Will IV Realising and Distributing Assets

Question 1

Order of payments from the estate to unsecured creditors

Answer 1

1) Property undisposed of by the Will (ex. in a partial intestacy)

2) Residue

If the will provides debts should not be paid from the residue, the debts will be paid from the following sources in order:

• Sources should be used for the payment of debts
• from cash (pecuniary legacies) which abates proportionately
• if no or insufficient pecuniary legacies, from specifically devised or bequeathed property (proportionately)

Question 2

How to realise assets if a property is to be gifted free of mortgage

Answer 2

If a gift provides a property is free of mortgage, the mortgage must be paid out of the residue to the extent it is available

Question 3

If an estate is insolvent, debts settled in the following orders

Answer 3

Secured debts unless contrary intention

Unsecured debts in the following orders:

Reasonable funeral and admonstration expenses

Preferred debts

Ordinary debts

Interest

Deferred (postponed) debts

not respecting the order PR may be liable if the assets are not sufficient to pay the higher ranking debt

Question 4

What is a vartiation from a benefiicary

Answer 4

A variation allows a beneficiary to change who gets their inheritance

if the variation is in writing, made within 2 years of death, and not made for monetary consideration, it will be treated as if the deceased had left he property to the new beneficiary

if not the variation will be treated as transfer of value and a deemed disposal by the original beneficiary

Question 5

Define appropriation

Answer 5

A beneficiary can ask the PRs to use a particular asset to satisfy a pecuniary legacy

Question 6

How to deal with gift for minor beneficiaries

Answer 6

A minor generally cannot valide receipt for a gift unless the will provides otherwise, alternatively PRs may:

• Accept a receipt from the minor’s parents
• Hold the property until the minor reaches age 18
• Appoint a trustee to receive and hold the property until the child attains age 18

Question 7

Can PR charge for acting for the estate for tax affairs

Answer 7

PRs generally cannot charge for acting as such execpt:

if the will authories it

by agreement with the beneficiaries

Question 8

Beneficiarie’ rights and remedies to legacies:

Answer 8

A beneficiary does not have a legal or equitable interest in the estate assets before administration of the estate is completed

They have only a right to have the estate properly adminsitered

Question 9

Rights of a beneficiary to bring a personal action for poor administration of estate

Answer 9

A beneficiary can bring a personal action against a PR, but a PR will not be liable if they acted ‘honestly, reasonably and out faily to be excused’

A beneficiary may use a tracing claim against the recipient to recover property which the PRs have wrongly transferred to someone else.