Wills Flashcards
1
Q
liability and burden of IHT meaning
A
liability = who must pay the tax
burden = who HMRC will chase if unpaid
2
Q
due execution clause
A
s9 Wills Act 1837
3
Q
what happens if no s9?
A
need to provide affidavit of due execution
4
Q
what happens if presumption of validity/(…) applies?
A
person trying to rebut has onus
5
Q
facts point towards random people witnessing will and youre tyring to challenge validity - what can be done?
A
ask for affidavit of due execution
interview witnesses to see if signatuers were genuine and in which circumstances they were made
6
Q
things to prove capacity
A
- medical attestation
- medical records
- detailed statement from those who visited person regularly
7
Q
if there is no presumption of validity, who has onus
A
person seeking to rely on will
8
Q
what induces suspicious circumstances
A
executor is also main beneficiary + often in position of trust (like carer…)
9
Q
issue with challenging will based on undue influence
A
- very high threshold
- need to show coercion that goes beyond simple persuasion
-claimant of undue influence can be penalised wtih costs if not able to establish it
10
Q
urgent steps to do if you want to challenge a will
A
lodge a CAVEAT in Probate Registry through PA8A form- its valid for 6m and will warn you if an executor has tried to take grand
+ SEND urgent letter to person seeking to rely on will, notifying of our interest and ask for their solicitor (so we can get a copy of the will etc)
11
Q
duty and liability of an executor
A
collect and manage the estate, will have to apply for grant of probate, pay IHT, distribute the estate conforming the testator’s wishes
duty for life
not personally liable for anything unless maladministration
12
Q
how to obtain a grant of probate
A
1) pay IHT
2) apply to Probate Service (PA1P) online where you have to send 2 A4 photocopies of will and any codicils, IHT400, fee of £273
3) within 20 working days of sending, HMRC usually sends response on IHT401 form and
13
Q
how to pay IHT
A
1) must pay within 6m of end of month when death occurred (otherwise will be charged interest)
2) unless there is an option which attract instalments (property, certain shares - 10x), pay all at once
3) option to fund can be bank loan, from B’s, own money, certain chattels or small sums that pass without need for grant
14
Q
act for if you are left out and want to claim
A
Inheritance (Provisions for Family and Dependants Provision) Act 1957
15
Q
what do you say if executor wants to keep will hidden
A
MUST inform Beneficiaries
the grant is public so once they’ve done that, anyone can see (+ shouldnt really delay grant after 1y - executors year, because B can start claim against them)
16
Q
what do you tell client if they want to make firm executors
A
1) obviously happy to act and will have them as testators and beneficiaries as best interest
2) will have to account for a reasonable sum for payment (payable from the estate)
3) remind testator that they don’t need to appoint law firm, can appoint a family member, a friend or anyone they might trust (cheaper)/ however understand we have a rapport and you may feel more confident in appointing us
17
Q
you send a codicil to your client for them to execute - what must you warn them about
A
1) how a codicil works: will effectively republish the will so has anything changed that might be affected (eg beneficiaries? which take place from date of will)
2) must be signed in same way as will and both witnesses must be over 18 and could be called to give explanation later on although unlikley
3) make sure witnesses are not beneficiaires or their spouse/CP as this makes gift fail
4) if they want to make any changes, safest for them to request you and then you send them a new version. if they’re pressed on time, can do it themselves but make sure to write their initials + witnesses initials next to it
5) please dont attach anything to codicil that could damage it, including stapling it, paperclips..
18
Q
a beneficiary wants to alter gift, what do you suggest?
