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FLK2 > Wills and Estate Administration > Flashcards

Wills and Estate Administration Flashcards

1
Q

Requirements for a valid will

A

Testator must have:
1. Had capacity when will was made
2. Intended to make a will
3. Executed will in accordance with formalities

Capacity + intent + execution

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2
Q

Testator’s capacity

A

At least 18

Had mental capacity (presumed but rebuttable)

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3
Q

Test for capacity

A

Testator understood:
- Nature of act
- Extent off assets
- Claims to which they ought to give effect

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4
Q

Testator’s intention

A
  • General intention to make a will
  • Specific intention to make the particular will

General rebuttable presumption of both BUT two exceptions:
1. Testator is blind or illiterate or will signed on their behalf
2. Suspicious circumstances

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5
Q

Grounds to challenge a will

A
  • Force
  • Fear
  • Fraud
  • Undue influence: someone (usually recipient of a large gift under the will) used their position with respect to the testator to overpower the volition of the testator
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6
Q

Will execution - formalities

A
  1. In writing
  2. Signed by testator
  3. Signed or acknowledged by testaor in presence of two or more witnesses
    - The witnesses do not have to be in each other’s presence
  4. Signed by witness in presence of testator
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7
Q

Attestation clauses

A

Clauses that witnesses sign to attest or state “signed by us in his presence and by him in our presence”

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8
Q

An external document can be read as part of a will provided it existed when the will was executed as referred to in the will as being in existence at that date

A
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9
Q

Will alteration: valid alterations

A

Must prove:
1. Alteration made before will was executed or executed like a will
AND
2. Will reads naturally after alteration

How?
- Witness statements
- Testator and two witnesses sign their initals next to the change

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10
Q

Unattested alterations

A
  1. Not signed or initialled
  2. Presumed to have been made after execution unless filling in blank space
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11
Q

Codicil

A

Document that adds to, amends or partially revokes existing will

Must be executed with the same four formalities of a will

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12
Q

Will revocation through law

A
  1. Marriage: automatically revokes a will BUT exceptions is that if the testator was expecting to marry a specific person and they intended that all or part of the will should not be revoked by that marriage which will be shown by an appropriate clause in the will
  2. Divorce:
    - Former spouse treated as dead (any gifts revoked and property won’t pass)
    - Former spouse’s appointment as executor or trustee ineffective
    - The entire will is not revoked only the provisions relating to the spouse
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13
Q

Will revocation by testator’s act

A
  1. Later will revokes earlier will to extent that later will is inconsistent with earlier will
  2. Destruction:
    - Burning, tearing or otherwise destroying with intention to destroy the will (intention must accompany act)
    - Another person can do the above but it must be in the presence of the testator and by their direction
    - Writing cancelled or revoked across the will is NOT sufficient to revoke
    - Putting a line through parts of the will is NOT sufficient to revoke
    - If a will is found mutilated at the date of death it is presumed the testator mutilated the will with the intention of revoking it
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14
Q

Mutual wills

A

A contract to make idential wills and also not to revoke without the consent of the other

The agreement creates a constructive trust in favour of beneficiaries and will normally be referred to in wills themselves

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15
Q

Constructive trust

A

Equitable remedy to prevent unjust enrichment of one person at expense of another as a consequence of wrongful conduct

Only duty of trustee is to convey estate to beneficiaries who should have received it

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16
Q

Will interpretation: when does the will speak?

A

Gifts: date of testator’s death

Beneficiaries: date of will’s execution

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17
Q

Types of gifts

A
  1. Legacy: gifts of personal property
  2. Devise: gifts of real property
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18
Q

Types of legacies

A
  1. Specific:
    - gift of particular asset identified in will
    - gift fails if no longer part of estate
  2. General:
    - Gift that does not identify particular item
    - if the subject of the legacy is not in the general estate at the time of death the executors have to purchase it if they have sufficient funds
  3. Pecuinary: gift of cash
  4. Demonstrative:
    - general legacy which identifies source of gift e.g. specific bank account
    - if insufficient funds in specific source then the executors have to use alternative sources of funds from the estate to meet the gift
  5. Residuary: gift of rest of deceased’s estate
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19
Q

