Wills

Question 1

1.1.1 EXECUTION OF WILLS

1. To make a valid will:

Answer 1

1. To make a valid will:
   i. the testator must have mental capacity
   ii. intention to make a will
   iii. The will must also be duly executed in accordance with s9 Wills Act 1837.

Question 2

1.1.2 EXECUTION OF WILLS

iv. A testator is presumed to have the necessary mental capacity to make a will…

Answer 2

…unless someone challenging the validity of the will can point to a lack of capacity.

Question 3

1.1.3 EXECUTION OF WILLS

v. A testator must have understood…

Answer 3

a) The nature of their act
(That they were making a will)
b) The extent of their property
c) Who a testator would normally give gifts to

NB. A court may deem a testator to have acted with capacity if the testator did not have adequate mental capacity at the date of executing the will, but had sufficient capacity when giving instructions to the drafter.

Question 4

1.1.4 EXECUTION OF WILLS

vi. Suspicious circumstances…

Answer 4

If there were suspicious circumstances*:
the gift will fail

unless evidence of the testator’s knowledge and approval of the gift is offered by the person putting forward the will:

*e.g. where the drafter benefits from the will.

Question 5

1.1.5 EXECUTION OF WILLS

vi. If a testator wants to give the solicitor a substantial gift in their will…

Answer 5

…the solicitor should refuse to draft the will including the legacy unless the testator has taken independent advice.

Question 6

1.2.1 EXECUTION OF WILLS

If a will is made as a consequence of force, fear, fraud or undue influence:

Answer 6

It is
i. not regarded as the act of the testator
and
ii. not admitted to probate.

Question 7

1.2.2 EXECUTION OF WILLS

ii. A will issued as a result of force or fear of injury

Answer 7

a) Is issued under duress

Question 8

1.2.3 EXECUTION OF WILLS

iii. Undue influence

Answer 8

a) Arises when something:
overpowers the testator’s volition;
it must be:
beyond mere persuasion.

Question 9

1.3.1 EXECUTION OF WILLS

iii. The will must also be duly executed in accordance with s9 Wills Act 1837.

Answer 9

a) in writing, and signed by the testator, or by some other person in his presence and by his direction; and
b) it appears that the testator intended by his signature to give effect to the will; and
c) the signature is made in the presence of 2 or more witnesses present at the same time; and
d) each witness
1. either attests and signs the will;
2. or acknowledges his signature,
e) in the presence of the testator
(but not necessarily in the presence of any other witness),

Question 10

1.3.2 EXECUTION OF WILLS

i. Signed by the testator:

Answer 10

a) A mark intended as a signature may be sufficient e.g. an unfinished signature, thumbprint, or signature stamp.
b) Signatures are usually at the end of the will but may be included in the body of the will.
c) A witness may sign for the testator if directed by the testator to do so

Question 11

1.3.3 EXECUTION OF WILLS

ii. Signed by the testator in the presence of two or more witnesses

Answer 11

a) The witnesses do not need to see the contents of the will or even be told that they are witnessing a will

Question 12

1.3.4 EXECUTION OF WILLS

iii. Signed by each witness in the presence of the testator
(but not necessarily in the presence of the other witness)

How do you prove?

Answer 12

a) An attestation clause should be included to confirm the above requirements i.e.
1. “signed by the testator in our presence and then by us in his”
b) If an attestation clause is not included, proof must be offered that these requirements were met.
= affidavit of due execution?

Question 13

1.4.1 EXECUTION OF WILLS

A will may identify another document that effectively becomes part of the will.

Answer 13

i. Such a document must exist at the date of the will and be referred to in the will as so existing, otherwise it cannot be incorporated.
ii. A future intention to make a list, schedule or memorandum does not suffice.

