Wills and Administration of Estates

Question 1

a solicitor will deal with the deceased’s assets in what order?

Answer 1

assets passing independently over the will
the will
rules of intestacy (fall back position)

Question 2

which property passes independent of a will and the rules of intestacy?

Answer 2

1. joint property (survivorship applies to JTs but not tenants in common - property will pass dependent on their will)
2. insurance policies - the payout of a life insurance policy goes to the person who has died -> insurance company will pay the sums to their personal representatives who will distribute in accordance with the will or the intestacy rules (unless the policy is written in trust for beneficiaries - upon death it will be transferred to the beneficiaries)
3. pension benefits - (where the person dies before they receive their pension)
4. trust property - the trust will be devolved according to its terms

Question 3

after the deceased dies, what does the executor usually do?

Answer 3

make an application to His Majesty’s Courts and Tribunals Service Probate (HMCTS) for a grant of probate which confirms that the will is valid and that the executor has authority to act

the grant of probate will not be issued if there are any concerns as to the validity of the will

Question 4

what are the requirements for a valid will?

Answer 4

1. capacity
2. intention
3. formalities

the absence of any of these will invalidate the will

Question 5

what is the test for capacity?

Answer 5

‘soundness of mind, memory and
understanding’ - Banks v Goodfellow

Testators must understand:

(a) the nature of their act and its broad effects (the fact that they are making a will which will have effect on their death);

(b) the extent of their property (although not necessarily recollecting every individual item); and

(c) the moral claims they ought to consider (even if they decide to reject such claims and dispose of their property to other beneficiaries).

In addition, the testator must not be suffering from any insane delusion which affects the disposition of property.

Question 6

what is the exception to the rule on capacity?

Answer 6

Parker v Felgate:

a will can be valid if the testator has capacity when they give instructions for the will even if they lose capacity by the time the will is executed. but at the time the testator executes the will, they
appreciate that they are signing a will prepared in accordance with their previous instructions

Question 7

what happens if a testator is mentally incapable of making a valid will?

Answer 7

‘statutory will’ may be made on their behalf under the MCA.

The Court of Protection empowers an authorised person to execute the will and then gives effect to the will by affixing the court seal.

The Court of Protection will require full details of the deceased, their family, property and previous wills and will approve a draft will only if it is in the testator’s best interests.

Question 8

if a testator’s mental capacity is in doubt, what should the solicitor who is preparing it do?

Answer 8

follow the ‘golden rule’

The solicitor should ask a medical practitioner to provide a written report confirming that the testator has testamentary capacity and also ask the doctor to witness the will.

The solicitor should record their own view
of the testator’s capacity in a file note.

The written evidence should be kept on the file in case someone challenges the validity of the will after the testator’s death.

Question 9

who has the burden of proof in proving the validity of a will?

Answer 9

that it is for the person who is asserting that a will is valid to prove it

however in most cases, the executor does not have to prove this, as there is a presumption that the testator satisfied the mental capacity test

The presumption applies if the will is rational on its face and the testator showed no evidence of mental confusion before making the will.

In the event that someone wishes to challenge the validity of the will on the ground that the testator lacked capacity, the burden shifts to the challenger to prove lack of capacity.

the courts are less likely to find the testator lacked capacity if an experienced, independent solicitor and a medical practitioner stated they did

Question 10

what is meant by a testator having intention to create a will?

Answer 10

they must have general and specific intention

(general = to make a will as opposed to any other legal doc + specific = must intend to make the will now being executed - the testator must know and approve its contents - exception in Parker v Felgate)

Question 11

where does the burden of proof lie regarding a testator’s intention?

Answer 11

Again, the general rule is that it is for the person asserting that a will is valid to prove it.

However, usually, it is not necessary to prove intention because a presumption of knowledge and approval arises.

A testator who has capacity and has read and executed the will is presumed to have the requisite knowledge and approval.

Question 13

in what circumstances does the presumption of knowledge and approval not apply?

Answer 13

1. Testator blind/ illiterate/ not signing personally

HMCTS will require evidence to prove knowledge and approval before
they will issue a grant of probate.

statement at the end of the will stating that the will was read over to the testator, or read by the testator who knew and approved the contents

2. suspicious circumstances surrounding the drafting and/ or execution of the will (eg the will has been prepared by someone who is to be a major beneficiary under its terms or who is a close relative of a major beneficiary)

the executor or person putting forward the will must remove the suspicion by proving that the testator did actually know and approve the will’s contents

3. Force or fear (through actual or threatened injury), fraud, undue influence (coercion or duress) and mistake (words included without testator’s approval = omitted from probate vs words included but not understood the legal meaning of = not omitted from probate)

Question 14

which cases tell us about the presumption of knowledge and approval in finding a testator’s intention to create a will?

Answer 14

Wintle v Nye - sol drew up will which gave him the bulk of elderly testarix’s large estate

The House of Lords held that the suspicious circumstances of the beneficiary preparing the will meant that there was no presumption of knowledge and approval. The burden of proof was on the solicitor, Nye, to prove that the testatrix knew and approved the contents of the will.
In the circumstances of the case this was a very heavy burden to discharge.

Gill v Woodall - the presumption did not apply where the beneficiary played no part in the preparation of the will

Question 14

should a solicitor accept instructions from a third party to draw up a will for a testator?

Answer 14

no - they should interview the testator in the absence of the third party to ensure that any will drafted reflects the testator’s wishes

Question 14

what is the consequence of someone making an unsubstantiated claim for undue influence in the creation of a will?

Answer 14

must prove undue influence (cannot just allege)

it very difficult for a person to challenge a will on this basis

collect evidence from family, friends and carers

it is such a serious allegation that a claimant
who fails to substantiate their claim will be penalised in costs.

Question 15

why is it to differentiate between actual mistake and misunderstanding as to the true legal meaning of words in a will?

Answer 15

it affects whether the presumption of the testator having knowledge and approval of the will and the will therefore being valid, will apply

the presumption that the testator had the knowledge and approval of the will does not apply where part or all of the will has been included by mistake - may invalidate the will

where there is a misunderstanding to the true legal meaning of the words = presumption still applies

Question 16

which formalities are required to execute a will?

Answer 16

section 9 wills act 1837

1) the will must be in writing and signed by the testator, or by some other person in his presence and by his direction
2) the will must be signed
3) the testator must have intended to give effect to the will by his signature (the testator intended that his signature would cause the will to take effect)
4) the signature must be witnessed

Question 17

would a purely electronic will be sufficient under the formalities required under section 9 of the wills act?

Answer 17

a will can be typed but it unlikely a purely electronic will will be considered as in writing

the purpose of section 9 is to prevent fraud and it would be easy for a third party to fraudulently change a purely electronic will

Question 18

will the following be sufficient signatures for the purposes of section 9 wills act 1837?

signing as ‘your loving mother’

crosses

thumbprints

another party signing the will on the testator’s behalf whilst in the presence of the testator and following their direction

Answer 18

yes all four will be sufficient

note - regarding another person signing the will on behalf of the testator - the testator must give the person a positive and discernible direction (verbal or non- verbal) that they want the person to sign on their behalf.

Question 19

explain what is meant by the signing of the will must be witnessed according to section 9 wills act 1837

Answer 19

The testator must either sign in the presence of two witnesses or acknowledge to the witnesses that it is their signature on the Will.

signing - two stages:

1) testator must sign in the presence of two witnesses (the two witnesses must be present together)

2) the witnesses must sign to say they have seen the testator sign the will (they don’t have to do this together/at the same time)

presence = mental (witnesses must be aware the testator is signing the will) and physical presence (unobstructed view of the signing)

Question 20

are there any rules in relating to the capacity of witnesses to the signing of a will?

Answer 20

no but they must be capable of understanding the significance of being witnesses to a signature

note - section 15 wills act 1837
If either of the witnesses is a beneficiary under the will or is the spouse or civil partner of a beneficiary, the will remains valid but the gift to the witness or to the witness’s spouse/civil partner fails

Question 21

what is the legal position on remote witnessing?

Answer 21

wills made between 28 September 2020 and 31 January 2024 - witnesses being present to the signing / acknowledgement of the will = able to be done via videocon

only applied to where testator was signing their own will (where a third party was signing on the testator’s behalf - remote presence is not enough)

1) pre-recorded videos = not enough, must be seen in real time
2) the witnesses and the testator can be in three separate locations via a three-way link
3) The testator must physically sign the will (or acknowledge an earlier physical signature). Electronic signatures are not permitted. The testator must date the will with the date of signature.
4) the will must then be taken or posted to the witnesses
5) the witnesses must then sign the will themselves in the virtual presence of the testator and ideally in the presence of the other witness too
6) The witnesses will sign with the date on which they are signing, which may be different from the date on which the testator signed and the date on which the other witness signs. The execution process is not complete until everyone has signed.

If the testator dies before all signatures have been added, the will cannot take effect.

Question 22

where does the burden of proof lie regarding valid execution of the will?

Answer 22

it is for the person who is asserting a will is valid to prove it.

However, in most cases, no proof is necessary because there is a presumption of due execution if the will includes a clause which recites that the s 9 formalities were
observed, such as, ‘Signed by the testatrix in our joint presence and then by us in hers’. = attestation clause

The presumption means that anyone challenging the validity of the will on the ground that it was not validly executed has the burden of proving this was the case.

Question 23

what is the exception to the rule that wills must comply with the formalities in section 9 wills act 1837 in order to be valid?

Answer 23

A will made on actual military service or by a mariner or seaman at sea may be in any form, including a mere oral statement (s 11 Wills Act 1837).

only requirement = intends to dispose of his property after death

Question 24

what happens if there is no attestation clause in a will? can it still be executed?

Answer 24

If the will does not contain an attestation clause, HMCTS will require:

1) an affidavit of due execution (or witness statement verified by a statement of truth) from a witness or any other person who was present during the execution

OR failing the above…

2) an affidavit of handwriting evidence to identify the testator’s signature

OR

3) refer to a judge

Question 25

what duties does a solicitor have regarding the execution of a will?

which case?

Answer 25

ideally the execution would be done in the sol’s office so it can be supervised

if done in testator’s own time - sol should explain how to sign the will and provide a warning that beneficiaries and those married to beneficiaries should not be witnesses (otherwise it affects their gifts)

If the testator executes the will at home, the solicitor should ask them to return the will so that the solicitor can check that s 9 appears to have been complied with and that the witnesses are not beneficiaries or their spouses or civil partners.

failure to do the above = potential negligence

It has been held that solicitors preparing wills owe a duty of care to the prospective beneficiaries - Humbleston v Martin Tolhurst Partnership (sols secretary incorrectly states will is in order - cohabitee sued for negligence + received damages equivalent to that which she would’ve received under the will)

Question 26

in which situations will the rules of intestacy apply?

