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
Who pays costs for:
A) transferring property to a specific legatee;
B) insurance on property subject to specific legacy;
C) litigation establishing ownership of deceased’s title to asset
The legatee for all
Should reimburse for expenses on transferring and insurance, unless will states otherwise
If will does not say where pay of pecuniary legacies from, what should PRs do?
Pay from residuary estate, with any personalty (in residue) being used in preference to realty (in residue)
e.g. residue contains football and a house. use the football first.
If partial intestacy cos gift residue fails, likely pay from undisposed property, with ready money (ie not personalty/realty - money in bank account etc) used first
(nb this is an unclear area of law)
When is pecuniary legacy payable?
General rule = end of executor’s year
(ie one year after testator’s death)
If payment of pecuniary legacy delayed beyond executor’s year, does legatee have any rights?
Entitled to interest by way of compensation
Will be payable at rate stipulated in will or if not, rate payable on money paid into court
(see diff queue card for when this will be calculated from)
From what date is interest payable on pecuniary legacy?
(normal rule and exceptions
general rule = begin to pay interest if not paid by end of executor’s year
EXCEPTIONS:
- will says legacy payable ‘immediately on death’ or some future date/event
- then pay from the following day (ie day after should have paid) - must be paid on date of death (instead end executor’s year) if the p legacy is:
- in satisfaction of debt of T to creditor;
- charged on land owned by testator;
- payable to testator’s minor child - unless other funds exist for their maintenance;
- payable to any minor where intention of that legacy is maintenance
When may PRs need to adjust amount of IHT payable?
- Discovered additional assets or liabilities
- Discovered lifetime transfers
- Agreement of provisionally estimated values
(eg with HMRC on value of shares) - Agreement with HMRC re tax owe or tax rebate due (re deceased’s income and capital gains before death)
- Sales made before deceased’s death which gave rise to IHT ‘loss relief’ claim
Any IHT relief for fluctuating assets?
CONDITIONS
- Assets with fluctuating value (eg shares and land)
- If PRs had to sell for less than would have been worth on date of death (probate value)
- ‘loss of sale relief’ can reduce IHT liability here
(that’s all it says)
(might be the same as the below textbook not clear - main thing is below) - ‘Qualifying investments’
- shares or securities in quoted companies or recognised stock exchange
- sold within 12 months of death for less than probate value
- sale price can be used as probate value and IHT reduced accordingly
- must apply (not automatic)
- only applicable when it is PR (not beneficiary) who sells
If beneficiaries insolvent or disappear, who has to pay IHT? effect?
PR remains personally liable
Consider retaining enough assets to pay IHT if this happened
When would PRs be liable for IHT on PET/LCT and to what extent?
Effect?
If unpaid by donee in 12 months after end of month when donor died
Limited to amount of deceased’s assets which they have received or would have received if not for own neglect/fault
above also apply if reservationary interest retained by testator (we know this)
Consider retaining enough in estate to cover in case this happens.
What is a corrective account?
Once all variations to accounts are known and reliefs quantified, report corrective account to HMRC
(ie all outstanding matters)
What can PRs do to be sure there is no further claim to IHT and rest easy at night?
How can they get it?
Request CERTIFICATE OF CLEARANCE from HMRC
Releases all persons from further liability to IHT (unless fraud etc)
HMRC must be satisfied IHT re a CHARGEABLE TRANSFER has or will be paid
When must PRs make return to HMRC regarding deceased’s income and capital gains tax liability?
Throughout what period?
Can they claim any reliefs?
Immediately following death
From 6 April before death and ending with date of death
even if died during the income tax year, can still claim reliefs and allowances would have been entitled to if survived the whole year
How will income and capital gains tax on a deceased’s estate impact IHT?
Any tax owed will be deductible from amount of IHT
(tax is deductible remember!)
Any tax refund will increase size of estate for IHT
(because it’s an asset!)
What tax are PRs subject to in their capacity as PR, and on what?
Any exceptions?
