The other options were incorrect because: S 143 does not create a tax-free gift under the will A gift of chattels made by the client to the grandchildren would ordinarily be a PET but the effect of s 143 is to treat these gifts as having been made by the will of the client’s father, and so she will not make a PET No formal trust is created The client has no obligation to comply with the wishes of her father

Answer 19

the woman's partner, children and step-children who is entitled? even though the estate has been distributed to the children, they are still entitled step child 1(1)(d) partner 1(1)(e): maintenance in this case, someone independent would be appointed on behalf of the step child since the partner has an interest

Answer 20

Yes within the 6 months time period as the grant of probate was only 4 months ago

Answer 21

£50,000 Correct Correct: The woman has made one PET of £50,000 in the last seven years.

Answer 22

Tax will be payable at the lifetime rate of 20% Correct: The gift is an LCT. The man survives more than seven years after the LCT so it is not reassessed at the death rate.

Answer 23

A PET which is made 9 years before death Correct: A PET made more than 7 years before death is not chargeable.

Answer 24

£305,000 Correct: Two of the gifts were made in the seven years before the man's death so are included in the cumulative total.

Answer 25

£1,000,000 Correct: A surviving spouse can make use of their own basic NRB (£325,000) and RNRB (£175,000) and receive a transfer of up to 100% of the basic NRB and RNRB from the estate of their deceased spouse.

Answer 26

His estate can claim a basic NRB, his wife’s basic NRB, his RNRB and his wife’s RNRB Correct: The man and his wife both died with full basic NRB available (his PETs were made more than 7 years ago so the man’s cumulative total when he died was zero). The wife also did not use her RNRB so this is also available to transfer.

Answer 27

The income tax, credit card bill and funeral bill Correct: The deceased’s income tax and pre-death liabilities are deductible, as are funeral expenses. The other expenses are not deductible for tax purposes (but can be paid from the estate assets).

Answer 28

When valuing the taxable death estate, the solicitor did not include the deceased's share of a house held as joint tenants with her brother because joint tenancy assets pass via survivorship. Correct: Although assets owned as joint tenants pass via survivorship (and therefore do not form part of the succession estate) the deceased's interest is still part of the taxable death estate. By failing to include the value of the deceased's share of the house, the solicitor will have reached the wrong figure for the taxable death estate.

Answer 29

Step 1 - Calculate the cumulative total, Step 2 - Identify the taxable estate, Step 3 - Value the taxable estate, Step 4 - Deduct debts, Step 5 -Apply exemptions and reliefs, Step 6 - Apply RNRB, Step 7 - Apply NRB and calculate tax Correct. It is necessary to start by calculating the cumulative total, then identify and value the taxable estate. Deduct debts from the gross value of the estate to reach the net value, then apply exemptions and reliefs. RNRB should be applied before the basic NRB, then calculate the tax.

Answer 30

False Correct Correct: There are exemptions and reliefs that apply to both lifetime transfers and the death estate.

Answer 31

False Correct Correct: Exemptions and reliefs are available by virtue of statutory authority and are set out in the Inheritance Tax Act 1984. Case law relating to exemptions and reliefs usually concerns a dispute over the application of statutory rules.

Answer 32

True Correct: The NRB is a 0% rate of tax. To the extent the value of a transfer falls within the NRB there is no tax to pay, which is why people sometimes confuse the NRB as an exemption/relief.

Answer 33

The gift of cash and the gift of the estate will be exempt from IHT irrespective of their value. Correct Correct: Spouse/civil partner exemption applies to lifetime transfers and to gifts made under a will – any assets passing to the man’s civil partner will be entirely free of IHT. The other options were incorrect because: There is no upper limit to the amount of the spouse exemption where both parties are UK domiciled. Although the gift of cash to a person during the man’s lifetime would usually be a PET, this cash transfer is exempt by virtue of spouse/civil partner exemption and it does not matter when the man dies The man could leave his assets into a life interest trust and spouse exemption could still apply provided the man’s civil partner is the life tenant A standard survivorship clause in a will does not prevent the application of spouse/civil partner exemption

Answer 34

£0 – irrespective of the value of her estate. Correct: Charity exemption applies and this gift is fully exempt. The size of the gift and the value of the other assets in her estate are irrelevant. The reduced death rate of IHT at 36% is only ever applied to the chargeable assets within an estate – it is not a rate of tax applied to a charitable gift itself.

Answer 35

True Correct Correct: All of these are available to use in respect of lifetime transfers and the death estate. You are not required to know about these exemptions in detail.

Answer 36

No IHT reliefs will be available Correct: The qualifying period of ownership has not been satisfied for either BPR or APR so neither relief is relevant.

Answer 37

BPR at £100,000 can be claimed Correct Correct. The woman owned shares in a private company (it ends with “ltd”) for more than 2 years before she died. BPR applies at 100%, ie £100,000. The other options were incorrect because: The 50% rate is not applicable (these are not quoted shares) There is no requirement to have a controlling interest for a private company shareholding to qualify The qualifying period of ownership is 2 years, not 3 The period of time her daughter owns the shares for is irrelevant when considering the availability of BPR for the woman’s estate

Answer 38

APR worth £300,000 can be claimed. Correct: The woman has owned and occupied the land for the purposes of agriculture for more than 2 years. The conditions of APR are met. APR can be claimed at 100% of the agricultural (not open market) value of the land. The other options are incorrect because: APR applies at 100% in this case, not 50% APR applies to the agricultural value, not market value, of the land Where both APR and BPR apply, APR takes priority.

Answer 39

Woodlands relief is not applicable. Correct Correct. Woodlands relief is a deferral of inheritance tax (‘IHT’) that would otherwise be payable. This is estate is not subject to IHT so there is nothing to defer. incorrect A claim for woodlands relief can be made (with reference to the value of £15,000). Incorrect. Refer to your notes on woodland relief. Woodlands relief is not relevant to this estate as there is no IHT due.

Answer 40

QSR does not apply to either estate. Correct Correct. For QSR to apply both relevant estates must have been taxable –here the sister’s estate was not subject to IHT. The other options were incorrect as QSR does not apply. incorrect QSR would apply to the woman’s estate only. Incorrect. Refer to your materials relating to QSR. Ensure you appreciate when this relief will apply; crucially there needs to have been an IHT charge in respect of both estates. The sister’s estate cannot benefit from a credit against an IHT charge of zero.

Answer 41

Annual exemption Correct. The annual exemption cannot be claimed in respect of a person’s death estate. The other exemptions and reliefs were all potentially relevant: BPR in respect of the partnership interest Spouse exemption in respect of the £10,000 gift in his will Charity exemption in respect of the £2,000 gift in his will Quick succession relief in respect of the car he inherited from his brother

Answer 42

A non-excepted estate. Correct Correct. The gross value of the estate is above the nil rate band (only one is available) and no spouse or charity exemption applies. IHT is payable and also the value of foreign property is greater than £100,000. The other options were incorrect because tax was payable on this estate so the estate could not be excepted.

Answer 43

A non-excepted estate. Correct Correct. Although the gross value of the estate is below the NRB and no IHT is payable, because the value of the trust property is above £250,000 this estate cannot be excepted. The other options were incorrect as they did not take into account the value of the trust interest.

Answer 44

A low value excepted estate - the estate is worth less than £325,000. Correct Correct. The gross estate is less than the nil rate band, foreign property is less than £100,000, trust property is less than £250,000 and lifetime gifts are less than £250,000. The deceased had never married so no transferrable NRB applies and the relevant NRB amount to consider was £325,000. The other options were incorrect because no spouse or charity exemption applied (so the estate could not be an exempt excepted estate), the relevant NRB threshold to consider was a single NRB, and the value of the assets described were below the values at which the estate would be prevented from being excepted.

Answer 45

£1,000,000 Correct Correct. The man has his own NRB of £325,000. The man’s PRs can also claim the TNRB in respect of his civil partner who died before him. We know that the man’s civil partner left all of his estate to the man. Therefore, the man’s civil partner did not use his own NRB because his whole estate qualified for civil partner exemption. The RNRB of £175,000 also applies. The man left a qualifying residential interest (his home) to his lineal descendants (his children). As the man’s civil partner did not use his own RNRB, this can also be claimed by the man. As neither of them made any lifetime transfers the maximum amounts are available.

Answer 46

£650,000 Correct. The woman has her own NRB of £325,000. The woman’s PRs can also claim the TNRB in respect of her civil partner who died before her. We know that the woman’s civil partner left all of her estate to the woman. Therefore, the woman’s civil partner did not use her own NRB because her whole estate qualified for civil partner exemption. As neither made any lifetime transfers the maximum amounts are available. The RNRB does not apply as the total value of the woman’s estate is above the threshold. £825,000 There is no RNRB available at all for net estates worth £2,350,000 or more.

Answer 47

£80,000 less a discount to reflect the fact that the property was co-owned. Correct Correct: The value of the woman’s share is £80,000 (she owned 80% of the total worth £100,000). The woman co-owned the property and a discount to reflect the fact that the property was co-owned can be applied. The other options were incorrect because: - The property does not pass by survivorship, but in any event, the value of the woman’s share is taxable whether owned as joint tenants or tenants in common - The value of her share is proportionate to share she owned, not the number of co-owners. A 50/50 split applies to joint tenants and those owning as tenants in common in equal shares. - The related property rules apply to married couples and are not relevant here. - A discount is available because the couple were not married. It would not have been available if they were.

Answer 48

£70,000 Correct Correct. Step 1: The man’s cumulative total was 0 as he made no lifetime gifts. Steps 2/3: The man’s taxable estate includes both properties and the bank accounts with a total of £670,000. Step 4: The man’s debts and funeral costs which total £20,000 can be deducted, leaving £650,000. Step 5: No exemptions or reliefs apply. Step 6: The man can claim his own RNRB. No transferrable RNRB applies as he does not have a spouse who pre-deceased. His main residence is a QRI and it passes to his son (a lineal descendent) absolutely. The amount of the RNRB is £150,000 (capped at the value of the QRI). The let property is not a QRI so an RNRB can be claimed. The total RNRB is: £150,000. Once applied to his estate, £650,000 - £150,000 = £500,000 remains. Step 7: The man’s basic NRB is £325,000 (his cumulative total was 0 – so no deduction is made). No transferrable NRB applies as he did not have a pre-deceasing spouse. 0 - £325,000 @ 0%. Balance of £175,000 (£500,000 - £325,000) @ 40% = £70,000.

Answer 49

£0 Correct Correct: The whole of the man’s estate passes to a life interest trust in which his spouse is the life tenant. Spouse exemption applies to the whole estate and no inheritance tax is payable. The other options were incorrect because spouse exemption was not applied. £114,800 Incorrect Incorrect: Review your materials relating to inheritance tax. You have not considered the IHT implications of a person leaving their estate to a life interest trust and naming their spouse as the life tenant.

Answer 50

False Correct This was an incomplete statement. The administration process also includes other obligations, including payment of the deceased’s debts and administration expenses.

Answer 51

False Correct The authority for an executor to act as PR does derive from the will, whereas the authority for an administrator to act derives from the grant of representation. However, an executor will still need to apply for a grant of representation because many institutions will insist on seeing the grant as proof of the executor’s authority to act before releasing funds/assets to them.

Answer 52

False Correct The grant of representation confers power on the PRs to deal with the succession estate assets, ie those items passing under the will or under intestacy, and does not, for example, give PRs the right to have assets passing by survivorship transferred into their name.

Answer 53

True Correct The executor of an estate may be expressly appointed in the role of trustee of any trust that arises following death, but that this is not always the case.

Answer 54

False Correct The role of a PR is fiduciary in nature but there is no prohibition on a PR also being a beneficiary. There is no conflict of interest as the PR does not receive benefit in their capacity as PR.

Answer 55

True Correct A solicitor may become involved if they are appointed as PR by a will or if the PRs instruct a solicitor to carry out administrative services.

Answer 56

False Correct Correct. There is no duty to complete the administration within the “executor’s year”. A PR is not obliged to distribute the estate before the one-year anniversary of death, although after this period they must be able to justify any delay.

Answer 57

A duty to report to HMRC about the estate assets and liabilities and pay any inheritance tax due. Correct Correct. Prior to the grant the PR is not able to collect in and administer the deceased’s assets and the primary duty the PR has is to report to HMRC and pay the IHT, both of which must be completed before the grant is issued.

Answer 58

The executor has a duty to administer the estate. The executor has the power as PR to sell estate assets. If he acted as the purchaser he would be in breach of his fiduciary duty, even if a fair price was paid (unless consent of the court or beneficiaries was obtained). Correct Correct. An executor who accepts office has a duty to administer the estate in full under s.25 AEA. A PR is subject to fiduciary duties which include the duty to avoid a position of conflict. Acting as both buyer and seller of the estate assets (without court or beneficiary authorisation) would place him in a position of conflict and would therefore breach that duty, even if there was no loss suffered to the estate and fair market value was paid.

Answer 59

The PRs cannot give the money to G directly but can appoint trustees of the legacy and pay the money to the trustees. Correct Correct. By s.42 Administration of Estes Act 1925 the PRs may appoint trustees of a legacy and pay the amount of the legacy to the trustees, who hold on trust for the minor beneficiary. The trustees will provide confirmation of the receipt to the PRs and so the administration can be completed. The other options were incorrect because: - There is no discretion to pay the money directly to a minor - The PRs do not have to wait until the minor reaches 18 or married - The power to pay the money to a beneficiary aged 16 or older must be conferred by the will and in this scenario we know that the will does not contain any administrative provisions

Answer 60

The PRs have a duty to invest the cash in the bank account to achieve a greater rate of return than the current rate of interest. Correct Correct. As the administration is likely to take time the PRs have a duty to maintain the estate and actively invest to achieve better rates of return than are being paid in respect of the current account. The other answers were incorrect because: - Although the general power of investment gives the PRs the power to invest as if they were absolutely entitled, their discretion is not absolute. They must invest having regard to the standard investment criteria and must seek and follow appropriate advice. - The statutory power to invest (s.3 Trustee Act 2000) does apply to PRs - There is no obligation to retain original assets - The statutory duty of care applies to the exercise of investment powers and is applicable to PRs as well as trustees.

Answer 61

Transfer the shares to the friend plus a cash sum equivalent to the difference in value between the shares (at the date of appropriation) and £10,000. Correct Correct. S.41 AEA provides the PRs with the power to appropriate assets in or towards a beneficiary’s entitlement. As the value of the shares is less than the legacy the PRs may appropriate the shares and then make a balancing cash transfer of the difference. The consent of the residuary beneficiary is not required as the shares were not specifically given to them.

Answer 62

The creditor may bring a devastavit claim against the PRs on the grounds of maladministration. Correct Correct. A claim against a PR is referred to as a devastavit. Where the estate has not been distributed to those who are entitled to it the grounds for a claim would be maladministration. The other options were incorrect because: - Duties are owed to both beneficiaries and creditors - The wrongdoing would not amount to a breach of fiduciary duty - An unpaid creditor could also claim against the estate beneficiaries - The PRs owe a personal liability to a creditor who was not paid from the estate

Answer 63

Compliance with the s.27 Trustee Act 1925 notice procedure. Correct Correct. S.27 notices are intended to help protect the PRs from personal liability to unknown creditors and beneficiaries. The other options are possible steps a PR might take if they know about a beneficiary but cannot locate them. incorrect Making a payment into court. Incorrect Incorrect. Refer to your materials relating to PR protection. A payment into court would not be useful in relation to an unknown beneficiary.

Answer 64

Despite the express clause in the will the executor would remain liable for fraud. Correct Correct. A clause which limits the executor’s liability is enforceable but not to the extent it attempts to avoid liability for fraud. The other options were incorrect because: - it is not possible to remove all personal liability irrespective of how the executor behaves. - both lay and professional executors have personal liability - limitation of liability clauses are enforceable in respect of an honest mistake

Answer 65

Grant of probate Correct Correct. The deceased left a will that appoints an executor. It does not matter that the deceased died partially intestate and only one executor is required even where minor interests arises.

Answer 66

Grant of probate Correct Correct. The deceased left a will that appoints an executor. It does not matter that one of the executors has pre-deceased, the remaining executor can apply. It does not matter that the will fails to dispose of all of the deceased’s assets.

Answer 67

Grant of letters of administration (with will) Correct Correct. The deceased left a will which does not appoint any executors who can act.

Answer 68

A grant is required to deal with the property and the life policy only. Correct Correct. A grant is required to deal with assets within the succession estate unless an exception applies. A property owned as tenants in common, and a life policy where proceeds are payable to the estate, are items that fall within the succession estate and will require the PRs to take out a grant to deal with them. The account with a balance of less than £5,000 could be collected under the exception in the Administration of Estates (Small Payments) Act 1965 and no grant is required to deal with household possessions. incorrect A grant is required to deal with all of the assets. Incorrect Incorrect. Review your materials and ensure you appreciate which items may be dealt with without the need for a grant. Consider the treatment of building society accounts with less than £5,000 and personal household possessions.

Answer 69

The estate could be administered without the need for a grant. Correct Correct. A property owned as joint tenants does not fall within the succession estate and passes under survivorship rules. The life policy proceeds do not fall within the succession estate and may be paid directly to the deceased’s spouse. The building society account with a balance of less than £5,000 could be collected under the Administration of Estates (Small Payments) Act 1965 and no grant is required to deal with household possessions.

Answer 70

A grant is required to deal with the property and the bank account only. Correct Correct. The life policy proceeds do not fall within the succession estate and may be paid directly to the deceased’s spouse and no grant is required to deal with household possessions. The deceased’s share of property owned as tenants in common will pass as part of the succession estate and a grant is required. As there is more than small amount in the bank account this would usually require a grant to be provided before the bank would release the funds.

Answer 71

The PRs should obtain a professional valuation for the ring but may record estimated values for the dining table and the painting. Correct Correct. The sale value of the assets at the date of death is relevant. Estimated figures may be used for ‘low value’ chattels, which would include the dining table (£200 sale value) and the painting (£300). The ring is a single item worth more than £500 so a professional valuation should be obtained.

Answer 72

Transferring the house and chattels into the name of the executors. Correct Correct. The joint tenant property passes automatically to the survivor under the survivorship rules and does not form part of the succession estate for administration purposes and would not be transferred into the names of the executors. incorrect Notifying assets holders of the deceased’s death. Incorrect Incorrect. Refer to your materials regarding the obligation of the PRs in respect of assets passing outside of the succession estate.

Answer 73

Further enquiries are needed to establish whether or not the deceased held a 50% share of the property and joint bank account. Correct Correct. Where an asset is owned jointly (whether a property or bank account) enquiries are needed to establish what the terms of that co-ownership are. You cannot assume that the deceased held a 50% share or that all joint property is owned as joint tenants. The other options were incorrect because it was assumed that the deceased owned 50% of one or both of the assets. incorrect The deceased will be deemed to own 50% of both the property and the joint bank account. Incorrect Incorrect. Review your materials regarding the valuation of the estate. Is it always the case that 50% ownership can be presumed where the deceased owned assets with another person?