Answer 26

1. where no will has been created or all wills have been successfully revoked (total intestacy)
2. Where there is a will, but for some reason it is invalid or it is valid but fails to dispose of any of the deceased’s estate (total intestacy).
3. Where there is a valid will, but it fails to dispose of all the deceased’s estate (partial
   intestacy). This will occur if the will simply omitted a gift of residue or if a residuary gift
   fails, for example because the residuary beneficiary has predeceased. In a partial
   intestacy the intestacy rules only apply to that part of the estate not disposed of by
   the will.

Question 27

is it possible to make any kind of provision or declaration to exclude specific people from inheriting under the intestacy rules?

Answer 27

no they are mandatory and the only way to avoid them is to make a will

There are situations in which the rules can be displaced but these arise in very limited circumstances, such as by an order made under the Inheritance (Provision for Family and Dependants) Act 1975

Question 28

if there is no will, do all the deceased’s assets become subject to the rules of intestacy?

Answer 28

no - remember some property passes independent of a will and the rules of intestacy e.g property held as joint tenants, insurance policies, pension benefits, trusts

Question 29

the intestacy rules impose a ____________ ________ over all the property

explain what the PRs role is in these circumstances, what should they do?

Answer 29

statutory trust

that property is then held on trust by the PRs

The trust provides that the PRs must pay:
the funeral
testamentary
administration
expenses (such as legal fees and any tax)
any debts (if necessary, the PRs can sell assets from the estate in order to raise cash to pay these debts and expenses)

The balance remaining (after setting aside a fund to meet any pecuniary legacies left by the deceased in the will) is the ‘residuary estate’ to be shared among the family under the rules of distribution set out in s 46 AEA 1925.

Although the PRs have a power of sale, they are not required to sell the assets which form the residuary estate. The PRs have power under s 41 AEA 1925 to appropriate assets in or towards satisfaction of a beneficiary’s share (with the beneficiary’s consent).

Question 30

Distribution where there is a surviving spouse or civil partner and issue…

according to the rules of intestacy, what does ‘spouse’ mean?

Answer 30

the person who the deceased was married to at the time of their death

all spouses are treated equally so the nature/quality of the relationship is irrelevant - even if the spouse has a new partner

a former spouse is excluded from the definition, but only from the point when the divorce is actually finalised - Re Seaford

a party to a void marriage is not a spouse for the purposes of the intestacy rules (e.g. one party already married or one is under-aged - treated as void ab inito - from the beginning) - Shaw v Shaw

a voidable marriage (e.g. because one entered into it under duress) is void until the court makes a nullity order

the above applies equally to civil partners

Question 31

Distribution where there is a surviving spouse or civil partner and issue…

what does ‘issue’ mean?

Answer 31

all direct descendants of the deceased e.g. children, grandchildren, great-grandchildren

adopted children included

included = those who’s parents were not married at the time of their birth

child of the spouse/civil partner/step children = not included

Question 32

where the intestate survives both the spouse/civil partner and issue, the ‘residuary estate’ is distributed as follows…..

Answer 32

a) the spouse/civil partner receives personal chattels, personal chattels are tangible moveable property other than any
such property which–

(i) consists of money or securities for money, or
(ii) was used at the death of the intestate solely or mainly for business purposes, or
(iii) was held at the death of the intestate solely as an investment.

b) In addition, the spouse or civil partner receives a ‘statutory legacy’ free of tax and costs plus interest from death until payment. The rate of interest payable is the Bank of England rate that had effect at the end of the day on which the intestate died. The ‘statutory legacy’ is a set amount fixed by Parliament and for deaths on or after 26 July 2023 is £322,000. If the residuary estate, apart from the personal chattels, is worth less than £322,000, the spouse receives it all (in a partial intestacy the spouse does not have to account for anything received under the will).

(c) The rest of the residuary estate (if any) is divided in half. One half is held on trust for the spouse or civil partner absolutely. The other half is held for the issue on the statutory trusts.

(you take the statutory legacy from the estate and then the spouse/cp gets half of the residuary estate and issue gets the other half of the residuary estate. if not residuary estate - issue gets nothing)

Question 33

The intestate’s spouse or civil partner must survive the intestate for ________ in order to inherit.

Answer 33

28 days

Question 34

what happens to the family home under the rules of intestacy?

Answer 34

(if not held as joint tenants)

if the family home is held in the intestate’s sole name or as tenants in common - intestate’s interest in the home forms part of the residuary estate and therefore subject to the intestacy rules

under the rules, the family home will not automatically pass to the surviving spouse/ civil partner

Question 35

what could the surviving spouse/civil partner do in the following scenario?

1. the surviving spouse’s entitlement under the intestacy rules amounts to £500,000 and the residuary estate includes the family home worth £300,000 (held in the
   intestate’s sole name)
2. what about if the spouse’s entitlement was £250,000?

Answer 35

looking at the right to appropriate the family home - only applicable if the spouse/cp is living in the property

1. if the family home forms part of the residuary estate passing on intestacy, the surviving spouse/ civil partner can require the PRs to appropriate the family home in full or partial satisfaction of their interest in the estate.
2. the spouse/ civil partner may still require appropriation provided they pay the difference, ‘equality money’,
   to the estate

Question 36

if a spouse/cp elects to use their right of appropriation to the family home, what must they do?

Answer 36

The surviving spouse/ civil partner must formally elect to exercise this right and notify the PRs in writing within 12 months of the grant of representation

Question 37

That part of the estate which does not pass to the surviving spouse passes to the intestate’s issue on ‘the statutory trusts’

The statutory trusts determine membership of the class of beneficiaries, and the terms on which they take, as follows……

Answer 37

1) primary beneficiaries = children alive at testator’s death (if none alive, next is remoter issue e.g. grandchildren who are alive)

2) The interests of the children are contingent upon attaining the age of 18 or marrying or forming a civil partnership (whichever happens first). Any child who fulfils the contingency at the intestate’s death takes a vested interest

3) If any child of the intestate predeceased the intestate, any children of the deceased child (grandchildren of the deceased) who are living at the intestate’s death take their deceased parent’s share equally between them, contingently upon attaining 18 or earlier marriage or formation of a civil partnership.

Great grandchildren would be included only if their parent had also predeceased the intestate. This form of substitution and division, whereby each branch of the family receives an equal share, rather than each member receiving an equal share, is known as a ‘per stirpes’ distribution. (per stirpes distribution)

4) If children or issue survive the intestate but die without attaining a vested interest, their interest would normally fail and the estate distributed as if they had never existed.
However, by virtue of an amendment to s 47 AEA 1925, if they die without attaining a vested interest but leaving issue, they will be treated as having predeceased the intestate so that they can be replaced by their own issue. To be substituted, the issue must be living at the intestate’s death.

Question 38

what happens when the intestate leaves a surviving spouse/cp but no issue?

Answer 38

the whole estate goes to the spouse/cp

note - spouse/cp must survive the intestate for 28 days in order to take

Question 39

how is the residuary state distributed where there is no surviving spouse/cp?

Answer 39

the residuary estate is divided between the intestate’s relatives in the highest category in the list below:

∘ issue
∘ parents
∘ brothers and sisters of the whole blood
∘ brothers and sisters of the half blood
∘ grandparents
∘ uncles and aunts of the whole blood
∘ uncles and aunts of the half blood
∘ the Crown, Duchy of Lancaster, or Duke of Cornwall (bona vacantia).

Each category other than parents and grandparents takes ‘on the statutory trusts’. This means
that members of the specified class categories take the estate equally (children under 18 take
their interest contingently upon attaining 18 or marrying earlier), and that issue of a deceased
relative may take that relative’s share. (Again, a person with an interest under the statutory trusts who dies without attaining a vested interest but leaving issue, will be treated as having predeceased the intestate so that they can be replaced by their own issue. To be substituted, the issue must be living at the intestate’s death.)

This means that relatives not mentioned in s 46 (eg nephews, nieces and cousins) may inherit
on intestacy if their parents died before the intestate.

The list works on an all or nothing basis. Working from the top, if anyone falls within the category, they will receive the whole of the entitlement (divided equally if there is more than one person in the category) and those in the next and lower categories receive nothing

Question 40

Tom dies intestate. He was not married to his partner, Penny, although the couple have a son, Simon, aged 13, Tom’s only child. Tom’s parents predeceased him, but he is survived by his only sibling, his brother, Bob, aged 40.

how will his estate be distributed?

Answer 40

looking at distribution where there is no spouse / cp

Tom’s estate is held on trust for Simon, contingently upon attaining 18 or marrying earlier.

If Simon dies before the contingency is fulfilled, Tom’s estate passes to Bob absolutely.

remember you can only vest your interest /take it up when you are 18/ married, so if you die before then, the estate goes to the next in the list

Question 41

Rose, a widow aged 80, is cared for by her step- daughter, Katya (the child of her deceased husband’s first marriage). Her only living blood relatives are cousins, the children of her mother’s brothers and sisters. Rose dies intestate.

how will his estate be distributed?

Answer 41

looking at distribution where there is no spouse / cp - look at list

Her estate is divided ‘per stirpes’ between her cousins (and the children of any cousins who predeceased her).
Katya receives nothing from Rose’s estate.

Question 42

what discretion does the crown have where an estate is passed to it bona vacantia?

Answer 42

discretion to provide for dependants of the intestate,
or for other persons for whom the intestate might reasonably have been expected to make
provision. That discretion could be exercised, for example, in favour of an individual who had
a close relationship with the intestate, but no entitlement under the intestacy rules such as a
step- child or a cohabitant.

The Treasury Solicitor’s policy is to require proceedings to be brought under the Act if possible as this enables all potential claimants to be involved and their respective interests weighed.

Question 43

when looking at the distribution of an estate, what is the position on adopted children?

Answer 43

for intestacy purposes, adopted children are children of their adoptive family (not their natural family)

If a person who was adopted dies intestate without spouse or issue, their estate will be distributed between the closest relatives in the adoptive family.

An adopted child may also inherit on the intestacy of any member of their adoptive family.

if a minor has a contingent interest in an estate and is subsequently adopted, their interest is preserved - this
exception is limited to parents, so an adopted child will still lose a contingent entitlement to the estate of other relatives.

Question 44

what is the legal position regarding division of an estate where children are born as a result of assisted reproduction

Answer 44

where a mother uses donated sperm it is her spouse or CP who is the father

can give notice that male cohabitant is to be the legal father

surrogacy - the ‘commissioning parents’ = able to apply to court for a parental order which confers legal parenthood exclusively to them

Question 45

Ann and Ben witness Tariq’s signature on his will. In the will Tariq gives £3,000 to Ann and £2,000 to her husband, Hari.

which is correct?

a) Ann cannot take her legacy but Hari can take is legacy

b) both Ann and Hari are unable to take their respective legacies

Answer 45

B is correct. A will witnessed by a beneficiary or the spouse (or civil partner) of a beneficiary remains valid but the beneficiary loses their entitlement (s15 Wills Act 1837). Ann has acted as a witness and so she will lose her entitlement as a beneficiary. As Ann is Hari’s spouse, Hari will also lose his entitlement (C is wrong).

Question 46

if an executor of a will is also a witness of a will, does it make the will invalid?