Income tax
On any income paid into estate DURING the administration
(eg if property let out to tenants who continue to pay rent to the estate)
What is good practice for PRs to do with any income earned during period of administration on estate property?
Put it in a savings bank account where it can earn interest
They would be expected to this tbf!
What rate do PRs pay income tax at?
Are they entitled to same allowances as individuals?
Dividends - 8.75%
Other income - 20%
Do not pay at higher rate
But do not benefit from allowances (eg personal allowance)
when do PRs not have to pay income tax?
only income of the estate is interest which does not exceed £500
- that money will go to the relevant beneficiary instead
(eg interest on a bank account)
what may PRs be able to claim income tax relief on and when?
for interest PAID on a bank loan
if needed loan to be able to pay IHT
(which needed to obtain grant)
when do beneficiary’s need to declare income earned from assets they have received in their tax return?
yes
if they receive remaining net income from estate once PRs have settled the tax
NB they will receive credit if the tax declared already been paid by PRs
(textbook if confused:
Once the PRs’ tax position has been settled, the remaining net income will be paid to the beneficiary. The payment forms part of the beneficiary’s income and the gross amount should therefore be included in their return of income for the income tax year to which it relates. The beneficiary receives credit for the tax already paid by the PRs. Whether there is any more tax to pay, or, indeed, whether a refund can be claimed, will depend on the beneficiary’s own income tax position.)
when will CGT become payable on deceased’s estate?
- not payable on death
(wipes out gains accrued during deceased’s lifetime) - only if PRs make a disposal
(but even then, they acquire at probate value instead of value deceased originally purchased for) - if PRs transfer assets to beneficiaries, they do not make a disposal
CGT rate of tax payable by PRs?
20%
Unless resi - 28%
Reliefs/deductions available to PRs on CGT?
- annual exemption 6k
^ in tax year of death and for the 2 following tax years (if admin lasts this long)
(so if died in 2025, also use in 2026/27)
can also deduct:
- acquisition cost (ie probate value)
- incidental costs of disposal
- proportion of fees for valuing estate
e.g. probate value 34k. Sold for 50k. = gain of 16k. minus 6k (annual exemption). x 0.2.
= 2k
yeah i get this
What will deceased’s assets be valued at for CGT purposes?
Market value on date of death i.e. probate value
If there is a CGT loss on an estate, what is good practice?
(If PRs sell for less than probate value, they make a loss. If sell for more, capital gain.)
Can set losses against gains made in same or any future tax year in administration period.
If already set against all gains, consider:
- Selling other assets
(so can set against their gain) - Transferring property worth LESS to beneficiaries
(since beneficiaries will be deemed to acqurie at PROBATE value - they could sell it future at a loss if not inc in value and set that against any other gains they made).
it is a hard point but i get it now !
do PRs need to:
- calculate income tax / CGT?
- make tax return re income tax and CGT liability for each tax year?
(ie declare gains made on disposals or income received)
must always calculate and pay for each income tax year in administration period
but can **make informal payment w/o need to provide tax return **
unless is a COMPLEX ESTATE (need to do a return) i.e.:
1. value of whole estate is over £2.5 mil; or
2. OVER 10k tax due for whole administration period; or
3. value of assets sold in tax year exceed 50k
when do PRs need to pay:
- income tax and CGT other than resi land
- CGT on resi
Income tax and CGT usually one lump sum at end of administration period
(unless estate is complex)
CGT on resi = 60 days of completion
how will estate property be transferred whilst awaiting for beneficiary to satisfy contingency ?
transfer to trustees to hold on their behalf until satisfy contingency
minor beneficiary - does it need to be held on trust if vested interest? what about contingent?
yes to both unless vested and:
- express clause accepting receipt from minors
- giving to parents/guardians on their behalf (allowed unless excluded in will)
When disposing of remaining property to residuary beneficiaries, what should PRs consider?
Any interim distributions which those beneficiaries already received on account of their entitlement
if already received a bit of what they are owed, then don’t transfer them as much as would otherwise common sense
What do estate accounts show?
Who do they need approval from?
What stage are estate accounts done at?
