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SQE general > WAE WK 5 > Flashcards

WAE WK 5 Flashcards

1
Q

What is the primary source of a PR’s duties?

A

Statutory and common law

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2
Q

Which common law duty applies to PRs before obtaining a Grant of Representation?

A

Dispose of the deceased’s body. This duty is often carried out by family members before a solicitor becomes involved.

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3
Q

Which statutory duty is imposed on PRs by the Inheritance Tax Act 1984?

A

Provide information to HMRC and pay inheritance tax as applicable.

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4
Q

What is the purpose of form IHT400?

A

To detail the deceased’s assets and liabilities for non-excepted estates.

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5
Q

What is the statutory obligation of PRs regarding IHT payment?

A

Pay IHT on the estate assets before obtaining a Grant of Representation

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6
Q

What is the central duty of PRs after obtaining a Grant of Representation?

A

To collect and administer the estate in accordance with the law.

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7
Q

List some key tasks encompassed by the duty to administer an estate.

A

Securing assets, paying debts, covering administration costs, distributing legacies, and managing the residual estate.

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8
Q

What does the duty to “collect in” entail for PRs?

A

Identifying, locating, and taking possession of all the deceased’s assets and liabilities.

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9
Q

What is the PRs’ responsibility regarding estate documentation?

A

Maintaining a detailed inventory of the estate and an account of their actions.

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10
Q

Who has the right to request access to estate accounts?

A

Beneficiaries and creditors. If denied, they can apply to the court for access.

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11
Q

Describe the Duty of Due Diligence for PRs.

A

Administering the estate with reasonable care and within a reasonable timeframe.

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12
Q

What is the typical timeframe for estate administration?

A

There is no fixed or “typical” timeframe for completing estate administration. The duration varies significantly depending on various factors, including the complexity of the estate, the presence of a will, the number of beneficiaries, potential family disputes, and the efficiency of legal processes.
Delays beyond this require justification.

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13
Q

Does the conclusion of administration absolve PRs from responsibility for newly discovered assets or unknown beneficiaries?

A

No, PRs retain responsibility even after administration concludes.

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14
Q

Why do PRs require powers in estate administration?

A

To effectively administer the estate, for example, to sell assets to cover debts.

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15
Q

What are the two primary sources of PR powers?

A

Statutory powers and powers granted by the deceased’s will or codicil.

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16
Q

What is the consequence of PRs acting beyond their granted powers (ultra vires)?

A

It constitutes a breach of duty.

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17
Q

What is the statutory duty of care imposed on PRs?

A

To exercise reasonable care, particularly in areas like investment and delegation.

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18
Q

Are professional PRs held to a higher standard of care?

A

Yes, professional PRs (e.g., solicitors) or those with special expertise are subject to higher standards.

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19
Q

Which statute primarily governs the power of PRs to sell, charge, or lease estate assets?

A

Administration of Estates Act 1925 (AEA), Sections 33 & 39.

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19
Q

What is the purpose of the power to appropriate?

A

To allocate specific assets to beneficiaries to satisfy their entitlement, with consent and without prejudice to any beneficiary.

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20
Q

Which statute grants PRs the power to insure estate assets?

A

Trustee Act 1925 (TA 1925), Section 19.

21
Q

Which statute governs the PRs’ power to invest estate assets?

A

Trustee Act 2000 (TA 2000), Sections 3-8. PRs have a duty to invest and must adhere to statutory criteria.

22
Q

Can professional PRs charge for their services?

A

Yes, subject to consent from other PRs in writing. Lay PRs need express permission in the will to charge.

23
Q

Which statute allows PRs to reimburse themselves for reasonable expenses?

A

Trustee Act 2000, Section 31.

24
Q

Can PRs delegate their duties?

A

Yes, certain tasks can be delegated, but restrictions apply. Delegation must be in writing, with regular reviews of the agent’s work.

25
Q

Which statute provides the power for PRs to appoint trustees for minors’ inheritance?

A

Administration of Estates Act 1925, Section 42.

26
Q

Can PRs accept receipts from parents/guardians of minor beneficiaries?

A

Yes, under Section 3 of the Children Act 1989, unless the will specifies otherwise.

27
Q

What are the limitations on PRs running a business owned by the deceased?

A

Common law restricts PRs from running a business for over a year without express authority in the will.

28
Q

What is the purpose of express powers in wills?

A

To enhance or modify statutory powers. Express provisions in the will override statutory defaults.

29
Q

Do PRs need to act unanimously in all decisions?

A

Generally, yes. However, in certain cases, one PR may act alone, except for transferring jointly registered stocks/shares.

30
Q

Are PRs personally liable for breaches of duty during estate administration?

A

Yes

31
Q

How can PRs seek protection from potential liability?

A

Through various mechanisms, including court directions, statutory notices, indemnities, and insurance.

32
Q

What options do PRs have for seeking court guidance on estate administration?

A

Administration action (court takes over) or specific relief (guidance on a particular issue).

33
Q

Which statute allows PRs to distribute assets based on legal advice, providing protection from liability?

A

Section 48, Administration of Justice Act 1985.

34
Q

What is the purpose of a Section 27 Trustee Act 1925 notice?

A

To protect PRs from claims by unknown beneficiaries or creditors by providing notice of intended distribution.

35
Q

When is a Benjamin Order used in estate administration?

A

When a known beneficiary is missing. It allows PRs to distribute assets assuming the beneficiary is deceased, providing protection if this assumption is later proven incorrect.

36
Q

How does the Presumption of Death Act 2013 assist PRs?

A

By enabling them to seek a declaration that a person missing for 7 years is presumed dead, offering greater certainty than a Benjamin Order.

37
Q

Can insurance protect PRs from liability?

A

Yes, PRs can obtain insurance to cover potential claims, although premiums can be substantial.

38
Q

Can PRs obtain indemnity from beneficiaries for protection?

A

Yes, but this relies on the reliability of the beneficiary providing the indemnity.

39
Q

What option is available to PRs if a beneficiary refuses their inheritance?

A

Paying the legacy amount into court, allowing for the distribution of the remaining estate

40
Q

Under what circumstances can PRs seek exoneration from liability under Section 61 of the Trustee Act 1925?

A

If they acted honestly and reasonably, even if a breach of duty occurred.

41
Q

Can wills include clauses that exempt PRs from liability?

A

Yes, exemption clauses can be included, but they typically do not cover willful fraud or dishonesty.

42
Q

What is the statutory order for paying debts from an estate?

A

Residue, general legacies, then specific legacies.

43
Q

Can a will override the statutory order for debt payment?

A

Yes, a will can specify a different order or release secured assets from their related debts.

44
Q

What is marshalling in estate administration?

A

A remedy for beneficiaries if PRs incorrectly pay creditors from the wrong assets, allowing them to claim against assets that should have been used.

45
Q

What factors should PRs consider when choosing assets to sell to cover debts?

A

Capital Gains Tax implications, ease of sale, and beneficiaries’ wishes.

46
Q

What is the chattel exemption for CGT purposes?

A

PRs can dispose of personal possessions without incurring CGT if the sale price is £6,000 or less.

47
Q

Explain the concept of “death uplift” for CGT.

A

Upon death, an asset’s base value is uplifted to its probate value, effectively eliminating any lifetime gains for CGT.

48
Q

What options do PRs have for distributing assets to beneficiaries?

A

They can either sell the asset during administration or transfer it to the beneficiary, considering the tax implications for both options.

49
Q

Does transferring an asset to a beneficiary constitute a CGT disposal?

A

No, the beneficiary inherits the asset at its probate value for future CGT calculations.

SQE general (24 decks)

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