Answer 74

The brother Correct Correct. The civil partner cannot act because of the effect of s.18C Wills Act 1837. The sister’s executor cannot act because the chain of representation does not apply in this scenario. The brother may apply as the sole surviving executor.

Answer 75

B, C, D and E. Power may be reserved to A who could apply once they reach the age of 18. Correct Correct. A minor may be appointed by will but cannot act until they reach the age of 18. Power may be reserved to them until this time. A maximum of four executors may apply, so B, C, D and E can be named on the grant.

Answer 76

None of them Correct Correct. The chain of representation only applies where a sole surviving executor, who has taken out a grant of probate, dies before administering the estate and appoints their own executor in turn. The others were incorrect because: Estate A: the executor died before taking the grant. Estate B: there is a surviving executor who will act Estate C: the executor did not survive the testator Estate D: the sole surviving executor died intestate so cannot have appointed an executor for their own estate.

Answer 77

The testator’s spouse cannot act as sole administrator because one of the two children is a minor. Correct Correct. Where administrators are needed for an estate a minimum of two must be appointed where any minor interest arises (s.114 Senior Courts Act 1981). There will be a minor interest under the deceased’s intestacy because one of the children is only 15. The other options were wrong because: - Two administrators are required - A minor cannot act - There is no conflict where a PR is also one of the beneficiaries incorrect The testator’s spouse can apply on their own to act as sole administrator because they will be the primary beneficiary under the deceased’s intestacy. Incorrect. Refer to your materials regarding the number of PRs required where a minor interest arises.

Answer 78

The deceased’s spouse under NCPR 20 because they are the residuary beneficiary. Correct Correct. The deceased left a will that does not appoint an executor who is able to act (the appointed brother has died before the testator). Therefore, an administrator will need to be appointed under NCPR 20. Only one person is required as there are no life or minor interests and the surviving spouse has the best right to apply, as the residuary beneficiary.

Answer 79

Both sons and the woman (on behalf of the daughter) although applications made by the sons will be preferred over the woman’s. Correct Correct. Under Rule 22 (1) (b) all three children have equal entitlement to apply. However, the daughter is a minor and cannot apply on her own behalf. The woman can apply on behalf of the daughter but the court will prefer an application by an adult in their own capacity (i.e. the sons) over an application made on behalf of a minor. incorrect Both sons and the woman (on behalf of the daughter). All three have equal entitlement. Incorrect. Where an application is made on behalf of a minor, does the court treat this equally to one made by an adult in their own capacity within the same category of entitlement?

Answer 80

None of the executors named in the will Correct Correct. The testator’s former civil partner cannot act (s.18C Wills Act 1837) unless the will expressly states otherwise (which it does not). A minor and someone who lacks capacity are both unable to act.

Answer 81

Renunciation Correct Correct. The spouse with an entitlement to apply as administrator may renounce that right even if she has intermeddled. The other options were incorrect because: - Reserving power is not an option for administrators - She cannot act alone where there is a minor interest - Doing nothing is not a viable option

Answer 82

The sister can apply for a grant of double probate. Correct. The 2nd grant issued in the estate is a grant of double probate. The other options were incorrect because; - the new grant was incorrectly stated -the sister has no entitlement to act under the grant originally issued in the sole name of the spouse - reserving power does not preclude a later application when the administration is still ongoing -the original grant will have referred to notice having been given to the sister who reserved power

Answer 83

The PA1A is required and at least two administrators will be appointed under NCPR 22. Correct Correct. Where the deceased died without making a will the correct form is the PA1A. Two administrators are required because there will be at minor interests.

Answer 84

Confirm their familiar relationship with the deceased and their beneficial entitlement to the estate Correct Correct. If NCPR 22 applies the deceased died intestate. The entitlement to apply derives from the relationship with the deceased and their right to receive a share of the estate under intestacy, so both must be stated. The other options were incorrect because: - they were either incomplete or: - It is not always necessary to clear-off anyone else e.g. when the person with the greatest entitlement will be applying. - If NCPR 22 applies the deceased did not leave a valid will

Answer 85

The grant can be issued in the deceased’s true name and also any common name in which they held assets. Correct Correct. The full name of the deceased should be included in the application and where the deceased owned assets in a common name this should also be stated so the grant can be issued in both names. The other options were incorrect because: - The grant should be issued in the true name of the executors- if this is not how their name appears in the will, the discrepancy can be explained - The application should refer to all executors named in the will- and if any are not applying the reason for this should be explained - Most probate applications can be made online - It is the value of the deceased’s succession (not taxable) estate which appears on the grant

Answer 86

Original will and form of renunciation Correct Correct. When an executor renounces power they will completed a form of renunciation and this must be submitted along with the application for probate. The original not a copy will must also be provided. The other options were incorrect because: - The original will is needed - The IHT 400 is sent to HMRC not probate registry incorrect Original will, form of renunciation and IHT 400 Incorrect Incorrect. The IHT 400 is sent to HMRC not to the probate registry.

Answer 87

The probate registry fee Correct. This is sent to the probate registry as part of the grant application. The other options were incorrect because there was no will (the deceased died intestate) and the IHT 400 is not relevant.

Answer 88

No Correct Correct. The executor has already taken out the grant in their own name. The probate registry would only be sent the power of attorney if the grant was being issued in the name of the attorney i.e. the executor was delegating their right to apply. incorrect yes Incorrect Incorrect. The executor has already taken out the grant in their own name. The probate registry would only be sent the power of attorney if the grant was being issued in the name of the attorney i.e. the executor was delegating their right to apply.

Answer 89

An affidavit of due execution confirming knowledge and approval. Correct Correct: On the facts the will was correctly executed. However, as the woman could not read her will there is no presumption that she knew and approved of its contents. This presumption could have been raised by a specially worded attestation clause – however, this was not done and an affidavit confirming the will was read out loud to her and that she understood it may be needed.

Answer 90

None – the will is not valid so cannot be submitted to the probate registry Correct Correct. The will has not been executed in accordance with the requirements of s 9 WA as there are only two signatures on it not three (a will must be signed by the testator and two witnesses). If a will is not valid it cannot be admitted to the probate registry. Incorrect. The will has only been signed by two people. An affidavit cannot be submitted to suggest otherwise.

Answer 91

An affidavit of due execution cannot be sworn. Correct Correct. An affidavit of due execution can be used to confirm the date of a will. However, it must be signed by someone who can swear under oath what this date in fact was. If the only people who knew about this will have pre-deceased there is no suitable deponent. incorrect Affidavit of due execution may be required. Incorrect. Refer to your materials on affidavits and consider who would sign the affidavit.

Answer 92

Only the unsecured debts will be repaid from the residue. Correct Correct. T’s brother will inherit the house subject to the mortgage (the mortgage will not be repaid using other assets in the estate) – s.35 AEA 1925. The unsecured debts will be paid in the statutory order prescribed in Sch 1 Part II AEA – the application of which directs the repayment of debts from the residue (as there is no undisposed of part of the estate). The other options were incorrect because: - The legacy to T’s friend is unaffected - The house is inherited subject to the mortgage charge and the mortgage debt is not repaid from other estate assets – the value of the house is sufficient to meet the whole of the secured loan - The house is only subject to the secured debts - The burden of debts is not shared proportionately between the whole of the estate

Answer 93

The woman’s estate is solvent because there are sufficient funds to pay all of her debts. It does not matter if the legacies cannot be paid in full. Correct Correct. An estate is solvent if all the debts, liabilities and expenses can be paid. It is irrelevant whether or not the legacies (pecuniary, residuary or otherwise) can be paid. The other options were incorrect because to be a solvent estate all debts must be payable from the estate in full not just secured/unsecured debts. incorrect The woman’s estate is solvent because there are sufficient funds to pay her unsecured debts and legacies. The secured debts do not need to be considered as these are tied to specific estate assets. Incorrect Incorrect. Refer to your materials regarding the payment of the deceased’s debts and review the definition of a solvent estate. Although the burden of secured debts falls primarily to the charged assets, all debts must be payable from the estate assets to be solvent.

Answer 94

The executors should sell the jewellery. Correct Correct. This would be the best option. While the executors have a legal duty to repay the deceased’s debts, and provided they identify items in accordance with the statuary order, they are not legally obliged to sell one item in preference to another, there are practical considerations which they should take into account. The other items would be less suitable because: - the painting has increased significantly in value and may result in a capital gains tax charge - a beneficiary has specifically asked for the car, and although the executors don’t have to agree with the request, in this case there is no reason not to because alternative assets can be sold - the motorbike would not provide the cash sum that they need.

Answer 95

£5,000 Correct Correct. The PRs are treated as having made a gain equal to the difference in value between the date of death value (£40,000) and the sale proceeds (£45,000). The other options were incorrect because: - Gains accrued during the deceased’s lifetime were included - Sale proceeds are not equivalent to the ‘gain’ - The PRs made the sale not the beneficiary – so the gain is attributed to the PRs

Answer 96

The PRs should complete a tax return for the deceased for the tax year of death (to include £2,000 rental income) but do not need to account to HMRC for the estate savings income. Correct Correct. The deceased’s PR must account to HMRC in respect of the deceased’s untaxed rental income for the tax year of death. They are not however required to account to HMRC for the estate savings income as this was bank interest of under the threshold of £100, and there is no other estate income. incorrect The PRs should complete a tax return for the deceased for the tax year of death (to include £2,000 rental income) and should also account to HMRC for tax due in respect of the estate savings income. Incorrect Incorrect. Refer to your notes on PR responsibilities for IT and CGT. There is no requirement to account to HMRC for the estate income if this comprises solely bank interest and is less than £100.

Answer 97

The PRs have made neither a gain nor a loss. The deceased’s mother has made a gain and the deceased’s brother has made a loss. Correct Correct. Where assets are transferred to beneficiaries there is no disposal by the PRs, so they make neither a loss nor a gain. The values at the date of transfer are not relevant. A beneficiary is deemed to acquire the asset at probate value so the deceased’s: - mother acquired the piano with a value of £1,200 - brother acquired the shares with a value of £3,500. When the assets were sold by the beneficiaries, the deceased’s: - mother sold the piano for £1,800 and would have made a gain of £600 - brother sold the shares for £2,500 and would have made a loss of £1,000. The PRs and the deceased’s mother has made a gain. The deceased’s brother has made a loss. Incorrect Incorrect. Refer to your notes on PR responsibilities for IT and CGT. Where assets are transferred to beneficiaries there is no disposal by the PRs, so the PRs do not make either a loss or a gain.

Answer 98

The PRs may appropriate the cash and shares in whatever proportions they see fit, provided that both beneficiaries receive assets with a total value of £1,500. Correct Correct. The PR may appropriate assets in or towards a beneficiary’s entitlement. Each beneficiary should receive half the value of the residue (£1,500), but neither is entitled to any particular asset. The other options were incorrect because the PRs: - do not have to divide each asset in ½ - do not have to convert the residue into cash in order to distribute identical sums to the beneficiaries - do not have to divide the number of items in the estate - may give effect to a beneficiary’s wishes but are not obliged to do so.

Answer 99

A receives the specific asset and the creditors are paid in full. B receives £36,000. C receives nothing. Correct Correct. The estate is solvent as there are sufficient assets to meet the debts. However, there are insufficient funds to pay the debts and all of the legacies. The beneficiaries receive their inheritance from the assets that remain after creditors are paid in full. As between the beneficiaries the specific legacies are paid first, then the general legacies and to the extent anything remains this would go to the residuary beneficiary. Here, the specific legacy will be paid in full and the beneficiary of the general legacy will receive what is left over (but will inherit less than the legacy amount). The residuary beneficiary receives nothing.

Answer 100

The PRs and residuary beneficiaries. Correct Correct. The estate accounts should be approved and signed by the PRs and residuary beneficiaries.

Answer 101

[A] Send a sealed copy of the grant of probate to the bank, arrange for the account to be closed and ask for the money to be transferred to Price Prior’s client account. - the bank's job is just to transfer the balance to PR and not make the payments to the beneficiaries - in this scenario, Tara and Desmond have instructed Price Prior Solution available for in class MCQs (one drive) Correct [A]: A sealed copy of the grant of probate (rather than the will) is used to confirm that the Executors have authority to act (B, C and E are incorrect). The money in the bank account should be sent to Price Prior’s designated client account or a specific Executors account. It should not be paid into the personal account of either Tara or Desmond (Option B, D and E are incorrect); this would mix estate money with their personal money making it more difficult to keep track of funds, accurately account for bank interest and prepare estate accounts and risks a breach of duty. The money should not be paid by the bank to the beneficiaries at this point – these funds will be needed to pay creditors and meet the estate administration costs (options D and E are incorrect).

Answer 102

[D] The bank interest is excluded from Robert’s IHT estate. The interest is income payable to the estate. No IT is payable because the only income is savings income and the amount is below the estate IT threshold. - he did not have this interest when he died so it should not have been included at all! no retrospective adjustment for IHT unless claiming a specific loss relief -- so not subject to IHT - subject to income tax (IT) -- income tax applies but the amount is so low that HMRC is not interested - D and E could in theory be correct Solution available for in class MCQs (one drive) Correct [D]: It is the value of assets on the date of death which are relevant for IHT purposes and any interest accrued following Robert’s death cannot form part of his estate (so options B and C are incorrect). Post death bank interest is income for the estate and would ordinarily be subject to income tax (an estate expense payable by the PRs from the estate funds). However, where the only income received is saving interest, and the amount is below the de-minimus threshold at which IT would be due (as it is here), no IT is payable (option E is incorrect). The Executors are not entitled to a Personal Allowance (option A is incorrect).

Answer 103

[A] They would make a £5,000 gain. The Executors’ tax free allowance would minimise any CGT liability. - you always want the value of the asset on the date of death! - death is not a disposal so increase before death is irrelevant here! capital gains tax starting point is date of death Solution available for in class MCQs (one drive) Correct [A]: The Executors have a power of sale in respect of all of the estate assets. Gains accrued during the deceased’s lifetime (the increase in value from £30,000 to £40,000) are effectively cancelled out on a person’s death, and option E was correct in this respect only. Therefore, only the post death gains (the increase from £40,000 to £45,000) are relevant - the figure for gains stated in all options except A were incorrect. Whether or not the gain would give rise to any CGT liability depends on how much of the Executors’ annual exempt amount is available. Personal Representatives do qualify for a CGT tax free allowance (so option D was incorrect in this respect). If you thought they did not you may have confused this with the Income Tax rule where there is no personal allowance for PRs.

Answer 104

[B] Robert’s estate is solvent - there are sufficient funds to pay his debts and administration expenses. The order in which these payments are made does not matter. solvent: expenses and liabilities does not matter if you can pay legacies where it is solvent there is no statutory order of priority since all the creditors are going to be paid! if the estate was insolvent then there is legislation for which creditors have priority Solution available for in class MCQs (one drive) Correct [B]: An estate is solvent for these purposes if there are sufficient funds to pay the creditors and meet the administration expenses. It is irrelevant whether or not all of the legacies can be paid (therefore options A, C and D were incorrect). Where the estate is solvent, but there are insufficient funds to pay the legacies, special rules apply to determine how the legacies are met and in what order. This does not apply to Robert’s estate. Where an estate is solvent the order in which unsecured debts are paid is not important, the statutory order of payment only applies where the estate is not solvent (therefore options D and E were incorrect).

Answer 105

[E] Place a notice of their intention to distribute Robert’s estate in the Gazette and a newspaper local to Robert’s address in accordance with s.27 Trustee Act 1925. The executors should delay distributing the estate until two months from the date of the notice. Solution available for in class MCQs (one drive) Correct [E]: To comply with the requirements of s.27 Trustee Act 1925 (and thus be protected by claims from unknown creditors) the Executors must place a notice of their intention to distribute the estate in the Gazette and a local paper, giving creditors 2 months from the date of the notice to get in touch. Once this deadline has passed the Executors would be protected by claims from unknown creditors and may make distributions. A: is incomplete - an advert is also needed in a local paper. B and D: there is no deadline for when the notice should be placed. C: the deadline is incorrect. You may have been thinking about claims under the IPFDA 1975. -s27 notice procedure: simply the way of notifying the general public that you are about to distribute somebody's estate and time limit is lined to notice (and not date of death) and it is 2 months! local newspaper only relevant for land and business in the area

Answer 106

[D] The Executors have the power to give Crisis the painting provided that in addition they also transfer £2,000. Solution available for in class MCQs (one drive) they can but they don't have to and if they do they have to give the balance PR cannot underpay power of appropriation - ability to decide which assets satisfy the legacy need consent of beneficiary (here crisis) need to make sure it is a balancing payment and calculate balancing payment properly FROM THE DATE OF APPROPRIATION valuation = date of appropriation (NOT THE DATE OF DEATH) ---- Correct [D]: The Executors have the power under s.41 Administration of Estates Act 1925 to transfer assets in satisfaction of the charity’s cash entitlement under the will. Therefore, Option A is incorrect. There is no obligation to exercise this power, although most PRs will comply with a reasonable request. Therefore, Option B is incorrect. If a beneficiary requests assets in or towards the satisfaction of a cash legacy the Executors must ensure that the beneficiary receives their full entitlement. As the painting is worth £8,000 an additional £2,000 must be paid to Crisis so that they receive the full value of their inheritance. Option D is correct as the asset does not have to be exactly the same value as the cash legacy. Option E is incorrect. Tara is not entitled to the personal chattels. You may have been confused with the spouse’s entitlement under the intestacy rules, which do not apply in this case.

Answer 107

PA1P and a form of renunciation. Correct Correct. The man left a valid will so form PA1P is required, even though the named executors (his spouse and brother) will not be making the application. Inheritance tax will be payable following the man’s death. The value of his taxable estate is above the NRB and will pass to non-exempt beneficiaries. The man does not have any residential property so the RNRB will not apply. We do not know whether the TNRB may be claimed or not, but even if it did, the value of his estate is greater than 2 x NRB. As such the IHT 400 would be completed and sent to HMRC (not the Probate Registry). HMRC (not the executors) forward an IHT421 to the probate registry. Renunciation is only possible if the executor has not intermeddled; the man’s brother has not intermeddled and renunciation is possible. A form of renunciation is always required where an executor is renouncing their role. incorrect PA1A, IHT 400 and a form of renunciation. Incorrect Incorrect. Review the materials which explain when a PA1P / PA1A would be used. Ensure you can determine what IHT form is required for an estate and which documents are included in an application for probate of both excepted and non-excepted estates. The IHT 400 is not sent to the Probate Registry. PA1P, IHT 421 and a form of renunciation. Incorrect Incorrect. Ensure you can determine what IHT form is required for an estate and which documents are included in an application for probate of both excepted and non-excepted estates. The IHT 421 is not sent by the executors to the probate registry.