A
1) can simply give it to whomever they want, but don’t advise it because if they die in the next 7 years, gift will be taxed again
2) do a read back variation (will be as if original will stated this, no extra cost) (s142)(must be done within 2y from death)
3) look at whether any CGT will apply (if s142, WONT apply)
19
Q
protection available to PRs in distributing estate
A
1) s27 for unknown creditors (need to wait 2m from notice) (advertise as early as possible, Executor any time after death, Admin any time after grant)
2) for known, but missing B: keep asset in case they appear get indemnity from Bs, get insurance, lastly get Benjamin order (so expensive though)
3) wait 6m to make sure no Act 1957 applies
20
Q
what’s the general rule with alterations
A
1) presumed to have been made after alteration
2) need to be executed
3) if are not and original can be read, original takes place
4) if obliterated can try to use external evidence but usually understood that testator revoked gift
5) be weary of doctrine of conditional revocation (if thick line making gift unreadable and new gift on top but no attestation = can use extrinsic evidence to establish original gift and such will be valid)
21
Q
Claiming under Act 1957
A
a) spouse or civil partner
b) former spouse or civil partner (divorced + not remarried)
c) child
d) children of the couple
e) maintained by deceased immediately before death (substantial contribution to one’s needs)
f) living in same household and in relationship akin to husband and wife with deceased for 2y
22
Q
ordinary standard Act 1957
A
sum reasonable for maintenance
23
Q
spouse standard Act 1957
A
reasonable sum, whether for maintenance or not
24
Q
ground to apply for Act 1957 and standard
A
did not make reasonable provision (and then different standard whether ordinary or spouse)
burden is on applicant
25
common guidelines court considers in Act 1957
1) financial resources and needs of the applicant against those of other beneficiaries (looking at earning capacity, financial obligations)
2) size and nature of the estate
3) the deceased's obligations towards beneficiaries/appicant
4) physical/mental disability of applicant
5) anything else that may be relevant such as applicant's conduct
!! court has discretion
26
can testators be protected from Act 1957 by doing lifetime gifts?
not really, court can look into lifetime gifts up to 6 years before death and can claim from it
+ court can claim from any beneficiary
27
special guidelines court considers in Act 1975
1) if child: need for education, training?
2)other resources
3) for spouse/partner their age and contribution to the welfare family, duration of marriage, likelihood of financial settlement in divorce
4) if cohabitant, looks at their age, length of cohab, contribution cohab made to welfare of family
28
can a CP revoke a will?
yes, in the same way as marriage (unless will made in contemplation of specific marriage or will to be valid regardless of whether marriage happens or not --> need to make clear in drafting)
** will can also be valid contingent on marriage taking place
29
draft will made in contemplation of marriage
'This is the last will and testament of NAME of ADDRESS and is made in expectation of entering a CP/MARRIAGE with NAME and I declare this will will not be revoked by the formation of CP/MARRIAGE'
30
draft will made contingent on marriage
'this is the last will and testament of NAME of ADDRESS and I declare this will's validity is conditional on my marriage with X taking place within the next X months from the date this will is made (X)'
31
draft will to not be affected by marriage
this is the last will and testament of X of ADDRESS and I declare that the validity of this will is not to be affected by my marriage with X taking place, or not, within the next X months from the date this will is made (DATE).
32
key thing to remind testator when they leave a gift to their children !!!
there is a provision implied by law (s33) where if you leave a gift to your child without substitution and they predecease you, if they have a living child at the time of their death, the gift will automatically pass to their child (your grandchild).
in gifts not to your children, if the beneficiary predeceases you and there is no substitution, the gift would go back to your residuary estate.
if you do not want your grandchild to take the gift in any circumstances, please make sure to provide a substitution in case gift to child fails
33
what to remind client when they are making gifts
1) s33 implied for children
2) where do they want IHT to come from? usually its residuary estate
3) if the gift has mortgage and is silent, beneficiary takes gift subject to mortgage. make special provision if you want mortgage to be discharged before distrbution
34
things to be aware of a if a beneficiary is also the executor and want to change their gift
obviously could under normal rules of variation and power of appropriation but would actually be a breach of fiduciary duty!! (normally would just require consent from B who executor is appropriating)
35
in codicil - when do you rewrite a clause fully or just replace info? (draft)
fine to say replace X with Y in clause Z if its just one thing, but if its a substantial modification, better to say replace clause X with this; (and rewrite)
36
should you say you revoke clause X and replace it by Y? (in codicil) (drafting)
depends - if some things from clause are being maintained (like one of the B's and then just adding more gift and more B's), if you say revoke seems like you dont want original B to get anything so confusing- better to just say replace
37
key thing to remember regarding executor in drafting
make sure to have substitution
38
will drafting checklist
1) original sentence (last will....) (revocation...)
2) funerary arrangements
2) if made before CP/marriage, lay out whether its conditional, contemplation, regardless...
