Wills and Estate Administration - Estate Accounts, Assents, Beneficiaries' Rights and Remedies, and Claims Against Estates

Question 1

Estate Accounts

Answer 1

• Should be prepared by PRs to demonstrate what estate is
• Shows what IHT has been paid, expenses incurred during administration period and how assets have been distributed to other beneficiaries
• Should also show income received during administration period
• Result is to show what amount is available to residuary beneficiaries
• Common practice to attach a copy of the will and other relevant documents

Types of estate accounts:

• Income account
• Capital account
• Distribution account

It is the beneficiaries’ responsibility to approve the accounts

Question 2

Beneficiary a minor or lacks capacity

Answer 2

Beneficiary lacking capacity must have their deputy or attorney sign the accounts on their behalf (or payments could be made into court)

Minor beneficiaries: appointment of trustees who retain assets until they turn 18. However, if interest is contingent PRs will have to hold assets until they reach 18

Question 3

Assents

Answer 3

• Means the PRs are acknowledging they do not require an asset as part of administration and happy to transfer to beneficiary

Assents for land

• In writing
• Signed by PRs; and
• Name person in whose favour it is given

An assent triggers first registration of unregistered land

If land is registered the PRs can apply to be registered as the owner in the deceased’s place or transfer the property by assent to a beneficiary who will then apply to be the registered owner

When buying land from beneficiaries an assent is evidence that beneficiaries are entitled to the legal estate

If PRs are continuing to hold land in a different capacity (e.g. as a trustee or under intestacy law) - assent needed to vest legal estate in themselves

Question 4

Beneficiaries’ Rights and Remedies

Answer 4

• Until the administration is complete a beneficiary has no legal or equitable interest in estate assets
• Beneficiaries have chose in action (i.e. they have the right to ensure the deceased’s estate is administered properly) but do not have any legal or equitable interest in the assets until then
• Specific gift recipients: right to income accruing from death
• Residuary beneficiaries: right to intermediate income whether their interest is immediate or contingent
• Contingent pecuniary legacies: do not carry right to income unless the beneficiary is a child with entitlement at 18

Remedies:

Administration proceedings: ensure estate administration is property conducted

Action to recover losses:

• Personal action against PRs (PRs may not be liable if they acted reasonably and ought fairly to be excused, absolved under the will or by agreement with the beneficiaries)
• Tracing: right to trace and recover property of the estate from the PRs or other recipients (right lost if bona fide purchaser or if inequitable
• Other personal actions against persons who have wrongly received estate assets

Question 5

Claims under the Inheritance (Provision for Family and Dependants) Act 1975 Act [‘the 1975 Act’]

Answer 5

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

Persons who died domiciled in England and Wales or left property and family members/dependents there

Application must be made within six months from issue of grant of representation (or later with leave from the court)

Eligible applicants:

• Spouse or civil partner
• Ex-spouse who has not remarried
• Children or person treated as child of the deceased (adult children unlikely to suceed if able-bodied and employed)
• Person matained by the deceased (deceased must have been making a substantial contribution to their reasonable needs)
• Person who cohabited with deceased for at least two years before death as spouse, civil partner or same-sex partner

Court will consider:

• Whether the will or intestacy rules failed to make reasonable financial provision for the applicant
• If so, what would be such provision?

Standard to be applied

• Spouses: such financial provision as would be reasonable in all the circumstances, whether or not required for maintenance (focus is on all the circumstances) - court should consider what would be awarded in a divorce
• Other applicants: such financial provision required for their maintenance, such that they can live decently and comfortably according to their situation (focus on maintenance)

Test is objective but evidence of deceased’s for not providing for applicant in will is admissible

The surviving spouse standard can be applied to former spouses if the death occurs within 12 months of the decree absolute and no final order has been made in those divorce proceedings

If application granted the estate will devolve according to order rather than the will

Question 6

Discharge

Answer 6

• PRs endorse the accounts to indicate their approval
• Accounts sent to residuary beneficiaries for them to endorse
• Residuary beneficiaries then formally discharge the PRs with an agreement to indemnify them

Question 7

Guidelines for reasonable financial provision

Answer 7

Courts consider:

• Financial resources and needs of the applicant, any other applicant and any beneficiary (now or in the future)
• Any moral obligation of the deceased to any applicant or beneficiary
• Size and nature of the net estate
• Physical or mental disability of any applicant or benficiary

Question 8

Reasonable financial provision orders

Answer 8

If the court approves the application the estate devolves according to its terms rather than the will or intestacy rules

1. Transfer of property
2. Payment of a lump sum (or periodical payments)
3. Payment of income
4. Settlement of property on trust

Court can also make an order regarding property disposed off before death if intended to avoid provisions of 1975 Act