Answer 46

no

Question 47

In order to benefit from a parent’s estate under the intestacy rules an adult child must survive their deceased parent by 28 days. true or false?

Answer 47

It is false. Under the intestacy rules the 28-day survival requirement only applies to a spouse, not to the other categories of potential beneficiaries.

Question 48

under the intestacy rules, does the family home automatically get transferred to the spouse/cp?

Answer 48

no - there is no automatic right for the family home go to the spouse/cp

the surviving spouse/ civil partner can require the PRs to appropriate the family home in full or partial satisfaction of their interest in the estate, if the spouse/ civil partner is living in the property.

Question 49

When interpreting a will, the task is to discern the testator’s intentions through the language of the will itself. in trying to establish those intentions, the court applies two basic presumptions, what are they?

when will the presumptions be rebutted?

Answer 49

a) non-technical words are given their ordinary meaning

b) technical words are given their technical meaning

presumptions rebutted = if from the will (and any admissible extrinsic evidence)
it is clear that the testator was using the word in a different sense.

Question 50

what is the basic rule when the court is interpreting the testator’s intention?

Answer 50

The court interprets the will by looking at the words in the will itself.

The basic rule is that the court is not prepared to consider other evidence in order to try to establish what the testator
intended.

If the meaning remains unclear the gift will fail for uncertainty

Question 51

what is the exception to the basic rule regarding a court’s interpretation of a testator’s intention in their will?

which case?

Answer 51

S21 Administration of Justice Act - permits extrinsic evidence (including evidence of declarations made by the deceased) to be admitted in one of three circumstances:

(a) in so far as any part of it is meaningless;
(b) in so far as the language used in any part of it is ambiguous on the face of it;
(c) in so far as evidence, other than evidence of the testator’s intention, shows that the language used in any part of it is ambiguous in the light of surrounding
circumstances.

Thorn v Dickens [1906] - ‘all to mother’ but mother was dead, extrinsic evidence allowed showing he referred to his wife as ‘mother’

This was only allowed because there was no one fitting the description of ‘mother’ when the will was made.

Question 52

the court does not have the power to rewrite the testator’s will, but it does have the very limited power to ____________ or _________

in what circumstances could the court use this limited power?

give cases

Answer 52

correct or rectify the will - s.20 ADA

this arises where the testator’s intentions are clear, but the wording of the will does not carry them into effect

failure to carry out the testator’s clear intentions must have one of two causes:

1. either in consequence of a clerical error
   (Joshi v Mahida)
   OR
2. a failure to understand instructions e.g. sol misunderstood client’s instructions
   (Sprackling v Sprackling)

very narrow

Question 53

in what circumstances would it not be possible to rectify a will?

Answer 53

solicitor who wrote the will misunderstood the law or thought that the words chosen achieved the desired outcome, but they did not do so.

Question 54

what happens if words are included in a will by mistake?

Answer 54

the court may allow the will to be admitted to probate with those words omitted

but may also raise issues re testator’s knowledge and approval

Question 55

what is the basic rule regarding assets which form the subject matter of a gift?

Answer 55

s. 24 WA

the basic rule is that the assets are determined according to those in existence at the date of death – the will
is said to ‘speak from the date of death’.

A gift of ‘all my estate’ or ‘all the rest of my estate’ takes effect to dispose of all property
the testator owned when they died, whether or not the testator owned it at the time the will was made.

If the testator uses the word ‘my’ when referring to a specific asset (eg ‘my’ car) it is possible that the court could interpret this as meaning the gift is of the car which the testator owned at the date of the will.

However, if the asset concerned is generic in that it is capable of increase or decrease between the date of the will and the date of death, eg ‘my collection of cars’, then this will be taken to mean the cars in the collection at the date of death.

Question 56

what is the general rule regarding beneficiaries who are not named and are instead just described?

Answer 56

this basic rule differs froms.24 WA

beneficiaries are construed as to people alive at the time of the will’s execution - ‘speaks from the date of execution’ (not the time of death

If the will contains a gift made, say, to ‘Kate’s eldest daughter’ this is construed as a gift to the person who fulfilled that description when the will was made. If Kate has two daughters, Emily and Jenny, and Emily is the elder of the two, the gift passes to Emily. If Emily predeceases the testator, the gift does not pass to Jenny; although she is now Kate’s eldest surviving daughter, she did not fit the description at the time the will was executed.

Question 57

as a general rule, when gifts are left to family, family means blood relatives and not step children, which case was the exception to this?

Answer 57

Reading v Reading

The court found that there was sufficient evidence to demonstrate that the testator had intended his step- children to share a pecuniary legacy with his own children: the will included a substitutional gift of residue to both his own children and his step- children in the event that his second wife predeceased him, and the general wording
suggested step- children were intended to share in both cases.

Question 58

Ann dies in 2024 with a will leaving everything to ‘my nieces equally’.

One of her (now nieces formerly nephew) David obtained a gender recognition as a woman (Diana) in 2020.

is Diana entitled to anything?

are there any circumstances in which she would not be entitled to anything?

Answer 58

If the will is made before 4 April 2005, Diana cannot share in Ann’s estate because prior to the GRA, she would’ve be considered a nephew. If Ann’s will is made on or after 4 April 2005, David’s new gender will be recognised and she will be Diana/niece.

Question 59

if the devolution of property is different to what it would’ve been if the beneficiary hadn’t changed their gender, what can be done?

in other words where the intention of the will is defeated because of acquirement of gender…

Answer 59

make an application to the High Court

what powers does the High Court have if it is satisfied it ought to make an order?

it could order payment of a lump sum, transfer or settlement of property.

Question 60

what are trustees/PRs duties regarding investigating acquirement of gender in their administration of the estate?

Answer 60

they are protected from having to make enquiries about whether a full gender recognition certificate has been issued or revoked

and they are protected from any liability that may arise in relation to this

however this does not prevent the person with the acquired gender from following the property (unless it has been passed onto a third party who purchased it for value in good faith and without notice)

Question 61

a gift may fail for many reasons, what is the effect of a gift failing?

Answer 61

falls into the residuary estate and will be taken by the residuary beneficiary

where a gift of residue fails there will be a partial intestacy and the residuary
estate will pass under the intestacy rules

Question 62

what are the reasons a gift may fail?

what steps may the court take to try and prevent the gift failing?

Answer 62

1. uncertainty (as to the subject matter or recipient of the gift)
   - court may consider their powers of rectification
   - exception = charity is not sufficiently identified in the will, but if it is clear that the gift is exclusively for charitable purposes the court can direct which charity is to benefit.
2. beneficiary or their spouse witnesses the will (remember it doesn’t invalidate the will)
3. divorce and dissolution
   - Where after the date of the will the testator’s marriage or civil partnership is dissolved, annulled or declared void, any gifts left to former husband/wife/CP will fail
4. ademption
   - A specific legacy (ie a gift of a particular item or group of items of property) will fail if the testator no longer owns that property at death. The gift is said to be ‘adeemed’. Ademption usually occurs because the property has been sold, given away or destroyed during the testator’s lifetime.
   -Problems may arise where the asset has been retained but has changed its nature since the will was made. For example, where the will includes a specific gift of company shares, the company may have been taken over since the will was made so that the testator’s shareholding has been changed into a holding in the new company. In such a case, the question is whether the asset is substantially the same, having changed merely in name or form, or whether it has changed in substance. Only if there has been a change in substance
   will the gift be adeemed.
   - where the testator disposes of the property described in a specific gift but before death acquires a different item of property which answers the same description; for example a gift of ‘my car’ or ‘my piano’ where the original car or piano has been replaced since the will was made. It has been held that the presumption in such a case is that the testator intended that the specific gift was to be of the particular asset they owned at the date of the will so that the gift is adeemed.
5. Lapse
   - where the beneficiary of the gift dies before the testator (falls into residuary estate and if fails in there = intestacy)
6. Disclaimer
   - where the beneficiary refuses to accept the will
   - falls into residue or if not accepted by residuary beneficiary = intestacy
7. Forfeiture
   - shouldnt profit from killing the testator
   - exception of court intervention in unlawful killing

Question 63

a gift has been left to a beneficiary under a valid will. the testator dies and shortly after the beneficiary also dies, what happens to the gift?

Answer 63

goes into the beneficiary’s estate

Question 64

if the testator and the beneficiary die at the same time and the order of their deaths cannot be proven, what happens?

which case

Answer 64

the elder of the two is deemed to have died first

if the testator was older than the beneficiary,
the gift takes effect and the property passes as part of the beneficiary’s estate.

Scarle v Scarle [2019]

Question 65

If a gift is made ‘to A and B jointly’ and A dies before the testator, does B get the gift?

what about if the will gifted ‘everything to A and B in equal shares’?

Answer 65

yes - the whole gift passes to B (the gift has not lapsed)

no - the gift contains words of severance. A’s share lapses and B takes only one share.

A’s lapsed share will pass under the intestacy rules

Question 66

what is the exception to the doctrine of lapse?

Answer 66

Section 33 WA
where a will contains a gift to the testator’s child or remoter descendant and that beneficiary dies before the testator,
leaving issue of their own who survive the testator, the gift does not lapse but passes instead to the beneficiary’s issue

Question 67

what is the rule of forfeiture

what is the exception to the rule of forfeiture

what case

Answer 67

where a beneficiary of a will who kills the testator wont receive anything they would’ve been entitled to under the will

exception = unlawful killing (NOT MURDER) the court can intervene but must not intervene unless they are satisfied the justice of the case demands it having regard to the conduct of the deceased, the offender and the surrounding circumstances

must apply for relief within three months of the killing

Ninian v Findlay

(NOTE - IF THE SBAQ SAYS MURDER = NEVER EXCEPTION)

Question 68

what are the three methods of revocation?

summarise them

Answer 68

1. by a later will or codicil

-If a will does not contain an express revocation clause, it operates to revoke any earlier will or codicil by implication to the extent that the two are inconsistent.
- conditional revocation

2. by destruction

• ‘burning, tearing or otherwise destroying the same by the testator or by some person in his presence and by his direction with the intention of revoking the same’
• crossing out wording or writing revoked on the will = wont be destroyed - physical destruction is required
• if signature crossed out, the partial destruction may be seen to destroy the whole will
• if a less substantial part of the will is destroyed, may just destroy that part of the will
• The test is whether the remainder of the will is intelligible and can still operate in the absence of the destroyed part
• Cheese v Lovejoy - must have intention + destruction (e.g. accidental destruction wouldnt revoke because there is no intention)
• doctrine of dependent relative revocation - revocation conditional on for example a future will being drafted - if future will is not drafted, older version remains valid even if destroyed

3. by marriage/ formation of a civil partnership
   - exception = expected marriage with the particular person and a wish that the will is not to be revoked
   - a general hope of marriage is not sufficient

Question 69

looking at revocation of wills - what is the doctrine of mutual wills?

Answer 69

‘Mutual wills’ = the parties agree that neither party will alter or revoke either will after the death of the first testator.