Answer 108

The son is able to complete the administration of his mother’s estate under the authority conferred by the grant of probate of his father’s estate. Correct Correct. The chain of representation under s.7 Administration of Estates Act 1925 applies. As the woman’s spouse had taken out the grant of probate of her estate before he died, and their son had taken out the grant of probate of his father’s estate, the chain of representation is complete. The son can complete the administration of both estates under authority conferred by the grant in his father’s estate. No further application is required.

Answer 109

The woman’s sister Correct Correct. The woman left a will which does not validly appoint any executors. Therefore NCPR 20 applies. Under NCPR 20 the person with the greatest entitlement to apply is the beneficiary of the woman’s residuary estate, here her sister. The other options were incorrect because neither the mother nor son are beneficiaries and do not rank in priority above the sister. Only one PR is required (there are no life or minor interests) and the chain of representation does not apply.

Answer 110

Placing a notice in accordance with s.27 Trustee Act 1925. Correct Correct. All of the other options are feasible where there is a known but missing beneficiary. The protection afforded by a s.27 Trustee Act 1925 notice is in relation to unknown creditors and beneficiaries, not those who are known about but cannot be located.

Answer 111

£8,760 Correct Correct: The man had a cumulative total of £0 (Step A) and was able to use his AE from the year of the LCT and the previous year to reduce the chargeable value to £544,000 (Step C). The NRB is deducted from the chargeable value, leaving £219,000 to be taxed at the death rate of 40% (Step D). As the LCT was 4 years before death, taper relief is applied at 40% (Step E) and then credit is given for the IHT paid during his lifetime (Step F). The other answers were wrong because they failed to apply one or more of the AE at Step C, taper relief at Step E or credit for the lifetime tax at Step F.

Answer 112

£63,800 Correct: The woman has a cumulative total of £0 (Step A) and is able to use her AE from the year of the LCT and the previous year to reduce the value of the LCT to £644,000 (Step C). The NRB is deducted from the chargeable value, leaving £319,000 to be taxed at the lifetime rate of 20% Step D). The other answers were wrong because they missed one or both lots of AE and/or applied IHT at the death rate of 40%.

Answer 113

The woman’s daughter and the trustees of the trust Correct Correct: The liability for paying tax on the free-estate (here the bank accounts and share of the property owned as tenants in common) lies with the woman’s daughter as her executor under the general rule. The liability for paying tax on the trust interest lies with the trustees of the trust.

Answer 114

None of them Correct Correct: The general rule is that the residuary estate bears the burden of the IHT due in respect of the assets passing to the PRs and that other gifts in the will are made free of tax. The other options were incorrect because they involved using assets given away specifically in the will and did not form part of the residuary estate.

Answer 115

The trust assets cannot be used to pay any of the IHT due Correct Correct: The LCT was made more than 7 years before her death and is therefore not assessed to IHT at this time. As such, none of the trust assets can be used to meet the IHT bill. The other options were incorrect because: The PET failed and if IHT is due in respect of the lifetime transfer, the woman’s daughter would be liable to pay this. Grossing up occurs in respect of the IHT due on creation of the trust, not following death. The burden of IHT would not be shared between the beneficiary of a specific gift and the residuary beneficiary unless the testator had given a direction in her will to vary the general rule. The expression “all taxes” does not vary the general rule. incorrect The value of the LCT must be grossed-up before the IHT liability can be determined Incorrect: Review your materials relating to the liability and burden of inheritance tax. Grossing up occurs in respect of the IHT due on creation of the trust, not following death. Any IHT payable in respect of the lifetime transfers will be met from the residuary estate (the general rule has been varied) Incorrect: Review your materials relating to the liability and burden of inheritance tax. The expression “all taxes” does not vary the general rule. The burden of the IHT will be shared between the woman’s brother and grandson Incorrect: Review your materials relating to the liability and burden of inheritance tax. The burden of IHT would not be shared between the beneficiary of a specific gift and the residuary beneficiary unless the testator had given a direction in her will to vary the general rule.

Answer 116

Annual exemption of £6,000 Correct Correct: The man can claim the annual exemption (‘AE’) of £3,000 for the tax year of the gift. As he has made no other lifetime transfers we know he has not used his AE from the previous year, so this may be claimed as well, which gives a total of £6,000. The other options were incorrect because: AE of more than £3,000 can be claimed Small gifts allowance cannot apply to a gift worth more than £250, nor to a gift into a trust For marriage exemption to apply the gift must be made to a party of the marriage (not a trust) Woodlands relief is not available in respect of lifetime transfers.

Answer 117

The gift is chargeable to IHT following the woman’s death. Taper relief applies and a 20% reduction in the IHT due can be claimed. Correct Correct: The woman has made a gift to another person during her lifetime (a PET) and then died within 7 years after making the gift (the PET has failed). The failed PET is chargeable following the woman’s death. As the woman survived more than 3 years after making the gift, taper relief will apply. The rate of taper is a 20% reduction in the IHT due (i.e. 80% of the IHT due is payable). The other options were incorrect because: -The PET is chargeable - it failed as the woman died less than 7 years after making the gift - Taper relief applies as the woman survived more than three years after making the gift - The rate of taper is 20% and therefore 80% remains payable

Answer 118

£1,000 Correct Correct. The aunt is not a parent or grandparent so the other figures do not apply. She cannot give £1,000 to each party - the relief applies "per marriage"

Answer 119

The client could transfer the family home to his adult children and continue to live there rent free provided the children agree. Correct Correct – this option would not be good IHT planning. If a person gives away an asset that they continue to benefit from they make a gift with reservation of benefit (GROB). For IHT purposes the client would continue to be treated as the owner of the property and their estate for IHT purposes would be no smaller than if they had simply done nothing.

Answer 120

Family maintenance, annual exemption and normal expenditure from income. Correct Correct. The client could maintain their adult child while in full time education and make use of the family maintenance exemption. The client could also make regular gifts of their spare income and claim normal expenditure from income. The annual exemption would be useful for gifts that would not otherwise be covered by another exemption. The other options were wrong because: The client was not married There was nothing to suggest that the client would make multiple gifts of small amounts to other family members There is no marriage taking place

Answer 121

False Correct Correct. A single PET would be a gift to one person which the client has indicated is not suitable. It would be better to set up a trust to benefit a wider group of people i.e. make an LCT instead of a PET.

Answer 122

False Correct: Tax evasion is a criminal offence. Tax avoidance, however aggressive, is not.

Answer 123

£690,000 Correct: The woman’s assets are worth £800,000. The funeral expenses and loan are deducted to reach a figure of £740,000. As the loan is deducted from the value of the shares (reducing them to £50,000) only £50,000 can be deducted for BPR. This results in a figure of £690,000.

Answer 124

For IHT purposes, the cottage is treated as part of the woman’s taxable estate and is valued at £500,000. For CGT purposes, the woman disposes of the cottage for £300,000, resulting in a gain of £100,000. Her daughter acquires the cottage at its market value of £300,000. Correct Correct: The gift is a GROB which does not cease before the woman’s death so it is treated as part of her taxable estate for IHT purposes. It is also a potentially exempt transfer but it is not reassessed because it was made more than 7 years before the woman’s death, so it is not reassessed when the woman dies. The lifetime gift is treated as a disposal for CGT purposes, meaning the woman has made a gain (which will be chargeable because it’s not her main residence) and her daughter does not benefit from the free CGT uplift.

Answer 125

Testator A only. Correct Correct. Spouse exemption is useful where the deceased’s estate would otherwise be taxable. Testator A has assets worth more than the nil rate band and therefore IHT would be payable if spouse exemption did not apply. The other options were incorrect because: Testator B does not have a taxable estate. The value of the assets is less than the nil rate band so no tax saving is achieved. Testator C is not married when they died so spouse exemption does not apply. incorrect Testator B only. Incorrect Incorrect. Testator B does not have a taxable estate. The value of the assets is less than the nil rate band so no tax saving is achieved.

Answer 126

No IHT would be payable on the man’s estate. Correct. The man’s estate is worth £340,000. The gift to charity of £34,000 qualifies for 100% relief. The remainder of his estate worth £306,000 is within the nil rate band so no tax is due. The other options were incorrect because: Although the charitable gift is worth at least 10% of the estate, after the nil rate band is applied, there is no part of the estate chargeable to tax to which the reduced rate can apply. If tax were payable, the reduced rate of IHT would apply. The reduced rate of tax does not apply to charitable gift incorrect All of the estate will be taxed at 36%. Incorrect. The gift to charity is fully exempt and is not taxed. The gift to charity is exempt and the remainder of the estate would be taxed at 36%. Incorrect Incorrect. Although the charitable gift is worth at least 10% of the estate, after the nil rate band is applied, there is no part of the estate chargeable to tax to which the reduced rate can apply.

Answer 127

The testator could make a specific gift of the shares to his daughter. Correct Correct. The client’s estate is taxable to the extent it does not pass to his civil partner. As such, it is efficient to give exempt assets to the chargeable beneficiary. If the shares were given to the client’s civil partner BPR would be lost. The other options were incorrect because: - The shares must qualify for BPR when the testator dies (not executes his will). - It is not efficient to make a specific gift of exempt assets to an exempt beneficiary, and there is no guarantee the assets will still qualify for BPR on the death of the civil partner. - It is not efficient for the exempt assets to form part of residue where the residue is given to an exempt beneficiary. - A gift of cash will not qualify for BPR. incorrect If the testator is worried that the shares might fall in value he should sell them and leave a specific cash legacy of the sale proceeds to his daughter. Incorrect. A gift of cash will not qualify for BPR. The testator should ensure the shares form part of the residue of his estate. Incorrect Incorrect. It is not efficient for the exempt assets to form part of residue where the residue is given to an exempt beneficiary.

Answer 128

Whether your client chooses Option 1 or Option 2, it makes no difference to the IHT payable when your client dies. Correct. No IHT is payable when the client dies, whether Option 1 or 2 is chosen. With Option 1, the whole estate is spouse exempt. With Option 2, the gift to D is taxed at 0% and the balance is spouse exempt. The other options are incorrect because: It does make a difference to the NRB available for S. With Option 2, the client uses their own NRB and none will be transferred to S. With Option 1, the client’s NRB is not used and so can be transferred to S. For the family to benefit from an increase in the NRB after the client’s death, the client should avoid using their NRB (i.e. choose Option 1). When S later claims both NRBs, the amount is calculated with reference to the NRB at the time of S’s death. To guarantee that D will inherit, Option 2 (which includes a direct gift to D) should be chosen. If Option 1 is chosen everything falls within S’s control, and S may decide not to benefit D. If S has a smaller estate with only limited assets and will require the use /benefit of your client’s estate to maintain an acceptable standard of living, it may not be sensible to make a significant gift to D. incorrect Whether your client chooses Option 1 or Option 2, it makes no difference to the nil rate band available when S dies. Incorrect. Refer to your materials relating to tax planning by will and use of the NRB. It does make a difference to the NRB available for S. With Option 2, the client uses their own NRB and none will be transferred to S. With Option 1, the client’s NRB is not used and so can be transferred to S. Option 2 is preferable if S has a much smaller estate with only limited assets of their own. Incorrect. Refer to your materials relating to tax planning by will and use of the NRB. If S has a smaller estate with only limited assets and will require the use /benefit of your client’s estate to maintain an acceptable standard of living, it may not be sensible to make a significant gift to D. Option 1 is preferable if your client wishes to guarantee that D will inherit a significant portion of their estate. Incorrect. Refer to your materials relating to tax planning by will and use of the NRB. -To guarantee that D will inherit, Option 2 (which includes a direct gift to D) should be chosen. If Option 1 is chosen everything falls within S’s control, and S may decide not to benefit D.

Answer 129

False Correct Correct. The amount of the NRB might change over time, and the client may use some of their NRB during their lifetime, so you cannot know for certain what the exact amount should be. It is preferable to use a formula clause that refers generically to the nil rate band at the date of death. However, care should be taken to ensure a formula clause is not interpreted to also include any transferred NRB or residence NRB that might be available when the client dies.

Answer 130

The residence NRB could be claimed on the death of the survivor of your client and P. Correct. The residence nil rate band could be claimed by the survivor of your client and P; at this point the two estates would be combined into the hands of the survivor and therefore contain the residential property interest, and the whole amount will pass to their children. The other options were incorrect because: If P dies first, their NRB will only be used to the extent they have assets available. Their estate is well below the amount of the NRB. To the extent the NRB is unused it is wasted. No transferrable NRB applies because your client and P are not married. Although your client currently owns the residential interest, if they died first, the property passes to P (as the survivor), not the children and therefore the residence NRB would not be available at this time.

Answer 131

The man should create a life interest will trust naming his spouse as the life tenant and his children as the remainder beneficiaries. Spouse exemption would apply on the man’s death. Correct Correct. Setting up a life interest will trust with his spouse as the life tenant and his children as remainder beneficiaries would achieve the clients aims. His spouse would have a guaranteed right to income and the capital of his estate would remain available for his children following her death. Spouse exemption will apply provided his spouse is named as the life tenant so this is a tax efficient structure to use in his will. The other options were incorrect because i) a discretionary trust is not suitable because his wife would have no guaranteed rights to the trust fund and ii) for spouse exemption to apply his spouse needs to be the life tenant not the remainder beneficiary.

Answer 132

The man should create a life interest will trust naming his spouse as the life tenant and his children as the remainder beneficiaries. Spouse exemption would apply on the man’s death. Correct Correct. Setting up a life interest will trust with his spouse as the life tenant and his children as remainder beneficiaries would achieve the clients aims. His spouse would have a guaranteed right to income and the capital of his estate would remain available for his children following her death. Spouse exemption will apply provided his spouse is named as the life tenant so this is a tax efficient structure to use in his will. The other options were incorrect because i) a discretionary trust is not suitable because his wife would have no guaranteed rights to the trust fund and ii) for spouse exemption to apply his spouse needs to be the life tenant not the remainder beneficiary.

Answer 133

IHT would have been payable when the woman died. However, following the trust distributions a refund of inheritance tax can be claimed. Correct Correct. We know that IHT would have been payable following the woman’s death. Under s.144 IHTA distributions made from a discretionary will trust in the two years following death are treated as transfers made by the deceased under their will. In this case, the woman’s will is therefore treated as giving half of her estate to her civil partner and half to her children –in which case civil partner exemption will be available. A refund of some or all of the IHT paid at the time can be made. The other options were incorrect because: the effect of s.144 was not considered the effect of s.144 applies in the 2 years following death and is not limited to the administration period IHT would have been paid at the time – a discretionary trust is not an exempt beneficiary, and civil partner exemption would not have been available just because the civil partner was one of the beneficiaries

Answer 134

The testator should set up a discretionary trust under the will and name all of his children and grandchildren as beneficiaries. Correct Correct. A discretionary trust seems most suitable. A life interest trust and outright gifts would be possible but less appropriate given the children’s circumstances and that the grandchildren are minors. A discretionary trust offers flexibility for trustees to take individual circumstances into account before distributing money (no beneficiary is entitled to anything) and a discretionary trust may offer protection from claims by creditors or on divorce.

Answer 135

Yes, but only if the third party is appropriately authorised and the solicitor has no reason to suspect that the instructions do not reflect their client's wishes. Correct Correct: See CCS 3.1

Answer 136

Obtain the client's consent to approach their medical practitioner for confirmation of capacity and make a record of the findings. The solicitor should only prepare a will if capacity is confirmed. It is advisable for the doctor to act as a witness and record their findings. Correct Correct: This reflects the golden rule and best practice.

Answer 137

A solicitor is not absolutely prohibited from acting in these circumstances but there is a potential conflict of interest. They should not act where the client is proposing to make a gift of more than £500 to the solicitor unless the client takes independent advice. Correct: Solicitors should not act where there is a conflict or significant risk of conflict. The SRA considers a gift of £500 to be significant.

Answer 138

D -- Testamentary capacity need not exist at the time the will is executed if the testator had capacity when they gave instructions and the testator understands they are signing a will for which they gave instructions A/B - be wary of must in an ideal world, TC at both instruction and execution C/D - Parker v Felgate !! cf timing of capacity

Answer 139

C -- Testamentary capacity is presumed where the will appears rational and has been properly executed unless there is evidence that raises doubt in which case the burden of proof passes to the personal representatives.

Answer 140

Business property relief for his share of the family business. Residence nil rate band. Correct Correct: BPR will be available as he has owned the business interest for more than 2 years. incorrect Family maintenance for the gift to his mother. Business property relief for his share in the business. Residence nil rate band. Incorrect: The family maintenance relief is available for lifetime gifts only.

Answer 141

The client can continue to live in the house after making the gift but should continue to pay market rent to their son to ensure the house ceases to be part of the client’s estate for inheritance tax purposes. The client must also survive for more than seven years after the gift to ensure no inheritance tax is payable in respect of the lifetime gift. Correct Correct: The gift of the house will be a gift with reservation of benefit (GROB) unless the client pays market rent during his period of occupation. If he pays market rent then he has made a valid PET and the house will not be included in his taxable estate. For the PET itself to be fully exempt the man also has to survive 7 years from making the gift. The other options were incorrect because: - The man must pay market value rent during the whole period of occupation to avoid the GROB rules - If the man lives in the property rent free, but moves out of the house and ceases to derive benefit from the property before he dies, this is will ensure there is no GROB. However, there would still be a PET by the man of the property on the date he moves out (i.e. the date the gift becomes fully effective), and to avoid inheritance tax consequences the man must then survive 7 years from moving out. incorrect The client can continue to live in the house after making the gift but should pay market rent to their son for the seven year period following the gift to ensure that the house ceases to be part of their estate for inheritance tax purposes. The client must also survive for more than seven years after the gift to ensure no inheritance tax is payable in respect of the lifetime gift. Incorrect: The relevant period is the seven years before death, not the seven years after the gift. The client can continue to live in the house after making the gift but should continue to pay market rent to their son to ensure that the house ceases to be part of the client’s estate for inheritance tax purposes. This will also ensure that no inheritance tax is payable in respect of the lifetime gift. Incorrect: Although this would prevent an IHT charge under the GROB rules, note that the gift would be a potentially exempt transfer.

Answer 142

It is likely your client satisfies the test in Banks v Goodfellow and a will can be prepared which follows their instructions. Correct. To satisfy the test in Banks v Goodfellow a testator must: - Understand the nature of the will and its effect: nothing in the facts suggest this is in doubt - Appreciate the extent of their property. This does not require an exact recollection of every item. A general understanding of what is owned, and an approximate value of the item is sufficient. On the facts provided this appears to be the case. - Be aware of any moral claims upon them. This does not require fairness nor oblige the testator to actually leave anything to those with any moral claim. Your client is aware that all three children may expect to inherit, but is entitled to leave the estate in unequal shares and to do so without having an objectively good reason. The incorrect options were wrong because: - An exact knowledge of the number of shares owned is not required - There is no obligation to divide your estate equally between your children

Answer 143

There is no presumption of knowledge and approval in this case. Correct Correct. There is no presumption of knowledge and approval in this case. The will should be read over to the man and his express approval to the contents of the will must be given. The attestation clause should include wording to reflect that this took place.

