Wills and Estates Flashcards
1
Q
When will the presumption of intention (knowledge and approval) not apply?
A
- If the testator is blind or illiterate
- When there are suspicious circumstances
In these circumstances, the gift will fail unless evidence of the testator’s knowledge and approval is shown by the person putting forward the will.
2
Q
Will the presumption of capacity apply if T is blind?
A
Yes, but the presumption of knowledge and approval will not apply in these circumstances
3
Q
What are the implications when the rebuttable presumptions do not apply?
A
If the presumption applies, then a challenger will need to provide evidence that the person did not have capacity or did not have knowledge or approval by fear, fraud, undue influence or mistake
If the presumption does not apply (i.e. where the testator is illiterate, blind, or there are suspicious circumstances), the person relying on the will will need to prove that they did have the proper intention to make the will
4
Q
When can solicitors accept large gifts in a client’s will?
A
Only when the client has taken independent legal advice
5
Q
What is the definition of duress for the purposes of wills?
A
When the testator has been injured or threatened with injury to force them to make the gift
6
Q
What is a grant in solemn form?
A
The grant of a will in solemn form is when the will is contested and the Court has to declare whether it is valid
7
Q
What is the definition of undue influence (wills)?
A
It is something that overpowers the volition of the testator. A coercion which overpowered the freedom of the action of the testator.
8
Q
What happens if an attestation clause is not included?
A
The person admitting the will into probate has to prove that the formalities were followed, normally by getting a witness to testify
9
Q
When will a special attestation clause be required?
A
When the testator is blind or illiterate
10
Q
What are the rules on illiteracy/blindness for witnesses and testators
A
- An illiterate person can be a witness but a blind person cannot
- An illiterate or blind testator will be presumed not to have knowledge or approval of their will unless contrary evidence is put forward.
It is possible for another person to sign on behalf of the testator if they are blind or illiterate. However, the testator must be present, and the will should be read to them before the will is signed on their behalf
11
Q
Who cannot be a witness to a will?
A
- A blind person
- A beneficiary
- Someone who lacks mental capacity
12
Q
If a will references another document, what are the requirements for that document to be validly incorporated?
A
The document must exist at the time of the will and be referred to in the will as so existing. There cannot be a future intention.
13
Q
What are the requirements for a valid codicil?
A
- It makes reference to the will
- The requirements for a valid will have been met
- A codicil may remedy a gift which was void in the original will because the beneficiary witnessed it
- Should include a clause confirming the unamended parts of the will
14
Q
When will a will not be revoked by marriage?
A
When the testator was expecting to marry a particular person at the time the will was made, and and they did not intend for the will to be revoked
15
Q
What is the implication if only part of a will is destroyed?
A
It may result in only that part of the will being revoked
16
Q
When will the presumption of an intention to revoke the will apply?
A
When the will is found mutilated at the date of death OR if the will was last known to be in the possession of the testator but which cannot be found
17
Q
What is Dependent Relative Revocation?
A
The doctrine that if a testator revokes his will in the mistaken belief that a particular result will ensue, or is contingent on some future event and that event did not take place, then the revoked will may still hold good if it can be reconstructed from a copy or draft
18
Q
What are mutual wills?
A
This forms a contract between the parties that the wills are to be irrevocable and will remain unaltered. This creates a constructive trust in favour of the beneficiaries under the will (they are not advisable)
19
Q
When does the will normally speak from?
A
The will speaks from the date of death unless a contrary intention is apparent from the will. A contrary intention will be apparent by the use of the term ‘my car’,= from date of execution
but if the words ‘all my cars’ are used, then this will normally speak from the date of death (because this is something that can vary in value)
20
Q
What are the different types of legacies?
A
Specific legacy - an identified part of the estate
General legacy - does not identify a specific item e.g. ‘a BMW car’ (a beneficiary is entitled to require the executors to purchase this if it is not in the estate at the time of death
A pecuniary legacy - a gift of cash. This is usually general but can be demonstrative (i.e. identifies the source from where it will come). If it is demonstrative, and the source of funds is no longer available, the beneficiary can ask the executors to meet shortfall from other cash or assets in the estate
21
Q
When are beneficiaries determined under the will?
A
From the date of execution. As such, a gift to a specific person who dies before the testator will normally lapse.
22
Q
When will a gift to joint tenants lapse?
A
If one of the joint tenants dies before the testator, then the whole gift will pass to the other joint tenant. If made to tenants in common (in equal shares), then the share of the person who died will lapse.
23
Q
If a gift is made to certain beneficiaries conditional on them surviving a certain amount of days, what happens to the gift if they do not survive for that amount of days?
