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SQE1 FLK 2 > Wills - 4/5 > Flashcards

Wills - 4/5 Flashcards

1
Q

What does a ‘Grant of representation’ do?

A

Establishes the authority of the PR’s to act and the validity of the deceased’s will. Only covers assets in the succession estate.

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2
Q

What date can an executor act from?

A

Executors can act from the date of death. The grant confirms their authority.

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3
Q

What date can an administrator act from?

A

Administrators have no authority until the grant is issued.

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4
Q

What is the role of a Personal Representative?

A

Collect deceased assets, ensure deceased’s debts are paid, ensure tax is paid, and distribute assets to beneficiaries.

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5
Q

When will PR’s become trustees?

A

When the will expressly appoints them

Statutory rules under intestacy
(e.g., minor beneficiary, life interest trust, waiting for a class to close)

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6
Q

Is a Personal Representative personally liable for a breach of duty?

A

Yes.

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7
Q

What are the duties of a Personal Representative before the issue of Grant?

A

Dispose of the deceased’s body

provide information about the estate to HMRC

pay IHT.

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8
Q

What’s involved in ‘collecting in’?

A

Identify and locate the deceased’s estate

identify the deceased’s liabilities and creditors,

obtain control, possession or legal ownership of the assets.

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9
Q

What’s involved in ‘administering the estate’?

A

Keep assets secure

Paying out (liabilities, expenses, legacies, residue)

Must also keep Estate accounts.

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10
Q

What are the general duties on PR’s?

A

Act with due diligence

act within a reasonable time

complete administration within 12 months.

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11
Q

Does the appointment to be a PR end once the administration is finalised?

A

No, the appointment is life long.

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12
Q

Can PR’s purchase assets from the estate at fair value?

A

Yes, but only with an order from the court or with agreement of the beneficiaries.

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13
Q

Can PR’s profit from their position?

A

No, but payments will not be a breach if the PR acts in a professional capacity and the payments are authorised.

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14
Q

Do PR’s have a statutory power to sell, charge or lease?

A

Yes.

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15
Q

When do PR’s have the statutory power to appropriate an asset in satisfaction of a beneficiary’s entitlement?

A

Specific beneficiary has not been prejudiced (e.g., taking away somebody elses gift)

recipient beneficiary has consented

the value of the asset is considered at the date of transfer.

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16
Q

Can PR’s appropriate an asset valued in excess of the beneficiaries entitlement?

A

No, but they can ‘top up with cash’.

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17
Q

Do PR’s have a statutory power to insure?

A

Yes, PRs are authorised to pay the insurance premiums out of either estate income or capital.

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18
Q

Do PR’s have a statutory power to invest?

A

Yes, they have a duty to preserve the estate and actively invest.

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19
Q

What does a professional PR need in order to charge for services?

A

Needs to be reasonable

cannot be acting alone

co-PRs must give written consent.

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20
Q

Can PR’s charge for expenses when acting on behalf of the estate?

A

Yes, but not for time.

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21
Q

What statutory powers can’t a PR delegate?

A

How and when assets should be distributed

whether fees or costs are payable from income or capital, and

the appointment of trustees.

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22
Q

What formalities are required for PR’s to delegate?

A

Writing

agents must be provided with a written policy statement

use of an agent must be kept under review.

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23
Q

What are PRs statutory powers in respect of sole trades run by the deceased?

A

There is a common law power to sell the business as a going concern within a year of death.

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24
Q

How do joint PRs make decisions?

A

They are required to make decisions together and agree unanimously.

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25
Q

Can PRs distribute to minors?

A

No, but they can distribute to a trust set up for the minor’s benefit.

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26
Q

How can a PR protect themselves from liability for a breach?

A

Court direction

s.48 order (court orders action)

s.27 notice (publish in Gazette 4 unknown creditors/beneficiaries)

Benjamin Order (distribution allowed if a beneficiary is missing)

Presumption of Death Act (if missing beneficiary for 7 years, declares dead)

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27
Q

When might a PR be exonerated by the court?

A

If they acted honestly and reasonably.

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28
Q

What information is contained in a grant?

A

Identity and date of death of the deceased, deceased left a valid will, identity of executors appointed, and value of estate.

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29
Q

What are the three types of Grant?

A

Grant of Probate, Grant of letters of administration (with will), and Grant of letters of administration.

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30
Q

When is a grant of probate made?

A

Valid will

Appointing executors

At least one of the executors appointed is going to act.

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31
Q

Do you still need a grant of probate if the will does not dispose of any of the deceased’s property?

A

Yes.

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32
Q

When is a Grant of letters of administration (with will) made?