For approval of residuary beneficiaries
Done at end of administration
Shows:
- assets of estate
- payment of debts
- admin expenses/legacies
- any interim payments
- balance for residuary bens
R bens must sign to approve
Who must sign estate accounts (wills) and any effect of this?
Residuary beneficiaries
Releases PRs from further liabilities to ACCOUNT to beneficiaries
Unless fraud or failure to disclose assets
When will there NEED to be separate accounts produced for capital and income?
(wills)
(ie separate to estate accounts)
If there is a life or minority interest,
bcos the different interests of the beneficiaries in capital and income need to be distinguished throughout period of trust and when it ends
(checked this it makes sense don’t go back to textbook)
Order for payment of debts in solvent estates?
- Secured debts
- Unsecured debts
Are pecuniary or specific legacies paid first?
I think specific
not rly imp remember this being a point in wks
for CGT purposes, if transfer asset to beneficiary, what does beneficiary acquire at?
(e.g. value at date of transfer from PRs to beneficiaries or probate value?
Probate value
(market value date of death)
remember no CGT payable on transfer from PRs to beneficiary
- beneficiary will just be liable for CGT if they sell
Trustees Act - which section re trustees POWERS to use __ and ___ for beneficiaries ?
s31 - income
s32 - capital
If property in will subject to a mortgage, will that be a debt for the estate to pay?
(e.g. there is a house valued at 300k subject to mortgage of £275k)
Yes
Will be a secured debt (against the property)
Entitled to be paid £275k from proceeds of sale of house
Which means the assets available (to pay beneficiaries etc) from the house are actually £25k
v imp do u take annual exemption off before or after u do __ % for CGT?
Also do u use annual exemption for every year u had it or just the year u sell it
BEFORE
e.g.
15,000 - 6,000 = 9,000
9,000 x 0.2 = 1800
- just the year u sell it
- but if have any unused from previous years, can carrry forward indefinitely
- but use this years first
Who can make a claim under Inheritance (Provision for Family and Dependants) Act?
- Spouse
- Child (any age, including adopted)
- Former spouse who has not remarried, unless court order on divorce/nullity barred this
- Treated as child
(eg step-child/cohabitee’s child) - must still prove acted as parent - Maintained wholly or partly by financial contributions by deceased, immediately before death
- strong grounds
- substantial contribution - Lived with deceased continuously for 2 years prior to death as if were married
(cohabitees)
Will adult child always fall within category of people entitled to bring claim under Inheritance (Provision for Family and Dependents Act)?
No, if employed and likely earn for foreseeable future, unlikely application succeed without:
- moral obligation owed by deceased
- disability
- worked for deceased for years at low wage; or
- made sacrifices to care for deceased
Moral
Disabled
Worked
Sacrifices
MDWS - Mel Darren Wilf Sara
when will someone have been maintained by deceased, to bring claim under Inheritance (Provisions for Dependents) Act?
Maintained wholly or in part
Significant financial contributions
Towards reasonable needs
Immediately before death
- not construe literally
- general arrangements during deceased’s lifetime
- temporary break immediately prior to death (eg while in hospital) doesn’t prevent a claim
eg rent-free accommodation
Not if commercial agreement
(eg live-in carer)
What 3 conditions will cohabitants need to satisfy to bring claim under Inheritance (Provision for Dependents) Act?
(nb: if they are applying under the route would expect - could still apply under maintenance route)
- Same household as one unit
(not where living under 2 roofs as separate entities)
- but CAN live in 2 physical properties, as long as live as if you are ‘a household’
(nature of reli) - As if married couple
- whether reasonable person with normal perceptions would regard as such
- absence sex doesn’t preclude
- relationship must be openly acknowledged - Two years immediately prior to death
- temporary separation immediately before death (e.g. hospital) doesn’t disqualify
- degree permanence and commitment
e.g. walked out temporarily but always went back, apart for 3 months immediately before he died, could still bring claim bcos text her daughter asking her to come back but she didn’t pass on message - if daughter had passed on, would have got back with him - so even tho lived apart for last 3 months, continued to be part of ‘household’
Time limit to bring claim under Inheritance (Provisions for Dependent Act)?
