Wills & Admin of Estates

Question 1

What property cannot be disposed of by will?

Answer 1

• Joint property (survivorship)
• Insurance policies written into a trust.
• Pension schemes
• Trust property where the deceased had a life interest.

Question 2

What is a revocation clause?

Answer 2

A clause, usually at the beginning of a will, which makes it clear that no prior wills are effective.

Question 3

What is a legacy?

Answer 3

A gift of personalty (anything but land)

Question 4

What is a devise?

Answer 4

A gift of realty (land).

Question 5

What are specific gifts?

Answer 5

A specific item which the testator owns, which is seperated from the rest of the assets.

(e.g., I leave my engagement ring to Sophie)

Question 6

What are general gifts?

Answer 6

A gift which does not refer to any particualr item.

OR

An item which the testator does not own at death but provides a description.

(e.g., I give 100 shares in Destiny Pharma plc to Jack. If the testator does not own these shares at death, the executor must purchase them)

Question 7

What are demonstrative gifts?

Answer 7

A gift specific in nature but to be paid from a specific fund

(e.g., I give £500 to Amy to be paid from my Nationwide savings account)

Question 8

What are precuniary gifts?

Answer 8

A gift of money. This can be specific or general.

Question 9

What are residuary gifts?

Answer 9

The remainder of the estate after all assets have been distributed after the payment of any debts/expenses.

(e.g., I leave the rest of my estate to Megan)

Question 10

What are the three requirements of a valid will?

Answer 10

1. Capacity
2. Intention
3. Meet all requirements set out in Wills Act 1837

Question 11

What is the Banks v Goodfellow test for capacity?

Answer 11

The testator must have had ‘soundness of mind, memory, and understanding’

In other words:

• The testator must be aware that they are making a will
• The testator must know the extent of their property
• The testator must consider the moral claims even if they choose to ignore them

Question 12

What is the exception founded in Parker v Felgate?

Answer 12

A will can be valid if the testator had capacity at the time of giving instructions for the will, even if they lack capacity at the time the will is executed.

(e.g., Susan instructs her solicitor to create a will and goes through her wishes. Susan then is diagnosed with dementia and signs the will. This will is valid under the Parker v Felgate exception)

Question 13

What is the ‘Golden Rule’ in relation to capacity?

Answer 13

Where a solicitor is preparing a will for a client and doubts their capactity, the solicitor should ask a medical practitioner to provide a written report confirming that the client has testamentary capacity to avoid later disputes.

Question 14

Who has the burden of proof in relation to capacity?

Answer 14

General Rule: the person claiming the will is valid must prove its validity.

However, where:

a) the will appears to be rational; and
b) the testator shows no signs of mental confusion

There will be a presumption of capacity.

In this scenario, the burden of proof shifts to the person claiming that the will is invalid.

Question 15

Who has the burden of proof in relation to intention?

Answer 15

General rule: the person claiming the will to be valid must prove its validity.

However, where:

a) the testator has capacity; and
b) the testator has executed the will correctly

There will be a presumption of good intention.

In this scenario, the burden of proof shifts to the person claiming that the will is invalid.

Question 16

When will the general rule in relation to the burden of proof for intention apply?

Answer 16

• Where the testator is blind
• Where the testator is illiterate
• Where the testator does not sign the will personally
• Where the will has been drafted/executed by someone who is to a major beneficiary under the will.

Question 17

Can a solicitor take instructions in relation to a will from a third-party?

Answer 17

No. Instructions should come from the testator themselves in the absence of third parties.

Question 18

Where the presumption of good intention is applies, what must the party claiming that the will is invalid prove?

Answer 18

a) The testator drafted/executed the will through force or fear.

b) The will was drafted/executed through fraud.

c) The will was drafted/executed under undue influence.

d) There is an actual mistake in the will.

Question 19

What are the requirements under the Wills Act 1837?

Answer 19

a) The will must be in writing and signed by the testator, or by someone else in the presence and by the direction of the testator.

b) The testator must intend for their signature to give effect to the will.

c) The testator’s signature must be done or acknowledged in the presence of two or more witnesses at the same time.

d) Each witness must sign the will or acknowledge their signature.

Question 20

What are the rules in relation to remote witnessing?

Answer 20

• Remote witnessing can only be used where the testator has signed the will themselves.
• The witnessing must take place on a live videocall, not a recording.
• The witnesses and testator can all be in different locations.
• The testator must physically sign the will and then post it to the witnesses to sign physically.