A

When the deceased left a valid will but the will appoints no executors who are willing to act.

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33
Q

When is a Grant of letters of Administration made?

A

When the deceased died without making a will.

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34
Q

What assets in a succession estate don’t need a grant for the PRs to deal with them?

A

Assets distributed under the Administration of estates (Small Payments) Act, personal household possessions, and cash.

e.g., estates valued under 20k, payments from banks under 5k)

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35
Q

What assets are covered by the Administration of Estates (Small Payments) Act?

A

National Savings
friendly
industrial and
provident deposit accounts

arrears of salary and wages,
pensions,

and building society accounts.

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36
Q

What is the upper financial limit of assets in the Administration of Estates (Small Payments) Act 1965?

A

£5,000 per asset.

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37
Q

What are the PRs duties to HMRC?

A

Deliver an account to HMRC regarding the deceased’s estate and pay any IHT due.

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38
Q

What is included in the account delivered to HMRC?

A

All property and the value of each item at the date of death, and the exemptions and reliefs that apply.

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39
Q

What’s the deadline for submitting the account to HMRC?

A

12 months from the end of the month in which the death occurred.

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40
Q

What is the deadline for paying IHT due?

A

6 months from the end of the month in which the death occurred.

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41
Q

What are the rules regarding instalment payments?

A

Tax can be paid in 10 instalments, the first due on the normal payment date.

42
Q

What assets can the instalment option be used for?

A

Land and buildings
shares/securities
some unquoted shares
farms
business interests.

43
Q

What happens if an asset which is the subject of an instalment plan is sold?

A

The tax becomes due immediately.

44
Q

Which form is used to account to HMRC about an estate’s assets/liabilities?

A

IHT 400.

45
Q

What are the two types of excepted estates?

A

Low value and exempt.

46
Q

What is a ‘Low Value’ estate?

A

No IHT payable because the gross value of the estate is below NRB.

47
Q

What is an ‘Exempt excepted estate’?

A

Gross value is no more than £3m but no IHT is payable because the net value of the estate is below the NRB (after spouse/charity exemption, debts)

48
Q

What factors prevent an estate from being ‘low value’ or ‘exempt’ excepted estates?

A

Trusts, foreign assets, specified transfers, gift with reservation, and RNRB claim.

49
Q

When is form C4 used?

A

When additional assets or liabilities are discovered, corrections to values are needed, or changes to exemptions/reliefs occur.

50
Q

Is there a legal duty for the PRs to follow the funeral wishes set out in a will?

A

No, payment is made from the post-death administration expenses.

51
Q

When should a formal valuation be sought?

A

For items valued over £500.

52
Q

Where does the entitlement to act as an executor derive?

A

From the will.

53
Q

Can an executor give their right to take out the grant to someone else?

A

No, but they may appoint someone to act on their behalf.

54
Q

When is an executor unable to act?

A

If they pre-deceased the testator, are a minor, lack capacity, or are the testator’s former spouse/civil partner.

55
Q

How many executors are required?

A

One.

56
Q

What happens if the sole executor dies after grant?

A

Chain of representation applies or Grant of letters of administration de bonis non is issued.

57
Q

Where does an administrator get their authority?

A

Administrators are appointed under the NCPR and their authority derives from the grant.

58
Q

When will a Grant of Letters of Administration (with Will) apply?

A

When the deceased left a will but there are no executors willing/able to act.

59
Q

What is the statutory order of entitlement to be appointed as administrator under a grant of letters (with will)?

A

Executor, trustee of the residuary estate, any residuary beneficiary, PRs of anyone in the previous category.

60
Q

What is ‘clearing off’?

A

The applicants must explain why anyone with a better right to apply is not doing so.

61
Q

When will a Grant of Letters of Administration apply?

A

When the deceased dies without a will.

62
Q

What is the statutory order of entitlement to be appointed as administrator under a grant of letters?

A

Must have a beneficial entitlement under the estate.

63
Q

What if an applicant survived the deceased but dies before the grant?

A

The applicant’s PRs can apply, but a living person is preferred.

64
Q

Can a minor act as an administrator?

A

No, but someone can apply for a grant on their behalf.

65
Q

How many administrators are required under letters of administration / letters of administration (with will)?

A

One.

66
Q

What are the options if an executor is unwilling to act?

A

Renunciation, reserving power, or appointing an attorney.

67
Q

How does an executor formally renounce their right?

A

Sign a form of renunciation and submit it to the probate registry.

68
Q

When can’t an executor renounce?

A

When they have intermeddled.

69
Q

What is ‘Reserving Power’ by an executor?

A

An executor who may want to act later can reserve the power.

