Wills Flashcards
What does ‘testate’ mean? + what happens
When deceased’s will covers their entire succession estate. Only the will is relevant when determining how to distribute their estate.
What does ‘partially intestate’ mean? + what happens
When the deceased’s will does not cover their entire estate. The will is followed but intestacy rules apply to remaining property.
Main types of property which will not pass to the succession estate
Donationes mortis causa, discretionary pension scheme benefits, insurance policies written in trust, statutory nominations, property held as beneficial joint tenants, some other beneficial interests under trusts
3 requirements for valid DMC
The gift is made because the donor believes they may die imminently of a particular cause.
The donor makes it clear that the gift is conditional upon them dying, and that the property reverts to them if they survive.
The donor either parts with the property or something representing ownership of it.
When does an insurance policy form part of the succession estate?
If deceased had a simple life insurance policy = part of succession estate.
If intestate leaves spouse but no issue?
Spouse inherits entire succession estate absolutely
If intestate leaves issue but no spouse?
Issue inherits entire succession estate on the statutory trusts
How long must spouse survive deceased in order to be entitled to succession estate?
28 days
Entitlements for spouse if intestate leaves issue & spouse?
Personal chattels absolutely, statutory legacy of £322k free of tax and costs plus interest from date of death to date on which payment is made, one half of the residue (if any) absolutely
Entitlement for issue if intestate leaves issue & spouse?
Other half of the residue (if any) on the statutory trusts
If issue do not survive the deceased?
Their own issue may still inherit their entitlement under the ‘substitution limb’ of the statutory trusts
What is contingency limb of statutory trusts?
Each entitled beneficiary must survive intestate and reach age of 18 or marry earlier in order to inherit. If not satisfied: beneficiary has contingent interest.
What is substitution limb of statutory trusts?
If entitled beneficiary dies before intestate, beneficiary’s own issue can inherit in their place, provided they satisfy contingency limb.
s46 AEA order of entitlement to succession estate - if intestate not survived by a spouse or issue?
- parents 2. siblings of whole blood (share both parents) on statutory trusts 3. siblings of half blood on statutory trusts 4. grandparents 5. uncles and aunts of whole blood 6. uncles and aunts of half blood 7. the crown as bona vacantia
What is excluded from personal chattels?
Money or securities for money, property used by the intestate at their death solely or mainly for business purposes, property held at the death of the intestate solely as an investment
Spouses option to appropriate marital home if held as TIC?
Can appropriate home in full or partial satisfaction of statutory entitlements, i.e. ‘buy’ deceased’s share of the property from personal representatives using money would have received from the estate
When & how must surviving spouse make election to appropriate marital home?
Make election in writing to personal representatives within 12 months of the date of the grant.
What date is used for valuation of marital home re spouse appropriating?
Home is valued as date of appropriation not date of death
What are restrictions on right to appropriate marital home?
Consent of court required where home is only part of a building owned by the deceased or where home is part of farm or other business premises
True or false: If a person dies after expressing an intention to make a gift but before delivering the asset to the donee, equity will perfect the imperfect gift as long as the donor did not change their mind before they died.
False: It is not sufficient that the donor’s intention remained unchanged before their death. The gift must either be conditional upon death and satisfy the requirements of a donatio mortis causa, or it must be intended to be immediate and satisfy the requirements of Strong v Bird.
4 legal requirements for a valid will?
- Testator is over 18, 2. Has testamentary capacity, 3. Has knowledge & approval, 4. Has satisfied formal requirements under Wills Act
Banks v Goodfellow test for testamentary capacity
Testator must understand the nature of the act and its effects, appreciate the extent of the property which they are disposing, understand & appreciate the moral claims to which they ought to give effect & have no disorder of the mind that perverts their sense of right
Timing requirements for testamentary capacity?
Testator must have testamentary capacity at the time the will is executed or at the time they gave instructions for the preparation of the will (if it was prepared in accordance with those instructions)
Kenward v Adams ‘Golden rule’
When taking instructions for a will from a client who is elderly or seriously ill, a medical practitioner should be instructed to make an assessment of testator’s capacity
Who holds burden of proof of capacity?