In effect, there is a contract between the two parties that the terms of the wills are binding and cannot be amended unilaterally after the death of the first testator.

if the remaining testator tried to revoke the deceased’s will = doctrine of mutual wills steps in to create a constructive trust over the deceased’s estate for the original beneficiaries - in other words the original will remains valid

main difference from mirror wills = agreement not to revoke

Question 70

when will alterations take effect + not take effect?

think of obliteration

Answer 70

if they are done before the will is executed = valid provided the testator intended for them to be part of the will

the general position = alterations are presumed to have been made after the will was executed unless the contrary can be proved

alterations made after the will was executed will be valid if they themselves have been executed like a valid will (the initials of the testator + witnesses will suffice)

• An alteration which obliterates the original wording revokes the original wording by
  destruction, provided that the act of destruction is accompanied by the intention to revoke.
• The court may be prepared to apply the conditional revocation rule (dependant relative revocation) where the testator obliterates the original wording and adds some substitute wording e.g crosses out a gift of 10k so that it is wholly unreadable and writes above it 20k (+ validly executed like a will)

Question 71

testatrix appoints her husband to be executor but they subsequently divorce.

will the husband be the executor?

Answer 71

the appointment will not have effect because it is treated as though the husband predeceased her

this is why it is often prudent to appoint more than 1 executor

(no more than 4 can apply for grant of probate for the same assets)

Question 72

what is the default position on who pays inheritance tax when administering an estate?

a testator gifts their daughter a gift, what is the effect of the following wording:
‘subject to tax’
‘free from tax’

Answer 72

The default position is that the IHT on
the individual legacies is paid out of the residuary estate (so the legatee doesnt pay it)

‘subject to tax’ means the daughter would be responsible for the IHT on the gift

‘free from tax’ means the IHT will be paid out of the residuary estate

Question 73

if a will is silent on the costs of transporting a gift to the relevant beneficiary, who bears the costs?

a testator gives their daughter a house which has remaining mortgage debt on it. the will is silent as to who will inherit the mortgage debt. who inherits it?

Answer 73

the beneficiary

the mortgage debt falls on the beneficiary who receives the charged property (ADA)

Question 74

a testator leaves a gift for his daughter in his will. the daughter pre-deceases the testator. the daugter has a son. who is awarded the gift

Answer 74

the son

and if the son predeceases the testator - goes into his estate or fails and becomes partial intestacy?

ASK - think the gift only goes into the rules of intestacy if it fails so it would go into the son’s estate

Question 74

why is putting an express substitution in for gifts awarded in a will important?

Answer 74

so that the gift doesn’t fail and become subject to the rules of intestacy

Question 75

should a sol take instructions from a third party in drafting the will?

Answer 75

code of conduct says you only act for clients on instructions from the client, or from someone properly authorised to provide instructions on their behalf

so in normal circumstances can take instructions from third party in some circumstances, however solicitors should NOT take instructions from anyone but the client for the drafting of a will.

It would not be in the best interests of the client to take instructions from an intermediary.

Question 76

what are the professional conduct issues that arise when a testator appoints the sol who has drafted the will to also be their executor?

in what circumstances could the sol do this?

Answer 76

gives rise to a potential ‘own interest conflict’ because the solicitor will charge
remuneration for acting as executor

you should be satisfied that the client has made their decision on a fully informed basis. This includes:

• explaining the options available to the client regarding their choice of executor
  (ie if the estate is small and straightforward, informing them they may not need a sol as executor and it may not be cost effective)
• ensuring the client understands that an executor does not have to be a professional
  person or a business, that they could instead be a family member or a beneficiary
  under the will, and that lay executors can subsequently instruct a solicitor to act
  for them if this proves necessary (and can be indemnified out of the estate for the
  solicitors’ fees);
• recording advice that is given concerning the appointment of executors and the
  client’s decision.

Question 77

Personal representatives (PRs) and trustees have a number of statutory administration powers. Some may need to be amended. A will which might give rise to a trust (for example, because there is a substitutional gift to children of a primary beneficiary who predeceases the testator) will benefit from the inclusion of even more express powers.

list the powers of PRs that should be included in all wills irrespective of whether they give rise to a trust

Answer 77

– Charging clause
– Power to appropriate assets without the beneficiary’s consent (s 41 gives PRs the power to appropriate any assets in the estate in or towards satisfaction of any legacy or any interest in residue provided that the appropriation does not prejudice any beneficiary of a specific legacy. Section 41 provides that the legatee to whom the assets are appropriated (or their
parent or guardian if they are a minor) must consent to the appropriation.)
– Power to insure
– Receipts (infant beneficiaries and charities)
– Self- dealing (The fiduciary position of PRs and trustees prevents them from entering into any transaction where their duties and personal self- interest conflict)

Question 78

Personal representatives (PRs) and trustees have a number of statutory administration powers. Some may need to be amended. A will which might give rise to a trust (for example, because there is a substitutional gift to children of a primary beneficiary who predeceases the testator) will benefit from the inclusion of even more express powers.

list the powers that would be considered where a trust may arise

Answer 78

– Power to appropriate assets without the beneficiary’s consent (s 41 doesnt apply here so would need to include this power expressly)
– Power to invest
– Power to purchase land
– Power to sell personalty
– Power to use trust income
– Power to make advancements of trust capital
– Clauses limiting control by beneficiaries
– Special provisions if the trust may include land or the testator’s business

Question 79

create a will in 2009 and leave to my wife. in 2010 get a divorce. in 2011 get remarried. in 2012 use codicil to amend gift to daughter. does the current or previous wife get the estate?

Answer 79

the current wife - the codicil republishes the date of the will

remember for beneficiaries, the will speaks from execution

Question 80

what are the three main occasions when IHT may be charged?

Answer 80

1. death
2. lifetime gifts made within 7 year of the donor’s death
3. lifetime gifts to a company or a trust

Question 81

IHT is charged on ‘the value transferred by a chargeable transfer’. The term ‘chargeable transfer’ is defined as ‘a transfer of value which is made by an individual but is not an exempt transfer’.

the charge may apply in three situations, what are they?

Answer 81

(a) the transfer on death; or
(b) a lifetime transfer which is potentially exempt when it is made but becomes chargeable because the transferor dies within seven years; or
(c) a lifetime transfer which is immediately chargeable at the time when it is made.

Question 82

what are the steps to calculate IHT?

Answer 82

Step 1: Identify the transfer of value
Step 2: Find the value transferred
Step 3: Apply any relevant exemptions and reliefs
Step 4: Calculate tax at the appropriate rate

Question 83

what is a transfer of value?

Answer 83

• A lifetime transfer of value is any disposition which reduces the value of the transferor’s estate.
• A gift of an asset reduces the value of the transferor’s estate, whereas a sale at market value
  will simply exchange the asset for cash and so there will be no reduction.
• On death, tax is charged as if the deceased had made a transfer of value of their estate.

Question 84

what is meant by estate rate?

how does it work?

Answer 84

the average rate of tax applicable to each item of property in the estate

tax is divided between the various assets in the estate proportionately, according to their value.

Question 85

when must inheritance tax be paid on death estates?

Answer 85

IHT is due for payment six months after the end of the month of death

(although PRs will normally pay earlier in order to speed up the administration of the estate as any IHT due must be paid before the grant of representation can be obtained)

if not paid in time, interest runs on the outstanding amount

Question 86

what is the instalment option? when are payments due and which kinds of land does it apply to?

Answer 86

• any tax payable may be paid in 10 equal yearly
  instalments, the first falling due six months after the end of the month of death
• use estate rate to apportion the tax

(a) land of any description;
(b) a business or an interest in a business;
(c) shares (quoted or unquoted) which immediately before death gave control of the company to the deceased;
(d) unquoted shares which do not give control if either:
(i) the holding is sufficiently large (a holding of at least 10% of the nominal value of the company’s shares and worth more than £20,000); or
(ii) HMRC is satisfied that the tax cannot be paid in one sum without undue hardship; or
(iii) the IHT attributable to the shares and any other instalment option property in the estate amounts to at least 20% of the IHT payable on the estate.

Question 87

how does interest accrue when using the instalment option to pay income tax?

Answer 87

shares/business/agricultural land = no interest is due on the outstanding tax provided that each
instalment is paid on the due date

other land = interest is payable with each instalment (apart from the first) on the amount of IHT which was outstanding for the previous year

NOTE If the instalment option property is sold, all outstanding tax and interest becomes payable.

Question 88

when does IHT become due on a PET?

Answer 88

Any IHT on a PET that has become chargeable is due six months after the end of the month of death.

instalment option may be available

Question 89

A woman executes a valid will, leaving all her estate to her cohabitee. If her cohabitee should predecease her then the will states that her estate should pass to her brother.

Two years later the woman and her cohabitee have a daughter together, and then the woman marries her cohabitee. The woman’s husband dies five years later. The woman then validly executes a codicil to her will stating that she wishes her estate to pass to her daughter instead of her deceased husband and in all other respects confirms the original will.

Later the woman dies, and the only relatives who survive her are her brother and her daughter, who is aged 19 years.

on the womans death does the daughter inherit the estate? why?

Answer 89

Yes, because the original will was confirmed when the woman made the codicil and the daughter inherits under the terms of the republished will, as read in the light of the codicil.

Question 90

what is the document which confirms the PRs’ authority and their title to the deceased’s assets?

Answer 90

the grant of representation

applications for grants are made to HMCTS

sols can provide advice to PRs on this procedure

Question 91

how do you identify who is the PR?

Answer 91

Question 92

how many PRs will be needed and how many trustees would be needed where the administration of an estate requires the sale of land?

Answer 92

• only need 1 PR because one PR can give the purchaser a good receipt for the sale proceeds
• in contrast, a purchaser will require either 2 trustees or a trust corporation

Question 93

looking at the administration of a deceased’s estate, where one of the beneficiaries is an infant (‘a minority interest’) or only has a life interest, how many executors and how many administrators would usually be required (instead)?

Answer 93

• two administrators usually required
• in contrast one PR can act alone

Question 94

where does an executor derive their authority to act in the administration of an estate from?

where does an administrator derive their authority from?

Answer 94

• the will
• the grant of probate just confirms this power
• grant = conclusive evidence of the title of the executors to the deceased’s assets and of the validity and contents of the will

administrators
- power is from the grant of letters of administration
- the letters of administration vests the deceased’s property in the administrators

Question 95

there are some assets that do not require a grant of probate. what are they?

NOTE If the whole estate comprises these assets and
nothing else, there is no need for a grant at all.

Answer 95

1. orders made under the Administration of Estates (Small Payments) Act 1965
   e.g.
   ∘ money in the National Savings Bank and Trustee Savings Bank (but not in other bank accounts);
   ∘ National Savings Certificates and Premium Bonds; and
   ∘ money in building societies and friendly societies.
   - not available if the asset is valued above £5k
   - it is not possible for PRs to insist the payments are made
   - if refused, PRs will need to obtain the grant
2. chattels
3. cash

Question 96

some assets do not pass under the deceased’s will or intestacy and therefore do not vest in the PRs. Consequently, the grant is irrelevant.

what are the above assets?