Question 14

2.1.1 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

1. A will can only be amended after it’s executed if:

Answer 14

i. The change is signed and witnessed in the same manner in which the entire will is witnessed.
ii. Generally unattested alterations are presumed to have been made after execution unless the the ‘alteration’ was just filling in a blank e.g. “I, Terry Testator, being of sound mind…”
iii. A will can be amended or partially revoked by codicil
i. A separate document which refers to the will and is executed like a will
ii. (more popular when wills were long handwritten documents).

Question 15

2.2.1 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

1. When can a will be revoked?

Answer 15

at any time before the testator’s death.

Question 16

2.2.2 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

i. If a testator marries after executing a will…

Answer 16

the will is automatically revoked

unless it appears from the will that, when it was made, the testator was expecting to marry a particular person

Question 17

2.2.3 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

ii. If a testator divorces their spouse after executing a will…

Answer 17

…the law treats the former spouse as having died on the date of the divorce

iii. Gifts to the former spouse are revoked, but the remainder of the will is valid

Question 18

2.2.4 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

iv. Destruction of a will by burning, tearing, or otherwise destroying the document…

Answer 18

revokes the will
i. The destruction must be by the testator or someone acting at the testator’s direction and in their presence
ii. The testator must have the intention to revoke at the time of destruction

Question 19

2.2.5 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

v. If a will is found mutilated after the testator’s death…

Answer 19

i. It will be presumed to have been mutilated by the testator
ii. with the intention to revoke,
iii. unless there is evidence to the contrary.

Question 20

2.2.6 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

vi. A destroyed will might be given effect if it’s proved that its destruction was contingent on a future event that didn’t occur

Answer 20

e.g. testator destroyed the old will intending to write a new one, but didn’t get around to it).

= the doctrine of dependent relative revocation…
= its revocation was dependent on related event which didn’t happen.

Question 21

2.2.7 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

vii. A new will revokes an earlier will:

Answer 21

i. To the extent that it is inconsistent with the earlier will.

Question 22

2.3.1 ALTERATION, AMENDMENT AND REVOCATION OF WILLS

3. If a testator has written a mutual will

(wills written by 2 people with clauses conferring reciprocal benefits):

Answer 22

i. The second to die can technically revoke their will.
ii. However, a constructive trust will be placed upon the estate in favour of any beneficiaries harmed by the changes to order a transfer to that person.

Question 23

3.1.1 INTERPRETATION OF WILLS

1. General Rule of when gifts in wills are given…

Answer 23

i. Gifts given in wills are treated as if they were given at the moment of death.
(unless the will shows a contrary intention).
ii. Collective gifts passes what is in the collection at the date of death
e.g. all of the jewellery owned at the date of death.
iii. The word ’my’ in an individual object, can indicate an intention only to give the specific object owned at the date of the will.
e.g. my car = my BMW at the date of the will, not my Mercedes at date of death.

Question 24

3.2.1 INTERPRETATION OF WILLS

2. 4 categories of gift:

Answer 24

i. A specific legacy
= specific item.
ii. A general legacy
= a BMW 3-series (even if not in the estate)
iii. A pecuniary legacy
= cash
iv. A residuary legacy
= A gift of everything that’s left in the deceased’s estate after giving the specific, general and pecuniary legacies, and paying all expenses of administering the estate.

Question 25

3.3.1 INTERPRETATION OF WILLS

3. If a beneficiary dies before the testator dies…

Answer 25

…the gift will fail (lapse)
and fall in to the residue
(Unless the testator included a substitution clause to name an alternative beneficiary)

Question 26

3.3.3 INTERPRETATION OF WILLS

ii. If the residuary gift lapses…
e.g. “I leave the residue of my estate to my good friend Edna” but Edna dies before the testator

Answer 26

…the residuary will pass through the laws of intestacy

Question 27

3.3.4 INTERPRETATION OF WILLS

iii. If 2 people (such as the testator and the beneficiary) die at the same time and it’s impossible to tell who dies first…

