WE 4 & 5 - PR duties Flashcards
What does a ‘Grant of representation’ do?
Establishes the:
- Authority of the PR’s to act,
- Validity of the deceased’s will
Only covers assets in the succession estate
What date can an executor act from?
Executors are Personal Representatives appointed by the Will. They can act from the date of death. The grant confirms their authority.
What date can an administrator act from?
Administrators are Personal Representatives appointed by the Grant. They have no authority until the grant is issued
What is the role of a Personal Representative?
- collect deceased assets
- ensure deceased’s debts are paid
- ensure tax is paid
- distribute assets to beneficiaries
When will PR’s become trustees?
- 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
Is a Personal Representative personally liable for a breach of duty?
Yes
What are the duties of a Personal Representative before the issue of Grant?
- 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)
What’s involved in ‘collecting in’?
- identify and locate the deceased’s estate.
- Identify the deceased’s liabilities and creditors.
- Obtain control, possession or legal ownership of the assets.
What’s involved in ‘administering the estate’?
- 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)
- What are the general duties on PR’s?
- When should they complete administration?
- 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).
Does the appointment to be a PR end once the administration is finalised?
No - the appointment is life long
Can PR’s purchase assets from the estate at fair value?
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.
Can PR’s profit from their position?
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
Powers granted by Statute take precedence over powers granted by the will true or false?
False - The will takes precedence.
Do PR’s have a statutory power to sell, charge or lease?
Yes
When do PR’s have the statutory power to appropriate an asset in satisfaction of a beneficiary’s entitlement?
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
Can PR’s appropriate an asset valued in excess of the beneficiaries entitlement
No (if the values is the PR’s can ‘top up with cash’
Do PR’s have a statutory power to insure?
Yes - PRs are authorised to pay the insurance premiums out of either estate income or capital.
Do PR’s have a statutory power to invest?
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.
What does a professional PR need in order to charge for services?
- needs to be reasonable,
- Cannot be acting alone,
- co-PRs must give written consent
Can PR’s charge for expenses when acting on behalf of the estate
Yes - but not for time (e.g. if could have earned elsewhere if not working for the estate)
What statutory powers can’t a PR delegate?
- How and when assets should be distributed,
- whether fees or costs are payable from income or capital,
- The appointment of trustees
What formalities are required for PR’s to delegate?
- 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.
What are PRs statutory powers in respect of sole trades run by the deceased
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.