Answer 144

£10,000 Correct Correct: Both the man and the woman can give £5,000 to their son. It does not matter that the woman has used the marriage relief as the exemption is per marriage, nor per tax year. They cannot also give £1,000 to his partner as the exemption applies per marriage, not per recipient.

Answer 145

The daughter’s share will pass to the granddaughter. The gift to the brother will fail and there will be a partial intestacy of his share. Correct Correct: S 33 Wills Act 1837 applies so that issue (children, grandchildren, great grandchildren etc) take the share their parent would have taken. The section does not apply to any other beneficiary so not to the brother’s share. This contrasts with the statutory trusts which apply on intestacy (s 47 AEA) where the substitution provision applies to all blood relatives. It is not the case that the sister takes her brother’s share unless it is expressly stated that the gift is to such of the named beneficiaries as survive and if more than one equally. This is not implied.

Answer 146

The solicitor may draft the will and accept the gift provided the man first takes independent legal advice. Correct Correct: There is no rule which prohibits a client making a gift by will to his or her solicitor. However, paragraph 6.1 of the Code of Conduct for Solicitors requires a solicitor not to act if there is an own interest conflict or a significant risk of an own interest conflict. If a solicitor drafts a will where the client wishes to make a gift of significant value to the solicitor, a member of their family, or an another employee of the firm, the solicitor should be satisfied that the client has first taken independent legal advice with regard to making the gift. If the client does not agree to take independent advice the solicitor should cease to act on the instructions. This includes situations where the intended gift is of significant value in relation to the size of the client's overall estate, but also where the gift is of significant value in itself. In practice however, most firms will have their own rules which prohibit this. incorrect The solicitor may draft the will but should refuse the gift as this is a conflict of interest under the solicitor’s code of conduct. Incorrect: Although there is a conflict of interest, there is not an absolute prohibition on the solicitor drafting the will or accepting the gift. What must they do before they can act?

Answer 147

The residue bears the whole of the inheritance tax and the house will bear the cost of transfer. Correct Correct: In the absence of any alternative express provision in the will the burden of inheritance tax falls upon the residue of the estate and is a testamentary expense. By contrast, costs of transfer of any specific gift will fall upon the beneficiary. incorrect The house and the residue bear the burden of inheritance tax proportionately according to their value and the residue will bear the cost of transfer. Incorrect: Revisit your materials on allocation of exemptions and reliefs. If there is no express provision in the will, do the recipients of specific gifts bear the cost of inheritance tax? And does the residue bear the transfer costs of specific gifts? The residue bears the whole of the inheritance tax and the costs of transfer of the house. Incorrect: Revisit your materials on allocation of exemptions and reliefs. If there is no express provision in the will, does the residue bear all costs?

Answer 148

The husband has a vested interest and the children have contingent interests. Correct: The husband has a vested interest in the capital. The children both have contingent interests. Whilst the daughter has satisfied the age contingency her interest is still contingent on surviving her father which is not yet satisfied. The son’s interest is contingent on reaching the age of 25 and surviving his father.

Answer 149

John will receive nothing, Althea will receive the 200 BT shares and Hayley will the receive £4,000 from the Building Society Account together with £1,000 from the general estate, provided there are sufficient funds. Correct: The watch is a specific legacy. Under s.24 Wills Act the general rule is that the will speaks from the date of death. However, use of the word ‘my’ indicates a contrary intention to the general rule indicating the man was referring specifically to the watch he owned when he made the will rather than the watch he owned at the date he died. As regards a holding of shares, or a collection of items that is capable of growing, the use of the word ‘my’ does not alter the general position and the gift is construed as the holding or contents of the collection at the date of death. The gift of the money in the building society is a demonstrative legacy. if there are insufficient funds in the designated account these are made up from other assets in the estate in the same way as a general legacy.

Answer 150

false Correct. The letter is intended as guidance only to the estate trustees, not to be a legally binding document.

Answer 151

No Correct. The note may or may not exist at the time of execution (it’s not clear) but, in any event, the will does not expressly refer to the note being in existence at the date of execution. incorrect yes Incorrect. The note may or may not exist at the time of execution (it’s not clear) but, in any event, the will does not expressly refer to the note being in existence at the date of execution.

Answer 152

No Correct Correct. To successfully incorporate an unexecuted document into a will it must exist at the time the will is made, not just before death.

Answer 153

Mary is not entitled to anything. Michael is entitled to £100. Correct: Applying s 21 Wills Act 1837, unattested alterations made after execution are invalid. This means Michael cannot receive £200 (the new amount is an invalid alteration). However, as the original amount of £100 remains visible so Michael is entitled to this. Although the alteration to Mary’s gift (the obliteration) is also unattested, as the original amount cannot be deciphered by natural means Mary receives nothing and the alteration is effective. The other options were incorrect because: - Mary cannot receive £500 because the amount is not visible through natural means - Michael cannot receive £200 because the alteration has not been attested and is therefore ineffective - Michael is entitled to receive £100 because the original clause hasn’t been amended and the amount is legible

Answer 154

£800, as it is not necessary for the alteration to be attested. Correct Where a blank space has been completed (inserting £800) there is a presumption that the blank was completed before execution. In which case the alteration would be valid under the general rule in s 21 Wills Act 1837. The other options were incorrect because: - There is a presumption the blank space was completed before execution so this does not have to be proved in order for the gift to be valid - Attestation of the alteration is not required where a blank space is completed - The attestation of the will as a whole does not need to refer to the alteration (completing a blank space is deemed to have occurred before execution) Affidavit evidence is not required

Answer 155

£100, under the general rule in s 21 Wills Act 1837. Correct Correct: The general rule in s.21 Wills Act 1837 is that unattested alterations are deemed to have been made after execution and are therefore invalid. In the absence of evidence to the contrary, the alteration is ineffective. The original gift is visible through natural means and so the nephew will inherit this. The other options were incorrect because: - There is a presumption the alteration was made after execution, so no affidavit evidence is required either by witnesses or the person who prepared the will. - The general rule does not confirm the validity of the amendment Crossing a line through a number does not of itself demonstrate intention to revoke

Answer 156

The testator’s third daughter will receive £400 because she was the youngest daughter when the codicil was made. Correct Correct: The codicil re-publishes the will which is interpreted with reference to the date of the codicil. On the date the codicil was executed the testator had three daughters and the youngest of them will receive £400. The other options were incorrect because: - The effective date of execution of the will is the date of the codicil - The codicil republishes the will as a whole not just the clauses it amends There is no reference in the codicil to how the clause should take effect the general legal principles apply

Answer 157

The testator’s son will receive £30,000. The testator’s daughter will receive £50,000, but only if evidence that the amendment was made before the codicil was executed is provided. Correct: The testator’s son witnessed the will. According to s.15 Wills Act 1837 he would not be entitled to the gift. However, the later codicil, which he did not witness, re-executes the will and therefore avoids the effect of s.15. The amendment to the daughter’s gift was made after the will was executed so would be ineffective. However, the later codicil re-executes the will (by which time it includes the amended clause) and so the amendment is confirmed. As the codicil does not expressly confirm the amendment was made before the codicil was signed affidavit evidence to this effect would be required. The other options were incorrect because the: - effect of s.15 is avoided - the codicil was not witnessed by the son and this ‘corrects’ the issue. - testator’s daughter will receive something – either the original amount or the increased amount if the alteration is proven to be effective - date of the codicil is, of itself, insufficient to validate the amendment. Evidence is needed to prove the amendment was made before the codicil was signed as the codicil itself does not expressly refer to the amendment to the will.

Answer 158

Testator 2 and 3 only. Correct: A codicil can revive a will that was previously revoked, but not if it has been destroyed. This means Testator 1 could not use a codicil to revive his previous will but Testator 2 could. A codicil can be used to revoke a will in whole or in part. Testator 3 can therefore use a codicil. It does not matter that there are no additional clauses to add.

Answer 159

The second will impliedly revokes the first will, but only to the extent they are inconsistent. Correct Correct. The clause in the question does not revoke the previous will. Where there are no express words of revocation both wills remain active. The later will revokes the earlier, but only to the extent they are inconsistent. The other options were incorrect because: - the clause included in the second will would not amount to express revocation - it is possible for a later will to revoke an earlier will by implication - the later will revokes the earlier where there are discrepancies (the earlier will does not take priority) the statement relating to conditional revocation is not standard practice.

Answer 160

The testator’s will remains valid. Correct: Revocation by destruction requires physically destruction by the testator and intention to revoke. Although this testator intends to revoke their will revocation is only effective if the original will is destroyed. Here only a copy has been destroyed. The other options were incorrect because: - the original will not a copy needs to be destroyed - there is no requirement to destroy the will in front of a solicitor - the testator’s words do not demonstrate an intention to partially revoke an intention to make a new will is irrelevant. An intention to revoke the existing will is required. incorrect The testator’s will is revoked because he carried out an act of revocation with intention to revoke. Incorrect: Review your notes on revocation. Make sure you understand all of the requirements for destruction to effectively revoke a will. The testator’s will is revoked only to the extent his daughter benefits from it. Incorrect: Review your notes on revocation. Make sure you understand all of the requirements for destruction to effectively revoke a will.

Answer 161

The testator’s will has not been revoked. However, it will be possible for the testator to revoke it now conditionally upon their son’s subsequent marriage. Correct: By writing “revoked” on his will the testator has not yet effectively revoked it (conditionally or otherwise). However, it would be possible for the testator to take steps now to revoke the will conditional upon his son’s subsequent marriage. The other options were incorrect because: - the will has not yet been revoked (conditionally or otherwise) - it is not necessary to wait until after the marriage incorrect The testator’s will has not been revoked. The testator should wait until after their son gets married before making a new will. Incorrect: Review your materials on revocation. Make sure you understand how a testator is able to revoke their will. Is writing “revoked” sufficient?

Answer 162

The will was automatically revoked when the testator entered the civil partnership and the testator died intestate. Correct: By virtue of s 18 B Wills Act 1837 (‘WA 1837’) entering into a civil partnership automatically revokes any previous will made by the testator. The express clause in the testator’s will concerns a hypothetic civil partnership and does not identify a named civil partner – it is therefore ineffective. The other options were incorrect because: S 18C WA 1837 does not take effect until a court order confirming dissolution has been issued S 18B WA 1837- entering a civil partnership revokes all previous wills in full, not just the last one incorrect The will was automatically revoked when the testator entered the civil partnership. If the testator has made a previous will, their estate will be distributed according to the terms of the previous will. Incorrect: Review your materials regarding the effect on a testator’s will of entering a civil partnership and any subsequent dissolution of this. S 18B Wills Act 1837 applies to all previous wills, not just the will made immediately before the civil partnership. The testator’s will has not been revoked as no court order confirming the dissolution of the civil partnership was issued before they died. Incorrect: Review your materials regarding the effect on a testator’s will of entering a civil partnership and any subsequent dissolution of this. Focus on the effect of s 18B.

Answer 163

The will was partially revoked when the testator divorced. The testator’s brother will act as sole executor, the testator’s nephew will inherit £300 and the rest of her estate passes to her children only. Correct: By virtue of s 18A Wills Act 1837 (‘WA’) the will is interpreted as though the testator’s former spouse has pre-deceased her (a partial revocation). This means only the brother can act as executor and the former spouse cannot take a share of her estate; the rest of her assets (after the gift to her nephew is paid) will be shared between her children only. The other options were incorrect because: - Divorce does not fully revoke the will – the gift to the testator’s nephew would be unaffected - S 18A WA prevents the appointment of the former spouse as executor and trustee as well as rendering their beneficial entitlements void - S 18A WA affects all wills/codicils made prior to the divorce

Answer 164

Will 2 will not be revoked by the testator’s marriage, provided it is made expressly in contemplation of the testator’s marriage to F. Correct: By virtue of s 18 Wills Act 1837 marriage automatically revokes any will or codicil made beforehand. This can only be avoided if the will includes an express clause stating it is made in contemplation of the marriage to F and should not be revoked by it. The other options were incorrect because: - Whether or not a will is made in contemplation of marriage, the will is effective on execution unless there is express wording that it should only take effect on the occurrence of particular event - Will 1 is revoked by the marriage. Will 2 can be made before the wedding provided it is made expressly in contemplation of that wedding.

Answer 165

The woman has died intestate. Correct. Entering a civil partnership has the effect of revoking any previous will – s 18B Wills Act 1837. There is nothing to suggest the will was made in contemplation of the woman’s subsequent civil partnership – the woman has died intestate.

Answer 166

The husband may not act as executor and the gift of residue to him lapses. Correct: The effect of s18A Wills Act 1837 treats the ex-spouse named in the will as if they had pre-deceased the testator. This means that ex-spouse cannot be appointed as executor and cannot inherit under the will.

Answer 167

The alteration is invalid and the man’s goddaughter will receive £500. Correct. Any alteration (strike through of the original gift) made after the will is executed is invalid, unless the effect of the alteration is an obliteration (s 21 Wills Act 1837). This amendment is not valid and as the original amount can be identified by natural means the gift remains effective and the man’s goddaughter receives £500.

Answer 168

The will is valid but the man’s brother receives nothing. Correct. Any alteration (the use of correction fluid to cover up the amount of the gift) made after the will is executed is invalid unless the effect of the alteration is an “obliteration” (s 21 Wills Act 1837). As this amendment has completely covered up (obliterated) the number and it is not possible to read what the original gift was, the will is submitted to probate with a blank space and the man’s brother receives nothing.

Answer 169

£6,400 Correct: The woman’s taxable estate includes her car, personal possessions, bank accounts and also the current value of the property. Although she was not the legal owner of the property when she died, its value is included in her taxable estate because she made a gift with reservation of benefit. The total value of her taxable estate is: £363,000. Her debts and funeral costs of £12,000 are deducted to leave £351,000. After applying charity exemption of £10,000, £341,000 remains. No RNRB applies as she did not leave the residence to a lineal descendent on her death. After the basic NRB of £325,000 is applied, £16,000 remains chargeable at 40%, which gives £6,400 of IHT payable. The other options were incorrect because: - The value of the property was excluded (a gift with reservation of benefit) but should not have been - No deduction was made for debts and funeral expenses - No charity exemption was applied - The RNRB should not have been applied - The basic NRB was not applied but should have been incorrect £0 Incorrect: Refer to your materials relating to the calculation of IHT in respect of the death estate. You did not consider the gift with reservation of benefit rules in respect of the property. Or, you have applied a RNRB when the woman’s estate does not qualify. £10,400 Incorrect: Refer to your materials relating to the calculation of IHT in respect of the death estate. You did not apply charity exemption.

Answer 170

Both properties and her savings account. Correct Correct. Residential and commercial properties are included, as is the cash balance of any bank account. The pension lump sum is excluded because it is discretionary in nature and has been nominated for her children - no money is payable to her estate. Her remainder interest in the trust is excluded property for inheritance tax purposes (the life tenant is still alive so the trust capital had not been paid to her before she died). The incorrect options either excluded an item that should have been included, or included an item that should not have been.

Answer 171

£20,000 Correct. Step 1: She made no lifetime gifts so has a cumulative total of 0. Step 2/3: The woman’s estate is worth £382,000 (home + bank account + shares). Step 4: Funeral costs (£7,000) can be deducted leaving £375,000. Step 5: No BPR applies because she did not own the company shares for at least 2 years before she died. Step 6: No residence NRB applies as the house passes to her nephew. Step 7: The woman’s estate benefits from her own full NRB (there is no transferred amount as she never married). £375,000 less £325,000 leaves balance of £50,000 @ 40% = £20,000. incorrect £8,000 Incorrect. Your answer is too low. Review each step of the calculation and in particular think about whether the estate qualifies or not for a Residence or Transferred Nil Rate Band.

Answer 172

BPR is not available on the failed PET as the son no longer owned the business when his father died. Correct: The man’s lifetime gift of the business to his son is a failed PET as the man died within 7 years of making the gift. When assessing the failed PET, BPR can be claimed only if i) the assets would have qualified for relief when the gift was made by the man, and, ii) they still qualify for relief in the hands of the son. Here, the gift would have qualified for BPR when it was made because the man can include his spouse’s period of ownership (he inherited the assets following her death) and so satisfy the two-year ownership requirement. However, when the man died the son no longer owned the property and so BPR does not apply. BPR cannot be claimed in respect of the man’s lifetime gift. incorrect BPR is not available on the failed PET as the man had not owned the interest in the business for two years when he made the gift. Incorrect: Revise your materials on BPR. Note that the man inherited the business from his wife. What effect does this have on the qualifying period of ownership? BPR is available on the failed PET and reduces the tax payable on the gift. Incorrect: Revise your materials on BPR. Note that the son no longer owned the business when the man died. You should also revisit the effect of BPR. It reduces the value of the gift, rather than the amount of tax payable BPR is available on the failed PET and reduces the value of the gift. Incorrect: Revise your materials on BPR. Note that the son no longer owned the business when the man died. BPR is available as the man was still alive when his son sold the business. Incorrect: Revise your materials on BPR. Is it relevant that the man was still alive when his son sold the business? At this point it is still a PET and not chargeable. .

Answer 173

APR will be available on the farmland at 100% but will not be available on the farmhouse. Correct: Where the land is not farmed by the owner at the date of the transfer (here being death) it must have been owned by the transferor and occupied for agricultural purposes by the owner or another for 7 years. That requirement is satisfied as the occupation for agricultural purposes by the farmer is added to the 5 years of occupation by the tenant. As the tenancy although a long tenancy was a granted after 2005 100% relief is available. APR is not available on the farmhouse as it is no longer occupied for agricultural purposes. incorrect APR at 100% will be available on the farmland and the farmhouse. Incorrect: APR at 100% is available on the farmland for the reason set out above. APR will not be available on the farmhouse as it is no longer occupied for agricultural purposes.