A
The gift will fail and fall back to estate
24
Q
What are the rules about gifts to the deceased’s issue?
A
If a gift is made to the testator’s child (or grandchild) and that person dies before the testator, the gift will not lapse if that person has living issue, it will go to their issue. This includes children in the womb!!
However, this does not apply if there is a contrary intention in the will (i.e. to such of my daughters who shall survive me…)
25
When will a gift to a beneficiary/witness not fail?
If there are at least two other witnesses who are not beneficiaries (or their partners or children).
26
Who is classed as children for the purposes of a will?
legitimate children, illegitimate children and adopted children but NOT stepchildren
27
Do minor beneficiaries have a vested interest?
Yes, if there are no conditions attached, but they will not receive trust property until they are 18
28
What are the class closing rules?
Vested interest: the class closes when at least one beneficiary has a vested interest. For example, '£5,000 to the children of Z'. If at the date of the testator's death there is a living child of Z then they will inherit and the class will be closed. If no child, then will stay open until Z's death
Contingent interest: the class closes when one beneficiary living at the date of the testator's death fulfils the condition, and will include all those children then living who go on to fulfil that condition. For example, £5,000 to the children of Z who reach the age of 18. If there is one 19 year old, a 5 year old and a baby in the womb, the class will close around all of those living children (provided they reach the age of 18), and will not include anyone born after the death of the testator. If there is a 15 year old and 14 year old, the class will only close once one of them turns 18 (so others may join in that time)
If the will states "£5,000 to EACH of the children of Z who reach the age of 18" then the class closes at the date of the testator's death. If no children exist at that point, then the gift fails.
29
What is a summary of the class closing rules?
£5,000 to the children of Z - closes at the date of death if one beneficiary has a vested interest (e.g. there is already a child0. If no beneficiary yet has a vested interest, it remains open until the death of Z.
£5,000 to the children of Zebadee who attain the age of 18 - closes at the date of the testator's death if any child has fulfilled the contingent interest. I.e. if there are any living children at the testator's death the class will close around all of the ones that are living once one of them reaches 18.
£5,000 to each of the children who attain the age of 18 - class closes at the date of the testator's death and fails if there are no children
30
How long does the spouse have to survive in order to take the deceased's estate under the intestacy rules?
28 days
31
Intestacy rules - order of entitlement
- Spouse
- Issue (under 18 can inherit but will not receive the money until their 18th birthday)
- Parents
- Siblings
- Half brothers and sisters
- Grandparents
32
Intestacy - what is the rule of appropriation?
A surviving spouse can ask the PRs to give the matrimonial home (or the deceased's share in it) to them to satisfy their entitlement under the intestacy rules. If this is more than their share, they will have to pay over the balance as equality money.
33
Does 'statutory trust' - i.e. the fact that issues take instead of the actual beneficiary apply to intestacy?
Yes!
34
Intestacy - What does statutory trusts mean?
That if the beneficiary dies and is survived by issue (as long as they are over the age of 18 or married earlier) the issue will inherit.
35
Intestacy - what happens if a potential beneficiary under the intestacy rules dies before they are 18 or married earlier (i.e. have a vested interest)?
Their issue (if any) will inherit. If they have no issue, the estate will be administered as if they never existed.
36
What happens if an adopted individual dies intestate without spouse or issue?
Their estate will be distributed between the closest relatives in the adoptive family.
An adopted individual can also inherit on the intestacy of any member of their adoptive family
37
What happens if a child whose parents were never married dies intestate?
The law presumes that their father has not survived them (unless there is evidence to the contrary)
38
Which property passes outside of the will/intestacy rules? (THIS CANNOT BE VARIED BY THE TERMS OF THE WILL)
- Life assurance policies in the name of a specific beneficiary
- Pension scheme death benefits in the name of a specific beneficiary
- National Savings Bank or Savings Certificates with a specific beneficiary (NOT EXCEEDING £5,000).
- Life interests in a trust (they pass to the remainderman on death and do not remain part of the estate - but will be taxed for IHT)
- Gifts with reservation of benefit (will be taxed but does not actually form part of death estate)
- Property owned as a joint tenant (will be taxed but does not actually form part of death estate)
39
When will the naming of an executor in a will be void for uncertainty?
If they are referred to by description of their office (i.e. my excutor) but not actually named
40
Can a minor or someone lacking mental capacity be named as an executor?
No!
41
What happens if a spouse is named as executor and then they get divorced?
The executorship will be invalid - the former spouse is treated as having died
42
Would notifying the deceased's bank of the death be counted as intermeddling in the estate?