Person seeking to admit the will to probate (usually executor) but capacity is presumed if will on the fact of it appear rational & has been duly executed
Can a will be made for someone who lacks capacity?
Under statute a court can authorise the execution of a will on behalf of an adult who lacks capacity to make one for themselves, but court must be satisfied there are grounds to diverge from existing testamentary position and it is in persons’ best interests
Does a discretionary trust not yet exercised go towards succession estate in intestacy?
No as no absolute right to benefit
How to get Land Registry Official Copies to be in sole name after joint tenant dies?
Death certificate to Land Registry and forms
How to get joint bank account to be in sole name after other party dies?
Death certificate to the bank
What is excluded from definition of personal chattels for the distribution under intestacy rules?
Business assets, investments & cash
What is statutory order of entitlement?
Parents, siblings, half-siblings, grandparents, uncles & aunts, half-uncles & aunts, the Crown
What general intention must a testator have to make a valid will?
A general intention to make a testamentary document which disposes of their property and should take effect following their death
What specific intention must a testator have to make a valid will?
A specific intention to make the particular will they sign i.e. they know & approve of its contents & understand choices they have made
Is knowledge & approval presumed?
Generally knowledge & approval is presumed if the testator had testamentary capacity and the will was executed with the requirements of the wills act
When is knowledge & approval not presumed?
If testator is blind or illiterate, if will was signed by someone on behalf of testator, there are suspicious circumstances
Effect if will is made with undue influence?
If whole will made under undue influence then whole will is invalid, if only part of will is made under undue influence then remainder may be given effect to
Where does burden of proof for proving undue influence lie?
WIth the person making the allegation & the court requires evidence
What is question when assessing whether a will has been made under undue influence?
Whether the testator acted as a free agent
Formal requirements for validity of a will?
In writing, signed by the testator or by some other person in his presence and by his direction, it appears that testator intended by his signature to give effect to the will, presence of 2 or more witnesses who sign in front of the testator
When should attestation clause be amended?
If the will is executed in special circumstances e.g. testator is blind or illiterate
Can gifts be made to attestating witnesses?
No - any such gifts are void but remainder of will is valid
What is the purpose of the commencement clause?
Identify the testator, state full name & address (sometimes occupation), and reference to any other names they are known by
What is the purpose of a revocation clause?
To revoke all former wills & codicils so only one valid will exists at a time
What is an executor?
A personal representative appointed by will
How many executors should be appointed?
Minimum 1 (Best to have more), maximum of 4 can apply for grant of representation
Ways in which an executor’s role may be qualified?
By time, location of the assets or type of the assets
Can a partnership be appointed executor?
No but you can appoint all of the partners of the firm and specify one/two should act
Can you charge for your time as an executor?
Only professional executors can charge. Entitled to be paid a reasonable remuneration for the services they provide
What does executor do?
Administer the estate
What does a trustee do?
Responsible for management of any trusts that continue following the estate administration for as long as the trust is in existence
What is an attestation clause?
Describes circumstances in which the will was signed
Who may act as executor?
Any adult with mental capacity
What happens if a clause is uncertain?
It is void
What happens to specific gift if testator does not own it at death?
Gift adeems = fails to take effect
How to overcome conflict between specific gifts and gift of all chattels?
Amend gift of all chattels to only include ones not specifically gifted elsewhere
What is a general legacy?
A gift of property which is not distinguished from property of a similar type “a” not “my”
What is a residuary gift?
A gift of all the testator’s property (succession estate) which has not already been disposed of under the will or later codicil
What is the general rule for determining date from which will speaks with regard to gift ?
Unless contrary intention is shown, the will speaks from the date of the testator’s death
What is the general rule for determining date from which will speaks with regard to gifts of collections?
Construed to mean items included in the collection at the date of death
Rule for determining date from which will speaks when identifying persons who should inherit?
Will is deemed to speak from the date of execution
What is rule for payment of inheritance tax if there are no express provisions?
An individual gift is made free of IHT and IHT would be payable out of the residue as a general testamentary expense
What is rule for payment of expenses/cost of transfer of item if there are no express provisions?
