Wills 18

Question 1

Which 3 accounts comprise estate accounts?

Answer 1

• Income account* Capital account and* Distribution accountThese are often accompanied by a commentary, a copy of the will and other relevant documents e.g. death certificate

Question 2

Is there a prescribed format for estate accounts?

Answer 2

No but they must be clear and easy to understand. In some cases the income, distribution and capital accounts are combined

Question 3

When are separate income and capital accounts required?

Answer 3

When there is a life interest in the residue

Question 4

In which account are the following types of income recorded:* Income that relates to the period before death but is received post-death * Post-death income

Answer 4

• Income that relates to the period before death but is received post-death: capital account* Post-death income: income account.

Question 5

To which type of beneficiary are estate accounts of particular interest?

Answer 5

Residuary beneficiaries to know what is available to them.

Question 6

What types of things are recorded in the estate accounts?

Answer 6

• IHT paid* Expenses incurred during the administration period, such as funeral expenses, valuation fees etc* How the assets have been distributed to the other beneficiaries* Income received during the administration period such as dividends, interest, rental income from property, and other types of income.

Question 7

What is a ‘commentary’ in the estate accounts?

Answer 7

A document that accompanies the estate accounts to assist the beneficiaries and:* identifies the gross and net values of the estate; * indicates the estate’s disposition; and * deals with any other relevant matters, such as interim distributions and distributions in specie.It also usually details the name of the deceased, dates of death and the grant, and details of bequests made in the will.

Question 8

What is the purpose of the income account of the estate accounts?

Answer 8

The income account should: * Provide details of income receipts* Itemise details of expenditure from income (e.g. income tax, interest paid on legacies) and * Show the net amount to be distributed

Question 9

What is the purpose of the capital account of the estate accounts?

Answer 9

The capital account should: * Itemise all assets at probate value* Show any sales by the PRs* Provide details of all liabilities discharged, pecuniary and specific legacies and expenses paid including all taxes and * Show the balance available for distribution

Question 10

What is the purpose of the distribution account of the estate accounts?

Answer 10

To show how the beneficiary’s entitlement is to be met. The account will include interim distributions and may inclued a schedule of investments.

Question 11

How are PRs discharged?

Answer 11

• The PRs usually endorse (i.e. sign them) the accounts to indicate their approval. * The accounts are then sent to the residuary beneficiaries for them to endorse - and for them to formally discharge the PRs with an agreement to indemnify them against all claims and demands. * If a beneficiary refuses to approve the accounts (and doesn’t take administrative action to have them examined), the PRs may ask the court to approve them or may pay the beneficiary’s share into court.