Yes (probably)
43
What formalities are required to renounce an executorship?
- Renunciation must be in writing
- Signed by the executor
- Contain a statement that the person has not inter-meddled, and
- Be signed by a disinterested witness
- Must be filed at the Probate registry
44
Once they have renounced executorship, can the executor reclaim probate?
No, not without the permission of the Court
45
What happens if an executor who is also a trustee renounces their executorship?
They remain a trustee even though they have renounced their executorship (they would have to renounce the trusteeship separately)
46
How can someone with power reserved go on to take probate?
They do not need the consent of any other executors or beneficiaries, they just have to apply to the Court for a grant of probate
47
Where are probate matters heard?
- Family division of the High Court (non-contentious)
- Chancery division of the High Court (if contentious)
- County Court if the estate is below £350,000
48
Which types of assets can be sold without first taking a grant of probate?
- Amounts up to £5,000 in National Savings Certificates, Premium Bond savings or National Savings Bank Accounts
- Chattels such as furniture, jewellery, clothing and cars
- Quoted shares
(All that needs to be shown is a death certificate)
49
PROBATE - may one executor take a grant of probate and act alone?
Yes (but not a minor or someone who is the divorced spouse)
50
PROBATE - what is the maximum amount of executors which may be appointed?
4 (different parts of the estate can have different executors)
51
PROBATE - When does the estate vest in executors?
On the testator's death. The grant of probate is required to legally sell property in the estate's name (subject to the property which can just be evidenced with death certificate - chattels, national savings products up to £5,000).
52
Can power be reserved for a grant of letters of administration with will annexed?
No
53
Can powers be reserved/ renounced for a grant of letters with will annexed?
Powers can be renounced even if intermeddling has occurred, but they may not be reserved.
Clearing off applies to clear off an individual with a better right
54
What is the order of entitlement for a grant of letters of administration with will annexed?
1. Executor
2. Trustee of the residuary estate
3. Residuary beneficiary
3. PRs of the residuary beneficiary (but not a life tenant)
4. Any other beneficiary or creditor
5. PRs of other beneficiary or creditor (but not life tenant)
Essentially, the residuary beneficiary has a higher ranking right
55
Grant of letters of administration with will annexed - where there are persons of equal rank entitled to take a grant, who will be preferred?
Vested interests will be preferred over contingent interests
56
Can a beneficiary who witnessed the will apply for a grant of letters of administration with will annexed?
No
57
How many PRs are required if there is a minor beneficiary or life interest under a will?
Two
58
Do the rules of clearing off and the ability to renounce apply equally to grant of letters of administration and grant of letters with will annexed?
Yes - same rules apply
59
What is a grant de bonis non?
This is a grant made to allow the completion of administration of an estate where the last surviving PR dies or has revoked. It will be granted to the next most entitled person.
It does not apply to executors where there is a chain of representation (re: executors)
60
Can a minor be appointed as an executor?
No, but if they are one of several executors or potential administrators, the grant is made to the adults with power reserved to the minor should they take a grant in their majority.
If the minor is the sole executor, a limited grant of letters of administration will be given to their parents until the child reaches 18.
61
Does the court have any power to appoint an administrator?
Yes - the court has discretion to make a grant to someone other than the personal ordinarily entitled (if for example the PR is bankrupt or in prison)
62
What is the pre-grant procedure for PRs?
1. Register the death with banks and insurance companies, HMRC and creditors
2. Obtain a valuation of assets
3. Notify beneficiaries of potential entitlements
4. Place early advertising for unknown beneficiaries and creditors
5. Pay IHT
63
How can PRs fund the payment of IHT before grant is taken?
- Asking bank to release the deceased's funds directly to HMRC
- Bank loan (with undertaking to pay back using first funds from sale of estate)
- Loan from a beneficiary
- Sale of those assets that don't require grant prior to sale (e.g. chattels and quoted shares)
- Life insurance policies where estate is beneficiary
in exceptional circumstances, HMRC may allow the grant to be obtained on credit
64
When does IHT on death estate need to be paid?
6 months from the end of the month of death
65
When do IHT accounts have to be delivered to HMRC?
12 months from the end of the month in which the deceased died
66
PROBATE - What must accompany an application to the Probate Registry for a grant?
- The will + 2 copies
- A copy of the death certificate
- IHT form
- probate fees
- Any relevant affadavits
67
Which forms are used for probate/ with will annexed v letters of administration
PA1P - probate or letters with will annexed
| PA1A - letters of administration
68
What is an affidavit of 'plight and condition' and when is it necessary?