Answer 96

1. joint property
2. Insurance policies assigned or written in trust
3. pension benefits (death in service benefits)

Question 97

If IHT is payable, some of it is likely to be due before the grant is obtained. what do the PRs do?

Answer 97

• they have to find ways of paying the IHT
• before the grant is issued, the PR will send the IHT account IHT400 to HMRC (or IHT401 for a person domiciled outside the UK) and pay any IHT due
• HMRC will write to the PRs confirming receipt and processing of the IHT400 and providing a unique code
  and details of the estate values which will be required when submitting the grant application to HMCTS.

Question 98

how do you make an application for grant for probate?

Answer 98

• must be made online unless one of the exceptions apply
• send a copy of the will / codicil
• HMCTS may need further documentation to prove the validity of the will e.g. witness statements
• no attestation clause = HMCTS are likely to want evidence

Question 99

how do you make an application for grants of letters of administration (with or without the will)?

Answer 99

by post
made by sending a completed form PA1P if there is a will (ie for grants of probate or letters of administration with the will annexed) or a PA1A where there was no will

note - can be made online if certain conditions are fulfilled e.g. where there is only one applicant, and they are the only person entitled to the estate

Question 100

what is the current fee for making an application for grant of probate or grant of letters of administration?

Answer 100

• same fee is payable irrespective of whether the application is made on paper or online
• for paper applications = cheque
• online applications made by professionals = the firm must open a ‘HMCTS Payment by Account’ from which payment is taken automatically when the application is submitted.
• £273 where the estate exceeds £5,000
• no fee if the estate is £5,000 or less
• applicants automatically receive
  one free copy of the grant
• extra copies can be requested and cost £1.50 each.

Question 101

what evidence may HMCTS request before granting a grant of probate?

Answer 101

1. Evidence of due execution and/or capacity
   - if no att clause > witness statement
   - doctor affadavit
2. Evidence as to knowledge and approval
   - adapted att clause or
   - affidavit or witness statement made by someone who can speak as to the facts
3. Evidence as to remote witnessing
   - amended att clause or
   - affidavit or witness statement will be required from the witnesses or anyone else who was present (remotely or physically)
4. Evidence of plight and condition
   e.g. alteration or revocation (there is a rip) or where there is some obvious mark on the will indicating a document may have been attached to it (eg the marks of a paper clip, raising a suggestion that some other
   testamentary document may have been attached)
   - affidavit or witness statement from someone with knowledge of the facts
5. lost will
   - if the will has been lost or accidentally destroyed, probate may be obtained of a copy of the will, such as a copy kept in the solicitor’s file, or a reconstruction
   - application should be made to the registrar, supported by appropriate evidence in the form of
   an affidavit or witness statement from the applicant

Question 102

If the estate is not an ‘excepted estate’, the PRs will prepare an IHT400 (IHT401 for a person
domiciled outside the UK) and whichever of the supporting schedules are relevant to the
estate. For example, if the deceased made lifetime gifts, the PRs must complete schedule 403
which deals with lifetime gifts.

what is IHT400?

Answer 102

• inventory of the assets to which the deceased was beneficially entitled and of their liabilities
• is the form for claiming reliefs and exemptions
• is the form for calculating the inheritance tax payable.

Question 103

when should an IHT400 be submitted?

Answer 103

• delivered within 12 months of the end of the month in
  which the death occurred
• usually PRs aim to deliver it within 6 months of the
  end of the month of death to comply with IHT time limits for the payment of interest

Question 104

can a grant be issued without the IHT400 account being complete?

Answer 104

no

Question 105

Where IHT is payable, it is necessary to ____________________________ before submitting the
IHT400.

Application may be made online or by post using schedule IHT422.

Answer 105

apply for a reference number

Question 106

when do PRs not submit and IHT400 form?

Answer 106

excepted estates

Information as to value of the estate is included on the forms submitted to the HMCTS which is passed on to
HMRC.

HMRC has 60 days from the issue of the grant of representation to ask for additional information.

If no such request is made, the estate receives automatic clearance.

If an estate which initially appears to be excepted is subsequently found not to be so, the PRs must submit
the IHT400 within six months of the discovery.

Question 107

there are three types of excepted estates. because they are excepted they do not have to submit an IHT400.

what is a category 1 excepted estate?

Answer 107

• small estates
• the deceased’s settled property (immediately before death) does not exceed £250k + not more than £100k worth of property outside the UK
• where the gross value of the estate for IHT purposes, plus the value of any ‘specified transfers’ and ‘specified exempt transfers’ in the seven years prior to death, does not exceed the current nil rate threshold

remember > the gross value of the estate = the value before deduction of debts and exemptions and reliefs

remember > the NRB can be increased if the deceased’s spouse or civil partner predeceased without using all or part of their NRB

Question 108

what is meant by ‘specified transfers’ in categories 1 and 2 of excepted estates?

Answer 108

• chargeable transfers of :
  i) cash
  ii) personal chattels or tangible moveable property
  iii) quoted shares or securities, or an interest in or over land (unless the land becomes settled or is subject
  to a reservation of benefit)

made in the seven years before death

This means that if someone makes a gift which does not fall within this category in the seven years before death (for example, a transfer of unquoted shares), the estate cannot be excepted under Categories 1 or 2.

note - business and agricultural relief is ignored

Question 109

what is meant by ‘specified exempt transfers’ for the purposes of categories 1 and 2 of excepted estates?

Answer 109

These are transfers of value made during the seven years before death which are exempt under one of the following exemptions:
(a) s 18 (transfers between spouses (or civil partners));
(b) s 23 (gifts to charities);
(c) s 24 (gifts to political parties);
(d) s 24A (gifts to housing associations);
(e) s 27 (maintenance funds for historic buildings, etc);
(f) s 28 (employee trusts).

Gifts which are exempt under the normal expenditure out of income exemption are treated for this purpose as chargeable if they exceed £3,000 in any one tax year.

Question 110

there are three types of excepted estates. because they are excepted they do not have to submit an IHT400.

what is a category 2 excepted estate?

Answer 110

‘exempt estates’

• same rules regarding trust property as cat 1 estates (250k in uk + 100k outside of PLUS the total amount of trust property after deductions is not more than £1m)
• the gross value of the estate (plus specified transfers and specified exempt transfers made in the seven years before death) must not exceed £3 million; and
• the net chargeable estate after deduction of liabilities and spouse and/ or charity exemption (plus specified transfers and specified exempt transfers made in the seven years before death) must not exceed the nil rate band.

as with category 1 estates, a deceased’s spouse/cp who didnt use their NRB can increase the remaining spouse’s/Cp’s

Question 111

there are three types of excepted estates. because they are excepted they do not have to submit an IHT400.

what is a category 3 excepted estate?

Answer 111

The third category is where the deceased was never domiciled or treated as domiciled in the United Kingdom, and owned only limited assets in the United Kingdom.

Question 112

looking at the procedure for a grant for ‘excepted estates’…

PRs provide no information to HMRC. Instead, they provide certain information on their applications for a grant - what?

Answer 112

(i) the deceased’s full name and date of death; and

(ii) a declaration:
– that the estate is an excepted estate; and
– whether they are claiming against the estate the unused proportion of the IHT nil rate band of a pre-deceased spouse or civil partner (the transferable nil rate band); and

(iii) the following three IHT estate values:
– the gross value of the estate for IHT plus any specified transfers and specified exempt transfers made by the deceased in the seven years before their death;
– the net value of the estate for IHT less any allowable debts;
– the net qualifying value of the estate, that is, the net value of the estate for IHT less any spouse, civil partner or charity exemptions.

HM Courts and Tribunals Service will have one month to pass the information to HMRC.

Question 113

when is IHT payable?

Answer 113

• The general rule is that IHT is due six months after the end of the month in which the deceased died
• However, certain types of property such as land and some types of business property attract the instalment option which means that there is the right to pay by 10 annual instalments

see table

Question 114

do instalments of IHT on land carry interest?

Answer 114

yes - doesnt matter whether they are paid on time or not - interest is still accrued

Question 115

Funding IHT payable before the grant is problematic. The institutions holding the deceased’s assets, such as banks and building societies, usually want to see the grant before they will release the money.

list the options PRs have?

Answer 115

1. direct payment scheme
2. life assurance policies
3. assets realisable without the production of the grant (max value of any one asset = £5k)
4. loans from beneficiaries
5. bank borrowing
   - A bank may also require an undertaking from
   the solicitor to repay the loan from the proceeds of the estate. Whether or not the solicitor is a PR, any undertaking should be limited to ‘such proceeds as come into the solicitor’s control’.
6. National Savings and Government stock
7. Heritage property in lieu of tax
   - The Secretary of State must agree to accept such assets and the standard required of such objects is very high.
   - The item must be ‘pre- eminent for its national, scientific, historic or artistic interest’.
8. obtaining a grant on credit

Question 116

Funding IHT payable before the grant is problematic. The institutions holding the deceased’s assets, such as banks and building societies, usually want to see the grant before they will release the money.

what is the direct payment scheme?

what is its procedure for payment?

Answer 116

• allows PRs to arrange payment of IHT direct to HMRC directly from the deceased’s accounts
• The scheme is voluntary on the part of the institutions, so PRs must check whether the relevant
  banks and building societies are part of the scheme

procedure:
i) provide ID as required by the bank/building society
ii) complete a separate IHT423 for each bank and building society from which money is to be transferred
iii) The PRs send each IHT423 to the relevant bank or building society at the same time that they send the IHT400 and supporting schedules to HMRC.
The IHT423 includes an IHT reference number provided by HMRC to allow HMRC to match up the payment with the correct estate.
iv) The bank or building society will send the money direct to HMRC.

this process is not quick

sometimes sols can make arrangements with banks/building societies to make payments directly to HMRC and this is relatively quick

Question 117

when making an application for a grant the PRs must also specify the gross and net figures for the estate passing under the grant (‘the probate value’).

This determines the probate fee payable

Answer 117

probate value / gross value = excludes the deceased’s interest in joint tenancies, life policies assigned or written in trust, discretionary lump sums under pension schemes and trust property in which the deceased had a life interest + before deductions

net estate passing under the grant = value after deduction of debts and the funeral account

Question 118

both PAP1 and PAP1A end with what?

Answer 118

• statement of truth
• The applicants confirm that they will administer the
  deceased’s estate in accordance to law, and that the content of the form is truthful.
• They also acknowledge that criminal proceedings for fraud may be brought against the signatories if it is found that the evidence provided is deliberately untruthful or dishonest, as well as revocation of the grant.
• each applicant must then sign and date
• Where the applicant is legally represented and the
  legal representative (usually a probate practitioner) is authorised by the applicant to sign on their behalf, the legal representative signs next to their name with either a typed or handwritten signature

Question 119

what happens where a person appointed as an executor by the will, at the testator’s death, lacks capacity to make decisions?