Answer 174

A -- Each of his four nieces will receive 6,000 of the 24,000 shares he owned on the date he died. correct consolidation recording w11 goes through answers

Answer 175

E -- The woman's spouse cannot disclaim her inheritance because she wants her share to pass to specific beneficiaries. correct consolidation recording w11 goes through answers

Answer 176

B -- The man's grandfather and son. correct former spouses can bring claims only if they have not remarried! consolidation recording w11 goes through answers

Answer 177

C -- £0 correct not D as the 3000 exemption is only for lifetime transfers!! consolidation recording w11 goes through answers

Answer 178

A -- £0 correct 3 Taxable estate: 450 + 40 + 13 + 5 + = 508,000 4 Deduct expenses: 508 - 1 = 507 5 Exemptions: 507 - 10 = 497 6 RNRB: 497 - 175 = 322 7 RNB + IHT = 322- 325 = <0 ! No tax consolidation recording w11 goes through answers

Answer 179

D. The testator’s friend only. consolidation recording w11 goes through answers

Answer 180

C. The son and the man’s daughter only. consolidation recording w11 goes through answers

Answer 181

D -- The spouse is entitled to the man’s personal chattels and £282,000. The daughter will have a vested interest in £6,000, the granddaughter will have a vested interest in £3,000 and the grandson will have a contingent interest in £3,000. correct the spouse is entitled to 270k and half of what is left over the issues are entitled the the other half in equal shares the predeceased issue's own issue (ie the grandchildren) have equal shares consolidation recording w11 goes through answers

Answer 182

D -- No, because the will was revoked by destruction. correct consolidation recording w11 goes through answers

Answer 183

E -- The chargeable value of Gift 4 is £0. correct consolidation recording w11 goes through answers --------------- wrong A -- gift 3 is tax-exempt (5000 for marriage from parent per person) so both annual exemptions can be used for gift 4 B -- no taper relief as there is no tax! (same reason as D) taper does not adjust value of transfer - taper relief adjusts the value of the liability once the tax has been calucualted C -- no because earlier PET didn't fail D -- wrong as no tax was paid as there was no tax liability LCT - cumulative total is 0 - Value of transfer: 20k (-6k: annual exemptions x2) - chargeable value: 14k - apply NRB: no tax payable as value within NRB

Answer 184

A, X and Y A has a vested interest in the residue as A has reached the contingent age of 21. B and C both only have contingent interests as they are under the age of 21 (that B is over the age of 18 does not matter). D’s share passes by substitution to D’s children X and Y who are both minors. There are no contingent age requirements attached to the substitution under the will so both X and Y will have vested interests in the part of the man’s estate that would have passed to D. Note that a minor beneficiary may have a vested interest although they cannot give good receipt for capital until they reach 18. S does not inherit under the man’s will.

Answer 185

The holiday cottage is included at the value of £150,000. The woman has made a gift with reservation of benefit. Although she is no longer the legal owner of the holiday cottage, for inheritance tax purposes she is treated as never having given the cottage away because she continued to benefit from it without paying rent. Therefore, the value of the cottage at the date of her death is included in her estate. The other options were wrong because: i) the cottage did not fall outside of her taxable estate, ii) the value at the date of death is relevant, not the increase in value since the gift was made and not the value of the property when it was given away. Note that the date of death value is used whether the value of the asset has increased or decreased since the date of the gift.

Answer 186

A and B are each entitled to £200,000 on statutory trust. The woman's civil partner did not survive her by 28 days so the woman's estate is distributed under intestacy on the basis that she had issue but no surviving civil partner. In this situation the whole of the woman's estate is divided equally between her children on statutory trusts. The other options were incorrect because neither the woman's civil partner nor parents are entitled to take a share.

Answer 187

The man’s brother is only entitled to bring a claim under the Act if he was being financially maintained by the man at the date of his death. A person can only make a claim under the Act if they fall within one of the specific categories of applicant. The deceased’s siblings have no automatic entitlement to apply by virtue of their familial relationship. The only category that might apply to the man’s brother is a ‘person maintained’ by the deceased. The other options were incorrect because i) a claim by the man’s spouse would be assessed with reference to what was reasonable in the circumstances (the surviving spouse standard) and is not limited to what she needs for maintenance. ii) the man’s step-daughter could apply as someone 'treated as a child' of the deceased (or perhaps as someone maintained). i.e. that she is not the deceased’s biological child does not preclude her from making an application, iii) there is no requirement for a spouse to be living with the deceased to make an application under the Act and iv) there are circumstances were the court does have the power to make an order in respect of jointly owned property passing outside of the succession estate.

Answer 188

There is no presumption that the testator had knowledge and approval. The presumption of knowledge and approval does not apply because the will was signed by someone else on behalf of the testator and this was not expressly confirmed in the attestation clause. The other options were incorrect because although a presumption of knowledge and approval would usually apply where the testator has capacity and has executed the will in accordance with s 9 requirements, this does not apply where the testator themselves does not sign (and the attestation clause does not reflect what occurred). A will can be validly executed even if not signed by the testator, provided that is it signed by someone else at the testator’s direction and in his presence (as occurred in this case). The inclusion of an attestation clause (correctly drafted or not) is not a requirement for a will to be valid.

Answer 189

D’s half share of M’s estate passes under D’s intestacy to any of her children who reach 18 or marry beforehand. The man’s estate will be divided equally between his son and daughter under the terms of his intestacy. Each of D and S will have a vested interest as they are adults and there is no minimum period of survivorship required. When D later dies intestate, her estate (which includes the half share of her father’s estate) passes under her own intestacy to her children. Her children inherit on the terms of the statutory trusts, i.e. contingent on reaching the age of 18 or marrying beforehand. The other options were incorrect because: i) D has a vested interest in the half-share of M’s estate so these assets pass under her intestacy not his, and ii) Under D’s intestacy, her children inherit contingent on reaching the age of 18 (or marrying beforehand). As they are minors they do not inherit absolutely.

Answer 190

If the client left his estate to his spouse, the amount of spouse exemption available would be greater than the value of any APR that could otherwise be claimed. There is no limit to the amount of spouse exemption that can apply (the exemption is 100% of the value of the items inherited by the deceased's spouse). The amount of APR available is limited to the agricultural value of the exempt assets. The other options were incorrect because: i) it is possible for APR to apply to a farm house provided it is of a character appropriate to the farm, ii) as the client owns and occupies the land for farming purposes, the minimum period of ownership is 2 years not 7, iii) APR is claimed in respect of the agricultural value of the land, not the market value.

Answer 191

Any one of A, B or C The testator died intestate and his three children will share his estate between them. No minority interest arises so only one PR is required. Rule 22 NCPR 1987 applies as the man died without making a will. Under NCPR 22 the beneficiaries of the estate (his children) have the best right to apply. They are all adult so have an equal entitlement. The other options were incorrect because M, S and P have no right to apply under NCPR 22.

Answer 192

£300,000 less a percentage discount to reflect the fact that the house was co-owned at the man’s death with someone who was not his spouse. The value of the man’s half share can be discounted because he owned the property jointly with someone who is not his spouse/civil partner. The other options were incorrect because the related property rules do not apply in this case as the couple were not married. It is irrelevant whether the property was owned as joint tenants or tenants in common for these purposes.

Answer 193

The man’s nephew, niece, spouse, son and grand-daughter. The man has died partially intestate because the will does not deal with all of his estate. The cash legacy and chattels are given to the man's niece and nephew under the terms of his will. The other assets (the cash balance and the house) pass in accordance with the intestacy rules. Under intestacy, the man's spouse and children will receive a share of these assets. The man's daughter cannot inherit as she has pre-deceased the man, but her daughter (the man's granddaughter) will receive the share of the estate that would have passed to her parent under the substitution limb of the statutory trusts. The other options were incorrect because they did not include all of the beneficiaries.

Answer 194

£2,000 The related property rules do not apply in this scenario because the woman and her sister were not married or in a civil partnership. The market value of the 1/3 share owned by the sister on the date she died is the correct value for inheritance tax purposes. The other options were incorrect because they: i) applied the related property rules ii) considered the gift from the perspective of the donor not the donee or iii) considered the value at the date of the gift not the date of death.

Answer 195

A makes a gain of £30,000. B makes neither a loss nor a gain. Where assets in an estate are transferred to a beneficiary by the PRs there is no capital gains tax disposal. The beneficiaries are treated as receiving the assets at their date of death value. So here, the shares were worth £200,000 in total on the date of death (with a half share being worth £100,000). This means A and B are both treated as receiving the shares with an acquisition cost of £100,000. When A sells the shares later for £130,000, A makes a gain of £30,000, and when B sells the shares later for £100,000, B has made neither a loss nor a gain. The other options were incorrect because: i) the gain/loss made by A and B was incorrectly described with reference to the transfer value of the shares (instead of the date of death value), ii) the gain/loss made by A and B was incorrectly described with reference to the increase in value between the date of death and date of transfer, iii) the PRs have not made a disposal so have not made a gain or loss for capital gains tax purposes.

Answer 196

£378,000 The man’s taxable estate includes the property, the life interest trust and his bank accounts. The man's half share of the property is valued at £300,000 (there is no discount as related property rules apply - his spouse is the co-owner). The relevant value for the will trust is the value at death (not creation) here £75,000. Adding the bank accounts of £3,000 gives a total of £378,000.

Answer 197

The PRs should use the Direct Payment Scheme in relation to the funds in the woman's bank account. The bank will pay a sum equal to the IHT bill directly to HMRC.

Answer 198

They should place an advert in the London Gazette (and a newspaper local to the area in which the woman’s house was situated) and wait 2 months from the date of the advert. If the PRs follow the s.27 Trustee Act 1925 notice procedure they are protected from personal liability to pay creditors who were not paid from estate during the administration because the PRs were unaware at the time of their right to any of the estate – i.e. unknown creditors. The notice procedure requires the PRs to place an advert as stated in the question and wait 2 months from the date of the notice, after which they may distribute the estate. The other options were wrong because the time limits were incorrectly stated.

Answer 199

The woman's half share of the house, life insurance proceeds, chattels (excluding the gold ring) and the remaining cash in the bank account. The woman’s brother is only entitled to receive the assets passing as part of her succession estate. This includes the share of the house owned as tenants in common (it is joint tenant property that passes outside the succession estate), life policy proceeds (because these have not been written in trust), chattels (her spouse is not automatically entitled to these where there is a will) and the cash balance in her bank account. The woman’s succession estate excludes the gold ring which is the subject of a donatio mortis causa.

Answer 200

£60,000 Step 1: W made no lifetime gifts so her cumulative total is 0. Step 2/3/4: The value of her estate after debts and liabilities is £800,000. Step 5: No exemptions or reliefs apply on facts given. Step 6: No RNRB applies as she did not own a residential property. Step 7: W’s PRs can claim 2 x basic NRB (W's and a transferred amount from her pre-deceased spouse). We know the man did not use any of his own (he made no lifetime gifts and spouse exemption applied to the whole of his death estate) so the full amount can be transferred. £800,000 - £325,000 - £325,000 leaves £150,000 chargeable at 40%= £60,000.

Answer 201

Either nephew (only one PR is required) will apply for a grant of letters of administration with will annexed. The deceased left a valid will but the sole executor appointed under the will pre-deceased the testator the relevant grant is letters of administration with will annexed. The right to apply is determined by NCPR 20, under which those who have a beneficial entitlement under the will (here the nephews) have the best right to apply. The other options were incorrect because; i) the spouse was not a beneficiary of the will and has no right to apply, ii) there were no life or minor interests so only one PR was needed, iii) the chain of representation does not apply in this situation so the brother's executor has no right to apply.

Answer 202

For inheritance tax purposes the woman has made a gift to S under her will. As B made an election under s.142 IHTA the gift of £100,000 from B to S is treated as having been made (for IHT purposes) by the woman's will. The other options were incorrect because: i) B does not make a PET so does not need to survive 7 years to avoid IHT consequences, ii) although no election is made under s.62 TCGA, cash is exempt so CGT is irrelevant, iii) HMRC do not need to be notified, nor do A's PRs need to consent, because the variation has no effect on the amount of IHT payable (there are no exempt beneficiaries or exempt assets).

Answer 203

He can renounce probate because he has not intermeddled with the estate. A person may only renounce probate if they have not intermeddled. Arranging a funeral is not intermeddling but an act of common humanity so your client can renounce. The other options were incorrect because: i) an executor may continue to act from abroad ii) the consent of a co-executor is not required ii) although being “unavailable” may be the reason why a person wishes to renounce this is not a determining factor in whether they are entitled to and iv) one executor is sufficient.

Answer 204

£500 to E The correct answer is £500 to E. Both gifts to E are chargeable. The annual exemption applies to the gift to D. The small gifts exemption apply to the gifts to F and G.

Answer 205

Your client’s will is not revoked, but the gift of residue and executor appointment clause both fail. The legacies to friends and family will take effect. The correct answer is that the client's will is not revoked, but the gift of residue and executor appointment clause both fail. The legacies to friends and family will take effect. The effect of the divorce is to treat the spouse as having predeceased the testator, meaning the appointment of the spouse as executor is ineffective and any legacies to the spouse will fail.

Answer 206

£336,000 The correct answer is £336,000. The man can use the NRB, marriage exemption and two annual exemptions to make gifts to his daughter without any inheritance tax liability.

Answer 207

£336,000 The correct answer is £336,000. The man can use the NRB, marriage exemption and two annual exemptions to make gifts to his daughter without any inheritance tax liability. RNRB does not apply to lifetime gifts.

Answer 208

They will be protected from claims by unknown beneficiaries in their capacity as PR but not in their capacity as estate beneficiaries. They are not protected from a claim by the son. The correct answer is that the PRs will be protected from claims by unknown beneficiaries in their capacity as PR but not in their capacity as estate beneficiaries. They are not protected from a claim by the son. S 27 Trustee Act 1925 only provides protection against unknown beneficiaries, not missing beneficiaries. The protection is for the PRs only. If an unknown or missing beneficiary re-emerges, they can make a claim against other estate beneficiaries who have received more than they are entitled to from the estate. The PRs will be protected against unknown beneficiaries but only in their capacity as PR. They may still be liable to unknown beneficiaries and/or the son if they receive more than they are entitled to from the estate. S 27 Trustee Act 1925 only provides protection against unknown beneficiaries, not missing beneficiaries. The protection is for the PRs only. If an unknown or missing beneficiary re-emerges, they can make a claim against other estate beneficiaries who have received more than they are entitled to from the estate.

Answer 209

The man did not revoke his previous will because it was not destroyed by him and there are no express words of revocation in the new will. The later will takes priority if there is a discrepancy between the two. The correct answer is that the man did not revoke his previous will because it was not destroyed by him and there are no express words of revocation in the new will. The later will takes priority if there is a discrepancy between the two.

Answer 210

If the will was validly executed but one of the witnesses was a beneficiary, you may be liable for failing to provide adequate instructions to the client. The correct answer is that If the will was validly executed but one of the witnesses was a beneficiary, you may be liable for failing to provide adequate instructions to the client. A solicitor has a duty to prepare a will in accordance with their instructions and to properly advise the client on execution. They may be liable after the client's death to an estate beneficiary who suffers loss as a result. -- If the will was validly executed but it turns out that you failed to include a gift to one of the beneficiaries in accordance with the client's instructions, you would not be liable for this mistake as there is no element of dishonesty. - A solicitor is responsible for drafting a will which gives effect to their client's intentions. Even if the mistake was honest, the solicitor may be liable for negligence. After the testator's death, the solicitor may be liable to the intended beneficiary. If the will was validly executed but it turns out that you failed to include a gift to one of the beneficiaries in accordance with the client's instructions, you would not be liable for this mistake because the client (to whom you owe a duty of due diligence) has now died. - A solicitor is responsible for drafting a will which gives effect to their client's intentions. After the testator's death, the solicitor may be liable to the intended beneficiary. If the will was validly executed but it turns out that you failed to include a gift to one of the beneficiaries in accordance with the client's instructions, you would not be liable for this mistake as the client approved the draft and should have noticed this themselves. - A solicitor is responsible for drafting a will which gives effect to their client's intentions. After the testator's death, the solicitor may be liable to the intended beneficiary. If the client did not sign their will before their death, although regrettable, this would not give rise to any liability on your behalf. - It is possible for the solicitor to be liable to an estate beneficiary if they did not properly advise their client and this has resulted in a loss to an estate beneficiary.

Answer 211

£8,000 The correct answer is £8,000. The full amount is chargeable to tax. The NRB was used in the previous year and the annual exemption was used on the gift to B. £1,000 Read the question carefully. This is the amount chargeable on the gift to B, not C.

Answer 212

The sister will receive £40,000. The alteration is not effective as the original amount can be seen by natural means. The correct answer is that the alteration is not effective as the original amount can be seen by natural means. It is presumed that that alteration was made after execution, and it has not been attested, rendering it invalid.

Answer 213

£52,000 The correct answer is £52,000. The gift to B is a PET. As A died within seven years of making the PET it becomes chargeable. A has a full NRB of £325,000 available. The remaining £130,000 is taxed at the death rate of 40%. No taper relief is available. Don't forget the NRB.

Answer 214

The will has been validly executed and the attestation clause raises a presumption of due execution. The correct answer is that the will has been validly executed and the attestation clause raises a presumption of due execution. The requirements of s 9 Wills Act 1837 have been complied with. The attestation clause raises the presumption of due execution. The second witness did not need to be present when the testator signed the will. It is sufficient that the testator acknowledged his signature. It is not necessary for all parties to be present at the same time. The requirements of s 9 Wills Act 1837 have been complied with. The attestation clause raises the presumption of due execution.

Answer 215

The nephew will be entitled to the ring if extrinsic evidence can be obtained setting out the original clause in the will. The correct answer is that the nephew will be entitled to the ring if extrinsic evidence can be obtained setting out the original clause in the will. This is an obliteration without intention to revoke. Note that this is an obliteration without intention to revoke. There is no issue with execution of the will. The problem is that there needs to be evidence of the original clause.

Answer 216

The client may direct someone to sign the will on their behalf in accordance with s 9 Wills Act 1837. Provided the attestation clause is amended to demonstrate the correct process was followed, the client's knowledge and approval of the will can be presumed. The correct answer is that the client may direct someone to sign the will on their behalf in accordance with s 9 Wills Act 1837. Provided the attestation clause is amended to demonstrate the correct process was followed, the client's knowledge and approval of the will can be presumed. Amending the attestation clause raises a presumption of knowledge and approval. In the absence of such a clause, an affadavit of knowledge and approval would be needed when submitting the will to probate. A client who cannot physically execute a will may direct someone to sign it on their behalf but it is necessary to amend the attestation clause to show that this procedure was followed. Although any mark may constitute a signature, this is not the preferable approach and is inappropriate in a case where a client cannot hold a pen. The client may direct someone to sign the will on their behalf in accordance with s 9 Wills Act 1837. Provided the attestation clause is amended to demonstrate the correct process was followed, the client's knowledge and approval of the will can be presumed. If the attestation clause is amended appropriately, the client's knowledge and approval of the will can be presumed.

Answer 217

£487,500 The correct answer is £487,500. J has 100% of her own NRB which is increased by the unused percentage of F's NRB. This gives J 150% of £325,000. J has 100% of her own NRB which is increased by the unused percentage of F's NRB. This gives J 150% of £325,000.

Answer 218

The effect of the codicil is to re-publish the will at the date that the codicil was executed. The brother will receive £500. The correct answer is that the effect of the codicil is to re-publish the will at the date that the codicil was executed. The brother will receive £500. The amendment is effective and £500 will pass to the brother because the brother was not a witness to the codicil.

Answer 219

There is no presumption of undue influence in relation to testamentary dispositions. The burden of proof lies with the son. What the woman did is not of itself likely to lead to a successful claim for undue influence. The correct answer is that There is no presumption of undue influence in relation to testamentary dispositions. The burden of proof lies with the son. What the woman did is not of itself likely to lead to a successful claim for undue influence. Encouraging is not the same as coercing.