Answer 27

The older is deemed to have died first / the younger person is deemed to have survived the elder

the law of commorientes

Question 28

3.3.5 INTERPRETATION OF WILLS

iv. If the gift was made to issue of the testator and that beneficiary dies before the testator but leaves living issue…

Answer 28

the gift DOES NOT LAPSE and will go to the living issue:

Question 29

3.4.1 INTERPRETATION OF WILLS

4. If a will leaves a gift for a witness…

Answer 29

i. the will is valid
but the gift to the witness fails
ii. unless there are 2 other witnesses who are not beneficiaries:

Question 30

3.5.1 INTERPRETATION OF WILLS

5. A gift in a will to someone’s children:
   (Who is / isn’t included within “children”?)

Answer 30

i. INCLUDES the person’s legitimate, illegitimate and adopted children
ii. DOES NOT INCLUDE stepchildren i.e. children of testator’s spouse who were not adopted by testator.

Question 32

Intestacy Order

Answer 32

1. Spouse + No issue
= Spouse entitled to all decadent’s property
2. Spouse + Issue
= spouse entitled to tangibles + £270k + 50% of decadents remaining property, children split the rest
3. No spouse + Issue
= to decandent’s children
decedent’s parents
4. Decadent’s brothers / sisters of half blood
5. Decadent’s brothers / sisters of full blood
6. Grandparents
7. Uncles & aunts
8. Crown

Question 36

5. PROPERTY PASSING OUTSIDE THE WILL OR INTESTACY

Answer 36

1. Property owned as joint tenants automatically passes outside of the will by rules of survivorship.
2. Property owned as tenants in common or sole owner passes under the will or laws of intestacy
3. Life assurance policies pass to beneficiary named in the policy under contract law.
4. An interest in a trust fund passes according to the terms of the trust fund.

Question 37

8. PRE-GRANT PROCEDURE

Answer 37

1. PRs must pay IHT to obtain the grant of probate.
2. PRs can ask a bank / building society to pay IHT directly to HMRC (at the institution’s discretion.)
3. PRs can also ask bank / building society to pay funeral costs directly.
4. Or PRs can obtain a loan or sell estate assets

Question 38

9.1 APPLYING TO THE COURT FOR GRANT OF PROBATE

What should be included in an application for grant of probate?

Answer 38

An application for grant of probate should include
i. 2 copies of will
ii. Official copy of death certificate
iii. Tax form indicating that IHT has been paid or no IHT is payable
iv. Probate court fees

Question 39

9.2 what do you need to apply for a grant of letters of administration (with will attached)?

Answer 39

i. (2 copies of will if will attached)
ii. Official copy of death certificate
iii. Tax form indicating that IHT has been paid or no IHT is payable
iv. Probate court fees

Question 40

9.3 If there are any problems with execution of the will, or any unexecuted alterations

Answer 40

An affidavit of due execution must be provided witnessed by a witness or other person present when Will was executed.
Otherwise they will be presumed to have occurred after execution and be deemed to be ineffective.

Question 41

9.4 To prevent the issue of a grant of representation (READ IN DETAIL)

Answer 41

Individuals can register a caveat
i. if they think the will is invalid
ii. if the executor named lacks mental capacity

Caveats put the administration on hold for 6 months.
If the matter cannot be resolved the court may determine the issue.

Question 42

9.5 to accept or refuse a grant to a person with a prior right to a grant who has not applied / shows no intention of applying for a grant

READ IN DETAIL

Answer 42

An interested party may ask the probate registry to issue a citation

Question 43

10.1 Filing an inheritance account with HMRC (by the PR)

Deadline to file

Answer 43

1. PRs must file an inheritance account with HMRC within 12 months of the deceased’s death unless the estate is excepted.
   i. PRs will usually file the inheritance account sooner because interest starts accruing on taxes owed after 6-months and they cannot obtain a grant of probate or letters of administration until the tax has been paid.