Question 21

What is a priviledged will?

Answer 21

A will made on actual military service.

An oral statement will be valid.

Question 22

What is the burden of proof in relation to the requirements of the Wills Act 1837?

Answer 22

General rule: the person claiming the will is valid must prove its validity.

However, where the will contains an attestation clause, there will be a presumption that all formalities were observed.

In this scenario, the burden of proof switches to the person claiming that the will is invalid.

Question 23

What does it mean if someone dies intestate?

Answer 23

They died without a will.

Question 24

When will the intestacy rules be applied?

Answer 24

1/ Where there is no will.

2/ Where there is a will, but it is invalid.

3/ Where there is a will but not all property is disposed of.

Question 25

How is the intestate’s estate distributed if there is a SURVIVING SPOUSE & ISSUE?

Answer 25

1/ The spouse receives all personal chattels.

2/ The spouse receives a statutory legacy (currently £270,000)

3/ The remaining estate is divided in half. Half is held on statutory trust for the spouse and half is held on statutory trust for the issue.

Question 26

What counts as a surviving spouse?

Answer 26

• The person the deceased was legally married to at the time of death.
• The quality of the relationship is irrelvant. E.g., as long as the couple are legally married they could not get along or live seperately.
• A former spouse has no entitlement from the point of divorce.

Question 27

What counts as the issue?

Answer 27

• All direct descendants of the deceased (children, grandchildren)
• Includes legally adopted children and children born outside of wedlock.
• Step-children are not included!

Question 28

How many days must the surviving spouse survive the deceased by?

Answer 28

28 days. If the surviving spouse dies within 28 days of the deceased, the estate will be distributed as if the surviving spouse was dead at the time of the deceased’s death.

Question 29

What happens to the family home under the intestacy rules?

Answer 29

If the family home is held by joint tenants, the rules of survivorship will apply.

If the family home is owned by the deceased as a sole owner/tenant in common, the family home becomes part of the residuary estate.

If the surviving spouse is living in the family home at the time of death, they can require the personal representative to gift them the home in full/partial satisfaction of their claim.

Question 30

How is the property passed under a statutory trust?

Answer 30

The issue hold a contingent interest in the trust. This is because there are conditions each issue must satisfy in order to inherit their share.

Each issue must either:

• Attain 18 years of age; or
• Be legally married if under 18.

If the child of the intestate pre-deceased the intestate, their share will be divided between their children (the intestate’s grandchildren).

Question 31

How is the intestate’s estate distributed if there is NO SURVIVING SPOUSE?

Answer 31

Where there the deceased had no legal spouse at the time of death, or their spouse died within 28 days of their death, the estate will be distributed in the following order:

a) Issue, if not;
b) Parents, if not;
c) Siblings of whole blood; if not
d) Siblings of half-blood; if not
e) Grandparents; if not
f) Uncles/Aunts of whole blood; if not
g) Unlces/Aunts of half blood; if not
h) The crown

All of the above, except parents and grandparents, inherit on statutory trusts.

Therefore, all must attain the age of 18 or be legally married.

Question 32

How is the intestate’s estate distributed if there is a SURVIVING SPOUSE but NO ISSUE?

Answer 32

The entire estate passes to the surviving spouse.

If they die within 28 days of the intestate, the estate will pass as if there was no spouse.

Question 33

What are the rules in relation to human fertilisation?

Answer 33

A child’s mother is the women who have gave birth to them.

Where the child is created using donated sperm, and the woman is in a legal marriage, the husband will be the legal father of the child.

Question 34

When can a court use extrinsic evidence to determine a testator’s intention?

Answer 34

a) Where any part of the will is meaningless.

b) Where the language used is ambiguous (e.g., I leave £500 to my favourite child)

c) Evidence shows that the language used is ambiguous (e.g., I leave £500 to my daughter but the testators daughter is dead)

Question 35

When can a court rectify a will?

Answer 35

a) Where there has been a clerical error

b) Where the person drafting the will has failed to understand the testator’s instructions

Question 36

When interpreting a will, what property is deemed to pass under the will?

Answer 36

The will is determined to refer to the testator’s estate at the time of death. Not the time of execution.

Question 37

When interpretting a will, how will a court determine which beneficiaries the will refers to if no names are provided?

Answer 37

The beneficiaries will be the people alive at the time of execution.