70
Q

What is required to ‘reserve power’ by an executor?

A

No formal reservation; other executors must notify him that they are applying for probate.

71
Q

How is an attorney appointed by an executor?

A

After grant, PR may delegate for a max of 12 months.

72
Q

What can an administrator do if they are unwilling to act?

A

Renounce or appoint an attorney.

73
Q

How does an administrator renunciate?

A

A form of renunciation must be signed and submitted to the probate registry.

74
Q

How does an administrator appoint an attorney?

A

After the administrator has been appointed under grant, the PR may delegate their functions.

75
Q

What must be submitted to the probate registry with the application for grant?

A

A form of renunciation must be signed and submitted.

Administrator may do so any time before grant is issued - INTERMEDDLING RULE DOES NOT APPLY.

76
Q

Do executors who renounce their right to apply for grant automatically renounce their right to apply as an administrator?

A

No, executors do not automatically renounce their right to apply as an administrator.

77
Q

How does an administrator appoint an attorney?

A

After the administrator has been appointed under grant, the PR may delegate their functions.

Before a grant has been issued, the power to apply for grant can be delegated.

78
Q

What must be supplied to the Probate office?

A

Registry fee (no fee if estate worth less than £5k), a certified copy of the death certificate, original will, power of attorney docs (if required), forms of renunciation (if applicable).

If IHT 400 required, it goes to HMRC, and HMRC will send confirmation to probate registry.

79
Q

What is an affidavit?

A

A formal statement of fact signed by all parties and dated, completed and signed by the person witnessing.

The witness must be an independent solicitor or commissioner for oaths, including name/address & qualification.

80
Q

When is an estate considered solvent?

A

If the assets are sufficient to pay funeral, testamentary and administration expenses, debts and liabilities.

81
Q

What are the rules regarding secured debts?

A

Charged property will bear primary liability for payment of the debt unless a contrary intention is shown in the will.

If the debt is less than the value of the asset, no other estate assets can be used to repay the debt.

82
Q

How are unsecured debts/expenses paid?

A

Unsecured debts/expenses are paid from property not disposed of by a will, residue, property the will set aside, £ in the pecuniary legacy fund, and property specifically given.

Where gifts are in unequal amounts, debts are paid proportionately.

83
Q

How can PRs protect themselves against a claim under 1975 against the estate?

A

PRs may wish to delay distribution until 10 months after the grant is issued.

84
Q

How can PRs protect themselves from unknown creditors?

A

Get a s.27 notice in the gazette and wait 2 months.

85
Q

What happens if PRs pay debts out of order?

A

Beneficiary can apply for marshalling and claim against a beneficiary who received assets that should have been used to pay the debts.

86
Q

Are taxes owed at the date of death payable from estate assets?

A

Yes, they are deductible when valuing the estate for IHT.

87
Q

Is death a disposal for CGT?

A

No. Assets are valued at D.o.D. Any gain is ignored.

88
Q

What happens to income/gains after death?

A

PRs are liable at basic rate but with no personal allowance.

89
Q

When do PRs not have to account for Estate income?

A

If only income is savings interest of less than £500.

90
Q

What happens to Estate income tax when distributed to beneficiaries?

A

If B pays no tax, they can request a refund. If B pays higher rate, they will need to top-up the tax suffered by the PRs.

91
Q

Do the PRs have a personal allowance for Estate Gains?

A

Yes.

92
Q

Are transfers to beneficiaries taxable on the PRs?

A

No, they are not disposals for CGT purposes.

B acquires the asset at Probate value (d.o.d) not the value when the asset was transferred.

93
Q

What order are legacies paid in?

A

Specific, general, residuary.

94
Q

When can PRs ascertain the value of the residue?

A

When all debts, testamentary expenses and other legacies have been paid.

95
Q

Which assets must PRs use to settle general and residual legacies?

A

PRs are free to choose.

Cannot give an asset valued more than the entitlement of a beneficiary; can give asset valued less than entitlement and top-up.

96
Q

If there is tax to pay, will the estate be excepted?

A

No.

97
Q

How can you get money to pay IHT and apply for grant?

A

Send a copy of the IHT 400 to the bank so that they can pay HMRC directly.

Then send the IHT400 to HMRC. HMRC will then forward the IHT 421 to the Probate office directly.

98
Q

Who signs off the trust accounts?

A

The PRs; the beneficiaries are entitled to a copy.

99
Q

Are administration expenses deductible for IHT?

A

No, except reasonable funeral costs and headstone.

100
Q

When do you get executors?

A

If appointed by the Will. Otherwise, they will be administrators.

SQE1 FLK 2 (19 decks)

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