Question 44

10.2 Filing an inheritance account with HMRC
Co-owned Land

Answer 44

If the deceased was a co-owner of land at their death, the value of the land will be discounted to reflect the difficulty of selling co-owned land.

NB. No discount is given if the land is co-owned by a spouse.

Question 45

10.3 Filing an inheritance account with HMRC - Small Estates

Answer 45

Generally if an estate does not exceed the IHT NRB of £325,000 it is deemed to be a small estate and no formal account is necessary.

Question 46

10.4 Filing an inheritance account with HMRC - Exempt Estates

Answer 46

an account is generally not necessary if an estate is worth less than £3 million but the net chargeable estate does not exceed the NRB (after deducting liabilities and any spouse or charity exemption)
= an exempt estate.

Question 47

10.5 Filing an inheritance account with HMRC

Exception of Non-UK Domiciled Decedent

Answer 47

The estate of a Non-UK domiciled decedent is excepted if their UK estate consists solely of cash and/or quoted shares which total no more than £150,000.

Q - what if it includes property?

Question 48

11.1 DUTIES OF PERSONAL REPRESENTATIVES

Answer 48

PRPDAR
1. Take reasonable steps to preserve the deceased’s estate.
2. Realise any investments which are not proper for the PR to retain.
3. Pay off debts from estate funds.
4. Distribute assets as per will or intestacy
5. Act in best interests of beneficiaries
6. Take reasonable care & skill taking into account any specialist knowledge.

Question 49

12. ADMINISTRATIVE POWERS OF PRs

Answer 49

1. Power to sell, mortgage, or lease estate property.
2. Power to appropriate / use an estate asset to satisfy another interest (provided that the beneficiary consents).
3. Power to appoint trustees for minor beneficiaries.
4. Power to insure estate property.
5. Power to delegate duties to agents.
6. Power to indemnify / reimburse themselves for expenses.
7. No statutory power to continue the deceased’s sole trade business (unless provided in will).
8. Power to invest according to the standard investment criteria i.e. Suitable and Diversified.
9. Power to advance income for maintenance, education or benefit.
10. Power to advance capital provided anyone with a prior life interest consents.
11. A sole trustee can give valid receipt for the proceeds of the sale of land. However if there is more than one PR, all must join for the transfer of land or shares in a company.

Question 50

13.1 PROTECTION OF PRs

S.?? Trustee Act 1925

Answer 50

S.27 Trustee Act
1. PRs are personally liable to any unpaid beneficiary or creditor, unless they comply with S.27 Trustee Act 1925.
i. Place advert in London Gazette, local paper, appropriate trade publication, and
ii. request any interested party to come forward within 2-months.

Question 51

13.2 PROTECTION OF PRs

If a PR cannot find a known beneficiary or creditor

Benjamin Button

Answer 51

i. Make payment to the court and distribute the rest of the estate.
ii. Distribute everything with an indemnity from beneficiaries.
iii. Seek a Benjamin Order = Court Order to proceed on assumption known beneficiary is deceased.
iv. Purchase insurance
v. If a PR is worried about a possible claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975 they should wait 6 months from the date of the grant (because a claim cannot be made after this time).

Question 52

14.1 COLLECTING & REALISING ASSETS

money in
+
payment of creditors

Answer 52

1. PRs priority is to raise sufficient funds to pay off any loan taken to pay IHT.
2. Unsecured debts owed to the deceased should be collected as soon as possible (taking legal action if required).
3. PRs should not sell any property specifically gifted in the will to pay debts unless other assets have been exhausted.
4. PRs must pay estate creditors before distributing the estate to the beneficiaries.