3) always add a substitution for executor
4) if gift for children, remind testator of s33
5) remind testator that failed/lapses gifts go to residuary estate (+ if gift to joint people, make sure to say it doesnt fail if one dies)
6) remind testator where IHT usually comes from and if they want to change how mortgage/tax is borne
7) divide legacies between:
a) pecuniary
b) personal
8)always add receipt clause if leaving to charity or minor (+ substitution if charity no longer exists - executors can pay to whichever charity they think most closely fulfils purpose of X)
9) residuary gift clause
10) ultimate gift clause
39
drafting opening of will and revocation
This is the last will and testament of NAME of ADDRESS which I make on this day of DATE
1. I revoke all former wills, codicils and testamentary dispositions.
40
drafting appointing friend as executor and firm if fails
1. I appoint NAMe of ADDRESS to act as my executor
2. If she dies before me or if the appointment does not take place for any reason, I appoint FIRM of ADDRESS to act in her place. I would like no more than 2 partners to take the grant of probate of this will. The reference to FIRM includes any firm that has succeeded in carrying on or incorporated the practice of FIRM at the time of my death.
3. Any person acting as executor or trustee for this will in their professional capacity are entitled to charge, and be paid, a reasonable renumeration for the services they or their firm provide. To be borne for my residuary estate.
4. In my will the expression 'my Trustee' shall, where relevant, include any executor or trustee for the time being of any trust arising out of my will.
41
drafting to when you give legacy to 2 people
I give to X and Y of ADDRESS, the (sum of)(chattel of) JOINTLY/IN EQUAL SHARES, and if one predeceases me, to the one living at my death
42
drafting gift to charity
1. I leave (sum of)(my house of X) to the charity NAME registered in England and Wales under number X for their general charitable purposes. The receipt of X is sufficient to discharge my executors of the burden.
1.a. If at the time of my death the charity has ceased to exist or amalgameted with another or changed its name, my executors may pay to any charitable organisation which they consider most closely fulfils the purpose of NAME.
43
draft clause leaving all personal belongings to someone
1. I leave all my personal chattels as defined by the Administration of Estates Act 1925 to X, save those which are subject to specific gifts in this will
44
draft residuary estate clause
Subject to payment of my debts and expenses, I leave all my estate otherwise not disposed of ('my Residuary Estate') to X (contingent on X)(jointly)(and if one predeceases me)(to the surviving ones in equal share)
45
draft ultimate gift
If the declared gift in clause (residuary estate) fails for any reason, I leave my Residuary Estate to X
46
clause to appoint a guardian to your child
if my (wife)(husband) dies before me, I appoint as guardians of my children who are under the age of 18 X of ADDRESS and X of ADDRESS, jointly, or if one predeceases me, the one who is living at my death
47
draft gift of your main residence
I give to X of ADDRESS my house XXX or any other property which I use as my main residence at the time of my death ('the Property').
(I direct that my Trustees must pay from my estate any outstanding mortgages, debts, or any other sums secured on the Property or any other related interests or expenses)
48
clause to make sure your house if gifted free of mortgage
I direct my Trustees to pay from my estate any outstanding debts, mortgages or any other sums secured on the Property, or any other related interests or expenses
49
draft gift of shares
I give X Shares of X to Y
!!! never say MY SHARES because the gift will lapse if they no longer own them at death
50
giving money to two people
I give sum of X to Y and Z jointly, and if one of them predecease me, to the one living at my death
51
what to draft if testator wants beneficiary to pay the IHT of their gift
this gift is subject to Inheritance Tax
52
draft clause directing payment of IHT
My trustees must pay all Inheritance Tax payable as a result of my death on any specific gift in this will from my estate (except where the will expressly states that the gift is subject to inheritance tax)
53
additional power of trustees to make loans
I declare that my Trustees have unrestricted power to grant loans from my Residuary Estate to any of the beneficiaries entitled to my Residuary Estate in such as their discretion sees fit
54
draft clause if testator wants residuary estate to give income to one B and rest to another B
1. Upon payment of my debts and expenses, my Trustees shall hold all my estates not disposed of (my Residuary Estate) on the following trusts:
1.a. to pay income to XX (during her/his lifetime)
1.b to pay my Residuary Estate to (...)