E.g., I leave £500 to my eldest granddaughter - the gift will go to the person who was the eldest granddaughter at the time of execution, not at the time of death.

Question 38

When interpreting a will, how will a court approach the topic of gender recognition?

Answer 38

Where a person has legally changed their gender, this will not affect the disposal of gifts under a will if the will was executed before the person changed their gender.

However, if the will was executed after they changed their gender, the gift will be affected.

E.g. Sophie legally changes her gender to female in 2021. Sophie’s father executes his will in 2022 stating that he leaves his entire estate to his only son, Mark. Sophie would not inherit the estate as her father was aware of the gender change when executing the will.

Question 39

What happens when a gift fails?

Answer 39

The gift becomes part of the residuary estate.

Question 40

What happens where a gift of residue fails?

Answer 40

There will be partial intestacy and the residuary estate will be distributed in accordance with the intestacy rules.

Question 41

What are the potential reasons for a failed gift?

Answer 41

a) Uncertainty - it is not possible to identify the gift or the recipient of the gift.

b) A beneficiary witnesses the will - the gift to that beneficiary will fail but the will is still valid.

c) Divorce - a former spouse will not inherit where the will was executed whislt they were still married.

d) Ademption - a specific legacy will fail where the testator no longer owns the property at the time of death.

e) Lapse - a gift will fail where the beneficiary pre-deceases the testator UNLESS, the gift was made to 2 or more people or the deceased beneficiary has children.

f) Rejection - where a beneficiary refuses to accept the gift. The gift will either go to the residue or pass to the beneficiary’s children.

g) Forfeiture - where the beneficiary unlawfully killed the testator.

Question 42

Where two or more people die in the same accident, how does the court determine who died first?

Answer 42

The oldest person is presumed to have died first.

Question 43

How can a will be revoked?

Answer 43

a) By marriage - any will executed prior to marriage is revoked unless the earlier will takes a future marriage into account.

b) By a later will or codicil - either will automatically revoke a previous will/codicil unless stated otherwise.

c) By destruction - where a will is physically destroyed (burning, tearing, shredding etc). The destruction must be intended (not accidental) and must be carried out by the testator or someone else by their instruction.

Question 44

What is a mutual will?

Answer 44

A will made by two people, with similar terms, with the agreement that neither party will alter or revoke the will during their lifetime or after the first death.

Question 45

What does it mean if a beneficiary has a vested interst under a will?

Answer 45

The beneficiary will be immediately entitled to the gift upon the testator’s death.

Question 46

What does it mean if a beneficiary has a contingent interst under a will?

Answer 46

The beneficiary must satisfy certain conditions before they can inherit the gift.

e.g., I leave £500 to Harry once he attains 21 years of age.

Question 47

Who is responsible for paying the Inheritance Tax on the individual legacies?

Answer 47

The IHT is usually paid out of the residuary estate.

Question 48

Who is responsible for paying the costs/charges associated with the individual gifts?

Answer 48

The beneficiary

Question 49

What happens if there is no attestation clause at the end of the will?

Answer 49

There will be presumption of due execution and a person who was present at the execution of the will, will need to send an affadavit with the will to obtain a grant of probate.

Question 50

What are the three main occassions when IHT can be charged?

Answer 50

1) Upon Death - IHT taxed on value of the deceased’s estate.

2) Lifetime gifts made within 7 years prior to death - potentially exempt if the transferor survives for 7 years.

3) Lifetime gifts to a company or trust - IHT immediately charged at time of transfer.

Question 51

What is the four step method of calculating IHT?

Answer 51

1) Identify the transfer of value (what has been transferred?)

2) Find the value transferred (the amount transferred/the amount the transferor/deceased’s estate is reduced)

3) Apply any relevant exemptions and reliefs (marriage, charity, agricultural property relief, share/business interest)

4) Calculate tax at appropriate rate (Nil Band Rate, Residence Nil Band Rate, Charitable Giving Rate, Death Rate, Liftetime Chargeable Transfer)

Question 52

John died in 2004, leaving an estate consisting of stocks, shares, and cash valued at £800,000. He was widowed and had never remarried. His wife had left her whole estate to him. He leaves his estate in his will to his children in equal shares with a legacy of £10,000 to a registered charity. He had made no lifetime gifts.

How much IHT is due on John’s estate?

Answer 52

1) Identify the transfer of value

Property passing under a will.