Answer 119

• they cannot apply for the grant
• the other executors will take the grant
• if there was only one executor their attorney appointed under an enduring or lasting power
  of attorney can take the grant in their place

Question 120

what happens when the executor is a minor?

Answer 120

• if the minor is the only named executor someone else must take the grant
• where one of several executors is a minor, the other(s) being adults, probate can be granted to the adult executor(s) with power reserved to the minor to take a grant at a later date
• if the administration of the estate has not been completed by the time the minor attains 18 years, an application for a grant of double probate can be made to enable the former minor to act as executor alongside the other proving executor(s).

Question 121

Executors can renounce only if they have not ___________________ in the estate

Answer 121

• intermeddled i.e. doing tasks a PR might do
• once executors have intermeddled, they must take the grant because they are treated as having accepted office

Question 122

how is an executor’s renunciation made?

Answer 122

Form PA15, signed by the person renouncing (the
signature must be witnessed), and the renunciation must be filed with HMCTS

Question 123

how can an executor who is also a trustee renounce the executorship?

Answer 123

Executors who are also appointed as trustees will remain trustees despite renouncing the
executorship.

They will have to disclaim the trusteeship as well if they want to act in neither capacity.

Question 124

why would you apply for a grant with powers reserved?

Answer 124

• There is no limit on how many executors can be appointed by the will, but probate will be granted to a maximum of four executors in respect of the same property.
• Power may be reserved to the other(s) to take out a grant in the future if a vacancy arises
• or a person appointed as one of two or more executors may not wish to act initially but may not
  want to take the irrevocable step of renouncing the right to a grant of probate
• It is possible to obtain a grant limited to part only of the estate. This is frequently done where particular expertise is required. For example, an author’s will might appoint literary executors to deal with their books and general executors to deal with everything else.
• Up to four executors can take the grant limited to the deceased’s writings, and up to four can take the
  grant dealing with the rest of the estate.

Question 125

give examples of where a grant of letters of administration with the will annexed is appropriate…

Answer 125

• where the will does not appoint executors
• or they have all predeceased or renounced
• or where the will appointed the deceased’s spouse as
  the sole executor but they divorced before the deceased’s death

Question 126

if there is no executor willing or able to act, there is an order of priority of the person(s) entitled to a grant of letters of administration with will annexed.

what must the person applying for the grant do?

Answer 126

The applicant must explain the basis of their own entitlement to the grant by explaining why nobody in a higher category is applying (this is called ‘clearing off’) and also why they are entitled

note:
1. beneficiary with vested interest preferred:
- Where there is more than one person of equal rank but one has a vested and one a contingent interest in the estate, the court generally prefers an application by the beneficiary with the vested interest.
2. minors
- the minor’s parent(s) or guardian(s) may apply for a grant ‘for the minor’s use and benefit’ on their behalf
- the grant is limited until the minor attains the age of 18

Question 127

Where there is a life interest, or property passes to a minor (whether the interest is vested or contingent), the court normally requires a minimum of ____ administrators to apply for the grant.

Answer 127

2

Question 128

what is the max number of administrators?

Answer 128

same as executors > 4

Question 129

Jenny dies leaving her residuary estate by will to her two adult brothers, Ken and Larry.

Jenny’s will does not appoint an executor. Larry does not wish to act.

Ken can apply for a grant alone. This does not affect Larry’s beneficial entitlement to half the estate.

would Ken need to inform Larry of his application?

Answer 129

no

Question 130

Any person entitled to apply for a grant of letters of administration with will annexed can renounce.

how do they do this?

Answer 130

• same way as an executor (though using a Form PA16), except that an administrator does not lose the right to renounce by intermeddling
• renunciation does not affect any beneficial entitlement of the administrator or any appointment as a trustee

Question 131

Form PA1A is completed where the deceased died without a valid will and so is totally intestate.

what is the order of person or persons entitled to the grant?

Answer 131

the same as intestacy

Question 132

In Form PA1A, the applicants establish their entitlement to the grant by …

Answer 132

• explaining why nobody in the higher categories in Rule 22 is taking the grant (this is called ‘clearing off’)
• In Form PA1A the applicant has to state as a matter of course
  whether the deceased left a surviving spouse or civil partner and which other relatives in the Rule 22 (intestacy) categories survived
• stating the applicants’ relationship to the deceased.

Question 133

the same rules apply to administrators as they do to executors e.g. max number > 4, where two or more people are entitled in the same degree, a grant can be made on the application of any one of them without notice to the other, minimum of two administrators is generally required where the intestacy creates minority interests through property being held for minors on the ‘statutory trusts’ etc.

where are the rules re administrators slightly different than executors?

Answer 133

If there are more than four people with an equal entitlement, it is not possible to have ‘power reserved’ to a non- proving administrator.

Question 134

looking at the rights of beneficiaries…

beneficiaries can prevent the issue of a grant. how would they go about doing this?

Answer 134

• lodge a caveat at HMCTS
• once a caveat has been entered, no grant can be issued until the caveat is removed or ceases to be effective
• examples of where caveats might be considered:
  a) where the validity of the will is questioned
  b) where a beneficiary believes the executor named
  in the will lacks the mental capacity to act
• application can be made online or using form PA8
• lasts for 6 months and can be extended
• person lodging the caveat = caveator
• an applicant for a grant may issue a ‘warning’ to the caveator, which requires the caveator to enter an appearance within 14 days setting out their interest
• if the caveator fails to do so, the applicant for the grant can remove the caveat

Question 135

looking at the rights of beneficiaries…

beneficiaries can compel the issue of a grant. how would they go about doing this?

Answer 135

• if there is a delay
• apply to HMCTS to issue a citation
• there are several types of citation which may be issued at the request of a beneficiary (‘the citor’):

1. citation to take probate
   - A citation to take probate may be used where an executor has lost his right to renounce probate by intermeddling in the estate (eg by selling the deceased’s chattels) but has not applied for a grant of probate and shows no signs of so doing.
   - Once cited, the executor must proceed with an application for a grant of probate.
   - If the executor does not do so (without good reason) the citor can apply to the court for an order allowing the executor to be passed over and a grant of letters of administration with will annexed to issue to the person(s) entitled
2. citation to propound will
   - is a written notice that requires the executors of a later will to take action
   - it’s used when someone believes a later will may reduce their entitlement under an earlier will or intestacy
   - if the citees fail to enter an appearance or to proceed diligently to propound the will, the citor can apply to the court for an order for a grant as if the will were invalid
3. citation to accept or refuse grant
   - clearing off a person with a prior right to any type of grant who has not applied, and shows no intention of applying, for a grant
   - If the person cited does not take steps to take out the grant, a grant may be issued to the citor

Question 135

Unlike beneficiaries of trusts, beneficiaries of an unadministered estate do not have an equitable interest in the deceased’s property until the PRs transfer or assent the property to them.

Until that point, the legal and equitable interests are vested in the PRs.

Although, the beneficiaries of an unadministered estate do not have equitable interests, they do have the right to compel due administration of the estate.

in the exercise of their right to compel due administration of the estate they may want to see accounts or they may require info about the administration of the estate. explain how they can obtain this information.

Answer 135

ACCOUNTS:
- throughout the administration, PRs must keep accurate records of receipts and payments

• Beneficiaries (or anyone else interested in the estate) can ask to inspect accounts.
• If the PRs refuse the request for accounts, or if they are unclear or inaccurate, anyone interested can
  apply to the court for an order compelling the PRs to provide an inventory and accounts.
• immediately prior to the final distribution of the estate, the PRs (or their legal adviser) will prepare estate accounts showing all the assets, income and payments made
• the estate accounts are sent to the residuary beneficiaries, who will be asked to sign a receipt approving the accounts and discharging the PRs from further liability

INFO:
- There is no automatic entitlement to disclosure of
the reasons for the PRs’ decisions and deliberations on a discretionary matter. However, if PRs refuse disclosure, the beneficiaries can apply to the court.
- subject access requests under Data Protection laws may also be applicable

Question 136

Administration proceedings can be brought by anyone interested in the estate (including
beneficiaries, creditors and PRs). The proceedings fall into two categories, what are they?

Answer 136

1. Applications limited to a particular issue:
   - This type of application may be non- contentious;
   for example, PRs may seek guidance from the court on the performance of a duty or the meaning of words used in a will.
2. Applications for a general administration order:
   - less common.
   - the court supervises the PRs: they cannot exercise
   their powers without the court’s permission
   - last resort
   - another option = court appoints judicial trustee to act as PR with another person or alone

Question 137

what is meant by executor’s year?

Answer 137

personal representatives / administrators have at least one year – the socalled ‘executor’s year’ – from the date of the deceased’s death before they can be called on to distribute the estate

Question 138

Rather than bring administration proceedings, beneficiaries may be able to sue PRs directly
for breach of fiduciary duty.

explain

Answer 138

a) breach of fiduciary duty
- PRs = obliged to avoid placing themselves in
a situation where there is a conflict between their duties and personal interest
- PRs must account to the estate for any unauthorised profit
- if a PR purchases property from the estate = voidable
- Profits may be authorised by a provision in the deceased’s will, a court order or the consent of all the beneficiaries who must be aged 18 or more.

Question 139

Rather than bring administration proceedings, beneficiaries may be able to sue PRs directly
through a devastavit claim.

explain

Answer 139

• where a PR has caused loss to an estate
• PR will have to pay the beneficiaries out of their own resources
• claims may be based on:
  i) misuse of assets
  ii) maladministration
  iii) negligence

Question 140

what are the defences to a devastavit claim?

Answer 140

1. Section 61 Trustee Act 1925
   - court discretion to totally or partially relieve a PR of personal liability if they acted honestly and reasonably and ought fairly to be excused for the devastavit and for omitting to obtain the directions of the court in the matter
   - Re Gale
2. exclusion clause in the will
3. acquiescence of beneficiaries
   - an adult beneficiary who, with full knowledge of the facts, consented to a PR’s breach of duty cannot succeed in a claim against the PR.
4. Protection against unknown or missing claimants
   - Where the PRs have distributed the estate not knowing of the existence of a beneficiary, the PRs are personally liable if the omitted beneficiary later brings a claim.
   - However, the PRs will be protected from liability if they placed advertisements and followed the procedures in s 27 Trustee Act 1925
   - The omitted beneficiary would then be able to claim their entitlement from the beneficiaries who wrongly received the estate.
   - Section 27 does not protect PRs against personal liability to beneficiaries who are known to have existed but cannot be found.
   - The PRs should have obtained a Benjamin order,
   or insurance or an indemnity from beneficiaries
5. limitation
   - for an unpaid or underpaid beneficiary to bring a claim to recover a share or interest in an estate = 12 years running from the date on which the right to receive the estate accrued

Question 141

If a PR distributes assets to someone who is not entitled, the beneficiary (or creditor) may be
able to follow the assets into the hands of the recipient.

There are two potential remedies, what are they?