55
Then to children or by substitution, grandchildren. He does not see himself having any more children, although that can never be ruled out. So, as he sees it, currently Razak, Beatrice and Juliet get a third share each but, should he have another child or indeed, children (there are twins on his wife’s side) then the shares will obviously become smaller. He was adamant that his children should only inherit on reaching 25. If any die before that, any grandchild or grandchildren on reaching 25 will take their parent’s share. He does not want inheritance to go any further, so any share that fails (child and their grandchildren do not reach 25) should go back into the residuary estate.
Failing any children or grandchildren inheriting, the residue will go to the charity, Samaritans.
To any of my children, living at my death and if more than one in equal shares, contingent on them reaching 25 years old.
But if any of my children have predeceased me, their issue, providing they reach the age of 25, shall inherit by substitution, and if more than one in equal shares so much of my Residuary Estate Trust Fund as their parents would have
56
draft witness' signature
1) line for signature
2) name in CAPS
3) Address
4) Occupation
57
deed of variation parties
1) beneficiary changing legacy (the Original Beneficiary)
2) (if there is a charity) (the Charity)
3) (the executors if deed of variation is affecting tax) (the Executors)
58
deed of variation supplemental
'this deed of variation made on DATE is supplemental to the will of the late NAME of ADDRESS, probate of the Will having been granted on DATE from the DISTRICT PROBATE REGISTRY
59
deed of variation recitals
you basically explain
1) the entitlement of the original beneficiary or supplemental beneficiary under the will
2) the reason why the gift cannot take place (void ab initio etc)
3) what the original beneficiary has decided to do (wishes to honour the Testator's intention to xxx)
4) any other variation that may be requested (eg give 5k to X person)
60
this deed provides
this is where you will rewrite the clauses from the will where gift changed
1. Variation of the Will in favour of X
1.1 Clause X of the Will shall be read and interpreted as if X, it will leave as follows: 'rewrite'
1.2 if to a charity: talk about receipt
1.3 The chairty shall make no claim on the property (this is becuase this was their original gift that failed)
2. Variation of the Will in favour of X (additional beneficiary)
2.1 The will shall be varied to be read and interpreted as if the Testator had included in the Will a legacy of X to X
(receipt if minor - from parents or guardian)
61
what's crucial to add in deed of variation
Executor's undertaking
'the executors undertake to administer the estate in accordance with the variations made by this deed'
62
writing back provision (tax) in deed of variation
The provisions of the Inheritance Act 1984 section 142(1) and the Taxation of Chargeable Gains Act 1992 section 62(2) shall apply to the variations effected by this deed
63
who signs deed of variation
1) original beneficiary changing their gift (+ witness)
2) executors (especially if change in tax) (+ witness)
3) any other beneficiary from ORIGINAL WILL being impacted (+ witness)
a new B who was not in original will DOES NOT sign
64
important thing to remember re gifts when drafting codicil
make sure to say which original clause the gift/youre talking about!
always end with 'I confirm the rest of my will'
65
intro drafting codicil
1. I am X of ADDRESS
2. This is the firm codicil to my will dated DATE OF WILL
3. I make the following amendments to my will:
(...)
4. I confirm the rest of my will
Signed by X in our joint presence and then by us in hers
66
what is the golden rule
get medical certificate if unsure about mental capacity of someone making will
67
main points intention (when making will)
presumption of knowledge and approval
specific intention and general intention
need to understand the extent of property and any moral claims ought to consider
68
2 types of mistake in a will and their effect
1) actual mistake (lack of knowledge and approval) = annuls clause
2) misunderstanding (eg solicitor did not understand)= does not annul
69
rights of Beneficiaires to compel due admin
1) check accounts and info (this is for anyone interest in estate) (can get court order if executor refuses)
2) can bring proceedings against admin of estate, especially after 1y
70
rights of Beneficiaires
1) lodge a caveat (PA8A)
2) citation to take probate (for when executors lost right to renounce intermeddling, force to take and then can apply to court to get letter w will annexed themselves)
3) citation to accept or refuse grant (before they have started doing something)
4) citation to propound will (authenticate will by tkaing grant of probate)
5) passing over court order (apply to court for order to pass to someone else) (best option for someone unwilling to act, rather than forcing-)
71
can you force an executor out?
