Wills 2 Flashcards
Which administrative provisions should be considered for inclusion in ALL WILLS - trust or not?
- Power to CHARGE remuneration
- Extended power to APPROPRIATE assets without consent of legatee
- Self-dealing
- Power to INSURE assets
- Power to accept receipts from or on behalf of minors
Additional provisions should be considered inclusion in wills where a trust is created?
Power to:
- Appropriate assets
- Invest
- Purchase land
- Sell personalty
- Use INCOME for maintenance of beneficiaries
- Use CAPITAL for advancement of beneficiaries
- Control of trustees by beneficiaries
- Trusts of land
- To carry on testator’s business
What is a power to charge provision in a will?
-not statutory and should include regardless of if trust or not
- allows executors and/or trustees to charge remuneration for time spent administrating the will
- should clarify whether it is for any professional involved in administration (eg a brain surgeon) or only those whose profession relates to administration
(absence of charging clause prevents paying self fees for work done on behalf of trust)
Explain provision for extending powers to appropriate assets where there is a will with no trust?
inc what is the statutory position and requirements
(summary: under statute, PR can offer beneficiaries other assets in will to satisfy their legacy or residuary interest - can remove req for bens to consent)
s 41 gives PRs power to appropriate any assets in will towards satisfaction of any legacy or interest in residue
but must not prejudice legacy beneficiaries
so if asset not been bequeathed, can take.
receiving beneficiary (or parent/guardian) must consent
can remove need for receiving beneficiary to consent
but should still informally consult all involved
e.g.
- PRs MAY decide to allow that beneficiary to TAKE assets that NOT already given to another in the will, if receiving beneficiary consents.
- if want to appropriate a gift given to another in the will, that beneficiary’s consent not required in theory but would prejudice them so breach fid duty by PR.
- will can REMOVE need for legacy beneficiary’s consent
(nb s 41 doesn’t apply to trustees if will created)
How and why could will include express provision regarding power of PRs to insure assets?
(inc statutory position)
Statute gives PRs and trustees power to insure assets against risks AND pay out of income or capital
Can include provision in will which just states that they have that power ^
- makes it clearer for lay PRs that they can do that
Explain how and why will could be amended to include powers for PR/trustee to accept receipts from or on behalf of minors?
Explain statutory position.
Law:
- U 18 can’t give good receipt
- BUT parents and guardians can on their behalf ^
Could amend so:
- Trustee given the legacy to hold for the benefit of the minor; or
- Allowed to accept receipt from child over 16
Why:
- family tensions/may not want guardian to give good receipt
Explain what self-dealing provision in will may state?
Why good idea?
would it be for will where there is trust only?
Permits self-dealing by PR or trustee
Good idea if PR/trustees are also beneficiaries
No - can include for both - since PRs also aren’t allowed to self-deal
(nb self-dealing = fiduciary position prevents from transacting where personal interest conflicts)
should there be a provision in will where there is a trust allowing trustees to appropriate assets?
why/why not?
statute permits PRs to appropriate assets
- statute does not apply to TRUSTEES
- so need express provision allowing to appropriate trust property
In wills with a trust, should there be a provision regarding trustee powers to invest?
What is the statutory position on their power to invest?
Can include but no need.
Statutory position:
- general duty to invest
- as if they were entitled to trust property
- must consider standard investment criteria
- must take proper advice and review investments f
- can appoint investment specialist and delegate investment powers
- must do so in writing setting out objectives and restrictions, and review them
(probs more in trusts)
Explain statutory position on trustees powers regarding purchasing land?
what powers do they have when purchasing/over purchased land?
What additional provision MAY be needed?
s8 - power to purchase freehold or leasehold for any reason
(inc investment)
have powers of absolute owner - inc to sell
but does not include:
- power to buy land abroad 🌍
- power to purchase interest in land WITH someone else 👯♀️
(eg trustee and bens purchase together)
^ so express power would be needed
Do trustees have power to sell personalty?
What may will do to address concerns?
(clue: is an area where they defo can)
have total power to sell land held under the trust (statute)
but aside from land, if no express trust for sale, is doubted whether they have power to sell personalty
so will may:
1. impose express trust for sale over residue; or
2. giving trustees express power to sell personalty
s31 Trustees Act 1925 - what is it and how may will amend it?
(clue: trustee powers links to wills where u18 beneficiary)
whilst beneficiary is under 18,
trustee has POWER
to use trust INCOME
for minor’s education, maintenance and benefit
(MEB - meat eat bones)
- if don’t use that way ^, must accumulate that income
(can’t just spend it) - once turn 18, trustees have DUTY to pay that income to beneficiary
(UNLESS will amends)
BUT:
- will may postpone right to income until reach age later than 18
(covered more in trusts)
what section to advance capital to beneficiaries?
s 32
how may s 32 (capital beneficiaries) be amended in will?