Answer 141

1. beneficiary may bring a proprietary claim to the assets (or their traceable proceeds) from the recipient unless they are a bona fide purchaser of the assets for value without notice
2. the beneficiary can bring a personal claim for compensation against the recipient of assets wrongly paid by PRs, provided that all remedies against the PRs have been exhausted
   - Ministry of Health v Simpson

the time limit for both claims = 12 years

Question 142

how can a court remove a PR?

Answer 142

• s 50 AJA
• applications can be made by the PR or a beneficiary
• the court has a discretion to replace existing PRs
  with others or simply terminate an appointment without replacement
• at least one PR must remain
• main factor guiding courts decision here is the welfare of the beneficiaries

Question 143

what rights to creditors have regarding the administration of an estate?

Answer 143

• PRs may be personally liable to creditors for devastavit = for loss of assets caused by a breach of their duties
• the procedure set out in s 27 Trustee Act 1925 should be followed to provide a defence
  against creditors of whose existence the PR was unaware at the time of distribution to the
  beneficiaries

Question 144

often PRs and trustees are the same people.

what is the main difference between them?

Answer 144

unlike trustees, PRs cannot retire and cannot be removed without a court order

Question 145

who is liable to pay IHT?

Answer 145

on death = PRs
for PETs = transferee unless unpaid for 12 months > PR
for LCTs = transferee unless unpaid for 12 months > trustee

Question 146

who carries the burden for paying IHT

Answer 146

• falls on the transferor to decide
• transferor could direct that any IHT arising following death be paid from the residue of the estate
• if the will is silent, then the default position essentially is that the IHT on property which vests in the PRs is payable as a testamentary expense, and that on
  property held as beneficial joint tenants is borne by the surviving joint tenant

Question 147

the instalment option for paying IHT is available in what circumstances?

Answer 147

The instalment option applies to:
(a) land of any description;
(b) a business or an interest in a business;
(c) shares (quoted or unquoted) which immediately before death gave control of the company to the deceased;
(d) unquoted shares which do not give control if either:
(i) the holding is sufficiently large (a holding of at least 10% of the nominal value of the company’s shares and worth more than £20,000); or
(ii) HMRC is satisfied that the tax cannot be paid in one sum without undue hardship; or
(iii) the IHT attributable to the shares and any other instalment option property in the estate amounts to at least 20% of the IHT payable on the estate.

shares or any other business property or agricultural land = no interest is due on the outstanding tax provided that each instalment is paid on the due date

all other land = interest is payable with each instalment (apart from the first) on the amount of IHT which was outstanding for the previous year

If the instalment option property is sold, all outstanding tax and interest becomes payable

Question 148

To compel an unwilling person to take a grant is likely to produce more problems than it solves.

If a person is unwilling to act as executor in the administration of an estate, it is often preferable to do what?

Answer 148

• apply to the Court under s 116 Senior Courts Act 1981 for an order passing over that person in favour of someone else
• Re Biggs [1966] 1 All ER 358, an executor had intermeddled but then refused to have anything to do with the estate. The applicants obtained an order that he be passed over.

Question 149

which form do you use to apply for a grant?

Answer 149

where there is a valid will (grant or probate or letters of administration with will annexed) = PA1P

where there is no will (letters of administration (simple)) = PA1A

Question 150

The order of priority of the person(s) entitled to a grant of letters of administration with will annexed is governed by NCPR 1987, r 20.

what is the order of priority?

Answer 150

1. executor
2. trustee
3. beneficiary

bare in mind minors and contingent/vested interests

Question 151

look at consent of property sale in estate to the PRs

Question 152

PRs and trustees have statutory administrative powers via the ADA and TA.

However, it is usual to include clauses in wills extending or modifying some of these statutory powers where they are not regarded as sufficient. Even where the statutory powers are adequate,
it is common to repeat them in the will so that the testator, PRs and trustees can see all the powers in one place.

which administrative powers should be included in all wills regardless of whether they give rise to a trust?

Answer 152

(a) Power to charge
- important to draft so that it is clear which kinds of trustees can receive renumeration e.g. any trustee or a professional trustee

(b) Extended power to appropriate assets without consent of legatee

(c) Power to insure assets

(d) Power to accept receipts from or on behalf of minors

(e) Self- dealing

Question 153

explain how the administrative power to accept receipts from or on behalf of minors should be drafted

Answer 153

• under general law, a minor (infant) cannot provide a valid receipt for a legacy or share of an estate
• the Children Act 1989 allows parents or guardians to give a valid receipt on the minor’s behalf
• this can create potential issues if the testator does not want a parent or guardian to handle the receipt
• in such cases, the will can specify that the legacy be given to trustees to manage for the minor, rather than directly to the child
• can also include a clause allowing the PRs to accept the receipt of the child if the child is over 16 years

Question 154

explain how the administrative power to appropriate assets without the consent of the legatee could be drafted into a will

Answer 154

• power to appropriate any assets in the estate in or towards satisfaction of any legacy or any interest in residue provided that the appropriation does not
  prejudice any beneficiary of a specific legacy
• the legatee to whom the assets are appropriated (or their parent or guardian if they are a minor) must consent to the appropriation
• can remove the need for legatees consent

Question 155

in addition to the administrative powers that should be included in all wills regardless of whether they give rise to a trust, there are some additional powers which should be included into wills that could give rise to a trust (for example, because there is a substitutional gift to children of a primary beneficiary who predeceases the testator).

list the additional powers that should be drafted into these wills.

Answer 155

1. power to appropriate assets
2. power to invest
3. power to purchase land
4. power to sell personalty
5. power to use income for maintenance of beneficiaries
6. power to use capital for the advancement of beneficiaries
7. control of trustees by beneficiaries
8. powers relating to trusts of land
9. power to carry on the testator’s business

Question 156

explain a trustees power to appropriate assets in a will that gives rise to a trust and how the power should be drafted

Answer 156

• s.41 AEA gives PRs the power to appropriate any assets in the estate in or towards satisfaction of any legacy or any interest in residue provided that the appropriation does not prejudice any beneficiary of a specific legacy (with consent)
• s 41 does not apply to trustees
• It is necessary to include an express provision, equivalent to s 41, to permit the trustees to appropriate trust property towards beneficial interests arising under the trust without obtaining the consent of the beneficiary.

Question 157

explain a trustees power to invest where a will gives rise to a trust

Answer 157

• trustees have a general power to invest under s.3 TA and power to invest in land in s.8
• the TA also gives power to delegate
• therefore an express investment clause can be included but is no longer necessary in most estates
• note however, in relation to the statutory power to purchase land under s.8 TA, this does not authorise the purchase of land abroad, nor does it allow trustees to purchase an interest in land with someone else (eg a beneficiary)
• an express power will be needed if the trustees are to have such powers

Question 158

explain how a trustees power to sell personalty (property other than land) should be drafted in a will that gives rise to a trust

Answer 158

• there is some doubt whether trustees who
  hold no land and where there is no express trust for sale have power to sell personalty
• therefore may be worth putting an express clause in

Question 159

explain how a trustees power to use income for the maintenance of beneficiaries should be drafted for a will that gives rise to a trust

Answer 159

s 31 TA > power to use income for beneficiary’s maintenance, education and benefit

once 18 s 31 also makes them entitled to trust income

if the testator thinks this is too young - they can amend the age in the will

Question 160

explain how a trustees power to use capital for the advancement of beneficiaries should be drafted for a will that gives rise to a trust

Answer 160

s .32 TA power of advancement to beneficiaries who have an interest in the trust capital

s.32 confers absolute discretion on the trustees

Question 161

explain how beneficiary’s power to control a trustee should be drafted for a will that gives rise to a trust

Answer 161

Section 19 of TLATA = where beneficiaries are sui juris (aged 18 or more with full capacity) and together entitled to the whole fund, they may direct the trustees to retire and appoint new trustees of the beneficiaries’ choice

testator could exclude this

Question 162

explain how a beneficiary’s special powers under a trust of land should be drafted for a will that gives rise to a trust

Answer 162

TLATA gives special powers to a beneficiary under a trust of land who has an interest in possession i.e. they are entitled to income from the trust

the special powers: duty to consult the beneficiary (where they of age and beneficially entitled to the land + beneficiary’s rights of occupation (even if not of age)

can exclude these

Question 163

explain how a trustees’ power to carry on the testator’s business should be drafted for a will that gives rise to a trust

Answer 163

Where an estate includes a business which was run by the deceased as a sole (unincorporated) trader, the powers of the PRs to run the business are limited. For example, they may only run the business with a view to selling it as a going concern and may use only
those assets employed in the business at the date of death.

the trustees are unlikely to want to get involved with the running of the business but the will could be drafted in such a way to bequeath the business by specific legacy and to appoint the legatee as a special PR of the business

Question 164

what is the administration period? when does it commence?

Answer 164

• commences at the moment immediately following the death and ends when the PRs are in a position to vest the residue of the estate in the beneficiaries, or
  the trustees if a trust arises under the will or the intestacy rules
• a PR holds office for life
• if further assets or liabilities are discovered after the residue has been transferred, the PRs are still required to deal with them

Question 165

Section 61 Trustee Act 1925 gives the court power at its discretion to relieve a PR from liability for breach of duty if satisfied that the PR ______________________________________________

Answer 165

• ‘has acted honestly and reasonably and ought fairly
  to be excused for the breach’
• there may also be a clause in the will providing protection from liability for mistakes made in good faith

Question 166

PRs are responsible for administering the estate correctly. Consequently, if the PRs fail to pay someone who is entitled either as a creditor or as a beneficiary, they will be personally liable to that person.

how can a PR protect themselves from claims from unknown beneficiaries and creditors?

Answer 166

• advertising for claimants in compliance with the requirements of the s 27 TA
• provided the PRs wait for the time period specified in the statute (at least two months) before distributing the estate, the PRs will be protected from liability if an unknown claimant later appears
• note the claimant will have the right to claim back assets from the beneficiaries who received them
• should advertise as early as possible
• if executors = advertise at any time after the death
• if administrators = advertise at any time after obtaining the grant of representation

notice requirements:
(a) advertisement in the London Gazette;
(b) advertisement in a newspaper circulating in the district in which land owned by the deceased is situated; and
(c) ‘such other like notices, including notices elsewhere than in England and Wales, as would, in any special case, have been directed by a court of competent jurisdiction in an action for administration’.

• if the PRs are in any doubt as to what notices should be given, they should apply to the court for directions
• each notice must require any person interested to send in particulars of their claim within the time specified in the notice, which must not be less than two months from the date of the notice
• PRs should also conduct LR searches

Question 167

how can PRs protect themselves from claims from beneficiary’s they know exist, but cannot find?

