Wills & Administration of Estates Flashcards
Are PRs liable to pay IHT on joint property which passes on survivorship?
Yes
who does the tax liability for a qualifying interest in remainder under a trust lie with and how is it calculated?
the trustees- calculated by:
value of trust x estate rate = tax liability
N.B. the remainderman is concurrently liable with the trustees for trust property transferred to them before tax has been paid
who is responsible for paying tax on a gift where the enjoyment/ benefit was retained by the donor?
The donee, however, if the tax remains unpaid for 12 months after the end of the month of death the PRs become liable
Who is liable to pay IHT on a chargeable PET?
The transferee, however, if the tax remains unpaid for 12 months after the end of the month of death the PRs become liable
Who is liable to pay IHT on a LCT?
In practice, the trustees pay IHT out of the property they have been given. The transferor is primarily liable
Who has the burden of paying IHT
the transferor decides who should have the burden. they can take it themselves, direct the beneficiaries to pay IHT themselves etc.
When is IHT due for payment?
six months after the end of the month of death
How may tax on property that attracts the instalment option be paid?
In 10 equal yearly instalments, the first falling due six months after the end of the month of death
What property does the instalment option apply to?
1- Land
2- A business/ interest in a business
3- Shares (quoted or unquoted) which gave control of the company to the deceased
4- Unquoted shares which did not give control if:
i-holding of 10% of the value of the companies shares and worth more than £20,000; or
ii- HMRC feels tax cannot be paid in one sum without undue hardship; or
iii- IHT attributed to the shares and any other installment option property in the estate amounts to at least 20% of the IHT payable
Is interest due on the outstanding tax applicable to instalment option property?
No, so long as tax instalment paid on time
Exception: Land
If instalment option property is sold, what is the IHT tax position?
All outstanding tax and interest must be paid
When does IHT become payable on a PET?
6 months after the end of the month of death
When does IHT become payable on an LCT made after 5 April but before 1 October?
30 April in the following year
When does IHT become payable on an LCT made between 2 October and 4 April?
6 months after the end of the month in which the LCT is made
When is any additional tax due on a LCT following death within 7 years due?
6 months after the end of the month of death
What property passes independently of the will and intestacy rules?
1- Joint property
2- Life assurance policies made out for specific individuals
3- lump sums of pension benefit
In what 3 ways can a will be revoked?
1- Subsequent Marriage
2- Destruction
3- Formation of a later will
What are the requirements for a valid will?
Testator must have the necessary mental capacity and intention
What are the 2 limbs of intention?
1- intended to make a will
2- intended to make the particular will now being executed
A testator that has capacity is presumed to haver requisite knowledge and approval unless what?
blind/ illiterate; or
In suspicious circumstances
If someone wanted to challenge a will, what must they prove to prevent it from being admitted to probate?
1- force or fear
2- Fraud
3- Undue Influence
4- Mistake
What is ademption?
a gift in a will failing as the testator no longer owns the property at the time of their death
What is a codicil?
a supplement to a will which adds to or changes it in a minor way. It is executed in the same way as a will
What is the effect of a codicil on specified gifts?
republishes the will, so gifts made out to the person specified at the time the codicil is published, not the original will
What is a grant of representation?
court doc authorising PRs to transfer deceased’s assets to beneficiaries
How many PRs are required to administer an estate
One
what is a benjamin order?
ourt order allowing PRs to distribute the estate on the basis a missing known claimant is dead
What are the 3 Categories of excepted estates for IHT Purposes?
1- Small Estates
2- Estates that mainly fall under the spouse/ charity exceptions and are valued at under £1m
3- Non-dom estates with only UK holding in cash