Failure of gifts: specific gifts

A
  1. Is no longer part of the estate
  2. Is subject to binding contract for sale
  3. No longer meet description in will
    - Change in substance of subject causes it to adeem/fail
    - Change in name or form does not cause the subject to adeem/fail
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20
Q

An exception to the general rule that a gift speaks at the date of death, for gifts that refer to the word ‘my’ e.g. my car or my ring then instead it is presumed that the testator wanted the beneficiary to receive the gift as it was on the day of the will’s execution

A
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21
Q

Ademption = fails

A
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22
Q

Failure of gifts: lapse

A

Lapse: if beneficiary dies before testator the gift will lapse (fail)

The gift will fall into the residual estate

Gifts can be made conditional upon the survival of a beneficiary

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23
Q

Simultaneous death

A

Older person assumed to have died first

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24
Q

Failure of gifts: exception to lapse

A

Gifts to deceased descendants are saved for their issue

Example: if a testator’s child has died before them, then that child’s children (issue) are entitled to the legacy instead. if more than one then they will take equal shares

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25
Q

Descendants of testator

A

Children
Grandchildren
Great grandchildren
Etc…

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26
Q

If a gift in a will is made to a beneficiary who is no longer alive when the testaor dies, the gift to the beneficiary will fail (lapse) UNLESS the gift was to issue (the children, grandchildren, great-grandchildren) of the testator

A
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27
Q

Interested witnesses

A

Gifts to witness or witness’s spouse fails UNLESS there are at least two other witnesses

Will remains valid

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28
Q

Definition of children does not include step-children but does include adopted children

A
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29
Q

Gifts to children

A

Class gifts are gifts of property to be divided between those beneficiaries who meet the class description

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30
Q

Class closing rules

A

Class closes when at least one beneficiary has vested interest

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31
Q

Vested interest: when the benficairy does not have to satisfy any condition to receive the interest

A
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32
Q

A will can exclude the class closing rules

A
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33
Q

Intestacy

A

State of dying without a will

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34
Q

Intestator

A

Deceased person who has died without a will

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35
Q

Intestate succession

A

Method of distributing the deceased person’s assets who has died without a will

Residue of intestaor’s estate is distributed according to intestacy rules

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36
Q

Intestacy can be whole or partial

A
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37
Q

Administrators and personal representatives

A

People who settle estate after someones estate

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38
Q

Intestacy rules: surviving spouse

A

If the deceased is survived by a spouse for at least 28 days and if there is no issue (children) then spouse gets everything

If the deceased is survived by a spouse for at least 28 days and there are issue (children) then spouse is entitled to:
- Personal chattels (tangible, moveable property e.g. car)
- Monetary sum of £270,000 (assuming deceased has that much)
- 50% of remaining assets
issue entitled to
- 50% of remaining assets

Spouse can get personal representatives to transfer matrimonial home to them in partial or total satisfaction of their interest. If house is worth more than their interest they can still request the house and repay the excess value back to the estate.

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39
Q

Order of entitlement

A
  1. Issue
  2. Parents
  3. Brothers and sisters of whole blood
  4. Brothers and sisters of half blood
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40
Q

Statutory trusts

A

If class member dies before intestate, their issues takes their parent’s share per stirpes

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41
Q

A beneficiary must be 18 to inherit by intestacy

A
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42
Q

Adopted children treated as children of adoptive parents in intestacy

A
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43
Q

Intestacy rules apply regardless of child’s parent’s marital status in intestacy and wills

A
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44
Q

Step-children are not considered issue in intestacy and wills

A
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45
Q

Property passing outside will or intestacy: joint tenancy

A
  • Right of survivorship
  • Surviving joint tenant entitled to asset when other dies
  • Any clauses in will to the contrary are disregard
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46
Q

Property passing outside will or intestacy: life assurance policy

A

Policy proceeds can normally be paid out on production of a death certificate only