Draft these clauses
if trust creates LIFE INTEREST
extend s32 by:
- permit trustees to make advancements of capital to the LIFE TENANT
- advance capital to life tenant by loan
DRAFTS:
“I give my trustees the…”
“power to pay or apply capital money [from my residuary estate] to any extent to the benefit of the Life Tenant”
“power to loan capital money from my residuary estate to the Life Tenant to any extent upon such terms and conditions as my Trustees see fit”
When will beneficiary be sui juris?
Aged 18 or more with full capacity
Section 19 TLATA 1996 (beneficiaries entitled to whole trust fund can direct trustees to retire and appoint new ones)
What is it and how may WILL amend that??
If bens abso entitled + sui juris (over 18 / MC)
^ can direct to retire and appoint new one of choice
Will may expressly exclude that ^
Own idea:
“The beneficiaries shall not have the power to remove or appoint any or all of the trustees, unless permitted by a court order.”
What special powers does TLATA give beneficiaries in trust of land?
(explain each one)
What type of beneficiaries are given these rights?
Special powers to ben if trust of land and ** interest in possession**
i.e. entitled to claim income as it arises either cos:
- life interest; or
- over 18 and entitled via s 31
- Duty consult beneficiaries over 18
- give effect wishes if **consistent ** w interest of trust - Right to occupation trust land
- even if not 18
if
(a) one of purposes of trust; or
(b) reason for trustees acquiring land
was to allow them to occupy it.
(see sep queue card for how amended in will)
How can will amend the 2 main statutory powers of a beneficiary if creates a trust over land?
Duty to consult
- may exclude
Beneficiary’s right to occupation
- can’t exclude
– but will may declare that purpose of trust is not for occupation of land
( so that beneficiary’s right of occupation doesn’t apply)
Explain whether / to what extent a PR in will has powers over the deceased’s business?
How can will amend / should it?
- if estate includes business run by deceased as SOLE TRADER
- PRs may only run business with view to selling as going concern
- may only use business assets used by the business at date of death
Will:
- can extend powers
- likely better to bequeath business by specific legacy or appoint an executor just in relation to the business
- don’t usually want the PR to be involved in running business
when will attestation clause need to be adapted?
if execution of will did not follow the standard procedure
eg will signed by someone other than the testator
should you take instructions to draft a will from a third party?
no
(even tho code of conduct says u can take from someone properly authorised, risks are too big with a will, so should never)
are solicitors who drafted will able to act as executor?
SRA risks?
(inc what must explain)
risk of own interest conflict
can do, but:
- make sure client aware that not default that solicitor must be executor
- must be in cl’s best interests
eg affairs complex/family disputes - considering expense
ensure fully informed by explaining:
1. options available re executor;
2. that executor not have to be professional and lay executors may subsequently appoint professional if deemed necessary; and
3. record advice given and testator’s decision
when is the administration period?
moment immediately following death
ends when PRs in a position to vest the residue of the estate
(either in beneficiaries or selves if trusts imposed)
How long does a PR hold office for?
LIFE!
(bcos even once all assets disposed of, further assets or liabilities may be discovered and they would be required to deal with them)
Primary duty of PRs?
collect and get in the real and personal estate of the deceased
and administer it according tot he law
statutory wording
just distribute and administer i guess
What type of liability will PR face if fail to administer estate correctly?
Personally liable (to that person)
How can PRs protect selves against claims from unknown beneficiaries and creditors?
(inc name of relates statutory provision, steps and time limits)
(clue: where should they __ ?)
Follow s 27 Trustee Act:
- Advertise notice of intended distribution of estate in:
A) Gazette;
B) any newspaper in relevant district of deceased; and
C) if special case, any notices that court may require
if unsure which notices to give, can apply to court
^ requires any interested person to send notice of their claim
- Wait at least 2 months before distributing estate
- Must still make searches would if was purchasing land so can tell if anyone with interest in deceased’s land
(e.g. Land Charges search)
If a trustee/PR has followed s 27 trustee act, will an unknown beneficiary have any rights after 2 month time period?
yes
can get property from hands whoever received it, unless they are a purchaser
(but PR/trustee won’t be personally liable)
Trustees can’t rely on s 27 as protection against claims from _______
()
People who KNOW they have a claim but can’t find
How can PRs protect selves from liability due to claims under Inheritance (Provision for Fam and Dependents Act)?
What can they do if this is not possible?
What liability would have PRs if brought?
Personally liable if assets distributed then get order
Wait 6 months from grant
If earlier distribution required, retain sufficient assets
When do assets in will devolve to
a) executors
b) administrators
?
a) immediately on death
(authority comes from will)
b) when grant representation issued
What is devolution?