The specific beneficiary bears the burden of costs of delivery of item & any expenses incurred after death in preserving the item
What is the general rule for payment of charges/debts of property if there are no express provisions?
Unless contrary intention is shown, the asset charged bears liability for payment
What happens if meaning of a will or clause is unclear?
The courts can rule on how it should be constructed, based on what testator intended by the words within the will
Circumstances in which extrinsic evidence can be submitted for determining meaning of will?
If the will or any part of it is meaningless; if the language used in any part of it is ambiguous on the face of it; if the will is ambiguous in light of the surrounding circumstances
What is commorientes rule?
If it is unclear who died first (if testator & beneficiary both die), then it is presumed that the eldest died first
What happens to IHT if order of death is unknown?
Deaths treated as simultaneous, for IHT purposes neither inherits from the other & estates are taxed separately
What is ‘class closing’ rule?
A class closes when any one member of the class first becomes entitled to possession i.e. ‘grandchildren who reach age of 21’ = after first grandchild reaches 21 no children born afterwards are included in the class
What happens if residue clause lapses?
Intestacy rules apply
What happens will contains gift to testator’s issue but the intended beneficiary dies before the testator but has descendants of their own?
s33 Wills Act enables gift to be shared equally between the issue of the deceased beneficiary
Can s33 be excluded?
Yes but should be done with express wording
Eligibility to make an IPDFA claim?
Must be within jurisdiction of IPFDA; must demonstrate they fall within a recognised category of eligible applicants; must make claim within prescribed time limit
Jurisdiction of IPFDA?
Only applies where deceased died domiciled in England and Wales
Categories of eligible applicants under IPFDA?
spouse/civil partner; former spouse/civil partner who has not remarried; cohabitant of deceased for 2 years prior to death; child of deceased; any person who was treated by deceased as a child of their family; any person who was maintained by the deceased
Time limits under IPFDA?
Application cannot be made more than 6 months after date of grant of representation was made
Can time limit for claim under IPFDA be extended?
Court has discretion to extend the time limit for making a claim; taking into account: circumstances, whether negotiations were commenced before, if estate had already been distributed before notification of the claim, whether refusing applicant to bring proceedings would leave them without recourse against anyone else
Which property does IPFDA apply to?
Orders under IPFDA are made out of the ‘net estate’ of deceased
Grounds for making IPFDA claim?
Deceased’s will did not make reasonable financial provision for the applicant; the distribution of the deceased’s estate under intestacy rules fails to make reasonable financial provision for the applicant
Orders that court can make under IPFDA?
Periodical payments, lump sum, transfer of property, settlement of property, acquisition of property for transfer, variation of marriage settlements, variation of civil partnership settlements, variation of trusts on which estate is held
2 stage test for IPFDA claim?
- Did the deceased fail to make reasonable financial provision for the applicant?, 2. If so, what award should the court make?
Surviving spouse standard of financial provision?
Such financial provision as would be reasonable in all circumstances for a husband or wife or civil partner to receive whether or not provision is required for his or her maintenance
Maintenance standard of financial provision?
Such financial provision as would be reasonable in all the circumstances of the case for the applicant to receive for his/her maintenance
When can court extend surviving spouse standard?
- Applicant is former spouse or civil partner of deceased who has not remarried, or is judicially separated, 2. divorce, dissolution, nullity or judicial separation occurred within 12 months of death, 3. no order for financial provision has been made or refused in ancillary proceedings
What court must have regard to when considering person’s financial needs for IPFDA claim?
Financial resources & financial needs, resources & needs of any other applicants, resources & needs of any beneficiary of the estate, obligations & responsibility which deceased had towards applicants or beneficiaries, size & nature of net estate, physical or mental disability of applicant or beneficiary, any other matter or conduct relevant in circumstances
Specific guidelines for court for IPFDA claims for spouse/civil partner?
Applicant’s age & duration of marriage, contribution made by applicant to welfare of family of deceased (inc looking after home), provision which applicant might reasonably have expected to receive in divorce proceedings if couple had ended relationship at date of death
Specific guidelines for court for IPFDA claims for cohabitees?