Proceeds do not form part of deceased’s estate for inheritance tax purposes

Any clauses in testator’s will to the contrary are disregarded

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47
Q

Property passing outside will or intestacy: pension scheme death benefits

A

Proceeds do not form part of deceased’s taxable estate for inheritance tax

Any clauses in testator’s will to the contrary are disregarded

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48
Q

Property passing outside will or intestacy: life interest trusts

A

May be subjecto to inheritance tax

Do not pass by will or intestacy

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49
Q

Property passing outside will or intestacy: gift in which donor retained benefit

A

Treated as part of deceased’s estate in inheritance tax

Does not pass by will or intestacy

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50
Q

Personal representatives

A

Executors: appointed in will

Administrators: needed when there is no will or no executor able or prepared to act

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51
Q

Testator appoints an executor through an express clause in a will or codicil to administer their estate according to law and provisions of the will

A
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52
Q

Executors can renounce if they did not intermeddle in estate

A
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53
Q

Renouncing executorship

A

In writing

Include statement that they have not intermeddled in estate

Statement must be witnesses by someone with no interest in estate

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54
Q

Executor can ask for power to be reserved and they can apply for a grant of probate at a later stage. There would be no automatic substitution

A
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55
Q

Reserving executorship

A

Named executor does not want to be involved now but if the substitute executor fails in their duties, the executor whose power is reserved is willing to step in and take over

56
Q

Grants of representation

A

Legal document that confirms person’s ability to administer an estate

57
Q

Which court deals with contentious probabte matters?

A

Chancery divison of High Court
or
County Court if estate below 350,000

58
Q

Types of grants of representation

A
  • Probabte
  • Letter of administration with will annexed
  • Letter of administration
59
Q

Grant of probabte

A

Valid will names one or more executors who are willing and able to act

Only one executor needed but up to four can apply for grant of probate

Testator’s property vests in executor at point of death and executor has authority to deal with testator’s property at that point, grant is needed to legally sell property owned in the estate name, access bank account, transfer or sell shares etc.

60
Q

Grant of letter of administration with will annexed - used when?

A
  1. Valid will but no executor able and willing to act
    or
  2. Estate is partially intestate

Testator applies for grant of letter of administration with will annexed

61
Q

Order of entitlement to grant

A
  1. Executor
  2. Trustee of residuary estate
  3. Residuary beneficiary or anyone entitled to residue
62
Q

Vested interest does not depend on any conditions occurring

A
63
Q

Contingent interest is subject to one or more conditions

A
64
Q

Clearing off

A

Accounting for anyone with better right to grant

65
Q

Two administrators required if there is a life interest or minor beneficiary

A
66
Q

Anyone entitled to apply for a grant can renounce. The right is not lost by intermeddling in the estate

A
67
Q

Letters of administration

A

Deceased died without a valid will

Grant gives named administrators the legal authority to administer estate in accordance with statutory rules of intestacy

Administrators do not have legal authority to administer estate from date of death. They only gain authority when grant is issued to them.

68
Q

Order of entitlement for grants of letters of administration

A
  1. Surviving spouse
  2. Children
  3. Parents
69
Q

If there is more than one person in the same class entitled to apply for a grant they may apply without giving notice to the others in that class

A
70
Q

Grants of letters of administration can only be issued to a maximum of four administrators and no power can be reserved

A
71
Q

Types of grant of representation

A
  1. Grant of probate - the deceased left a valid will
  2. Grant of letters of administration with will annexed - the deceased left a valid will but there is no executor
  3. Grant of letters of administration - the deceased did not leave a valid will
72
Q

Grants de bonis non

A

Second grant needed when last PR dies or previous grant revoked

BUT no such grant is necessary if a chain of representation exists

73
Q

Chain of representation

A

Executor dies and executor’s executor takes grant of probate

Only applies to a chain of executors and not administrators

If any administrators are involved a grant de bonis non will be required

74
Q

Minors cannot take a grant of representation but if they are one of several executors power may be reserved to the minor

A
75
Q

A minimum of two administrators is required if there is a minor beneficiary or a life interest under a will

A
76
Q

Pre-grant procedure

A
  1. Gather full details of deceased family members and beneficiaries
  2. Full details of assets and liabilities
  3. Register death with various
    institutions banks, insurance, HMRC etc.
  4. If there is a will consider the validity of will
77
Q