Question 53

14.2 COLLECTING & REALISING ASSETS

if an estate is insolvent

i.e. doesn’t have sufficient funds to pay funeral, testamentary and administration expenses, debts and other liabilities in full

Answer 53

If an estate is insolvent debts should be paid in following order:
1. Secured debts should be paid first.
2. Unsecured debts should be paid in the following order:
i. Reasonable funeral and administration expenses
ii. Preferred debts – wages, salaries and deceased’s employees in the 4 months prior to death up to a maximum of £800.
iii. Ordinary debts – including money owed to HMRC and the balance of preferred debts.
iv. Interest on preferred and ordinary debts.
v. Deferred debts – i.e. loans from the deceased’s spouse.
vi. If a PR pays a category of debt knowing there are higher ranking debts, the PR is personally liable if the assets aren’t sufficient to pay the higher ranking debt.

Question 54

15.1 POST-DEATH CHANGES

What are the 2 methods to change dispositions of an estate after the deceased’s death?

Answer 54

1. Disclaimer - allows a beneficiary to disclaim / reject a gift, in which case the gift falls into the residue.
2. Variation - allows a beneficiary to reject a gift and control who receives it.

Question 55

15.1.1 POST-DEATH CHANGES

Answer 55

1. Disclaimer - allows a beneficiary to disclaim / reject a gift, in which case the gift falls into the residue.
   i. If the last or sole beneficiary of the residue disclaims, the residue passes through intestacy.
   ii. A disclaimer of a gift under a will does not prevent the person disclaiming from receiving the property under the intestacy rules.

Question 56

15.1.2 POST-DEATH CHANGES

Variation

Answer 56

2. Variation - allows a beneficiary to reject a gift and control who receives it.
   i. 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 the property to the new beneficiary.
   ii. If the above conditions are not met, the gift will be treated as a transfer of value for IHT and a deemed disposal for CGT by the original beneficiary.

Question 57

16.1 PAYMENT OF LEGACIES

how to vest gifts in beneficiaries

Answer 57

The method PRs use to vest gifts in beneficiaries varies according to the type of property being transferred:
i. Chattels - Transfer is achieved by delivery in return for a receipt
ii. Company shares – A stock transfer form should be completed and sent with an office copy of the grant and share certificate.
iii. Land – Transfer requires an assent in writing and the beneficiary must register their interest at HMLR.

Question 58

16.2 PAYMENT OF LEGACIES

practicalities 1

Answer 58

2. Costs of transfer are borne by the beneficiary (unless the will says otherwise).
3. Beneficiaries are entitled to income from property gifted to them arising after the deceased’s death.
4. The will usually states the source from which pecuniary gifts are to be paid (normally from the residue).
5. When estate funds or assets are not sufficient to pay the legacies in full, like debts of the same rank, the legacies shall abate in proportion.
6. A beneficiary can ask the PRs to use a particular asset to satisfy a pecuniary legacy (appropriation).

Question 59

16.3 PAYMENT OF LEGACIES

practicalities
Gifts to minors

Answer 59

7. A minor generally cannot give valid receipt for a gift unless the will provides otherwise.
   Alternatively, PRs may:
   i. Accept a receipt from the minor’s parents.
   ii. Hold the property until the minor reaches 18 years of age.
   iii. Appoint a trustee to receive and hold the property until the child attains 18 years of age

Question 60

17. ASCERTAINING THE RESIDUE

i. PRs calculate IHT and withold amount to cover
ii. Beneficiaries endorse estate accounts
iii. Beneficiaries discharge PRS with an agreement to indemnify.

Answer 60

1. Before distributing the residue to the residuary beneficiaries, the PRs must calculate any tax liability for which they are responsible and withhold an amount to cover the liability.
2. PRs generally cannot charge for acting except:
   iii. if the will authorises it.
   iv. by agreement with the beneficiaries.
3. PRs prepare estate accounts to show residuary beneficiaries what is available to them.
   i. Residuary beneficiaries endorse the accounts and discharge the PRs with an agreement to indemnify them against all claims and demands.
   ii. If a beneficiary refuses to approve the accounts, the PRs may ask the court to approve them or pay the beneficiary’s share into court.

