Wills Flashcards
Specific legacy
gift of a specified part of the estate that is clearly identified at time of execution
subject to ademption: so if it doesn’t exist at date of death–>fails/adeems
General legacy
Doesn’t identify a particular item
ademption doesn’t apply so if the object (such as BMW car) isn’t in the estate, can require executors to purchase one if they have sufficient funds
Pecuniary legacy
gift of cash
Demonstrative legacy
general legacy that identifies the source from which the gift is to be made
Residuary legacy
everything that is left of the estate not otherwise disposed of or taken up by payment of liabilities
Ademption
a gift will adeem if it is no longer part of the estate, subject to binding contract for sale or no longer meets description in will
change in substance causes ademption - change in name or format does not
Lapse
gift lapses if beneficiary predeceases testator
if substitutional gift included, will go to substitutional beneficiary. otherwise, falls into residue
if residual gift lapses, passes under intestacy
Beneficiaries/objects of will are determined at date of:
will’s execution
Gifts in will takes place as if executed:
immediately before death, unless superseded by words like “now” or “at present”
per stirpes
‘through the root’, issue receive/split deceased person’s share
When does class normally close?
when at least one beneficiary has a vested interest
Class gift
gift of property to be divided amount beneficiaries who fit a general description -
Grant of representation
legal document that confirms a person’s ability/right to administer the estate of the deceased
Grant de bonis non
second grant to allow for completion of administration of estate
following death of last PR or when previous grant revoked
granted to whoever would have been entitled if original PR had never taken the grant
not needed if there is a chain of representation
Chain of representation
when executor dies and their executor takes grant of probate
Power to appropriate/appropriation
use of an asset to satisfy a legacy or interest in the estate provided the beneficiary consents and no specific beneficiary is affected
PR’s cannot make an appropriation in their own favour except cash or equivalent unless allowed to do so in the will
“Small gifts” for IHT
up to £250, can give to as many people as you want
“all or nothing” exception: if gift £300, whole £300 is the transfer, not just the amount over £250H
Lifetime gifts on marriage limits for exemption
parent: up to £5000
grandparent: up to £2500
bridge to groom or vice versa: £2,500
all others: £1,000
per marriage
not “all or nothing” so only excess above limits are transfers of value for IHT
Potentially Exempt Transfer
not covered by an exemption, will not give rise to lifetime IHT charge but if the donor dies within 7 years, will become chargeable and any tax due will become payable by the recepient
Tax rates for CLTs
if the donor pays, 25%
if the trustees pay, 20%
in intestacy, survived by spouse and children, how is property split?
spouse gets all tangible moveable property (not money, investments and business property), £322,000 and half remaining property.
children split the rest
spouse can require PR to give them the matrimonial home in partial or total satisfaction of the spouse’s interest (will have to pay over difference if worth more than their share)
How can PRs protect themselves from liability against unknown claims?
placing ads in the London Gazette, a newspaper local to the area in which any land forming part of the estate is situated and any other appropriate newspaper (for ex. trade journal) requesting any person interested contact within 2 months minimum
What can PRs do if they cannot find a known beneficiary or creditor?
making the payment into court and distribute the rest
distribute everything with an indemnity from the beneficiaries
seek a Benjamin Order
purchase insurance against risk of missing claimant appearing
Benjamin Order
Court order giving PRs leave to distribute estate based on assumption set out in the order (for ex that the missing beneficiary should be treated as having died before the deceased)
requirements for valid will
had capacity when will was made
intended to make a will
executed properly
test for capacity
- testator understood:
nature of act: what they are doing and its significance - extent of assets
- claims to which they ought to give effect: who they would ordinarily give wills to
2 parts of intention
general and specfiic
intention to make a will and specific to make that particular will
exceptions to presumption of knowledge and approval of will
- testator blind, illiterate or signed on their behalf
so include attestation clause saying it’s been read to them
- suspicious circumstances
person benefitting will have to prove the intention in these circs if challenged
ways to pay IH liability before grant of probate
banks pay HMRC directly
loan from bank or beneficiary
life assurance policy proceeds
sell estate assets
what included in grant application
will plus 2 copies
official copy of death certificate
further supporting docs (for ex affidavit if no attestation clause, of full name, about any alterations)
tax form
payment for probate fees
caveat
prevent issue of grant of representation
citation to take probate
used when exec inter-meddled but not applied for grant and don’t intend to
once cited, must proceed w application for probate
if they refuse, citor can apply for order allowing executor to be passed over. can lead to grant of admin w will annexed
citation to accept or refuse grant
to clear off someone with prior right and shows no intention of applying for grant
if they don’t take it up after being cited, can be taken by citor
excepted estate
no IHT due (usually as under threshold)
formal IHT account not needed to be filed with HMRC unless HMRC request it
