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SQE1 - FLK2 - W&E > WE 4 & 5 - PR duties > Flashcards

WE 4 & 5 - PR duties Flashcards

1
Q

What does a ‘Grant of representation’ do?

A

Establishes the:
- Authority of the PR’s to act,
- Validity of the deceased’s will
Only covers assets in the succession estate

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2
Q

What date can an executor act from?

A

Executors are Personal Representatives appointed by the Will. They can act from the date of death. The grant confirms their authority.

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3
Q

What date can an administrator act from?

A

Administrators are Personal Representatives appointed by the Grant. They have no authority until the grant is issued

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4
Q

What is the role of a Personal Representative?

A
  • collect deceased assets
  • ensure deceased’s debts are paid
  • ensure tax is paid
  • distribute assets to beneficiaries
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5
Q

When will PR’s become trustees?

A
  • The will expressly appoints them,
  • There is an intestacy (the estate is held on trust with a power to sell)
  • A statutory trust arises under intestacy where there is a minor beneficiary
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6
Q

Is a Personal Representative personally liable for a breach of duty?

A

Yes

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7
Q

What are the duties of a Personal Representative before the issue of Grant?

A
  • dispose of the deceased’s body,
  • Provide information about the estate to HMRC and pay IHT (grant will not be issued until tax is paid)
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8
Q

What’s involved in ‘collecting in’?

A
  • identify and locate the deceased’s estate.
  • Identify the deceased’s liabilities and creditors.
  • Obtain control, possession or legal ownership of the assets.
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9
Q

What’s involved in ‘administering the estate’?

A
  • Keep assets secure
  • Pay deceased liabilities
  • Meeting administration expenses,
  • Paying legacies,
  • distributing the residue to those legally entitled.
  • must also keep Estate accounts (show assets & values, record of steps taken whilst administering. Court can order PR’s produce an inventory and accounts.

(Note: only succession estate)

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10
Q
  • What are the general duties on PR’s?
  • When should they complete administration?
A
  • act with due diligence
  • act within a reasonable time
  • administration should be completed within 12 months (if longer PR’s are required to justify the delay).
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11
Q

Does the appointment to be a PR end once the administration is finalised?

A

No - the appointment is life long

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12
Q

Can PR’s purchase assets from the estate at fair value?

A

Yes but only with an

  • order from the court

OR

  • agreement of the beneficiaries.

PR’s must not place themselves in a position of conflict of interest.

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13
Q

Can PR’s profit from their position?

A

No - but payments will not be a breach if the PR acts in a

  • professional capacity

AND

  • payments are authorised under the will or s.29 TA 2000
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14
Q

Powers granted by Statute take precedence over powers granted by the will true or false?

A

False - The will takes precedence.

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15
Q

Do PR’s have a statutory power to sell, charge or lease?

A

Yes

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16
Q

When do PR’s have the statutory power to appropriate an asset in satisfaction of a beneficiary’s entitlement?

A

As long as:
- A specific beneficiary has not been prejudiced (e.g. was the asset promised to someone else)
- The recipient beneficiary has consented
- The value of the asset is considered at the date of transfer, not the date of death

17
Q

Can PR’s appropriate an asset valued in excess of the beneficiaries entitlement

A

No (if the values is the PR’s can ‘top up with cash’

18
Q

Do PR’s have a statutory power to insure?

A

Yes - PRs are authorised to pay the insurance premiums out of either estate income or capital.

19
Q

Do PR’s have a statutory power to invest?

A

Yes, they have a duty to preserve the estate and actively invest
- must have regard to the standard investment criteria
- have a duty to obtain advice unless they reasonably conclude that it is unnecessary or inappropriate.

20
Q

What does a professional PR need in order to charge for services?

A
  • needs to be reasonable,
  • Cannot be acting alone,
  • co-PRs must give written consent
21
Q

Can PR’s charge for expenses when acting on behalf of the estate

A

Yes - but not for time (e.g. if could have earned elsewhere if not working for the estate)

22
Q

What statutory powers can’t a PR delegate?

A
  • How and when assets should be distributed,
  • whether fees or costs are payable from income or capital,
  • The appointment of trustees
23
Q

What formalities are required for PR’s to delegate?

A
  • must be done in writing
  • agent’s must be provided with a written policy statement which the agent must agree to.
  • the use of an agent and the policy doc must be kept under review.
24
Q

What are PRs statutory powers in respect of sole trades run by the deceased

A

There is a common law power to sell the business as a going concern within a year of death.
PRs are personally responsible to business creditors.

25
Q

How do joint PRs make decisions?

A

They are required to make decisions together and agree unanimously.

However, when using the power to sell or transfer, they usually have the authority to act alone.

26
Q

Can PRs distribute to minors?

A

No - they cannot give good receipt. However, they can distribute to a trust set up for the minor’s benefit.

27
Q

How can a PR protect themselves from liability for a breach?

A
  • Court direction,
  • s.48 order (distribute in accordance with a written legal opinion)
  • s27 notice (only protects from unknown beneficiaries and creditors & beneficiaries may still be liable).
  • Benjamin Order - (used where there is a known but missing beneficiary)
  • Presumption of Death Act - PRs apply for a court order that someone thought to have died for 7 years is dead
    .
  • Insurance
  • Indemnity from beneficiaries
  • Payment into court - e.g. where beneficiary can be located but won’t accept their inheritance
28
Q

When might a PR be exonerated by the court?

A
  • acted honestly and reasonably,

-ought to be excused for:
– The breach of trust, and
– Omitting to obtain a direction from the court on the matter

29
Q

what information is contained in a grant?

A
  • identity and date of death of the deceased.
  • Deceased left a valid will.
  • Identity of executors appointed.
  • Value of estate to which the grant applies.
30
Q

what are the three types of Grant?

A
  • Grant of Probate.
  • Grant of letters of administration (with will).
  • Grant of letters of administration.
31
Q

When is a grant of probate made?

A
  • the deceased left a valid will.
  • the will appoints executors.
  • at least one of the executors appointed is going to act.
32
Q

Do you still need a grant of probate if the will does not dispose of any of the deceased’s property?

A

Yes

33
Q

When is a Grant of letters of administration (with will) made?

A
  • the deceased left a valid will
  • but the will appoints no executors who are willing to act

(administrators are appointed. Rule 20 lists those in order of priority who can apply for the grant).

34
Q

When is a Grant letters of Administration made?

A

The deceased died without making a will.

35
Q

what assets in a succession estate don’t need a grant for the PRs to deal with them?

A
  • Assets distributed under the Administration of estates (Small Payments) Act.
  • Personal household possessions
  • cash
36
Q

What assets are covered by the Administration of Estates (Small Payments) Act?

A
  • National Savings
  • Friendly, Industrial and Provident deposit accounts.
  • Building society accounts
  • Arrears of salary and wages
  • Pensions where the deceased was police, fire, air force or army.
  • £5k per asset
37
Q

What is the upper financial limit of assets in the Administration of Estates (Small Payments) Act 1965?

A

£5,000 per asset (if exceeds this, a grant is needed for the whole sum, not just the excess).

SQE1 - FLK2 - W&E (25 decks)

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