Question 61

18. ASSENTS

Answer 61

1. An assent by the PRs vests the legal title to the asset in the beneficiary
2. An assent relates back to the date of death i.e. the property is treated as belonging to the beneficiary from the date of death.
3. An assent must be in writing, signed by the PRs and name the person in whose favour it is given.
4. HMLR must be notified of the change of land ownership from the deceased to either the PRs or the beneficiary.

Question 62

19. BENEFICIARIES’ RIGHTS AND REMEDIES

Answer 62

1. Beneficiaries do not have a legal and equitable interest in the estate assets before administration of the estate is completed, they only have a right to have the estate properly administered.
2. A beneficiary can bring a personal action against a PR, but a PR will not be liable if they acted “honestly, reasonably and ought fairly to be excused”.
3. A beneficiary may use a tracing claim against the recipient to recover property which the PRs have wrongly transferred to someone else.

Question 63

20. CLAIMS AGAINST ESTATES UNDER INHERITANCE (PROVISION FOR FAMILY & DEPENDANTS ACT 1975)
21. What does the Inheritance (provision for Family & Dependants Act) 1975 Act provide?

Answer 63

a. Under the act an application for family provision claim may be made to the court:
i. to set aside the terms of a will or vary an intestacy of a person who died domiciled in England and Wales
ii. on the grounds that reasonable financial provision has not been made for the applicant.

Question 64

20. CLAIMS AGAINST ESTATES UNDER INHERITANCE (PROVISION FOR FAMILY & DEPENDANTS ACT 1975)
21. How long do you have to make a claim under the Inheritance (provision for Family & Dependants Act) 1975?

Answer 64

A claim must typically be made within six months from the date of the grant.

Question 65

20. CLAIMS AGAINST ESTATES UNDER INHERITANCE (PROVISION FOR FAMILY & DEPENDANTS ACT 1975)
21. Who can make a claim under the Inheritance (provision for Family & Dependants Act) 1975?

Answer 65

a. The surviving spouse or civil partner
b. A former spouse or civil partner who has not remarried nor formed a civil partnership
(nb. can be barred if a ‘clean break’ divorce.)
c. A child / person treated as child of the deceased
d. A person who was being maintained wholly or partly by the deceased.
e. A person who was living with the deceased for the whole 2-year period before the death as the spouse, civil partner or same-sex partner of the deceased.

Question 66

20. CLAIMS AGAINST ESTATES UNDER INHERITANCE (PROVISION FOR FAMILY & DEPENDANTS ACT 1975)
21. What are the standard of reasonable financial provision under the Inheritance (provision for Family & Dependants Act) 1975?

Answer 66

a. Spouse applicant = what would be reasonable in all the circumstances whether or not required for their maintenance.
b. Other applicants = such provision required for their maintenance such that they can live decently and comfortably according to their situation.

Question 67

20. CLAIMS AGAINST ESTATES UNDER INHERITANCE (PROVISION FOR FAMILY & DEPENDANTS ACT 1975)
21. What happens If the court approves an application for family provisions claim under the Inheritance (provision for Family & Dependants Act) 1975?

Answer 67

a. The estate devolves according to the terms of the court’s order and not in accordance with the will / rules on intestacy.
b. The court has a wide discretion and has the power to make the following orders:
i. Transfer of property
ii. Payment of a lump sum
iii. Payment of income
iv. Settlement of property on trust

Question 68

21. IHT

Answer 68

Check what was supposed to be here

Question 69

22. TAXATION OF ESTATES IN ADMINISTRATION

Answer 69

1. PRs must complete the deceased’s income tax return from 6 April to the date of death and pay any amount owed.
   i. The return will also include any CGT in the year of death.
2. If an estate generates income or capital gains during administration, the PRs will submit tax returns detailing any income and gains accruing.
3. Rates
   i. Non-savings income (trading income, rental profits, employment income, and pension income) and interest @ 20%
   ii. Dividends @ 7.5%
   4. Capital gains:
   i. PRs are deemed to acquire the assets at the date of death at their market value at death (probate value).
   ii. The PRs are liable to capital gains tax on any gains made during the administration.
   5. Distribution
   i. A distribution of an asset by the PRs to a beneficiary under the will is not treated as a disposal for CGT.

