WAE Flashcards
If an executor named in a Will does not want to act, what should they do?
Either renounce their appointment, reserve powers or appoint an attorney. They should NOT sit back and do nothing even if the minimum number required to act do so.
If a sole executor pre-deceases D, what is the appropriate type of grant required to administer D’s estate?
Letter of administration with Will (NOT: chain of representation or de bonis non as these are only appropriate where a sole remaining executor dies post grant)
How can beneficiaries receive funds payable under a life policy D had written in trust?
The funds pass outside the succession estate. The funds are not an asset over which the PRs have authority and do not need a grant to deal with. The proceeds can be paid direct to Bs. Bs shoudl contact policy provider directly. They will be paid once show the provider D’s death certificate.
Does income received after D’s death form part of their estatae for IHT purposes?
No - pre-death only. Treated as income of estate and will be subject to IT at basic rate with no personal allowance if more than £500.
When do related property rules apply so that value of an item is calculated by reference to share of the collection value not item value?
- other items in collection are owned by spouse
- asset is part of a collection which is worth more when valued together
When is an estate a Low Value Excepted Estate or Exempt Excepted Estate
Low Value:
* Gross Value is below NRB (including TNRB not RNRB)
Exempt:
* Gross Value is £3m or less
* After deduction of Liabilities + Spouse Exemption + Charity Exemption value is below NRB (including TNRB)
And in both cases:
1. No GROBs
2. Foreign assests £100k or less
3. 1 life interest not exceeding £250,000
4. Chargeable transfers not exceeding £250,000
5. No claim is made from RNRB
Gross Value = Taxable Estate + Chargeabeable Transfers + Transfers to spouse and charity
Trusts and taxable estate
Includes:
* Capital value of trust if Life Tenant
* Fixed Trusts created by Will or pre-22 March 2006
Excludes:
* Remainder interest whilst LT is alive
* Discretionary trust
* intervivos fixed trust created on and after 22 March 2006
Test for capacity
- Understands nature of will and its effect (roughly knows what a will is)
- Understands extent of property (roughly knows property they own)
- Aware of moral claims (knows how many kids they have)
- No insane delusions affecting Will (D can make valid will on lucid day even if they have dementia)
APR test
- Qualifying: Land, Buildings, Farmhouse if connected with agricultural activity
- Duration: 2 years (7 years if tenanted)
Relief:
100% (50% if tenancy began before 1 September 1995)
If lifetime gift is assessed at death, APR is only available if still owns QAP and still farmed
When is a grant of representation not required
- Asset is not part of succession estate (JTs / Insurance in trust / Discretionary pension / DMC / trust); or
- Asset is part of succession estate but PR has authority to deal with the asset (cash, chattels except cars, bank account worth £5k or less)
Burden of tax, charges and costs
Gifts in Will:
- Free of IHT
- B must pay expenses and costs of transfer
- B inherits subject to any charge (estate will not pay off mortgage)
Order legacies are paid
- Specific Gifts
- General Gifts
- Residue
if cannot pay all Bs within a category, divide proportionately between Bs within the category
Quick Succession Relief
Applies?
- D dies within 5 years
- IHT was paid by original person who died
DOES NOT APPLY IF: spouse exemption
Effect?
- Reduces the amount iHT payable (applied to the IHT due, not estate value)
Valuing shares - probate value
Lowest price on date of death + 1/4 difference between highest and lowest.
(e.g. £50 - £54 = £50 + £1 = £51)
No of administrators for grant of letters with will?
1 unless life interest trust or minors in whcih case 2.
NOTE: court may permit sole adminsitrator if expedient in all circumstances
Does a video call amount to physical presence?
No
Direction does not have to be in writing
Application for retification
- when
-effect
When: within 6 months of grant of probate
Effect:
- Interim Distribution after 6 months: PRs not personally liable but can try to recover from Bs who received property they were entilted to.
Min age to make a will
18 unless serving in army / navy.
When is something incorporated by reference?
- Specifically mentioned in Will
- In existence at time will was executed
Forms part of terms of will and must follow its instructions.
Intestacy - what happens to a child once adopted?
No longer relation of biological parents
Effect of discretionary life policy
Trustees of policy may either make payment to named B or to estate (if payment is made to estate, subject to terms of will) or anyone else?
Should you review chargeable transfers in 7 years prior to death if spouse is sole beneficiary?
Yes because:
- older gifts may affect charge to IHT on that gift
Most appropriate ways to proceed if inquest following death
- Obtain interim death certificate which can be used to carry out valuations and preliminary administrative tasks including applying for grant of representation
What happens if sole executor is under 18?
Cannot apply for grant.
Someone else must apply for a grant for thier use and benefit. Once turn 18, the grant will come to an end and minor can make an application for further grant .
What happens if contentious probate and validity of will is challenged - can executors get authority to defend the action?
May obtain temporary grant to defend. May apply for full grant once action is settled by court.
Can B challenge appointment of an executor?
Yes if:
- grounds to challenge validity or will; or
- grounds to challenge suitabilty of executor
Provided they are a beneficiary or someone who may benefit under intestacy if the will is found to be invalid.
They do so by entering a caveat.
PRs power of sale limits
Power of sale over assets. Not limited to how they may exercise that power, other than by fiduciary duties
PRs powers in relation to running a partnership
should check partnership agreement to determine what can be done with D’s share
Form of assent
Assent must be
- writing
- name recipient
- signed by PRs.
Does not need to be by deed, but if it includes obligations on B (e.g. indemnity covenants) it must be in the form of a deed to ensure the covenants are enforceable.
Do you have to report tax if estate income is under £500?
No
Premiums paid for life insurance policy - PET or LCT
PETs but exempt due to NEI
Effect of no express revocation clause
The new will revokes the old to the extent that they are inconsistent.
