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SQE1 FLK 2 > Wills 4/5 v2 > Flashcards

Wills 4/5 v2 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 and tax are 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, there is an intestacy, or a statutory trust arises under intestacy where there is a minor beneficiary.

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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 and provide information about the estate to HMRC and pay IHT.

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8
Q

What’s involved in ‘collecting in’?

A

Identify and locate the deceased’s estate, identify liabilities and creditors, and 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, pay liabilities, meet administration expenses, pay legacies, distribute the residue, and 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, and 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 lifelong.

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12
Q

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

A

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

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13
Q

Can PR’s profit from their position?

A

No, but payments are not a breach if acting in a professional capacity and authorized.

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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

As long as a specific beneficiary has not been prejudiced, the recipient has consented, and the value 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, they can pay insurance premiums from 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 act alone, and 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

Must be done in writing, agents must have a written policy statement, and the 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 must 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, s27 notice, Benjamin Order, Presumption of Death Act, insurance, indemnity from beneficiaries, or payment into court.

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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, validity of the will, identity of executors, and value of the 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), Grant of letters of administration.

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30
Q

When is a grant of probate made?

A

When the deceased left a valid will and at least one executor is willing 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 no executors are willing to act.

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33
Q

When is a Grant 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.

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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, 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 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 applicable exemptions and reliefs.

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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, with interest charged.

42
Q

What assets can the instalment option be used for?

A

Land and buildings, company shares, some unquoted shares, farms, business interests, and timber.

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 is below NRB.

47
Q

What is an ‘Exempt excepted estate’?

A

Gross value is no more than £3m but no IHT is payable after debts and exemptions.

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 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 estate funds.

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.

55
Q

How many executors are required?

A

One.

56
Q

What happens if the sole executor dies after the grant?

A

Chain of representation applies (PR’s PR acts) or Grant of letters of administration de bonis non is issued (e.g., when PR died intestate)

57
Q

Where does an administrator get their authority?

A

From the grant under the NCPR.

58
Q

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

A

When the deceased left a will but no executors are willing 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 any residuary beneficiary too), any other beneficiary or creditor.

60
Q

What is ‘clearing off’?

A

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

How many administrators are required under letters of administration / letters of administration (with will) if there is a life interest in the estate or a minor?

A

Two.

67
Q

What is the maximum number of applicants to be administrators required under letters of administration / letters of administration (with will)?

A

Four.

68
Q

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

A

Renunciation, reserving power, or appointing an attorney.

69
Q

How does an executor formally renounce their right?

A

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

70
Q

When can’t an executor renounce?

A

When they have intermeddled.

71
Q

What is ‘Reserving Power’ by an executor?

A

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

72
Q

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

A

No formal reservation, but other executors must notify him.

73
Q

How is an attorney appointed by an executor?

A

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

74
Q

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

A

Renounce or appoint an attorney.

75
Q

How does an administrator renunciate?

A

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

76
Q

How does an administrator appoint an attorney?

A

After the administrator has been appointed, they may delegate their functions.

77
Q

What must be supplied to the Probate office?

A

Registry fee and a certified copy of the death certificate.

78
Q

Do applicants for a grant automatically renounce their right to apply as an administrator?

A

No, applying for a grant does not automatically renounce their right to apply as an administrator.

79
Q

How does an administrator appoint an attorney?

A

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

80
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 (not photocopy), original will (probate confirms validity), IHT 400 if required (goes to HMRC), power of attorney docs (if required), forms of renunciation (if applicable).

81
Q

What is an affidavit?

A

A formal statement of fact signed by all parties and dated, completed and signed by the person witnessing (independent solicitor/commissioner for oaths) including name/address & qualification.

82
Q

When is an estate considered solvent?

A

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

83
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.

84
Q

How are unsecured debts/expenses paid?

A

a) Property not disposed of by a will, b) residue (subject to retention of a legacy fund), c) property the will set aside, d) £ in the pecuniary legacy fund, e) property specifically given (e.g. chattels).

85
Q

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

A

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

86
Q

How can PRs protect themselves from unknown creditors?

A

Get a s.27 notice in the gazette (and local newspaper if estate includes land) and wait 2 months.

87
Q

What 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.

88
Q

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

A

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

89
Q

Is death a disposal for CGT?

A

No, assets are valued at the date of death. Any gain is ignored.

90
Q

What happens to income/gains after death?

A

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

91
Q

When do PRs not have to account for estate income?

A

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

92
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.

93
Q

Do PRs have a personal allowance for estate gains?

A

Yes.

94
Q

Are transfers to beneficiaries taxable on the PRs for CGT?

A

No, they are not disposals for CGT purposes.

95
Q

What order are legacies paid in?

A

Specific, general, residuary.

96
Q

When can PRs ascertain the value of the residue?

A

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

97
Q

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

A

PRs are free to choose but cannot give an asset valued more than the entitlement of a beneficiary.

98
Q

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

A

No.

99
Q

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

A

Send a copy of the IHT 400 to the bank to pay HMRC directly, then send the IHT 400 to HMRC. HMRC will forward the IHT 421 to the Probate office directly.

100
Q

Who signs off the trust accounts?

A

The PRs; the beneficiaries are entitled to a copy.

101
Q

Are administration expenses deductible for IHT?

A

No, except reasonable funeral costs and headstone.

102
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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