2) Find the value transferred

£800,000

3) Apply any exemptions or reliefs

Charitable exemption
£800,000 - £10,000 - £790,000

4) Calculate tax at the appropriate rate

£325,000 @ 0% (NRB)
£325,000 @ 0% (TNRB)
£140,000 @ 40% (death rate)

= £56,000 of IHT to pay

Question 53

How is the value of quoted shares calculated?

Answer 53

By looking at the Stock Exchange Official List for the date of death.

The list quotes two prices. To calculate the value, take 25% of the difference between the two prices and add it to the lower price.

E.g., The quoted price per share is 102p/106p

The difference between the two prices is 4p.

25% of 4p is 1p

102p + 1p = 103p

Value of quoted share = 103p

Question 54

What transfers are exempt from IHT?

Answer 54

a) Property transferred to the deceased’s spouse

b) Property transferred to a registered charity.

Question 55

What transfers have are entitled to relief from IHT?

Answer 55

a) Business Property Relief

100% reduction in IHT for a business/interest in a business or company shares not listed on a recognised stock exchange.

OR

50% reduction in IHT for company shares that are listed on a recognised stock exchange or land, buildings, machinery owned by the transferor.

To attract BPR, the asset must have been owned by the transferor for 2 years before transfer.

b) Agricultural Property Relief

Question 56

What are the different tax rates in relation to IHT?

Answer 56

a) Nil Rate Band - 0%
If the deceased made no chargeable transfers in the 7 years before death, the first £325,000 of their estate will be taxed at 0%

If the deceased did make any chargeable transfers in 7 years, the NRB is used to pay this.

b) Transferable Nil Rate Band - 0%
Where the deceased survived a spouse and inherited their estate, their spouse’s NRB will not have been used as the transfer was exempt. The deceased can use their spouse’s NRB on top of their own NRB.

c) Residence Nil Rate Band
Where the deceased’s dwelling property is ‘closely inherited’ (e.g., by a child), £175,000 will be charged at 0%. However, if the property is valued less than £175,000, only the vlaue of the property will be 0% tax.

If the property is valued at £2million or more the RNRB is reduced.

£175,000 - (value of estate - £2million) divide brackets by 2.

d) Charitable tax rate - 36%

Question 57

When is IHT paid on the property?

Answer 57

The IHT tax is usually paid by the executors, PRs or trustees using the deceased’s/transferor’s estate.

The beneficiarys will usually only receive the property once the tax had been paid.

Question 58

Who is responsible for paying IHT on what for estates upon death?

Answer 58

Executors/PRs - pay tax on the estate

Trustees - pay tax on trust property

Beneficiary - pay tax on legacy ‘subject to tax’

Question 59

How is the estate rate calculated and what is it used for?

Answer 59

Total IHT due on the deceased’s estate divded by the value of the estate x 100

Estate rate is used to calculate how much IHT is due on each asset/gift

Example: Graham leaves a house valued at £210,000 to Henry and leaves the rest of the estate, vlaued at £190,000 to Ian.

Tax on Graham’s estate:

£325,000 @ 0% (NRB)
£75,000 @ 40% (death rate)
= £30,000 IHT due

£30,000 divded by £400,000 = 0.075 x 100 = 7.5%

Henry’s tax on the house:
£210,000 x 7.5% = £15,750 IHT due

Ian’s tax on residue:
£190,000 x 7.5% = £14,250 IHT due

Question 60

Who is responsible for paying IHT on potentially exempt transactions?

Answer 60

Transferee is liable to pay IHT is transferor dies within 7 years of making the transfer.

If IHT is unpaid 12 months after death, PRs are liable.

Question 61

Who is responsible for paying IHT on lifetime chargeable gifts?

Answer 61

The transferor or trustees.

Question 62

What is the basic rule for the time limits on paying IHT on death estates?

Answer 62

6 months at end of the month of death.

E.g., Samatha dies on 17th April 2024. IHT will be due by 31st October 2024.

If IHT is not paid on time, interest will accrue from day after due date.

Question 63

What property can the IHT be paid by installments?

Answer 63

a) land
b) business or interest in a business

Question 64

What is the time limit on paying IHT on PETs?

Answer 64

6 months after the end of the month of death.

Question 65

What is the time limit on paying IHT on LCTs?

Answer 65

At the time of the transfer.

Deadline = 6 months from end of month of transfer