When may it be extended?
6 months from date of GRANT
Court discretion to extent if good reason for delay
eg coma
Considers
- merits of claim
- promptness
- whether estate been distributed
- did PRs have notice within time limit
- would applicant have other remedy
(eg solicitor negligence)
Ground for bringing claim under Inheritance (Provisions for Family and Dependents) Act?
(clue: there is one ground and 2 ways of assessing)
GROUND: Estate doesn’t leave REASONABLE FINANCIAL PROVISION
Objective test - reasonableness of deceased irrelevant
- ‘SURVIVING SPOUSE standard’
- reasonable provision whether or not needed for maintenance
- consider how much expect on divorce - ‘ORDINARY standard’
(all other applicants)
- reasonable provision for MAINTENANCE
- i.e. living expenses / not anything desirable
eg rent, food bills
- caution if adult applicant CAN work
In determining reasonable provision, consider general guidelines (sep card) - size and nature/needs of beneficiaries)
What guidelines should court consider in assessing grounds for claim under Inheritance (Provisions for Dependents Act)?
important
Objective or subjective test?
N O S Disability Conduct
Objective test
-
Financial needs of applicant, other beneficiaries and applicants now and in future
- inc effect order on any state benefits applicant receives -
Legal and moral obligations of deceased to applicant and beneficiaries
- legal eg child maintenance
- moral for adult child may be illness prevents working etc
- moral
eg wife left all to her husband. mutual understanding he would give all his to daughter. he remarried and gave all to second wife.
-
Size and nature of estate
(don’t want to swallow it up) -
Physical or mental disability of applicant
inc depression/illness - Anything else relevant, inc applicant’s conduct
eg prolonged period of estrangement
- see sep card
Can someone who killed decease receive anything from estate?
Their entitlement under the will itself is forfeit
HOWEVER could still bring claim under Inheritance (Provisions for Dependents Act)
- but guideline ‘anything else which may be relevant, including conduct’ allows court to dismiss claim
‘anything else which may be relevant, including conduct’ - Inheritance Provisions Dependents Act claims
What will courts GENERALLY consider? (not for specific categories)
(aka special guidelines)
- Reasons given by testator in will/other doc
(court discretion how much weight - consider along other factors) - Murdered deceased (forfeit under will but can claim under act)
General:
- conduct
eg period of estrangement
WIDE discretion court how much weight to attach
(may reduce amount get - e.g. estranged from mother for years and her wishes to exclude etc were considered and reduced entitlement - but still received some)
If court awarding sum under Inheritance (Provisions for Dependents) Act - what will order be made from?
Net estate
i.e. value after debt, expenses and allowable deductions
COULD INCLUDE DECEASED’S INTEREST IN JOINT PROPERTY (ie survivorship property)
good that it is from net i guess would be waste of time if awarded but all swallowed up by debts anyway
What type of orders may court make under Inheritance (Provisions for Dependents) Act?
What else must court declare in order re where the money is coming from?
inter alia
- transfer specified property
- lump sum
- periodic payments
Will also order which beneficiary likely to suffer burden of the order (ie lose property which applicant will received)
(remember order made against net estate)
IHT implications of order being made under Inheritance (Provisions for Dependents) Act?
Altered estate takes effect from death so may have to recalculate
eg if increases amount going to spouse - more spousal exemption
Can testator avoid claims under Inheritance (Provisions for Dependents) Act by gifting property during lifetime?
No
Court can avoid gifts made less than 6 years before death which had intention of defeating claim under the Act
Property would become part of net estate from which claim could be satisfied
NB: not 7 years like if LCTs/PETs
when could consider post-death variation or disclaimer?
- if feel someone missed out from will so gift their gift to them
- give their gift to applicant under Inheritance (Provisions for Dependents) Act (to avoid litigation)
- make more tax-efficient
How can beneficiary re-direct property or cash which they have inherited?
