Wills

Question 1

Will Requirements

Answer 1

• It is in writing (and signed)
• The testator intended by his signature to give effect to the will.
• The signature is made/acknowledged in the presence of two others.
• Each witness attests and signs the will, acknowledges the signature.

Question 2

General Rule (Identifying Beneficiaries)

Answer 2

References to beneficiaries are construed as people alive at the time of the wills execution. If the will contains a gift say to “the eldest daughter” it means that which fulfilled the description at the time the will was made.

Question 3

What if a beneficiary witnesses the will?

Answer 3

If a beneficiary (or spouse/civil partner) acts as a witness, the gift to the beneficiary will fail, as a witness should be impartial.

Question 4

What happens to the will after divorce?

Answer 4

If the marriage is dissolved, annulled or declared void, it will be as if the former spouse/civil partner has died.

Question 5

Section 33 Wills Act 1987

Answer 5

All gifts by will to the testators children have an implied substitution provision, which provides that where a will contains a gift to the child, and the child dies, the gift will pass to their children (if alive).

Question 6

Destruction of WIll

Answer 6

May be revoked by ‘burning, tearing or otherwise destroying the same by the testator or by some person in his presence and by his direction with the intention of revoking the same’.

• Destruction of the will AND intention to do so.

Question 7

Marriage/Civil Partnership affect on Will

Answer 7

If the testator marries or forms a civil partnership after executing the will, the will is revoked. HOWEVER the rule does not apply where it appears that the testator makes the will prior to, and in expectation of, a forthcoming marriage to a particular person.

• Remember that upon divorce, it will be as if that partner has died for the purposes of the will.

Question 8

Alterations to the will

Answer 8

Alterations made after the will was executed will be valid if those alterations were themselves executed like a will. Where an invalid alteration has been made, the original wording will stand PROVIDED that it can be deciphered.

If the original meaning is obliterated, and new words are put in (but not properly) then the Conditional Revocation Rule will apply. This means that the original wording will apply.

Question 9

Intestacy (and a surviving partner)

Answer 9

• The spouse receives a ‘statutory legacy’ of £322,000.
• The rest of the residuary estate is divided in half – Half on trust for the spouse/civil partner, and the other half is held to be issued.

The spouse must survive the intestate for 28 days in order to inherit.

Question 10

Inheritance Tax, Costs and Charges

Answer 10

Inheritance Tax: Default position is that the IHT on the individual legacies is paid out of the residuary estate.

Costs: Costs associated with packing/transport of a gift are borne by the beneficiary.

Charges: Section 35 Administration of Estates Act 1925 – The mortgage debt falls on the beneficiary who receives the charged property (unless stated otherwise)

Question 11

Power to use income for the maintenance of beneficiaries

Answer 11

• If under 18, then Section 31 TA 1925 gives the power to use income for the minor’s maintenance, education or benefit.
• If ages over 18, then the trustees have a duty to pay future income to that beneficiary.

Question 12

Power to use capital for the advancement of beneficiaries

Answer 12

• Section 31 TA 1925 – A beneficiary can get a payment of trust capital soner than they would have received this
• Before Inheritance and Trustees’ Powers Act 2015 – This was restricted to one-half of the beneficiaries share of capital

Question 13

Control of Trustees

Answer 13

• Section 19 TLATA 1996 provides that when the beneficiaries are all of full age, they may direct the trustees to retire and appoint new trustees.

Question 14

IHT - Spouse Exemption

Answer 14

Any property included in the estate, is exempt if it passes to the deceased spouse/civil partner under the deceased will or intestacy, or by survivorship (if joint property).

Question 15

IHT - Business Property Relief

Answer 15

• Reduction of 100% for a business/interest in a business OR company shares not listed on a recognised stock exchange.
• Reduction of 50% for company shares listed on a recognised stock exchange OR land, buildings, machinery or plant owned by the transferor personally but used for business purposes.

Question 16

Agricultural Property Relief

Answer 16

A reduction of 100% is allowed where either (broadly) the transferor had the right to vacant possession immediately before the transfer or where the property was subject to a letting commencing on or after 1 September 1995. A reduction of 50% is allowed in other cases.

Question 17

Tax Bands

Answer 17

• Nil Rate Band – The first £325,000 is free from tax (anything above is charged at 40%.
• Resident Nil Rate Band - £175,000 if you have lived at the property, as your primary residence, for two years prior to death. When the estate is valued at over £2m, then the RNRB is reduced by £1 for every £2 over the threshold.

Question 18

Exempt Transfers

Answer 18

Annual Exemption: £3,000 in each tax year. Any unused annual exemption may be carried forward for one year only so that a maximum exemption of £6,000 may be available.

Question 19

IHT Installements

Answer 19

Some property, such as land and certain types of business property, attracts the instalment option. Any tax attributable to instalment option property may be paid in 10 equal yearly instalments, the first falling due six months after the end of the month of death.
1. Land
2. A business
3. Potentially Shares

Question 20

Amending Will Post Death

Answer 20

In order to read back to the deceased’s death for IHT and/or CGT so that it is treated as though the deceased gave the property direct to the new beneficiary the disclaimer or variation must be made:
- in writing;
- within two years of the deceased’s death;
- not for consideration in money or money’s worth; and
- in the case of a variation, it must contain an election that it is to be read back for IHT and/or CGT.

Question 21

Who can claim under Inheritance (Provision for Family and Dependants Act) 1975

Answer 21

• A spouse or civil partner.
• A child (including adult children and adopted children as well sometimes, stepchildren).
• A former spouse or civil partner (if they have not remarried).
• A cohabitee (if they lived with deceased for at least 2 years before they passed away).
• Any person who was financially maintained by the deceased.

Question 22

How to apply for Probate?

Answer 22

To apply, send a PA1P or PA1A as appropriate to MCTS alongside the deceased’s will and codicil, additional evidence and probate fee.

Question 23

Payment of IHT

Answer 23

Inheritance Tax is due six months after the end of the month in which the deceased died. If you choose the instalment option for property then you must pay the first within 6 months of the end of the month of death, with the other 9 annually afterwards. Non-instalment option will be required to be paid before the grant is given.

Question 24

What if the executors won’t act?

Answer 24

If there is a valid will, but no executor able/willing to act, the grant will be one of letters of administration – Residuary Beneficiaries have the best right under this.

Question 25

Inheritance Tax (Deadlines)

Answer 25

IHT 400 - This is an inventory of the assets/liabilities the deceased had and is due within 12 months of the end of the month in which the death occurred. Usually, PR’s try and do so within six months to comply with IHT time limits for interest.

Question 26

Creditors that they are unaware/unknown relatives

Answer 26

To stop yourself being liable, the PR’s must wait two months, before distributing the estate. The claimant will then only have the right to claim back the assets from the beneficiary who received them.

The PR’s must advertise for two months in the London Gazette; a newspaper in the district; such other like notices as would be directed by the court.

Question 27

What if you don’t know the whereabouts of the beneficiary?

Answer 27

There is no protection to PR’s who know that there is a person with a claim but cannot find them. The PR will need to
a) Keep back assets in case the claimant appears.
b) Take an indemnity from the beneficiaries that they will meet any claims if they reappear.
c) Take out insurance to provide the funds.
d) Apply to the court for an order authorising the PR to distribute the estate on the basis that the claimant is dead.

Question 28

Could there be a successful claim under the Inheritance Act and how does this impact?

Answer 28

They will be personally liable if there is a successful claim for ‘reasonable financial provision’ from the estate. PR’s should ensure they retain sufficient assets, or wait more than six months following the date of the grant.

Question 29

PA1A

Answer 29

Application form if there is no will