Answer 220

£224,000 The correct answer is £224,000. The man's assets amount to £895,000. Deduct the £10,000 debts and funeral expenses to reach £885,000. The man had a full NRB of £325,000 available. The remaining £560,000 is taxed at the death rate of 40%. RNRB is not available. Nor is the annual exemption.

Answer 221

The will is still valid because although the will was destroyed there was no intention to destroy it. The correct answer is that the will is still valid because although it was destroyed there was no intention to do so. Destruction must be accompanied by an intention to destroy The intestacy rules are separate from the will. In any case, the will has not been revoked because the destruction was accidental. Destruction is not sufficient to revoke a will, unless accompanied by an intention to revoke. This doctrine is not relevant. There has been no attempt at substituting a legacy. The will has been destroyed. It is possible to revoke a will by destruction but that has not occurred here because the destruction was accidental. This rule applies to partial destruction. The whole will has been destroyed here but this will not revoke the will because the destruction was accidental.

Answer 222

There are grounds to doubt your client's testamentary capacity and therefore a medical professional should be instructed to confirm whether the test in Banks v Goodfellow is satisfied. The correct answer is that there are grounds to doubt your client's testatmentary capacity and therefore a medical professional should be instructed to confirm whether the test in Banks v Goodfellow is satisfied. The facts suggest the potential for a lack of capacity given the age, medication and indication they didn’t recognize the daughter. Medical advice should be sought and the correct test is Banks v Goodfellow.

Answer 223

100 Boots plc shares only. The correct answer is 100 Boots plc shares only. A gift of "my Boots shares" will be taken to mean the number of shares owned at the date of death. The gift of the piano adeems and cannot be replaced by the piano which was purchased later. A gift of "my Boots shares" will be taken to mean the number of shares owned at the date of death. The gift of the piano adeems and cannot be replaced by the piano which was purchased later.

Answer 224

The testator's grandchildren each receive £1,000 and the brother’s legacy of £1,000 passes into the testator’s residuary estate. The correct answer is that the son's children each receive £1,000 and the brother's legacy of £1,000 passes into the testator's residuary estate. S 33 wills Act 1837 applies so that the issue of the son take the share their parent would have taken. S 33 does not apply to the nephew. S 33 wills Act 1837 applies so that the issue of the son take the share their parent would have taken. S 33 does not apply to the brother's legacy. S 33 wills Act 1837 applies so that the issue of the son take the share their parent would have taken. S 33 does not apply to the brother's legacy but this does not mean that his share is distributed to the grandchildren.

Answer 225

The wills are likely to be regarded as mirror wills in the absence of any evidence that the couple intended the wills to be mutual. This was a question on Wills and Estates. This question tested your knowledge and understanding of mirror and mutual wills. Identical wills are likely to be treated as mirror wills in the absence of any evidence that there are intended to be mutual wills. Mutual wills are not very common and strong evidence is required that this was the intention because they effectively prevent a testator from amending their will.

Answer 226

The wife cannot act as executor. The house will pass to the son. This is a question on Wills and Estates. This question tested your knowledge and understanding of the effect of divorce on the provisions of a will. As the man and his wife were divorced, the wife is treated as having predeceased the man for all purposes but the rest of the will remains valid. The wife therefore cannot act as executor and is not entitled to inherit the house. The substitution provision in favour of the man’s son applies.

Answer 227

Yes, because she did not intend to revoke it. This was a question on Wills and Estates. This question tested your knowledge and understanding of the rules relating to revocation of wills. The woman’s will remains valid. A will can be revoked by a physical act of destruction but only if accompanied by an intention to revoke it. The woman has physically destroyed the original will but did so accidentally. As the solicitor has a copy of the will, this can be submitted to probate as evidence of the original will.

Answer 228

The daughter only. This was a question on Wills and Estates. This question tested your knowledge and understanding of eligibility to bring claims under the Inheritance (Provision for Family and Dependants) Act 1975. The woman’s daughter is the only person entitled to bring a claim on the facts of the question as she is a child of the deceased. The partner is not entitled to claim as they have not cohabited for more than two years and the partner is not financially dependent on the woman. The ex-husband is not eligible to claim because he has remarried.

Answer 229

The car will go to the cousin and the Penny Black stamp will go to the neighbour. This was a question on Wills and Estates. This question tested your knowledge and understanding of the interpretation of specific gifts in wills. The legacy relating to the Jaguar is treated as referring to the Jaguar owned by the man at the date the will was executed. However, the execution of the codicil means that the will is treated as having been republished, meaning that the reference is now to the Jaguar owned at the date of the codicil. The provision is therefore effective and the Jaguar passes to the man’s cousin. Collections are treated differently under s24 Wills Act 1837 as they are capable of growing. The reference to the man’s stamp collection is therefore to the collection owned at death, meaning that the Penny Black stamp passes to the neighbour along with the rest of the collection.

Answer 230

The will is valid but the estate will pass under the intestacy rules. The son can act as the executor of the estate. This was a question on Wills and Estates. This question tested your knowledge and understanding of the provisions of s15 Wills Act 1837. This provision provides that gifts to an attesting witness of a will are void. As the entire estate has been left to the son under the will, with no substitutionary provisions, the entire estate now passes under the intestacy rules instead. Although the gift to the man’s son is void, the will itself remains valid, meaning that the provisions relating to the appointment of executors are still effective. There is no prohibition on a witness acting as executor. The man’s son is therefore able to act as executor of the estate.

Answer 231

£33,800 This is a Wills and Estates question. This question tested your knowledge and understanding of inheritance tax on lifetime gifts. The gift to the woman’s son was a PET which had not failed by the time she set up the discretionary trust and so no annual exemptions had been used. The woman had a cumulative total of zero at the date of the payment into the discretionary trust. The payment into the discretionary trust was a lifetime chargeable transfer. This transfer benefitted from two annual exemptions (the current year and the previous year), reducing the taxable value to £494,000. The woman had a full NRB available to use against this transfer, resulting in a chargeable amount of £169,000 (£494,000 - £325,000 = £169,000). It was taxable at the lifetime rate of 20%, meaning inheritance tax of £33,800 was payable.

Answer 232

£451,000 This is a Wills and Estates question. This question tested your knowledge and understanding of the taxable estate for inheritance tax purposes. The personal chattels (£1,000), house (£300,000), half the holiday home (£50,000) and life insurance proceeds (£100,000) are all included in the taxable estate. Although the holiday home was held as joint tenants (and would therefore not form part of the succession estate) there is a deemed severance at the date of death for inheritance tax purposes, giving the man a half share. The life insurance proceeds are included because they are payable directly to the estate. The pension lump sum is not included in the taxable estate because it is payable directly to the children. The remainder interest in the life interest trust is also not included in the man’s taxable estate. -- Insurance policies must be looked at carefully to see whether the proceeds form part of the succession estate. If the deceased had a simple life insurance policy, the proceeds of the policy pass to the succession estate. If the benefit of the policy was written in trust for another person, the proceeds will not form part of the succession estate. The insured has no beneficial interest under the policy. The proceeds belong to the beneficiaries nominated in the policy and vest on the insured’s death.

Answer 233

The solicitor cannot refuse to advise the clients because a solicitor has a duty not to unfairly discriminate. This is a professional conduct question in the context of wills and estates. This question requires the student to apply the solicitor’s duty not to discriminate under CCS 1.1, their duty to provide a competent service (CCS 3.2) and to maintain their competence and keep their skills up to date (CCS 3.3). These were covered in the Wills induction session and the element ‘Client care – service and competence’.

Answer 234

The solicitor should provide the date on which the letter was posted, explaining the issue with the post tray and steps taken if necessary. This is a WAE question. This is a professional conduct question in the context of wills and estates. This question required students to recognise the obligation not to mislead clients (paragraph 1.4 Code of Conduct for Solicitors (‘CCS’)) and to be open and honest when things go wrong (CCS 7.11). The obligation of trust and confidence is covered in the element ‘maintaining trust and acting fairly’.

Answer 235

£120,000 This is a WAE question. This tests knowledge and application of the NRB, TNRB, RNRB and TRNRB. The total gross value of the woman’s estate is £1,300,000. Her estate has NRB of £325,000 and RNRB of £175,000. It also has the TNRB of £325,000 and TRNRB of £175,000 from the husband’s estate. The total NRB and RNRB are therefore £1,000,000 leaving £300,000 taxed at 40 % = £120,000. An individual’s surviving spouse or civil partner can inherit the unused portion of their RNRB similarly to with the basic NRB.

Answer 236

A low value excepted estate because the gross value of the estate is less than £325,000. This is a WAE question. This tests the category of estate, whether it is low value/exempt excepted estate or non-excepted estate. The total gross value of the estate is £318,000. This is an excepted estate as no more than £150,000 was immediately before death settled property, not more than £100,000 was situate outside the UK and the lifetime transfers did not exceed £150,000. No IHT is payable because the gross value of the estate is below the NRB threshold of £325,000. The estate therefore falls within the category of low value excepted estate.

Answer 237

The woman’s daughters. This is a WAE question. This tests the entitlement to a grant. The woman’s will does not have a willing or able executor as her spouse as died and her brother wants to renounce. The brother is entitled to renounce as he has not intermeddled in the estate. NCPR20 applies and the persons with the greatest entitlement can apply. Her children have the greatest entitlement, although her son cannot apply as he is not 18. The daughters can apply, and both are needed because of the son’s minor interest.

Answer 238

£26,000 This is a WAE question. This tests the calculation of Inheritance Tax on a death estate. The gross value of the taxable estate is £390,000 (£300,000 + £60,000 + £30,000). The remainder interest in the trust is excluded property. The shares in a private company qualify for BPR as he had owned them for more than 2 years. Allowing for the nil rate band of £325,000, the balance of £65,000 is taxed at 40 % = £26,000.

Answer 239

£495,000 This is a WAE question. This tests the application of the intestacy rules where there is a surviving spouse and issue. The spouse is entitled to the personal chattels (£20,000), statutory legacy of £270,000 and half the residue (£700,000- £290,000 = £410,000/2 = £205,000). The total entitlement is therefore £495,000.

Answer 240

The piano only. This is a WAE question. This tests knowledge and understanding of the spouse’s entitlement to personal chattels under the intestacy rules. The definition is in section 55(1)(x) AEA 1925. The definition includes tangible movable property and therefore includes the piano but not the holiday home. The computer is excluded as it was used solely or mainly for business purposes.

Answer 241

The sister’s children on the statutory trusts. This is a WAE question. This tests the application of the intestacy rules. As the intestate was not survived by a spouse or issue, the order of entitlement is set out in section 46 AEA 1925. The parents had predeceased. The sister had predeceased leaving two children. The sister’s children inherit on the statutory trusts. The brother (or his son) do not inherit as he is a sibling of the half blood (shares one parent), unlike the sister, who is a sibling of the whole blood (shares both parents).

Answer 242

The husband is entitled to assets worth £200,000. The children receive nothing. This is a WAE question. This tests the application of the intestacy rules. The right of survivorship applies to the house held as joint tenants. As there is a spouse and issue, the spouse is entitled to the personal chattels, a statutory legacy of £270,000 and half the residue. The spouse is therefore entitled to the remaining £200,000 (including the chattels) after the joint tenancy asset. The children receive nothing.

Answer 243

The trustees may advance some of the capital for the requested purpose if the wife consents

Answer 244

The sister and the son should approve the estate accounts. Correct. Executors (whether lay or professional) should prepare the estate accounts. There is no specific form required. Only residuary beneficiaries would usually sign these and in doing so indicate their agreement /approval.

Answer 245

The firm cannot charge the estate without consent from the deceased’s son. Correct. S.29 Trustee Act 2000 permits professional trustees (such as solicitors) to charge for their services. Without this statutory provision charging for their services would be “self-dealing” and a breach of fiduciary duty not to profit from their role. The power to charge applies to personal representatives as well as trustees. However, the statutory power to charge only applies where a firm is not acting alone, the charges are reasonable, and consent from the co-trustees is obtained. As such, the firm will need to obtain consent from the deceased’s son (the co-trustee). There is no obligation to obtain consent from beneficiaries. incorrect The firm may charge the estate without the need for any consent but only if the amount is reasonable. Incorrect. While it is correct that professional trustees may only charge a reasonable amount, in addition, consents from co-executors are required. Review your materials relating to s.29 Trustee Act 2000 and ensure you understand the circumstances in which professional trustees may charge.

Answer 246

The rent is the testator’s income for the tax year of his death. The IT due is a liability owed by the testator at the date of his death and will reduce the value of his inheritance tax estate. Correct. The rental income relates to a period before the testator died (even if received after this date). Therefore the income is taxed as the testator’s for the tax year of death. The IT will be a liability owed to HMRC by the testator on the date he died and the tax is deductible from the value of the IHT estate. NB: although not relevant to the question, the income itself will be treated as an asset of the estate. incorrect The rent is income of the testator’s spouse provided the executors transfer the property to her. If the property is sold during the administration the rent is taxed as estate income instead and the IT liability will be a post-death administration expense with no effect on the value of the testator’s inheritance tax estate. Incorrect Incorrect. Review your materials on how payments received post death but relating to a period prior to death are treated and review your notes on post-death administrative expenses.

Answer 247

A and B should provide the bank with the grant of probate confirming their appointment as executors and request a cheque for the closing balance. Correct. Although executors derive their authority to act from the deceased's will the grant of representation is the official document that confirms they have authority to administer the deceased's assets. The other options were incorrect as i) the estate accounts are not finalised until the end of the administration and ii) the bank has no authority to pay the deceased's money to a creditor.

Answer 248

The woman’s estate is solvent because the total value of her estate is greater than her debts and the administration expenses. Correct. An estate is solvent if the deceased’s debts and administration expenses can be paid in full (here £50,000). The other options were incorrect because: i) it is irrelevant whether the legacies can be paid, and ii) if insufficient cash is available the non-liquid assets (house / chattels) can be sold/used for the payment of debts, expenses and legacies.

Answer 249

* Parents, but if none; * Siblings of whole blood (share both parents) on the statutory trusts, but if none; * Siblings of half-blood (share one parent) on the statutory trusts, but if none; * Grandparents, but if none; * Uncles/Aunts of whole blood on the statutory trusts, but if none; * Uncles/Aunts of half-blood on the statutory trusts, but if none; * Crown as bona vacantia

Answer 250

s. 55(1)(x) AEA defines chattels as: tangible movable property except: * cash * assets used at the date of death solely or mainly for business purposes * assets held at death solely as an investment (some personal use means the item is a chattel, even if the deceased purchased the item hoping it would increase in value.

Answer 251

* PRs can choose which assets to appropriate to a beneficiary in satisfaction of their entitlement. However, a surviving spouse has a right to receive the intestate’s share of the family home in or towards the satisfaction of their inheritance, provided the right is exercised within 12 months of the grant. * The spouse’s right of appropriation is irrelevant if the deceased’s interest in the family home was held as joint tenants. The property passes by survivorship outside of the succession estate and the intestacy rules do not apply in any event.

Answer 252

Deceased (not applicant) must have died domiciled in England & Wales.

Answer 253

Claims must be made within made within six months of the grant of representation (subject to a court order permitting an extension of the time limit)

Answer 254

Only certain people are entitled to bring a claim: * Spouse of the deceased * Former spouse, provided they have not remarried * Person living with the deceased in a relationship akin to marriage for the 2 years immediately prior to death (a cohabitee) * Child of the deceased (includes adopted children). Both adult and minor children may apply. * Person treated by the deceased as a child of their family (e.g. step-child) * If none of the other categories apply, any other person who was financially maintained (wholly or partly) by the deceased immediately before their death. Financial maintenance means substantial voluntary contribution in money or money's worth towards reasonable needs, and not under a commercial arrangement. An applicant may bring a claim in the High Court (Family or Chancery Division) or County Court. Note that entitlement to bring a claim does not mean a claim will be successful.

Answer 255

A claim must be brought on the ground that the distribution of the deceased’s estate under their will, intestacy, or a combination of both fails to make “reasonable financial provision” for the applicant.

Answer 256

To determine whether “reasonable financial provision” has been made the court will apply one of two standards. The surviving spouse standard is used where the application is brought by a spouse, and the maintenance standard is used for all other applicants. * Surviving spouse standard: what is reasonable in the circumstances for a spouse to receive, whether or not required for their maintenance. * Maintenance standard: what is reasonable in all the circumstances of the case for the applicant to receive for their maintenance. The surviving spouse standard is more generous. Note that a court has discretion to apply the surviving spouse standard where the three following conditions are satisfied: * The applicant is a former spouse who has not remarried, or a spouse who is judicially separated from the deceased, and * Divorce, dissolution, nullity or judicial separation occurred within 12 months of the death, and * No order for financial provision has been made or refused in the ancillary proceedings. The court must apply statutory guidelines when assessing firstly, whether ‘reasonable financial provision’ was made, and if it was not, to determine the form and quantum of an award. It is an objective process and all factors have equal weight.

Answer 257

The following guidelines apply to all applicants: * applicant’s financial resources and financial needs * financial resources and financial needs of any other applicants * financial resources and financial needs of any beneficiary of the estate * obligations and responsibilities the deceased had towards any applicants or beneficiaries * size and nature of the net estate of the deceased * any physical or mental disability of any applicant or beneficiary * any other matter the court considers relevant in the circumstances (including the conduct of the applicant or any other person) When considering financial resources and needs, the court must take into account resources and needs they are likely to have in the foreseeable future.

Answer 258

in addition to common guidelines! Application by spouse * applicant’s age and the duration of the marriage * the contribution made by the applicant to the welfare of the family of the deceased, including contribution made by looking after the home or caring for the family Application by former spouse If the court exercises discretion to use the surviving spouse standard they will consider, in addition to the two bullet points above: * what provision the applicant might reasonably have expected to receive in divorce / dissolution proceedings if the couple had ended their relationship at the date of death. Application by cohabitee * age of the applicant and the length of the period of cohabitation. * the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family. Application by deceased’s child * the manner in which the applicant was (or might expect to be) educated or trained. Application by someone treated as a child of the deceased * the manner in which the applicant was (or might expect to be) educated or trained. * the basis on which the deceased maintained the applicant, for how long and to what extent * the extent to which the deceased assumed responsibility for the applicant’s maintenance. * whether the deceased maintained or assumed responsibility for maintaining the applicant knowing that the applicant was not their child * the liability of any other person to maintain the applicant. Application by a person maintained * the basis on which the deceased maintained the applicant, for how long and to what extent * whether and to what extent the deceased assumed responsibility for the maintenance of the applicant.

Answer 259

Once the court has decided that the applicant’s claim should succeed, they have wide powers to make a range of orders, which can include lump sum and periodical payments.