NO, a beneficiary cannot
can try to apply for court for passing over order if the executor is not doing anything
72
action that can be taken against executor
1) devastavit claim - breach of fiduciary duty brought loss to estate (negligence, maladministration, misuse of asset)
2) breach of fiduciary duty (purchased from estate, changed gift to themselves)
73
defences against devastavit claim
1) acted honestly and reasonably
2) exclusion clause in will
3) B acquiesenced
74
limitation for claim of devastavit/ fiduciary
12 years, unless fraudulent (no breach)l
75
time limit creditors can seek from estate
6 years
76
types of claim beneficiary can take if asset has been given to someone else
1) proprietary claim (for the asset or the proceeds of sale)
2) personal claim (against a recipient of asset provided all remedies against PRs have been exhausted and theyre not bona fide purchaser)
--> good option is a personal claim against PRs and then personal/proprietary claim against recipient (eg if they still have asset)
77
what should a B do if they were wrongly paid as a result of PR negligence
1) sue on grounds of devastavit claim
2) bring a personal/proprietary claim against recipient of original gift (only funds not obtained from PR in step 1)
78
PRs rate for CGT
20%
28% on property
--> have annual exemption for the first 2 years (£3,000 x2)
disposal value - probate value - incidental costs - exemption = X.20%
79
PRs income tax
only if over £500
8.75% on dividends
20% on everything else BUT NO PERSONAL ALLOWANCE
--> can deduct interest paid on bank loan
80
IHT
40%
NRB is 325,000
likely to get CP's NRB, (same % you got from estate)
81
can PRs sell asset which form specific legacy?
generally incorrect
should either get B's consent, or sell assets which do not form part of specific legacies
82
when are Bs entitled to income
when the property vests in them (not when the right arises) BUT they are entitled to the whole income that has accrued retrospective to the time of death (and thus they are also liable for any income tax on the interest)
83
what happens if property is not distributed within end of executors' year
starts to accrue interest
84
exception to general rule that interest accrues from end of executors' year (on delayed distribution)
1- payment of debt
2- charged on land owned by testator
3- payable to minor child (for maintenance and if no other funds exist)
4- any minor (not necessarily child of the testator - for maintenance)
--> interest is payable on the pecuniary legacy from DATE OF DEATH
85
order of payment
1) funeral, testamentary expenses and debts
2) specific legacies
3) IHT and CGT
4) residuary estate
86
quirk about giving executor extra power
can add a clause in will to allow any situation which would consitute as self-conflict of interest (allows self-dealing, defeats claim of breach of fiduciary duty)
87
quirk about trusts of land (to trustees) (TLATA 1996)
this is the only situation where
1) there is a duty to consult B full of age and with interest in posession and give effect to their wishes (so far as consistent with best interest for the trust)
2) B can occupy even if not of full age if purpose of land is for their occupaiton --> you can't actually remove this, but may try to circumvent
88
what happens if testator makes gift to wife but only has CP
gift is not valid!!! they do not mean the same thign
89
impact of divorce on will
gift fails - as if had died
90
ademption
specific gift which is no longer owned
91
lapse
beneficiary died before T
92
what happens if if a gift is made in an old will but is then lost, and a codicil is made
the B takes the replacement property
my gold watch --> watch is stolen (gift failed for ademption)
BUT if you buy a new watch and then make a codicil, B is entitled to the new watch
93
what's the effect of suspicious circumstances on will
presumption of intention does not apply
94
burden in wills
law presumes the will is valid - you have grounds for presumption, burden is on person seeking to challenge
95
when does person seeking to rely on will have burden to prove its valid
when any of the presumptions do not apply (eg no attestation clause = have burden to provide affidavit)
96
spousal requirement in intestancy
must survive deceased for 28 days
97
distribution in intestacy where there is spouse/CP and issue
1) spouse takes chattels absolutely + tax free statutory legal (£322,000) + 50% of remaining
2) issue on statutory trust take rest of 50% remaining per stirpes
!! if total value of estate is under £322,000, then the spouse will take everything regardless of issue
98
does a partial intestacy impact what spouse would get?
no - if they get stuff under partial intestacy, the intestate part is still distributed according to normal rules and wife does not have to account for any gain from will (doesnt diminish her 322)
99
what's issue interest contingent on (intestacy)
forming CP/marrying or turning 18
if they die before reaching, if they have an issue who was living at time of testator's death, they will get the interest (also contingent)
100
what happens if issue does not satisfy contingencies for vesting interest (intestacy)
either lapses OR if they had an issue livign at the time of testator's death, issue get the interest (also contingent)
101
what happens if a B disclaims gift?
lapses - goes to residuary estate
UNLESS they have an issue (s33 kicks in)
** can't disclaim if have eg received interest from it
102
does a CP that turned into marriage revoke will?