Ways to pay tax liability

A
  1. PR could ask deceased’s bank to pay to HMRC - voluntary scheme
  2. PR can apply for a loan from bank or beneficiary - many banks will grant loan but will require undertaking that loan will be repaid in priority
  3. Life assurance policy proceeds
  4. Sell estate assets that can be sold without a grant
78
Q

Applying for grant application

A
  1. Will plus two copies
  2. Official copy of death certificate
  3. Further supporting documents
  4. Tax form
  5. Payment for probate fees
79
Q

Further evidence for grant

A
  • Evidence of due execution of will
  • Affidavit confirming deceased’s full name
  • Affidavit of knowledge and approval
  • Affidavit confirming timing of alterations
  • Documents referred to in will
  • Affidavit of plight and condition
80
Q

Caveat prevents issue of grant of representation

A
81
Q

Citation

A

Citation to take probate: wehn executor has lost opportunity to renounce probate by intermeddling in estate but have not applied for grant and do not intend to do so

82
Q

Citation to take probate = force an executor to accept probate

A
83
Q

Citation to accept or refuse a grant = clear off a person with a prior grant

A
84
Q

Caveat = prevent the issue of a grant

A
85
Q

Inheritance tax

A

PR’s have to deliver an account to HMRC within 12 months from the end of the month of the deceased’s death

In practice earlier as interest on IHT due on the estate runs from 6 months

86
Q

Excepted estate

A
  • No inheritance tax due
  • Formal account not needed
87
Q

Transferable nil rate band

A
  • Deceased spouse
  • Spouse did not use all their nil rate band
  • Unused nil rate band transferable to spouse
88
Q

Transfers between spouses are exempt from inheritance tax

A
89
Q

If there are multiple PRs they are not generally liable for another PR’s breach

A
90
Q

Court can relieve PR from liability if PR acted honestly and reasonably and ought fairly to be excused

A
91
Q

Testator can exclude PR’s liability for breach

A
92
Q

Appropriation

A

Using asset to satisfy legacy or share of estate

93
Q

Legacies to minors

A

PRs can appoint trustees of property for minor has vested interest

If interest not vested, PR must hold property or transfer it to Court

94
Q

Power to maintain minor

A

Trustee may apply income for minor’s maintenance, education or benefit

95
Q

Power to advance capital

A

Trustees may advance capital to beneficiary with vested or contingent interest in capital

Beneficiary with prior life interest must consent

96
Q

Express will clauses may override or amend the rules on the power to apply income on behalf of the minor

A
97
Q

If there’s more than one PR, they have joint and several liability so the act of one binds the others BUT exception all PRs must join to transfer land or shares

A
98
Q

Notice to beneficiaries and creditors

A
  1. PR place adverts in:
    - London Gazette
    - Newspapers local to where deceased owned land
    - Trade publications (if relevant)
  2. Creditors and beneficiaries must have at least 2 months to to respond
99
Q

Protections from claims of missing beneficiaries or creditors

A
  1. Make payment into court
  2. Take out insurance against alter claim
  3. Apply to court Benjamin Order
100
Q

PRs should wait at least six months from date of grant before distributing the estate

A
101
Q

Solvent estate

A

Sufficient funds to pay all debts, expenses and creditors even if insufficient funds to pay legacies and bequests

102
Q

Payment of debts: secured debts discharged from property against which it is secured

A
103
Q

Order assets should be used to pay debts

A
  1. Property not disposed of in will
  2. Property which forms part of residue
  3. Property given for payment of debts
  4. Property specifically charged with debt payments
  5. Fund for pecuniary legacies
  6. Property specifically bequeathed or devised
104
Q

Insolvent estate

A

Insufficient funds to pay all expenses, debts and liabilities

105
Q

Order to pay creditors

A
  1. Funeral, testamentary and administration expenses
  2. Preferred debts
  3. Ordinary debts
  4. Deferred debts
106
Q

If PRs pay a category of debt knowing that there are higher ranking debts the PRs are personally liable if there are insufficient assets to pay the higher ranking debts BUT they are not liable if they paid an inferior debt without notice of a debt in a higher category as long as they did not do so with undue haste