Answer 260

Court orders may be made in relation to the deceased’s ‘net estate’. This includes: * deceased’s succession estate * property over which the deceased had a general power of appointment which was unexercised * property subject to a statutory nomination or given away as DMC * deceased’s severable share of a joint tenancy (if ordered under s. 9) * any property the deceased gave away during their lifetime if covered by the court’s anti-avoidance powers under ss 10 and 11.

Answer 261

1 -- Obtain official copy of the death certificate (usually a family member will provide this) 2 -- Arrange funeral (usually a family member will do this) 3 -- Secure deceased’s property / notify insurers 4 -- Locate original will / codicil * Check date / confirm it is the “last will” * Any issues with validity? * Might affidavit evidence be needed ? * Consider effect s.9/15/18/18A/21/24/33 Wills Act 1837 * Has it been revoked? 5 -- Establish succession estate and consider the basis of the distribution (intestacy/will/both if partial intestacy) 6 -- Identify/locate beneficiaries (consider whether a claim under the IPFDA is possible/likely?) 7 -- Prepare Schedule of Assets & Liabilities * Arrange valuation of property / chattels / shares (date of death values) * Notify banks/financial institutions/life insurance companies etc of death & request final statements 8 -- Prepare Schedule of Lifetime transfers 9 -- Collect assets that can be collected without a grant * Within the Administration of Estates (Small Payments) Act 1965 * Proceeds of life policies written in trust * Discretionary pension schemes * Statutory nominated property * Property held as joint tenants * Donatio mortis causa 10 -- Calculate IHT due and complete IHT form to account to HMRC (IHT 400) * Submit IHT400 to HMRC along with payment of any IHT due. HMRC send receipt Form IHT421 (probate summary) to the probate registry. * Submit PA form to the probate registry together with relevant fees. * IHT form must be submitted within 12 months of death. However, interest is due on unpaid IHT 6 months from end of month of death therefore this is effectively the deadline for paying IHT and submitting forms to HMRC. 11 -- Raise £ to pay IHT ( This needs particular consideration because assets will not usually be released to the PRs until the grant has been issued, but the grant will not be issued until IHT is paid.) * Loan from beneficiary (usually interest free) * Direct Payment Scheme (banks release £ directly to HMRC – not to PRs) * Bank loan (interest will be charged) 12 -- Complete online probate application or PA1P where there is a will and PA1A where there is no will. Signed by applicants (or their legal representative if authorised). 13 -- Submit documentation to the probate registry: * Online / PA1P / PA1A * Original will / codicil * £ probate application fee * £ fee per sealed copy of the grant [Death certificate may not be required where a professional is submitting the application] You may also need to provide: * Affidavit evidence * Form of renunciation * Confirm notice of reservation of power was given * Power of Attorney

Answer 262

1 -- Notify HMRC about changes to the IHT account using Form C4: * re extra assets or liabilities * correction to original valuations * corrections to amount of relief claimed * if any additional IHT is due, send the extra £ 2 -- Place s.27 Trustee Act 1925 notice * protect PRs from claims by unknown creditors / beneficiaries if they distribute the estate after the two month notice period has passed 3 -- Collect assets * once PRs have the grant a sealed copy is sent to each asset holder who will put assets into the PRs' names or close accounts and send cash balance to PRs * cash is usually collected in a PR or law firm client account 4 -- Pay debts and distribute estate to beneficiaries, e.g. * administration costs (includes legal fees, estate IT and CGT liabilities for the administration period) * specific legacies * pecuniary legacies * interim distribution of part of residue NB: Delay distribution: * until after s.27 notice deadline expires * if there is reason to believe an IPFDA claim may arise wait 6 months from the issue of the grant 6 -- Prepare Estate Accounts * signed by the PRs and residuary beneficiary(s) 7 -- Make final distributions to residuary beneficiaries from client account * PRs expected to complete administration within 12 months of death - known as the ‘executor’s year’.

Answer 263

7 steps 1 -- cumulative total 2 -- identify taxable estate 3 -- value taxable estate 4 -- deduct debts/liabilities 5 -- exemptions and reliefs 6 -- identify/ apply available RNRB 7 -- Identify and apply basic NRB and calculate IHT

Answer 264

step 1: cumulative total * Cumulative total = the total chargeable value of all the chargeable transfers made in the 7 years before death. * Chargeable value = the value of a chargeable transfer after exemptions and reliefs have been applied – so is unlikely to be same figure as the amount transferred. * Chargeable transfers = LCTs and failed PETs. * The effect of the cumulative total is to reduce the basic NRB for the death estate. Therefore, if the cumulative total is greater than £325,000 there will be no basic NRB for the estate (assuming no transferred amount). * The cumulative total from Step 1 is taken into account later at Step 7. [Please refer to the IHT (Lifetime) Summary for more detail on how the LCTs and PETs are taxed]

Answer 265

step 2: identify taxable estate * The taxable estate comprises all the assets/ interests in property that an individual may have which are potentially subject to IHT following their death * The following are excluded from a person’s taxable estate (i.e. never taxable): o Life policy lump sum written in trust o Discretionary pension lump sum payment o If a remainderman dies and the life tenant is still alive, the remainder interest is not subject to IHT o Discretionary Trust assets on the death of beneficiary – these are not assets in which any beneficiary has a fixed right or interest. * Unless an asset is mentioned above it will form part of the taxable estate even if the asset later qualifies for an exemption or relief. * The following items are included in a person’s taxable estate even if you might think otherwise: o Subject matter of a gift with reservation of benefit (GROB) – the value of the item given away during lifetime is included in the taxable estate at its date of death (not date of gift) value o If a life tenant dies, the value of the trust fund at the date of death is included in the life tenant’s taxable estate if the life interest was created by will (or came into existence before March 2006) o DMC gift, statutory nominations, and all jointly owned property whether held as joint tenants or tenants in common (you may have thought these were excluded because they are excluded from the succession estate)

Answer 266

step 3: value taxable estate * The assets in the estate are included at their market value on the date of death * Related property: If assets owed by spouses or civil partners are worth more when valued together (e.g. because they form a set e.g. share holdings which together give control but separately do not) each party’s share is valued on death as a proportionate share of the combined total. * Jointly owned property: The value of a person’s share of jointly owned property is the propionate share of the whole. However, where land or buildings are co-owned (whether as joint tenants or tenants in common) the proportionate value of the deceased’s share is reduced by 10%. This does not apply where the co-owners are married /civil partners.

Answer 267

Deduct debt/liabilities * Any debts the deceased owed on the date they died e.g. overdraft or bills are deducted before the IHT is calculated. * As an exception, funeral expenses and the cost of a tombstone can be deducted before IHT is calculated even those these costs are incurred after death. Other post-death expenses may be paid using the estate assets but cannot be deducted from the value of the estate for IHT purposes.

Answer 268

Exempt beneficiaries (spouse / charity) * 100% of the value of assets passing to an exempt beneficiary (whether under intestacy / will / outside the succession estate / any combination) can be deducted before IHT is calculated. For this module spouse/civil partner exemption and/or charity exemption may apply. * Spouse/civil partner exemption will apply to the total value of assets passing into a life interest trust where the spouse will be the life tenant. * You need to understand how the deceased’s estate will be distributed to work out the value that a spouse or charity receives. Exempt assets (business or agricultural property) * The value of exempt business or agricultural assets can be deducted before IHT is calculated. * Certain criteria must be satisfied before assets qualify for the relief. If these are met the rate of relief is either 100% or 50%. [Please refer to the adapt elements for detail of the criteria for APR and BPR] After Step 5 you will have the value of the estate which is chargeable to tax.

Answer 269

Step 6: Identify and apply available Residence NRB * Apply the total RNRB available at 0% * Amount of the RNRB is £175,000 (or the value of the Qualifying Residential Interest (QRI) if lower). * It can be claimed where a QRI is closely inherited by a direct (lineal) descendant. QRI: includes the deceased’s home or interest in their home (and excludes commercial and let property). Closely inherited usually means absolutely, rather than by e.g. trust. Lineal descendant: includes the deceased’s children and grandchildren but has a wider definition which you should know of. Note: the deceased’s spouse/civil partner, sibling or parent are NOT direct descendants. * Does the deceased have a spouse/civil partner who died before them and who did not use their RNRB at the time? If yes, the unused proportion can be claimed by the survivor’s estate. * The RNRB is reduced for estate worth £2m+ . There is no RNRB available for estates worth more than £2.35M (single RNRB) or £2.7M (if double RNRB applies).

Answer 270

Step 7: Identify and apply basic NRB and calculate Inheritance Tax * Amount of basic NRB is £325,000 * Does the deceased have a spouse/civil partner who died before them and who did not use their own NRB at the time? If yes, the unused proportion can be claimed by the survivor’s estate. * Reduce the total NRB by the value of the cumulative total (from Step 1). * Apply rate of 0% to the value of the remaining taxable estate up to the total NRB amount. * Apply death rate of 40% to the remainder – this is the IHT due.

Answer 271

* PET (transfer to another person) which has failed because the donor died within 7 years of making the transfer. * LCT (transfer to a trust), which is chargeable when it is made @ 0/20%, and later, charged again @ 0/40% if the donor dies within 7 years of making the transfer

Answer 272

5- 7 steps (A-F) If, after the donor dies, IHT becomes payable in respect of lifetime transfers (failed PETs and re-assessed LCTs) this IHT is in addition and separate to the IHT due in respect of the death estate assets. A -- cumulative total B -- identify value transferred C -- apply exemptions and reliefs D -- Apply NRB and calculate tax Steps E and F are only considered if the donor has died E -- Taper F -- Credit for tax already paid

Answer 273

Step A: Cumulative Total * Cumulative total = the total chargeable value of all the chargeable transfers made in the 7 years before the transfer being taxed i.e. chargeable value of any failed PETs or LCTs. * Chargeable value = the value of a chargeable transfer after exemptions and reliefs have been applied – so is unlikely to be same figure as the amount transferred. * The effect of the cumulative total is to reduce the NRB for the lifetime transfer under consideration. * The cumulative total from Step A is taken into account later at Step D.

Answer 274

* The value of a transfer is assessed by reference to the loss to the donor at the date of the transfer. * If the transfer is cash the loss to the donor will be the same as the amount transferred. For other assets, it will usually be the market value of the item / same as the value received by the donee. * Where there is a transfer for less than full consideration the “loss” to the donor is the difference between the price paid and the market value. * If IHT is payable when an LCT is made and the donor pays the IHT (in addition to the gift itself), the reduction in the value of his estate includes the amount of IHT paid as well as the gift itself and the amount of the gift must be ‘grossed up’ to find the total ‘value transferred’ for IHT purposes before the tax due is calculated. You are not required to carry out any calculation where grossing up is required, but should be aware of the legal principles.

Answer 275

* Reduce the value of the transfer by deducting the value of any exemptions or reliefs that apply – the chargeable value is what remains after the exemptions and reliefs have been applied. * Consider the following for lifetime transfers: o Spouse/civil partner exemption: 100% of value of the transfer. o Charity exemption: 100% value of the transfer. o Family maintenance exemption : uncapped amount – transfer to a) child for maintenance, education, or training (full time required if child is over 18), or b) to provide care for dependent relative o Annual exemption: £3,000 per tax year (6 April – 5 April). Use tax year of gift first, and if more is needed, use of any from previous tax year that is still available – ie. maximum of £6,000 o Small gifts allowance: £250 per tax year per person (no limit to number of different people). Cannot be combined with any other exemptions / does not apply at all if transfer is more than £250. o Normal expenditure from income: uncapped amount. Transfers are exempt provided they are made from income (not capital), part of a regular pattern of giving and do not affect the donor’s standard of living. o Marriage exemption : £5,000 if made by parent, £2,500 re grandparent, £1,000 re everyone else. Relief applies per marriage, and per donor. o Business property relief: 2 year qualifying period of ownership (unless special rules following death apply). o Relief at 100% for private company shares, partnership interests or sole trader business. Relief at 50% for quoted shares but only if donor had control, or if the donor owned the assets which were used by a business. NB: no relief for investment assets e.g. let property. Further detail can be found in the adapt element. o Agricultural property relief: 2/7 year qualifying period of ownership, depending on whether donor occupied the land for agricultural purposes, or if it was owned by the donor but occupied by someone else for agricultural purposes. o Relief applies to the agricultural value of the land (usually less than the market value). Most often at a rate of 100%, but in limited circumstances a 50% rate applies (for detail see adapt element).

Answer 276

Step D: Apply NRB and calculate tax * Establish the value of the NRB (and any transferred NRB if calculating IHT due following death of the donor). * Reduce the total NRB by the value of the cumulative total (from Step A). * Apply a rate of 0% to the chargeable value of the transfer up to the total NRB amount. * Apply the lifetime rate of 20% (LCT when made) or death rate of 40% (for failed PET or re-assessed LCT) to the balance to establish the IHT due. * RNRB does not apply to lifetime transfers. * NRB amount applicable to an LCT when it is first made is the NRB at the date of the transfer. The NRB that applies to a failed PET or re-assessed LCT is the NRB amount at the date of death.

Answer 277

Step E (Taper) * If, following the donor’s death, a failed PET or re-assessed LCT results in IHT becoming due (i.e. at Step D the NRB is used up and there is a tax charge) taper should be considered. If there is no tax payable at Step D there is nothing to taper so Steps E and F are irrelevant. * Taper relief reduces the tax charge by a % based on the number of years the donor survived after making the lifetime gift: Up to 3 years before death - reduction in IHT: nil - amount of IHT still payable: 100% 3 to 4 years before death - reduction in IHT: 20% - amount of IHT still payable: 80% 4 to 5 years before death - reduction in IHT: 40% - amount of IHT still payable: 60% 5 to 6 years before death - reduction in IHT: 60% - amount of IHT still payable: 40% 6 to 7 years before death - reduction in IHT: 80% - amount of IHT still payable: 20%

Answer 278

Step F (Credit for tax already paid) * If an LCT is being reassessed following the donor’s death any tax that was paid at the lifetime rate can be deducted from the amount still due after Step E. Only the balance then needs to be paid to HMRC. * If the balance is nil after crediting the lifetime amount already paid, there will be no further tax to pay. * It is not possible to obtain a refund for the lifetime payment if the balance is negative.

Answer 279

* There is no statutory presumption of testamentary capacity unlike the general test for capacity in the Mental Capacity Act 2005. * The burden of proving testamentary capacity lies with those propounding the will i.e. usually the PRs when submitting the will for probate. * However, there is a common law presumption of testamentary capacity if the will is properly executed, rational on its face, and there is no reason to doubt the testator’s testamentary capacity. * If real doubt is raised, the common law presumption does not apply and the propounder must demonstrate testamentary capacity was present.

Answer 280

* The burden of proof lies with the propounder of the will. However, there is a presumption of knowledge and approval where the will is duly executed, the testator had testamentary capacity, and the testator signed their own will having had the opportunity to read it. * The presumption does not apply (and the propounder must prove knowledge and approval) if: o the testator is blind or illiterate, or the will is written in a language the testator cannot read and understand o someone else signs the will on behalf of the testator o there are suspicious circumstances * If the presumption will not apply, the attestation clause should be amended to reflect any steps taken to ensure the testator had knowledge and approval. For example, where a will is read out loud to a blind testator who confirms their understanding and approval before signing. In this way, the attestation clause acts as evidence of knowledge and approval. * If the presumption does not apply, and the attestation clause does not expressly confirm that appropriate steps were taken, an affidavit of knowledge and approval should be submitted to the probate registry as part of the application for probate.

Answer 281

A will executed under the duress or undue influence does not reflect the true intention of the testator and therefore knowledge and approval will not be present, and the will is invalid. The burden of proof is with the person alleging duress or undue influence occurred.

Answer 282

o Compliance with s.9 is a matter of fact. There is no legal obligation to include an attestation clause nor is any specific form of attestation required. o However, a properly drafted attestation clause raises a presumption that the will was executed in accordance with the requirements of s 9 (a presumption of due execution). In the absence of, or a poorly worded, attestation clause proof of due execution is required, usually by way of an affidavit of due execution sworn by the witnesses.

Answer 283

- Identifies testator and purpose of document - Date can be included in the commencement or at the end of the will. - A will is valid without a date but a missing date causes confusion if there is more than one will /codicil

Answer 284

- ensures all previous wills/codicils are revoked so there is only one valid will - a will is valid without a revocation clause - if a testator has more than one will, the later will impliedly revokes the earlier will but only to the extent that it is inconsistent with the earlier will

Answer 285

- An executor’s power derives from their appointment under the will - Any adult with mental capacity may be appointed (solely or jointly) - A testator may name a substitute executor in the event that an original executor does not act - A sole executor may act even if life or minor interests arise, but a maximum of four may be named on the grant - Executors are often also appointed as trustees - S.18A/C WA: the appointment of the testator’s spouse/civil partner is ineffective if the testator later divorces/dissolves the civil partnership - If no executor is named/able/willing to act, NCPR 20 applies and an administrator will be appointed - Lay executors cannot charge for their time so an express charging clause should be considered - S.15 WA has no effect on the appointment of a beneficiary as executor

Answer 286

- A testator with parental responsibility can appoint a legal guardian for their infant children by will - The appointment would not normally take effect until after the death of the surviving parent

Answer 287

- Gift of a specific item which is distinguished from other property of a similar type - The subject matter is identified at the date of the will because the word “my” demonstrates a contrary intention to the general rule in s.24 WA - The gift will therefore adeem (fail) if the item is not owned by the deceased at the date of death and the beneficiary receives nothing unless an express substitution clause is as included - Unlike a gift of a specific item, a gift of a specific collection (“my chattels”, “my shares in [ ] plc”, “my rosewood antique furniture”) takes effect with reference to the items in the collection on the date of death

Answer 288

- A gift of property which is not distinguished from property of a similar type. In this example, it does not matter which shares are given. - If the deceased does not own the items referred to the gift does not adeem, instead the PRs would have to buy the specified property - Most pecuniary legacies (gifts of cash) are general in nature e.g. “I give £1,000 to [ ]”

Answer 289

- Where the will directs that the gift should be paid out of a specified fund - The legacy will not fail if there are insufficient assets in the specified fund - To the extent the specified fund is inadequate the balance is paid as a general legacy from other assets in the estate

Answer 290

- A gift of all of the testator’s property capable of passing by the will which has not already been disposed of under the will or any later codicil and is not needed to meet debts, liabilities, taxes and expenses. - The residue estate will often be defined before the terms of the gift are stated - If the residue clause or any part of it fails e.g. if a beneficiary of a specific share has pre-deceased there may be a partial intestacy if no substitution provisions apply

Answer 291

- If no express administrative powers are included only statutory and common law powers will apply - If express powers are included, they take priority over the default powers to the extent of any discrepancy

Answer 292

Signed by [ ] in our joint presence and then by us in hers Date: [ ] - The attestation describes the circumstances in which the will was signed and confirms the requirements of s. 9 WA are met. It should be amended to note special circumstances surrounding the execution e.g. if the will was read out loud. - A will is valid without an attestation clause but affidavit evidence may be required to demonstrate s.9 compliance. - If beneficiary (or their spouse) witnesses the will although the will remains valid, the beneficiary loses their entitlement under the will (s 15 WA) - The date usually appears with the attestation or commencement. A will is valid without a date but results in confusion if there is more than one will/codicil.

