WAE WK 5 Flashcards
What is the primary source of a PR’s duties?
Statutory and common law
Which common law duty applies to PRs before obtaining a Grant of Representation?
Dispose of the deceased’s body. This duty is often carried out by family members before a solicitor becomes involved.
Which statutory duty is imposed on PRs by the Inheritance Tax Act 1984?
Provide information to HMRC and pay inheritance tax as applicable.
What is the purpose of form IHT400?
To detail the deceased’s assets and liabilities for non-excepted estates.
What is the statutory obligation of PRs regarding IHT payment?
Pay IHT on the estate assets before obtaining a Grant of Representation
What is the central duty of PRs after obtaining a Grant of Representation?
To collect and administer the estate in accordance with the law.
List some key tasks encompassed by the duty to administer an estate.
Securing assets, paying debts, covering administration costs, distributing legacies, and managing the residual estate.
What does the duty to “collect in” entail for PRs?
Identifying, locating, and taking possession of all the deceased’s assets and liabilities.
What is the PRs’ responsibility regarding estate documentation?
Maintaining a detailed inventory of the estate and an account of their actions.
Who has the right to request access to estate accounts?
Beneficiaries and creditors. If denied, they can apply to the court for access.
Describe the Duty of Due Diligence for PRs.
Administering the estate with reasonable care and within a reasonable timeframe.
What is the typical timeframe for estate administration?
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.
Does the conclusion of administration absolve PRs from responsibility for newly discovered assets or unknown beneficiaries?
No, PRs retain responsibility even after administration concludes.
Why do PRs require powers in estate administration?
To effectively administer the estate, for example, to sell assets to cover debts.
What are the two primary sources of PR powers?
Statutory powers and powers granted by the deceased’s will or codicil.
What is the consequence of PRs acting beyond their granted powers (ultra vires)?
It constitutes a breach of duty.
What is the statutory duty of care imposed on PRs?
To exercise reasonable care, particularly in areas like investment and delegation.
Are professional PRs held to a higher standard of care?
Yes, professional PRs (e.g., solicitors) or those with special expertise are subject to higher standards.
Which statute primarily governs the power of PRs to sell, charge, or lease estate assets?
Administration of Estates Act 1925 (AEA), Sections 33 & 39.
What is the purpose of the power to appropriate?
To allocate specific assets to beneficiaries to satisfy their entitlement, with consent and without prejudice to any beneficiary.
Which statute grants PRs the power to insure estate assets?
Trustee Act 1925 (TA 1925), Section 19.
Which statute governs the PRs’ power to invest estate assets?
Trustee Act 2000 (TA 2000), Sections 3-8. PRs have a duty to invest and must adhere to statutory criteria.
Can professional PRs charge for their services?
Yes, subject to consent from other PRs in writing. Lay PRs need express permission in the will to charge.
Which statute allows PRs to reimburse themselves for reasonable expenses?
Trustee Act 2000, Section 31.
Can PRs delegate their duties?
Yes, certain tasks can be delegated, but restrictions apply. Delegation must be in writing, with regular reviews of the agent’s work.
Which statute provides the power for PRs to appoint trustees for minors’ inheritance?
Administration of Estates Act 1925, Section 42.
Can PRs accept receipts from parents/guardians of minor beneficiaries?
Yes, under Section 3 of the Children Act 1989, unless the will specifies otherwise.
What are the limitations on PRs running a business owned by the deceased?
Common law restricts PRs from running a business for over a year without express authority in the will.
What is the purpose of express powers in wills?
To enhance or modify statutory powers. Express provisions in the will override statutory defaults.
Do PRs need to act unanimously in all decisions?
Generally, yes. However, in certain cases, one PR may act alone, except for transferring jointly registered stocks/shares.
Are PRs personally liable for breaches of duty during estate administration?
Yes
How can PRs seek protection from potential liability?
Through various mechanisms, including court directions, statutory notices, indemnities, and insurance.
What options do PRs have for seeking court guidance on estate administration?
Administration action (court takes over) or specific relief (guidance on a particular issue).
Which statute allows PRs to distribute assets based on legal advice, providing protection from liability?
Section 48, Administration of Justice Act 1985.
What is the purpose of a Section 27 Trustee Act 1925 notice?
To protect PRs from claims by unknown beneficiaries or creditors by providing notice of intended distribution.
When is a Benjamin Order used in estate administration?
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.
How does the Presumption of Death Act 2013 assist PRs?
By enabling them to seek a declaration that a person missing for 7 years is presumed dead, offering greater certainty than a Benjamin Order.
Can insurance protect PRs from liability?
Yes, PRs can obtain insurance to cover potential claims, although premiums can be substantial.
Can PRs obtain indemnity from beneficiaries for protection?
Yes, but this relies on the reliability of the beneficiary providing the indemnity.
What option is available to PRs if a beneficiary refuses their inheritance?
Paying the legacy amount into court, allowing for the distribution of the remaining estate
Under what circumstances can PRs seek exoneration from liability under Section 61 of the Trustee Act 1925?
If they acted honestly and reasonably, even if a breach of duty occurred.
Can wills include clauses that exempt PRs from liability?
Yes, exemption clauses can be included, but they typically do not cover willful fraud or dishonesty.
What is the statutory order for paying debts from an estate?
Residue, general legacies, then specific legacies.
Can a will override the statutory order for debt payment?
Yes, a will can specify a different order or release secured assets from their related debts.
What is marshalling in estate administration?
A remedy for beneficiaries if PRs incorrectly pay creditors from the wrong assets, allowing them to claim against assets that should have been used.
What factors should PRs consider when choosing assets to sell to cover debts?
Capital Gains Tax implications, ease of sale, and beneficiaries’ wishes.
What is the chattel exemption for CGT purposes?
PRs can dispose of personal possessions without incurring CGT if the sale price is £6,000 or less.
Explain the concept of “death uplift” for CGT.
Upon death, an asset’s base value is uplifted to its probate value, effectively eliminating any lifetime gains for CGT.
What options do PRs have for distributing assets to beneficiaries?
They can either sell the asset during administration or transfer it to the beneficiary, considering the tax implications for both options.
Does transferring an asset to a beneficiary constitute a CGT disposal?
No, the beneficiary inherits the asset at its probate value for future CGT calculations.