NO
but a CP blank will revoke will like a marriage does (but here they were already CP when will was made)
103
'i leave my diamond necklace to my sister' and turns out I have 2 diamond necklaces
the gift FAILS for UNCERTAINTY
104
what happens if a will is lost/cannot be found
presumed to have been destroyed by T!! (if it was in T's possession)
if accidental, will need a copy + affidavit (or witness statement)
105
gross value of estate
literally everything
106
net value of estate
everything - debts and liabilities
107
qualifying net value of estate
everything - debts and liabilities - spouse/CP exemption
108
probate value of estate
only things that pass THROUGH PRs hands
(can also be net and gross)
109
what can you do if there are words included in will by mistake
apply to court to see if can allow probate to be granted without those words
otherwise challenge on basis that T did not have intention (knowledge and approval of will)
(this is because its not clerical error)
110
thing to be aware when establishing transferred value of PET/LCT
if you own a pair, establish whether its the combined value or the related property value which applies
111
NRB and RNRB
£325,000
£175,000 (to lienal or direct descendant)
111
exemptions for PET/LCT
1) spouse/charity exemption of 100%
2) 3k annual exemption (which can be carried forward 1y!! so may be 6k for one year)
3) if under £250 = exempt
4) wedding gift of 5k by parents/2.5k relatives/1k friends = exempt
112
reliefs IHT
1) UNLISTED shares: 100%
2) interest in unincorporated business: 100%
3) controlling (over 50%) interest in quoted shares: 50%
4)land/capital asset used in unincorporated business/incorporated with controlling interest: 50%
5) agricultural property relief
113
who has liability and burden of IHT
non-settled estate; PRs
(beneficiaries are liable)
settled estate: trustees
114
who has burden and liability for PETs
receiver is liable, but PRs become liable if unpaid within 12m
115
burden and liability for LCTs
transferor is primarily liable, but HMRC can also reclaim from trustees if unpaid
(if additional tax is needed after the person benefitting is primarily liable)
116
order of entitlement for grant of admin
1) executor
2) trustee of residuary
3) beneficiary of residuary
4) PR of B of residuary
5) any other B
6) PR of any other B
116
can administrators rennounce
yes, even if they have intermeddled w estate
+ cannot reserve power to administration
+ need at least 2 if trust over land or minor
117
small estate
GROSS value of estate
+
PET/LCT in last 7 years
+ exempt transfer (spouse or charity)
= do not exceed NRB (which can be higher if attracted CP's)
118
exempt estate
(bulk of estate attracts charity/spousal exemption)
gross value + specified transfer + LCT/PET 7y before are under £3m
And net chargeable estate does not exceed NRB
119
non-domiciled UK estate
deceased never domiciled in UK
120
what 'annuls' exempt and small estate
1) made transfer of unquoted shares
2) has over £100k in property outside UK
3) has over £250k in trust
4) no transfer in previous 7y exceeded £275k
5) no trust property over 1m
121
what do you have to do if youre an excepted estate to get grant
1) deceased's full name + date of death
2) declare that its an excepted estate and whether youre using CP NRB
3) give 3 IHT values (gross, net, net qualifying)
--> send this to HMCTS, who will then send to HMCR (within 1 month) (if no furhter info needed, safe to assume its ok)
122
what attracts instalment option (IHT)
- land
- shares (either type) which gave controlling power before
- interest in business
- unquoted shares which gave no control if holding over 10% nominal value and worth more than £20,000 + HMRC satisfied cannot pay in one sum (hardship) + amounts to at least 20% of IHT payable
123
order to pay debts
1) property undisposed of
2) residuary estate (leaving enough to pay pecuniary legacies)
3) property specifically left to pay debts with no direction to leftover money
4) property specifically left to pay ddebt with direction to leftover money
5) fund for pecuniary legacies
6) property specifically left to beneficiaries
124