A
107
Q

Disclaimers

A

Beneficiary can disclaim gift unless they accepted any benefit from it

Gift falls into residue

Does not prevent person disclaiming from receiving the property under the intestacy rules

108
Q

Variation

A

Beneficiary changes who receives their inheritance

Variation can be made even if original beneficiary has accepted a benefit

109
Q

Payment of legacies

A

Chattels: handed over

Stocks and shares: require completed transfer form

Land: conveyance by deed BUT exception PR has power to assent to the vesting of an interest in land in any person entitled to that land

110
Q

Costs of transfer are absorbed by beneficiary unless will says otherwise

A
111
Q

Pecuniary legacies paid from residue BUT will can dictate otherwise

A
112
Q

Abatement

A

When assets are insufficient, debts and legacies reduce proportionately

113
Q

A beneficiary can ask PR to use a particular asset to satisfy pecuniary legacy = appropriation

A
114
Q

PRs should obtain a receipt from the beneficiary to prove the PRs have satisfied their obligations

A
115
Q

Options for gifts to minors

A
  • Hold property until minor reaches 18
  • Use power of appropriation
  • Appoint trustees to hold property until child reaches 18
  • Pay legacy into Court
116
Q

PRs need to consider whether legacies are subject to or free of tax as this is relevant to determine who suffered the burden of IHT on a legacy - recipient or residuary beneficiary?

A
117
Q

Certificate of discharge

A

Discharge from further inheritance tax liability

118
Q

Limited certificate of discharge

A

Issued when there is still some inheritance tax due but PRs have decided to pay IHT in instalments

119
Q

No certificate of discharge is required for an accepted estate as there is no IHT liability

A
120
Q

PRs must be authorised to charge for their services through express clause in will, beneficiaries approval or court approval

A
121
Q

PRs prepare estate accounts to demonstrate to residuary beneficiaries what assets and liabilities were compromised in estate and IHT paid, expenses incurred and how assets have been shared and also income to show how much is available for distribution

A
122
Q

Estate accounts

A
  • Income account
  • Capital account
  • Distribution account
123
Q

Residuary beneficiaries approve the estate accounts by signing them and acknowledges receipts of amounts due which discharges PRs from liability

A
124
Q

If a residuary beneficiary is a minor or an indvidual who lacks mental capacity they cannot sign the estate accounts

A
125
Q

Assent

A

Vests the legal estate in a named person

126
Q

Assents for land

A

In writing

Signed by PRs

Name person in whose favour it is given

127
Q

Beneficiaries’ rights and remedies

A

Until the administration of the estate is complete the beneficaries do not have any legal or equitable interest in the estate

128
Q

Beneficiaries have a chose in action = right to ensure estate is administered properly

A
129
Q

Recipients of specific gifts have the right to income from the asset concerned accruing from death e.g. rent from investment property

A
130
Q

Residuary beneficiaries have the right to income from the residue assets

A
131
Q

Beneficiaries remedies

A
  • Administration proceedings
  • Action to recover losses, including personal action against PRs
132
Q

Claims under 1975 Act

A

Allows a person to ask the court to set aside the terms of a will or vary and intestacy on the grounds reasonable financial provision has not been made for them

133
Q

Applications under 1975 Act

A

Must be made within 6 months from issue of grant

Made by:
- Spouse or civil partner
- Ex-spouse who has not remarried
- Child or person treated as child of the family (adult child in employment unlikely to succeed)
- Person maintained by the deceased e.g. mistress
- Person who cohabited with deceased for at least two years before death

134
Q

Tests court consider under the 1975 Act

A

Has the will or intestacy rules failed to make reasonable financial provision for the applicant?

If so what would be such provision

135
Q

Standard for spouses under the 1975 Act

A

Such financial provision as would be reasonable in all the circumstances, whether or not required for maintenance

136
Q

Standard for applicants other than spouses under the 1975 Act

A

Such financial provision required for their maintenance such that they can live decently and comfortably according to their situation

FLK2 (8 decks)

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