Ownership of estate’s assets transferred to PR
(on death for executors or on grant for administrators)
What should PRs pay first?
Bank loan IHT first proceeds undertaking
Outstanding debts and funeral account
Administration expenses (eg valuers fees) as they arise
SEU
Secured
Expenses (funeral, administrative)
Unsecured
What should PRs consider when deciding which assets to sell to raise money for paying debts and expenses?
- Provisions of will itself
- may direct where to pay from
- usually residue
- if no provision, **follow statute **
- generally shouldn’t use specific legacy if avoidable
(sep queue card) - Beneficiary wishes
- although have power to sell what want, good practice to consider beneficiary’s wishes -
Tax implications of sale
eg capital gains
PRs are required to pay ____ expenses of a funeral ?
Reasonable
- reasonableness depends on facts of case
eg deceased’s position
To what extent are PRs liable for payment of funeral costs?
Only to extent of the available assets left by deceased to make the payment
What are testamentary expenses?
(inc main things they include)
Those INCIDENTAL to PR duties
Include:
1. Costs of obtaining grant
2. Costs of collecting and preserving deceased assets
3. costs of administering estate
eg solicitors/valuers fees
4. IHT payable on property in UK which VESTS in PRs
(not survivorship property - can try to reclaim reimbursement if paid from joint owner but practically diff unless they are a beneficiary)
What is a solvent estate?
Where sufficient assets to pay all expenses, debts and liabilities in full
EVEN if nothing left to pay beneficiaries with
How will secured debts be paid in a solvent estate?
What about “pay debts out of residue”?
- Beneficiary taking the asset responsible for paying debt
^ UNLESS there is a contrary INTENTION in any other document
- for there to be intention, must be express reference to the secured debt (eg mortgage)
- eg “my cottage to my daughter free of mortgage”
- eg “mortgage will be paid from residue
“Pay debts out of residue”
-not suffice
- presume pay debts other than secured
Order in which assets will be used to pay UNSECURED DEBTS AND EXPENSES in a SOLVENT estate?
Name of this order?
“Statutory order”
baso undisposed and then residue before property for legatees
Unless will varies it:
- Property UNDISPOSED of
^ this includes a gift which has failed - Property in residue
- Property SPECIFICALLY GIVEN for payments of debt.
i.e. directed to use that specific asset but says nothing about left over money
(eg debts are to be paid from proceeds of sale of X Co shares) - Property CHARGED with payment of debts
- charged means direct to be used for paying debts but any LEFT OVER to someone
- e.g. debts paid from proceeds of X Co and balance to John - Any fund retained to meet pecuniary legacies
- Property specifically devised (real property) or bequeathed (personal property), rateably according to value
- Property appointed by will under general power rateably according to value
How will statutory order for solvent estates (re unsecured debts) be impacted by contrary intention in will?
If expressly releases property otherwise taken in priority
COMMON:
- debts and expenses payable from residuary estate
e.g.
- subject to tax: IHT payable FROM asset
- FREE from tax = IHT payable as a testamentary expenses
When will estate be insolvent?
Effect on creditors/beneficiaries
Not enough assets to pay funeral/testamentary expenses and debts
Creditors won’t be paid in full (or at all)
Beneficiaries receive nothing
What does it mean to realise security?
Sell the property by exercising power of sale as chargee
Order of priority of payments in insolvent estate?
(inc how those within each class can claim)
- Secured creditors
(eg hold a charge or mortgage)
(eg cos can exercise right of sale) - Testamentary, funeral and administration expenses
- Unsecured creditors
- rank and abate equally
How should the following be transferred to a beneficiary/trustee:
A) legal interest in land
B) stocks
C) personal property (aside from stocks)
What should they do after that?
FORMALITIES FOR EACH.
A) freehold or leasehold land/interest
- ASSENT
- writing
- signed by PRs,
- name person to vest in
(even if PR transferring to self as trustee)
- person vests in must send to LR
- deed not required but defo should if indemnity
B) stock transfer form
- PRs show grant to co
- Transfer as ‘PRs of the deceased’
- Receiver must apply to co to be registered
C) personalty
- PRs pass title via ASSENT
- no particular form required
- property passes on delivery
- title derives via will
(assent just gives effect to that)
What/when will an asset be vested retrospectively (ie before) to death?
Effect of this, inc on tax?
Specific gifts only
(they always vest retrospectively)
(i.e. of specific item - land/personalty - not residue/pecuniary)
Means any income generated from the property belongs to beneficiary
(eg dividends)
But beneficiary will not be entitled to the income as it arises - must wait until trustee vests property in them
Will pay income tax that has become due since death