Question 70

Week 1 – 03/6/2024 - 01.01
Interview
Taking instructions when someone has died

Answer 70

1. Date of Death > has Death Certificate been received?
2. Circumstances of Death
3. Family Tree
4. Will
   * Did the deceased have a will?
   * Contents
   i. Assets - how owned
   ii. Beneficiaries
5. Potential claims against the estate
   * Inheritance Provision for Family Dependants Act 1975
   * was deceased was maintaining an elderly relative?
   * = Is there anybody who’s not provided for the will or under the intestacy rules that could make a potential claim against the estate?

Question 71

Week 1 – 03/6/2024 - 01.02
IHT and Jointly Owned Property
= Joint Tenants are still liable to IHT

Answer 71

• Real property and personal assets like bank accounts can be held jointly.
• If a property is held as tenants in common, each tenant has their own defined share that will be included in their inheritance tax estate.
• If an asset like a bank account or property is held as beneficial joint tenants, it passes automatically to the survivor on death regardless of a will.
• However, the deceased’s notional half share of the jointly held asset is still included in their estate for calculating inheritance tax liability. This prevents people from avoiding inheritance tax by holding all assets jointly.

Question 72

Week 1 – 03/6/2024 - 01.03
How to calculate IHT on death (when someone dies)

Answer 72

1. Estate
2. Value
3. Exemptions
i. Is anything passing to a spouse?
ii. Is anything passing to charity?
4. Reliefs
i. Does business property relief apply?
ii. Does agricultural property relief?
iii. If it does, reduce the value of those assets down either by 50% or 100%.
5. NRB @ [£325,000]
6. Lifetime Gifts in last 7 years
7. Tax @ 40%

Question 73

Week 1 – 03/6/2024 - 01.04
IHT
when somebody continues to benefit from something after transferring ownership…

Answer 73

1. 7-year rule
if a donor survives 7 years after gifting an asset, it is not included in their inheritance tax estate.
2. Gifts with reservation of benefit
= gifts where the donor continues to benefit from the gifted asset after transferring ownership in order to avoid inheritance tax.
3. Assets gifted with reservation of benefit are still included in the donor’s inheritance tax estate at their value on the date of death (not the value when originally gifted).
4. The reservation of benefit rules can only be avoided by paying a full market rent to use the gifted asset.

Question 74

Week 1 – 03/6/2024 - 01.05
Beneficial entitlement
= who gets what when someone dies

Answer 74

1. First consider any assets that pass under their own rules of succession
* Jointly owned assets
* Trust assets:
* Life insurance policies

2. If there’s a valid will:
* consider whether all of the assets of the estate pass under the will, and to whom they pass.

3. Partial Intestacy
* Consider whether any of the assets pass under the intestacy rules.

4. Total Intestacy
* If there’s no will or the will is invalid = the assets of the estate will pass under the intestacy rules,
other than those which pass under their own rules of succession.

Question 75

Week 1 – 03/6/2024 - 01.06
Survivorship Provisions in Wills

Why include?

Answer 75

1. Under a will there is no automatic or statutory survivorship period.

i. if the client wants to include a survivorship period so that the beneficiary can only if they survive the deceased for say 28 days, then that needs to be expressly provided for.

ii. Advantages of including a survivorship period:
i. Usually used with spouses or civil partners, so that if they died in quick succession, then there would be no need to administer the estate twice

2. Whereas under the intestacy rules = there is a statutory survivorship period of 28 days
   i. for spouses or civil partners.