Answer 167

OPTIONS:
1. Keeping back assets in case the claimant appears (usually unpopular with beneficiaries)

2. Taking an indemnity from the beneficiaries that they will meet any claims if the claimant reappears
   - risk for PRs if beneficiary’s dont have the means to meet the claim if the claimant appears
3. Taking out insurance
   - PR liable to meet any shortfalls
4. Benjamin order
   - this is where you apply to the court for an order authorising the PRs to distribute the estate on the basis
   that the claimant is dead
   - the court will require evidence that the fullest possible enquiries have been made to trace the missing person
   - protects the PR from liability
   - claimant could still claim from beneficiaries

Question 168

how can a PR protect themselves from a claim under Inheritance (Provision for Family and Dependants) Act 1975?

Answer 168

• PRs will be personally liable if the assets have been distributed and an applicant successfully obtains an
  order for ‘reasonable financial provision’ from the estate under the IA
  HOW PRs CAN PROTECT THEMSELVES:
• by waiting more than 6 months following the date of the grant of representation before distributing the assets
• if earlier distribution is required, PRs should ensure they retain sufficient assets to satisfy an order should an applicant be successful within six months of the grant

Question 169

explain how assets devolve on PRs

Answer 169

• devolving = ownership passing to
• assets passing under a will or via intestacy automatically devolve on a PR
• assets passing outside the will/intestacy = do not devolve on the PR, so PR has no power to deal with this property
• executors = devolution on death
• administrators = when the grant of representation is issued
• devolution gives the PRs ownership of the assets in the estate, but their duty is to collect them in as soon as is practicable

Question 170

how should a PR go about paying expenses?

Answer 170

1. funeral expenses
2. if needed to take loan to pay IHT bill, the PR may have given a ‘first proceeds’ undertaking to the bank
3. which assets to sell if required to pay outstanding debts and expenses
   i) provisions in the will
   - the will may contain provisions on this
   - if not = statutory rules for the incidence of liabilities
   - wrong to sell assets unless all other assets in the estate have been exhausted in payment of the debts
   ii) consult beneficiary’s wishes
   iii) consider tax implications of any sales

Question 171

what duties does a PR have regarding the payment of funeral expenses?

Answer 171

• reasonable expenses of a funeral conducted in a manner suitable to the deceased’s position and circumstances
• only liable in so far as they have available assets of the deceased to make the payment
• reasonableness is a question of fact

Question 172

what is meant by testamentary expenses?

Answer 172

• expenses which are incidental to the proper performance of the duties of a PR

EXAMPLES:
- cost of obtaining the grant
- costs of collecting in and preserving the deceased’s assets
- costs of administering the deceased’s estate e.g. solicitors or valuers fees
- IHT

Question 173

The rules applying to the payment of funeral and testamentary expenses and debts depend
on whether the estate is solvent or insolvent.

The AEA governs the order in which assets are to be used to pay the debts in estates.

what is the order for a solvent estate?

Answer 173

note > solvent estate = there are sufficient assets to pay all the expenses, debts and liabilities in full (irrespective of whether there remains anything with which to pay the legacies)

1. secured debts e.g. mortgage over the deceased’s property
   - a beneficiary taking the asset takes it subject to the debt and will be responsible for paying the debt unless expressly reserved otherwise
2. Unsecured debts and expenses - ‘statutory order’ (subject to contrary intention in the will)
   a) Property undisposed of by will subject to retention of a fund to meet pecuniary legacies.
   b) Property included in a residuary gift subject to retention of a fund to pay pecuniary legacies not already provided for.
   c) Property specifically given for the payment of debts
   d) Property charged with the payment of debts
   e) The fund, if any, retained to meet pecuniary legacies.
   f) Property specifically devised or bequeathed, rateably according to value.
   g) Property appointed by will under a general power rateably according to value.

broadly, assets forming part of the residue are to be used before using property given to specific legatees

Question 174

what is the order of distribution of assets for an insolvent estate?

Answer 174

• assets are applied to pay the debts until they have been used up
• the creditors will not be paid in full (or at all) and the beneficiaries under the will or the intestacy provisions will receive nothing from the estate
• an insolvent estate being administered outside court = order of distribution to be followed
  1. secured creditors
  2. funeral and testamentary expenses
  3. unsecured creditors (there will be insufficient funds to pay all unsecured creditors so these will abate equally i.e. reduced proportionately)

Question 175

Once the funeral, testamentary, and administration expenses have been settled or adequately provided for, the personal representatives (PRs) should focus on discharging the gifts made in the deceased’s will, excluding the residuary estate.

Explain how they administer specific legacies

Answer 175

• the transfer process depends on the kind of gift
• e.g. property transferred via assent (it is the beneficiary’s responsibility to send the assent to the LR for registration).
• e.g. stock = stock transfer form
• the transfer of the asset is retrospective to the date of the deceased’s death, meaning any income generated (like dividends) belongs to the beneficiary from that date
• the beneficiary is not entitled to the income until the property is officially vested in them by the PRs
• the beneficiary will also be liable for income tax on this income
• costs associated with transferring the specific legacy, e.g. insurance or litigation fees (if the ownership of the asset is disputed), are the responsibility of the beneficiary unless the will specifies otherwise

Question 176

Once the funeral, testamentary, and administration expenses have been settled or adequately provided for, the personal representatives (PRs) should focus on discharging the gifts made in the deceased’s will, excluding the residuary estate.

Explain how they administer pecuniary legacies

Answer 176

WHERE THERE IS PROVISION FOR PAYMENT IN THE WILL:
- common for the will to stipulate that the gift of the residuary estate is “subject to” or “after payment of” the pecuniary legacies
- this means the pecuniary legacies must be paid from the residuary estate before the balance is divided among the residuary beneficiaries

WHERE THERE IS NO PROVISION FOR PAYMENT IN THE WILL:
- PRs must decide which assets will be used to settle these legacies
- general principle is that pecuniary legacies are paid from the residuary estate, with personal property (personalty) being used before real property (realty)
- if a partial intestacy arises, (e.g. where part of a gift of residue fails because one of the beneficiaries dies before the testator) = legacies will be paid from the property which is undisposed of, with ready money being used first

Question 177

when are pecuniary legacies payable?

Answer 177

• at the end of “the executor’s year,” which is one year from the testator’s death
• if payment is delayed beyond this time, the legatee is entitled to interest as compensation
• rate of interest is typically set either by the testator’s will or, in the absence of such a provision, at the rate prescribed for money paid into court
• where the will specifies that a legacy is to be paid “immediately following my death,” or at some other specific date or event, interest will be due starting from that time

Question 178

the normal rule regarding the administration of pecuniary legacies = payment due one year from the testator’s death and if there is delay after this, the legatee is entitled to interest as compensation.

what are the four exceptions to this general rule?

Answer 178

interest is payable from the date of death (and is therefore an exception to the general rule), when the legacies are:

(a) payable in satisfaction of a debt owed by the testator to a creditor;

(b) charged on land owned by the testator;

(c) payable to the testator’s minor child (interest is not payable under this provision if other funds exist for the child’s maintenance); or

(d) payable to any minor (not necessarily the child of the testator) where the intention is to provide for the maintenance of that minor.

Question 179

Once the personal representatives (PRs) have settled the deceased’s funeral, debts, legacies, and testamentary expenses, they can distribute the remaining estate according to the will or intestacy rules.

Before final distribution, the PRs must address any outstanding matters, mainly related to inheritance tax (IHT), income tax, and capital gains tax (CGT).

Explain how this is done in relation to IHT

Answer 179

1. Adjusting IHT Assessment where:
   (a) discovery of additional assets or liabilities since the IHT account was submitted;
   (b) discovery of lifetime transfers made by the deceased within the seven years before death
   (c) Negotiations with HMRC over asset valuations or tax liabilities.
   (d) Sales made by PRs that lead to a claim for IHT “loss relief.”

• if instalment option has been used > likely to be some payments outstanding that the PR will be personally liable for regardless of whether they have agreed with the beneficiary to pay it - Harris v Commissioners for HMRC
• where there has been a PET or LCT on which IHT is payable, the donee is usually liable unless the payment is outstanding for 12 months after the month the donor died > then PRs become personally liable
• once all variations have been calculated > the PRs must report all outstanding matters to HMRC via a corrective account
• PRs should obtain a clearance certificate from HMRC confirming that all IHT obligations have been met. This relieves PRs from further liability unless there is fraud or non-disclosure.

Question 180

Once the personal representatives (PRs) have settled the deceased’s funeral, debts, legacies, and testamentary expenses, they can distribute the remaining estate according to the will or intestacy rules.

Before final distribution, the PRs must address any outstanding matters, mainly related to inheritance tax (IHT), income tax, and capital gains tax (CGT).

Explain how this is done in relation to income tax and CGT

Answer 180

INCOME TAX:
- PRs must report the deceased’s income for the period from the last tax year to the date of death.
- PRs are also responsible for income tax on estate income during administration.
- They can claim tax relief on loans used to pay IHT.

CAPITAL GAINS TAX:
- PRs must pay CGT on the sale of estate assets during administration.
- The deceased’s assets are transferred at probate value, which becomes the PR’s base cost for future sales.
- PRs may benefit from the annual exemption (£3,000) for CGT, which applies for the tax year of death and the next two years.

administration may take several years so income tax and CGT must be paid for each tax year of the administration period:
- where the estate is complex (over £2.5 million, tax exceeds £10,000, or assets sold exceed £500,000) must make tax return
- otherwise a lump sum at the end of the administration period is fine
- note CGT on the disposal of UK residential land
must be paid within 60 days of completion

Question 181

once funeral expenses, testamentary expenses, legacies and tax adjustments have been paid, the PRs should consider transferring any remaining property to residuary beneficiaries.

what must they consider when looking at this?

Answer 181

1. INTERIM DISTRIBUTIONS:
   - must be taken into account when calculating what remains to be distributed to each beneficiary on account of their entitlement
2. ADULT BENEFICIARIES:
   - where vested interest > transfer entitlement
   - if entitlement contingent > the property should be transferred to trustees to hold until the contingency is fulfilled.
3. MINOR BENEFICIARIES:
   - usually held on trust
   - if vested > can transfer to minor or their parent/guardian
4. TRANSFERRING PROPERTY
   i) Personal Property:
   -passes to the beneficiary by assent, which doesn’t require a specific form and often occurs through delivery
   - shares are transferred via a stock transfer form, and PRs must provide proof of their grant to the company to transfer shares.

ii) Freehold or Leasehold Land:
- transfer the legal estate in land through an assent, which becomes the title document
- if the PRs are to continue holding property as trustees, the assent transfers the legal estate to them in their trustee capacity
- the assent must be written, signed by the PRs, and name the beneficiary or trustee receiving the estate
- a deed is not necessary to pass the legal estate, but PRs may opt to use one, especially if an indemnity covenant is involved.

Question 182

what is the final task of PRs in the administration of the estate?

Answer 182

• produce estate accounts for the residuary beneficiaries
• residuary beneficiaries sign the accounts to approve them, which releases the PRs from further liability, unless there is fraud or undisclosed assets
• the accounts do not have a prescribed format but should be clear and concise
• small estates = single account may combine capital and income
• estates with life or minority interests = separate capital and income accounts are required to differentiate the beneficiaries’ interests