Disclaimer - reject and passes as if beneficiary deceased
Variation - can direct where benefit goes and on what terms
Lifetime gift - accept then gift it
Limitations on beneficiary making a post-death disclaimer?
- must disclaim whole of gift, not part
- can’t disclaim once accepted benefit
(since then it would be a gift really) - would only use if want to go to whoever entitled (if they had deceased)
When can a beneficiary effect a post-death variation?
18 or over with mental capacity
if not legally capable ^, court application
(notice that doesn’t refer to parents accepting)
Court can consent for them
Application expensive and timely
NB: restrictions re disclaimer’s don’t apply (e.g. that cannot have accepted/cannot be over part)
How are post-death disclaimers and variations treated for IHT purposes?
As if beneficiary had made a lifetime chargeable transfer to the new beneficiary
So would become chargeable to IHT if original beneficiary dies in 7 years
Means would be taxed twice - on testator’s death and new beneficiary’s death
How to overcome IHT problems with post-death variations and disclaimers?
(including conditions)
Disclaimer or variation read back into the will
Conditions - disclaimer or variation must be:
1. in writing and signed by original ben;
2. within 2 years of DEATH; and
3. not for monetary consideration.
AND if VARIATION, must state s 142 IHTA applies (!!!!)
If more IHT payable due to variations, PRs must join the written variation.
How can CGT be prevented on post-death variations AND disclaimers?
Read back into will
Same requirements as for IHT
(writing/signed by ben, no monetary consideration, within 2 years)
Means no disposal so no IHT
When may it not be worth doing a post-death variation or disclaimer? Alternative option?
Sometimes will increase IHT
eg wife varies for children, lose spousal exemption
sometimes may have signif impact cos gone from having no IHT chargeable to all chargeable, so that tax bill would deplete entire estate
INSTEAD may be best to do as lifetime gift but be aware that becomes chargeable on death
Could someone who inherits whole estate claim under Inheritance (Provision for Family and Dependants) Act 1975?
in theory yes no need because given whole estate so completely pointless
(in the sample Q they answered as if that person could not make claim - even tho could in theory)
you cannot disclaim under will if you have _____ from it
accepted
eg by taking income from it
(WKS thinks that administration concluding would count as accepting)
Can court meet a successful Inheritance Provisions Act claim using PETs if used to try and defeat claim by someone who could be entitled under Act?
Yes
Can’t deliberately give assets to another by defeating inheritance act claim
Court can reverse it
exam tip inheritance provisions dependents act - if wording of Q is “can ____ make claims”
it just wants to know if they satisfy category
e.g. child/spouse/former spouse etc.
bcos it is POSSIBLE for the to bring a claim
can court make order under Inheritance Provisions Act of something which is jointly owned by D?
e.g. their home which joint tenant of
Yes
Have powers to make against ‘net estate’ so includes property which passed via survivorship
Time limit for bringing devestavit claim?
12 years from date of right to receive estate
No time limit for fraudulent breaches or taken property from estate for own use
When will acquiescence of beneficiaries be a defence to devastavit claim?
18+ and informed consent to breach
alternative word for legacy
bequest
In assessing grounds for IH claim, what will courts consider re obligations owed by deceased?
Legal obligations
- eg child maintenance
Moral
- eg adult child - maybe illness prevents working
- eg wife left all to her husband. they both had an understanding that he would give all his estate to daughter. he remarried and gave all to second wife.
“Anything else including conduct”
What court consider for
- spouse
- cohabitee
- child
Spouse:
- applicant’s age, length of marriage, familial contributions, likely divorce settlement
e.g. looking after children, duration of marriage, likely divorce settlement
- Cohabitant:
age, length of cohabitation, contribution to welfare of family (inc looking after home/caring for fam) - Child:
education and training requirements
e.g. adult child
- estranged 26 years. went to animal charities. mother statement explained why excluded daughter. daughter had 5 kids / state benefits. still awarded 50k.
can u do a variation of part (instead of whole?)
what about disclaimer?
A variation can apply to some or all of the inherited assets (I think)
Disclaimer - can only disclaim whole (not part)