Age of applicant & length of period of cohabitation, contribution made by applicant to welfare of family of the deceased
Specific guidelines for court for IPFDA claims for child of deceased?
Consider manner in which applicant was or might expect to be educated, also applies where applicant is not child but was treated as such
What is a variation in a will?
A direction from an original beneficiary to the deceased’s PRs to transfer property that the beneficiary is entitled to to another person instead
IHT Consequences of variation?
Gift is read-back to date of death & treated as having been made by deceased to new beneficiary
Conditions for a variation to be effective at writing back IHT?
Variation made by original beneficiary in writing, within 2 years of death, contains express statement confirming s142 should apply, not made for consideration in money or money’s worth
When does original beneficiary need consent of court to make a variation?
If they are a minor or lack mental capacity
Number of variations possible?
Each asset can only be varied once
Limitations to disclaimers?
Beneficiary can only disclaim before acceptance, can only disclaim whole gift, does not disclaim their rights under intestacy that arises as a result of disclaiming, original beneficiary cannot control who receives assets they disclaim
What is a precatory trust?
Arises where gift is made to beneficiary by will with a wish expressed as to how beneficiary should pass on assets to other
IHT consequences of precatory trust?
If beneficiary makes distributions intended within 2 years of testator’s death then for IHT purposes treated as gifts made by testator’s will
CGT consequences of precatory trust?
Re-distribution in accordance with testator’s wishes would eb treated as disposal by original beneficiary
Can executors charge for their time?
Lay executors cannot, professional executors can. But provisions of a will can override the statute.
What are 3 kinds of IHT trigger events?
Potentially exempt transfers (that fail); Lifetime Chargeable Transfers; Death
What is the basic nil rate band?
325k
How much is residence nil rate band?
Extra 175k
When does PET become chargeable alongside death estate?
If individual does not survive 7 years after
What is a lifetime chargeable transfer?
A lifetime transfer of value made by a person into a trust on or after 22 March 2006
What is LCT tax treatment?
IHT payable on chargeable value of LCT at lifetime rate of 20%. If transferor survives 7 years then no further charge; if transferor dies within 7 years then LCT reassessed to tax at death rate of 40%
What is the cumulative total for IHT?
Total chargeable value of all chargeable transfers made in previous 7 years
When does residence nil rate band apply?
To individuals who leave their family home to direct descendants
What is transfer of basic nil rate band?
Allows surviving spouse to take advantage of unused potion of deceased’s basic NRB (calculated as a percentage)
Can you claim TNRB from multiple marriages?
Yes but amount is capped at 100%
Can you pass TNRB to a new spouse?
Yes but capped at one full NRB
When must TNRB claim be made & by who?
PRs of surviving spouse must make a claim for the TNRB in the IHT return within 2 years of the end of the month of death - no need to make claim when first spouse dies. If fail to make claim, anyone liable to pay IHT can make claim after the deadline & HMRC has discretion to extend the deadline.
What are 3 conditions for RNRB to apply?
Deceased died on or after 6 April 2017; their death estate included a qualifying residential interest; the QRI was closely inherited by a direct descendant
When is RNRB capped?
If deceased’s share or interest in property is worth less than 175k then it is capped at the value of the property
When does RNRB get reduced?
If estate net value is more than £2 million then RNRB is reduced £1 for every £2 above 2 mil threshold
What does ‘closely inherited’ mean?
If receive QRI by: gift under a will; operation of intestacy rules; operation of the rules of survivorship
Does a beneficiary with a contingent interest closely inherit for RNRB purposes?
No (unless specific exception applies)
Who is not ‘direct descendants’ for RNRB?
Siblings, parents, nieces & nephews
How to qualify for ‘downsizing’ rules?
Deceased must have given away or downsized QRI on or after Jul 2015; former home would have been QRI if retained; direct descendant inherits replacement QRI and/or other assets
What happens to deceased’s share of property held as joint tenant for IHT purposes?
Deemed severance of JT immediately before death, so deceased’s share of property is included in their taxable estate
How to avoid GROB rules?
Either do not derive any benefit from asset given away, or pay a market rent for the time they do derive benefit
