Wills Flashcards
What is the order of priority for an application for grant of letters of administration with will annexed?
a. executor
b. trustee of residuary estate, or
c. any other residuary beneficiary under will or anyone entitled to residuary via intestate
d. (if none of above) PRs of beneficiary (B in C) NOT life tenant of residue
e. (if none above) any other beneficiary or creditor
f. any PRs of beneficiary or creditor in (e)
What business property qualifies for 50% BRP Relief from IHT?
a. Company shares listed on a recognised stock exchange where the testator had voting control immediately before death and
b. Land, buildings, machinery or plant owned by the transferor personally but used for building purposes (by a partnership of which the transferor is a member or a company whether quoted or unquoted of which the transfer has voting control).
Voting control means ability to exercise over 50% of votes in all resolutions. Voting control can be met by considering the combined shareholding of the spouse and the deceased. If it is over 50% then their combined share has voting control.
AND
The assets must have been owned by the transferor for a period of two years
What is a citation?
A method of forcing the party with the right to grant to act
If there is a cause of action against the deceased, do the PRs take on the cause of action? If so, what is the limitation period?
Yes because PRs take on all of the debts and liabilities of the deceased.
PRs must also perform the deceased’s contracts.
They will only be liable to the extent of the deceased’s assets.
The limitation period is six years
Who can make applications to the court to remove or replace PRs?
PRs or Beneficiaries
Must ensure one PR is left
Court main consideration: welfare of beneficiaries
Can profits that would ordinary be a breach of fiduciary duty be authorised and by whom?
Profits may be authorised by a provision in the deceased’s will,
A court order or
The consent of all the beneficiaries who must be aged 18 or over.
Who can bring administration proceedings?
Anyone with an interest in the estate: beneficiaries, creditors and PRs
Do beneficiaries have a right to demand inspection of accounts?
Beneficiaries have a right to demand inspection of accounts (records of receipts and payments kept by PRs throughout the administration). If the PRs refuse to comply, the beneficiaries can apply for a court order.
What is a citation to take probate?
This may be applicable where an executor has lost their right to renounce probate by intermeddling in the estate but has not applied for grant of probate and will not do so.
Once they have been cited, they have to take out the grant.
If they do not take out the grant without good reason, the citor can apply to court to get the executor to be passed over. If there is no other executor, the grant to take out would then be a grant of letters of administration with with will annexed
What is a citation to accept or refuse a grant?
This is the standard method of clearing off a person with prior right to a type of grant who has not applied and shows no intention of applying for a grant.
If the person cited does not take steps to take out the grant, the grant may be issued to the citor.
What can be done to prevent the issue of a grant e.g. in a situation where someone needs more time to investigate the situation?
If a person has just cause to dispute the validity of a will or has another reason why the grant should not be issued, they can lodge a caveat at HMCTS. Other reasons could be a beneficiary not believing the executor has the capacity to act.
How long does a caveat last?
A caveat lasts for six months although its duration can be extended.
An applicant for a grant may issue a warning to the caveator which requires the caveator to enter a appearance within 14 days setting out their interest.
If the caveator fails to do so they can remove the caveat.
Why do PRs need to produce estate accounts?
PRs need to produce estate accounts for the residuary beneficiaries to show all the assets of the estate, the payment of debts, administration expenses and legacies and the balance remaining for the residuary beneficiaries.
The balance is usually a combination of assets transferred to the beneficiaries and some cash. Interim payments need to be taken into account and shown on the estate accounts.
The residuary beneficiaries then sign the accounts to indicate their approval.
Does the residuary beneficiary signing accounts absolve PRs from liability?
The residuary beneficiaries then sign the accounts to indicate their approval which also absolves PRs from future liability. But does not absolve them from liability for fraud or failure to disclose assets.
Are estate accounts always necessary?
Not for small estates.
Must produce if it creates life / minority interest (capital and income need to be distinguished throughout period of trust)
What do PRs need to consider when making final distributions to residuary beneficiaries?
Before making distributions, need to consider if they have made interim distributions already on account of their entitlement.
These must be taken into account when considering what is left to be transferred.
Whether they are adults/minors or have a vested/contingent interest.
How do PRs transfer freehold/leasehold to beneficiaries?
Freehold/leasehold = by means of an assent, which will become the document of title to the estate. If the PRs continue to hold in the capacity of trustees then another assent is necessary to formally vest it in themselves. Must be in writing, signed by PRs and in name of the person in whose favour it is made. A deed is not necessary to pass the legal estate. But this can be useful/necessary e.g. if an indemnity covenant needs to be given.
The PRs need to calculate the income tax and CGT liability for each tax year in the administration period or part of the year.
They can make an informal payment without having to provide a tax return in most cases. The exception is for complex estates.
What is a complex estate?
Complex estate:
- Value of the estate exceeds £2.5 million
- Tax due for the whole of the administration period is over £10,000
- The value of the assets sold in the tax year exceeds £500k
The payment is usually made in a lump sum at the end of the administration period (not complex estates). CGT for disposal of UK residential land must be paid within 60 days of completion