Question 76

When 2 people die at exactly the same time

Answer 76

Commorientes Rule ‘simultaneous deaths’ rule (S184 of the Law of Property Act 1925):

“In all cases where… two or more persons have died in circumstances rendering it uncertain which of them survived the other or others, such deaths shall (subject to any order of the court), for all purposes affecting the title to property, be presumed to have occurred in order of seniority, and accordingly the younger shall be deemed to have survived the elder.”

Question 77

11.2 PR liability

Answer 77

7. PRs may be liable to the estate for any losses resulting from breach of duty.
8. PRs NOT LIABLE for breach by another PR, unless PR was negligent in preventing the other’s breach.

Question 78

02.05
Wills – Why do married couples have a total NRB of £1million?

Answer 78

• NRB @ £325k + Transferable NRB @ £325k = £650k
  (because the spouse exemption applied)
• RNRB @ £175k + Transferable RNRB @ £175k = £350k
  (on property passing to children)
  = TOTAL £1,000,000

Question 79

video 02.05
Wills
Transferable NRB is based on…

Answer 79

The percentage unused,
not the amount unused

Question 80

video 02.07.1
Wills – Executors and Trustees
Executors…

Answer 80

Executors administer the estate:
* completing IHT forms
* applying for grant of probate / grant of representaion
* collecting assets
* distributing assets according to the will.
* Their role ends once the estate is administered.

Question 81

video 02.07.2
Wills – Executors and Trustees
Trustees…

Answer 81

Trustees administer any trusts set up in the will on an ongoing basis e.g.
* invest in accordance with their duty to invest
* ensure that the beneficiaries receive what they’re entitled to,
* or exercise their discretion for a discretionary trust
* attend trustee meetings
* complete trustee accounts and tax returns on an ongoing basis.

Question 82

video 02.07.3
Wills – Executors and Trustees
often the same
/ how many trustees are required for a trust?

Answer 82

It is common for the same people appointed as executors to also be appointed as trustees if a trust exists.
At least two trustees are typically required if there is a trust.

Question 83

video 02.08
Wills – Using Trusts in Wills

3 types of trusts commonly used in wills:

Answer 83

1. Contingent trusts
i. where assets are left to beneficiaries contingent on them reaching a certain age 21

2. Life interest trusts
i. where a beneficiary receives the income from assets for life and the capital passes to remainder beneficiaries after their death

3. Discretionary trusts
i. where trustees are given flexibility to decide who benefits and how much after the testator’s death

Question 84

video 02.09
Wills – IHT and life interest trusts

Answer 84

• For IHT purposes, if a deceased person was a life tenant of a life interest trust, their entitlement to the income is treated the same as owning the capital/assets in the trust.
• Therefore, the full capital value of the trust fund must be included in the deceased’s estate for calculating the overall IHT liability, even though they did not own the capital outright.

Question 85

video 03.01
Wills – The Structure of a typical will

Answer 85

if somebody dies and they were the beneficiary of a discretionary trust than for IHT purposes:
- no part of that discretionary trust is included within their inheritance tax estate
(because they were not entitled to anything from the trust)

Question 86

03.01
Wills
The Structure of a typical will

Answer 86

1. Preamble
* Name and address of the testator
* Refer to the document as a will = raises presumption of knowledge and approval.
* Date
* Revocation clause

2. Disposal of body

3. Appointment
* of executors (and trustees)

4. The dispositive / giving away
* Specific gifts
* Residuary gifts

5. Any additional powers and administrative provisions

6. Attestation clause

Question 87

Video 03.02
Wills
A solicitor’s duty to advise on will execution requirements

Answer 87

• Solicitors are under a duty to explain to clients how to execute the will correctly.
• Solicitors are also under a duty to check that the will, at least on the face of it, appears to have been executed correctly.

NB. a solicitor who doesn’t do that runs a risk of being found negligent to a beneficiary who misses out as a result of that negligence.