Answer 293

* Objects of a gift (i.e. identity of the beneficiary): the will is deemed to speak from the date of execution, unless there is express wording to the contrary. If a gift is given to a “class” of beneficiaries, unless express words clarify when members of the class are identified, ‘class closing’ rules apply and the class closes when the first beneficiary in the class obtains a vested interest. * Effect of codicils: a codicil republishes the will it amends to the date the codicil is signed. * IHT: gifts are made free of tax unless otherwise stated * Transfer costs: gifts are subject to transfer costs unless otherwise stated * Charges: a charged asset bears liability for payment of the secured loan unless will directs otherwise s.35 AEA * Survivorship provisions: there are no deemed survivorship provisions, so these need to be expressly drafted * Substitution provisions: there is no deemed substitution effect and a gift to a beneficiary who has pre-deceased would usually fail if there is no express substitution clause. However, s.33 WA is an exception; if a testator makes a gift to issue (children, grandchildren, great-grandchildren etc) who pre-decease, leaving their own issue, that issue can take by way of substitution the share the original beneficiary would have taken * Legacies can be drafted as contingent or vested - the most common contingency is the requirement to reach a specific age Trusts law: the equitable rules in relation to creation of a valid gift or express trust apply to the dispositive clauses within a will. You should be able to review these and conclude whether a valid gift/ fixed interest trust/ discretionary trust/ power of appointment has been created.

Answer 294

grant of probate grant of administration (with will) grant of administration

Answer 295

The grant of probate is required for estates where: The deceased left a valid will The will appoints executors At least one of the executors appointed is going to act The grant of probate is issued in the name(s) of those executors who apply. A grant of probate is required even if the will does not dispose of any/all of the deceased’s property. For example, the whole or part of the estate is left to a pre-deceased family member by will and no substitution provisions apply. If the appointment of an executor under the will is limited e.g. to specific assets, jurisdiction or by time, then this will be reflected in the authority conferred by the grant. Only those named may take out the grant and they cannot simply give that right to someone else. Yet a named executor may formally appoint someone to act on their behalf under a power of attorney.

Answer 296

A grant of letters of Administration (with will) is the appropriate grant where: the deceased left a valid will but the will appoints no executors who are willing/able to act. This is the correct grant even if the will fails to dispose of all the estate. Administrators are appointed under the Non-Contentious Probate Rules 1987 (‘NCPR’). Rule 20 applies and lists, in order of priority, those entitled to apply for the grant. Administrators (not executors) are appointed. Their entitlement to apply derives from Rule 20 NCPR not the will. Rule 20 lists, in order of priority, those entitled to make an application for the grant. The order in Rule 20 broadly follows the entitlement to the estate assets

Answer 297

A grant of Letters of Administration is the appropriate grant where the deceased died without having made a valid will (i.e. died intestate). This may be because they did not make a will at all, had revoked a will they did make, or the will they made is invalid. Administrators are appointed under NCPR 22 which lists, in order of priority, those entitled to apply for the grant. Administrators (not executors) are appointed. Their entitlement to apply derives from Rule 22 NCPR. Rule 22 lists, in order of priority, those entitled to make an application for the grant. The order in Rule 22 follows the entitlement to the estate under intestacy.

Answer 298

Where the following assets are included in the succession estate, no grant is required for the PRs to deal with them: - Assets which can be distributed under Administration of Estates (Small Payments) Act 1965 - Personal household possessions - Cash

Answer 299

Orders made under this Act permit payments to be made to persons who appear to be beneficially entitled to the assets without formal proof of title. There is a restricted category of assets to which the Act applies. National Savings (inc. Bank accounts, Savings Certificates and Premium Bonds) Friendly Society and Industrial and Provident Society deposit accounts. Arrears of salary and wages Pensions where the deceased was a member of the police, fire authority, air force or army. Building society accounts There is an upper financial limit of £5,000 per asset. If the value of the asset is greater than £5,000 a grant is required to establish title to the whole sum, not just that in excess of £5,000. The provisions only make payments permissible, they do not compel those holding the assets to do so. In practice, these statutory provisions are rarely required because most banks and financial institutions adopt their own policy and will release sums (commonly up to £15,000 but sometimes larger amounts) without sight of the grant. Each institution will have its own evidential requirements before closing an account. Most will require sight of the death certificate and will (or confirmation of entitlement under intestacy) as evidence that the recipient is entitled to the money. The PRs may also be expected to sign an undertaking confirming their right to administer and give an indemnity to the bank in the event the payment is made to the wrong person. Example: An estate incudes a Building Society account worth £60,000 Premium Bonds worth £2,000 High street bank current account worth £10,000 Building Society Account: A grant is required because the value is greater than the statutory limit under the Act. Premium Bonds: The Act would apply and these could be administered without a grant. Current Account: although technically not subject to the Small Payments Act, the bank, following its own polices, may agree to close the account without sight of the grant.

Answer 300

Title to personal household possessions passes by delivery and proof of ownership is not required when they are sold (with the exception of cars where registration documents are needed). Therefore, PRs are normally able to dispose of chattels without having to produce formal proof of their authority. This applies where items were owned solely by the deceased. If there was a joint owner they would need to consent before the PRs could effect a sale. Before any items are sold PRs should check whether any particular items were gifted specifically by the deceased's will. A PR does not need a grant to take possession of cash found at the deceased’s home.

Answer 301

Assets which pass outside of the succession estate (in other words, cannot pass by a will or intestacy) do not require a grant in order for them to be released. For these assets the PRs will need to produce the death certificate, together with any other documentation the asset holder requires. Items passing outside of the succession estate and process for dealing with these following death: x4 - Property owned as joint tenants (commonly land and bank accounts): On the death of one owner the property passes automatically to the survivor under the rules of survivorship and this does not rely on the issue of a grant. The land registry / bank will transfer title into the name of the surviving owner. - Donationes mortis causa (DMC): Here the deceased would have transferred ownership or control of the asset to the beneficiary during their lifetime. - Life policies written in trust, discretionary pension lump sums nominated for a third party, and other nominated assets. On production of the death certificate these funds would be payable to the named beneficiary. - Assets held in a trust in which the deceased had an interest: The trustee should be notified of the death. The trust deed will determine what happens to the trust fund (if anything) following the death of a beneficiary.

Answer 302

There are advantages to having some assets in an estate that can be administered without a grant: releases money which can be made available to beneficiaries without waiting for the grant or administration to be completed provides a source of funds to meet expenses, including IHT if the estate is small or comprises only assets which do not require a grant, it can be a cost-effective way to carry out the administration Note that unless an estate comprises only assets where a grant is not required the PRs will need to obtain a grant of representation. Once a grant is required, it is usually simpler to administer the whole estate with reference to the grant, rather than try and administer some assets without it, even if in principle that might be possible.

Answer 303

The statutory order of entitlement to be appointed as administrator under a grant of letters of administration (with will) is shown below. Legislation: NCPR 20 a) executor; b) trustee of the residuary estate; c) any residuary beneficiary (whether taking absolutely or for life), or, where there is a partial intestacy, a beneficiary of the estate under intestacy; d) the PRs of anyone in (c) other than a trustee or life tenant of the residue; e) any other beneficiary or a creditor; f) PRs of anyone in (e). Entitlement to the grant correlates with the distribution of the estate under the will, not the applicant's familial relationship with the deceased. A person in one category cannot apply if anyone in a higher category is able and willing to act as administrator. A trustee of the residue (b) cannot apply if there is an executor (a) willing and able to act. A residuary beneficiary (c) cannot apply if there is either an executor (a) or trustee of the residue (b) willing and able to act. Those within the same category have an equal right to apply (a beneficiary with a vested interest is preferred over one with a contingent interest). If there are 3 residuary beneficiaries (c) [and no executor (a) or trustee of the residuary estate (b)] all 3 beneficiaries have an equal right to apply. The applicant(s) must explain why anyone with a better right to apply is not doing so (known as “clearing off”). Applicants do not need to explain why a person in the same category i.e. with an equal entitlement is not making the application. If one of two residuary beneficiaries (c) applies for the grant, the applicant must “clear off” (b) by e.g. confirming no trustee of residue is appointed, and (a) by e.g. confirming the sole appointed executor has pre-deceased. But the applicant is not required to “clear off” anyone in (c), i.e. explain why the other residuary beneficiary is not applying. Example 1 The deceased left a valid will that appoints their spouse as executor. The residue of the estate is left on trust for their adult children. The deceased’s brothers are appointed as the trustees. The deceased’s spouse has pre-deceased. Who will apply for the grant? Under what authority? Check: Does NCPR 20 apply? Yes, the deceased left a valid will but because their spouse pre-deceased the will does not appoint an executor who can act. So who will apply? Either or both of the brothers could apply as residuary estate trustees under NCPR 20(1) (b) (not in their capacity as the deceased’s siblings). The brothers would have an equal right to apply and will need to “clear off” the deceased’s spouse. Example 2 The deceased left a will that does not appoint any executors. The will gives £10,000 to the deceased’s friend and the residuary estate absolutely to the deceased’s adult niece and nephew. Who will apply for the grant? Under what authority? Check: Does NCPR 20 apply? Yes, the deceased left a valid will but the will does not appoint any executors. So who will apply? Either or both of the niece or nephew would have an equal right to apply as residuary beneficiaries under NCPR 20 (1) (c). They would need to clear-off the executors (a) and trustees of the residue (b), by showing that there was no-one appointed

Answer 304

same as statutory order for intestact but logically include spouse/issue before! but must also show beneficial entitlement see example belwo The statutory order of entitlement to apply to be appointed as administrator under a grant of letters of administration is shown under NCPR 22. NCPR 22 a) surviving spouse or civil partner b) children of the deceased c) father and mother of the deceased d) whole blood siblings (share both parents) e) half-blood siblings (share one parent) f) grandparents g) uncles / aunts of whole blood h) uncles / aunts of half blood Issue of b, d, e, g, and h are included where their parent has pre-deceased. If there is no-one who can apply from (a) – (h): The Crown (claiming bona vacantia) may apply (22(2)) If the Crown does not apply, a creditor, or person who does not receive benefit (but would have done if the estate was larger) may apply (22(3)) Similarly to Rule 20: a person in one category cannot apply in priority to someone in a higher category, those within the same category have an equal right to apply, and applicants must “clear-off” anyone with a better (but not equivalent) right to apply. Under Rule 22(4), the PR of any applicant who survived the deceased but died before taking a grant may apply on their behalf, although an application by a living person within the same category is preferred. Applicants must demonstrate the nature of their familial relationship with the deceased (to evidence which category they fall within). In addition, they must also have a beneficial entitlement under the estate. Commonly, the applicant next in order to apply will have an entitlement to the estate, but this will not always be the case. Consider the example below. Beneficial Entitlement Example: A man dies intestate leaving an estate worth £200,000. The man is survived by his spouse and two adult children. The spouse has the best right to apply (a) but cannot do so until at least 28 days after the man’s death. This is because under the intestacy rules she is not beneficially entitled to the estate unless she survives the man by 28 days (s 46(2A) AEA). And, if the spouse choses not apply…. The adult children are the next category entitled (b). However, the value of the man’s estate is less than the statutory legacy so the whole estate passes to the spouse. The children therefore have no beneficial entitlement. Where no-one in a)–h) with a beneficial entitlement to the estate will apply, a person with no immediate entitlement may do so, provided they would have benefited if the estate were larger (22(3)). As the children would have taken a share of the estate with the spouse if the man’s estate was more valuable, they are able to apply. Example NCPR 22 A deceased died intestate and was survived by their mother and brother. The deceased was never married or in a civil partnership, did not have any issue, and their father had predeceased. Who will apply for the grant? Under what authority? Check: Does NCPR 22 apply? Yes, the deceased died intestate. So who will apply? The deceased's mother is entitled to the whole estate. She has the best right to apply under (c) and will clear-off (b) (explaining there are no issue), and clear-off (a) (explaining the deceased never married). She does not need to clear-off the father’s right to apply because he falls within the same category. The deceased's brother has no right to apply because he falls in a lower category of applicant (d). However, even if the mother decided not to act the brother would still be unable to apply. He would be next in order under Rule 22 but he has no beneficial interest in the estate. No matter how large the estate is, it all passes to the mother. The brother would only be able to apply if he were a creditor of the estate under Rule 22(3).

Answer 305

Capacity to act Someone who lacks mental capacity may not apply for a grant. Ideally, there would be someone else with an equal or greater entitlement to apply. However, if there is not, Rule 35 will determine who can act. The detail of Rule 35 is outside the scope of the module. A minor may not act as administrator, although it is possible for someone to apply for a grant on their behalf. However, an application by an adult with equal entitlement to apply is given priority over an application made on behalf of a minor (Rule 32). An application on behalf of a minor may be appropriate where: No adult with equal or greater entitlement will act The minor is the only person within the category having the greatest entitlement, or, all those within the category are minors. Number of Administrators — for both letters of administration (with will) & letters of administration: Only one administrator is required, unless, there are minor or a life interests in the estate, in which case two will be required (s.114 Senior Courts Act 1981). i.e. two are needed if any part of the estate is passing to a minor beneficiary or is to be held on a life interest trust. Where two administrators are required but there is only one able/willing person in the category with best entitlement to apply, that person may apply for the grant with somebody from the next category of entitlement (Rule 25(1) NCPR). A maximum of four applicants may apply.

Answer 306

A potential administrator may renounce at any time before the grant is issued. They are not prevented from renouncing even if they have intermeddled with the estate. unlike an executor An executor who renounces their right to apply for a grant of probate, does not automatically renounce their right to apply as administrator under NCPR 20/22 so they may may need to renounce both rights.

Answer 307

before or after grant has been obtained After the administrator has been appointed under the grant: s.25 Trustee Act 1925 confirms that a PR may delegate their functions to an attorney for a maximum of 12 months. This can be renewed if needed. Notice should be given to the other administrators. Once appointed the attorney can carry out administrative steps on behalf of the donor. Before a grant has been obtained: in this case the applicant is delegating the power to apply for a grant, which is permitted under Rule 33 NCPR. The power of attorney must be provided to the probate registry as part of the application.

Answer 308

An unwilling executor may renounce probate (unless they have intermeddled), have power reserved (provided another executor takes out the grant) or may appoint an attorney. An executor who has power reserved may apply later to administer the estate under a grant of double probate. An unwilling administrator may renounce their right to apply for a grant (even if they have intermeddled) or appoint an attorney. They cannot have power reserved. A minor or someone who lacks capacity cannot be appointed as a PR. Citations may be used to force an unwilling PR to act, remove their right to act, or authorise another to act in their place.

Answer 309

Needed for all applications: Online application or PA1A or PA1P Application fee + £ per sealed grant Needed for some applications: Certified copy of the death Certificate Original Will / Codicil (if testator made one) Form of Renunciation (if an executor is renouncing) IHT 421 (if the estate is not excepted) Affidavit evidence Power of Attorney (if an attorney is applying)

Answer 310

An affidavit can sometimes be required when an application is made for the grant of representation. Affidavits can be needed where there is evidence to suggest a problem with the validity or enforcement of a will or codicil. An affidavit: of due execution can be used to confirm compliance with s 9 Wills Act 1837, that knowledge and approval were present, and the date on which the will was signed. as to alterations can be used to confirm the timing of alterations made to a will. of plight and condition can be used to confirm the physical condition of the will at execution and after death. of search can be used to confirm steps taken to locate missing documents.

Answer 311

PRs should collect in the assets using the method prescribed by the asset holder. Estate cash should be held in a PR bank account and/or a law firm client account. The PRs owe a duty to estate creditors to pay the deceased’s debts. An estate is solvent where its value is sufficient to meet debts, liabilities and administration expenses (even if legacies cannot be paid in full). Subject to a contrary intention in the will: an asset subject to a charge bears the burden of the debt secured to it the application of assets to meet debts/expenses is prescribed by statute.

Answer 312

PRs are required to finalise the IT and CGT for the deceased. PRs will pay IT in respect of income generated during the administration and CGT in relation to gains made on the disposal of estate assets during the administration. Death does not constitute a CGT disposal. Transferring assets to a beneficiary does not constitute a CGT disposal. Post death gains are taxed in the hands of PRs if assets are disposed by PRs during the administration or taxed in the hands of a beneficiary who disposes of the asset after it has been transferred to them by the PRs.

Answer 313

PRs must work out who should inherit the deceased's assets and what they are entitled to receive by reference to the deceased’s will and/or intestacy rules. PRs must establish whether there are sufficient funds to pay all the debts/expenses as well as the legacies. If funds are insufficient to meet all the legacies, the residue followed by the general legacies abate in priority to the specific legacies. PRs have the power to decide which assets to appropriate in full or part satisfaction of an entitlement to a general or residuary legacy. PRs should obtain receipt from the beneficiaries when making distributions. PRs are subject to a statutory duty to keep estate accounts. Signing the estate accounts indicates the end of the administration.

Answer 314

In general law, unless the will states otherwise, legacies are paid in the following order: specific general residuary If it is not possible to pay all of the legacies they abate (reduce) in reverse order. So: - If funds are insufficient to pay all other legacies the residuary beneficiary takes no benefit. - If funds are insufficient to pay all specific legacies, the general beneficiaries take no benefit. - If there are sufficient funds to meet all specific gifts but not all general legacies, the general beneficiaries take a reduced inheritance. (Demonstrative legacies abate with general legacies once the specific fund set aside has been exhausted.) - specific gifts take priority. Within each category, if not all of the legacies can be paid, they abate proportionately.

Answer 315

Correct Correct. The woman’s partner could apply as a person maintained at the date of death under s.1(1)(e). However, he could not apply as a cohabitee under s.1(1A), as they were not living together for the two years immediately preceding her death. The woman’s step-child could possibly apply as a person treated as a child of the deceased under s.1(1)(d), or if the facts did not support this, then as a person being maintained under s.1(1)(e). The woman’s children could apply under s.1(1)(c). That they are adult children and have received her estate under intestacy does not preclude a claim but would affect the likelihood of them receiving any award.

Answer 316

Yes Correct. The deadline for bringing a claim (without court permission) is 6 months from the date of the grant of representation. A claim can be brought under the Act before the grant is issued.

Answer 317

The will is valid but the man’s brother receives nothing. Correct. Any alteration (the use of correction fluid to cover up the amount of the gift) made after the will is executed is invalid unless the effect of the alteration is an “obliteration” (s 21 Wills Act 1837). As this amendment has completely covered up (obliterated) the number and it is not possible to read what the original gift was, the will is submitted to probate with a blank space and the man’s brother receives nothing.