Where pin/ stable marks suggests revocation by a later will. The affidavit confirms that the will is in the same condition as when it was found after the testator's death
69
What is a caveat and for how long is it valid?
A caveat can be lodged by a beneficiary to prevent the issue of a grant of representation (e.g. if the executor lacks mental capacity or that the will is invalid)
Caveats are valid for up to 6 months
70
What is a citation to take probate?
This is used when an executor has intermeddled in the estate but has not applied for a grant and does not intend to do so.
if they refuse, the citor can apply for a court order to clear them off and then take a grant of letters of administration with will annexed
71
What is a citation to accept or refuse a grant?
This is used to clear off any person with a prior right to a grant and who has not applied for a grant. If they do not take the grant, the citor can then take a grant.
Or can apply for a court order to have them passed over immediately
72
What is an excepted estate for IHT purposes?
- The deceased died domiciled in the UK
- A maximum of £100,000 of estate property is situated outside the UK
- Specified transfers (i.e. to trusts, or people other than spouses or charity) in the seven years prior to death do not exceed £250,000
- The total gross estate PLUS specified transfers does not exceed the inheritance tax threshold of £325,000, or does not exceed £3 million and the net chargeable estate (after taking off spouse or charity exemption) does not exceed the nil rate band
- The estate is worth £650,000 or less (with transferable nil rate band being applied)
73
Do excepted estates have to file an inheritance tax account?
NO
74
When will the estate of non-doms be chargeable to IHT?
If their estate consists solely of cash or quoted shares of not more than £250,000
75
What are the duties of the PRs?
- To collect the deceased's assets
- To realise assets and pay off debts
- PRs must exercise reasonable skill and care in the administration of the estate (taking into account any specialist knowledge which they have)
- To act in the best interest of the beneficiaries
76
When will a PR be liable for breach of duty?
- A will normally excludes PRs liability for breach
- if it does not, PRs may be liable for breach of duty
- A PR is not liable for loss from a fellow PRs breach of duty
77
In what circumstances can a court relieve PRs of liability for breach of duty?
If they are satisfied that the PR "has acted honestly and reasonably and ought fairly to be excused for the breach"
78
Do PRs have a power to sell, mortgage or lease estate property?
Yes!
79
What is the PRs power of appropriation?
This is when the PRs use an asset in the estate to satisfy a legacy (with the consent of the beneficiary). But this cannot be done if a specified beneficiary is affected by this.
E.g. a legacy of £5,000 is left to a specific beneficiary but the estate is low on cash. If there is a piece of jewellery worth this amount which has not been left to any specific beneficiary, this can be used to satisfy the legacy (with the consent of the beneficiary who will recieve)
80
What happens if a residuary gift fails?
It passes under the intestacy rules
81
Do PRs have the power to invest in land?
Yes, a freehold or leasehold for any reason, but ONLY in the UK
82
Do PRs have to act solely or together?
All PRs must act together for the sale of land and shares
PRs have joint and several authority, meaning that the act of one binds the whole estate
83
How do PRs protect themselves against claims by UNKNOWN beneficiaries or creditors?
PRs will be personally liable to any unknown beneficiary or creditor unless they
They can protect themselves by:
Placing adverts in the London Gazettte
Placing adverts in a local newspaper and any other appropriate newspaper (e.g. a trade journal)
Wait 2 months before distributing the estate
84
How do PRs protect themselves from claims by named beneficiaries?
- Make the payment owed to the beneficiary into the Court
- Receive an indemnity from the beneficiaries (but this may be worthless if the beneficiary has no funds)
- Seek a Benjamin Order (best option)
- Purchase insurance against the risk of a missing claimant (may be quicker than applying to Court)
85
How do PRs protect themselves from a claim for financial provision under the 1975 act?
By waiting 6 months from the date of grant to distribute the estate
86
How can PRs avoid liability for failed PETs or CLTs?
This liability arises if the IHT due is still unpaid after 12 months
Liability can be avoided if the PRs have made fullest enquiries and have obtained a certificate of discharge from HMRC
87
What happens to causes of action vested in the deceased at the date of death?
It survives for the benefit of the estate
88
Do PRs have power to deal with assets passing outside the will or by intestacy?
No
89
What is a solvent estate?
One where the reasonable funeral, testamentary and administration expenses, debts and other liabilities can be paid in full (Does not relate to the ability to pay legacies under the will)
90
How should secured debts of a solvent estate be paid?
A secured debt (e.g.a mortgage) should be paid from the property against which it is discharged (unless there is a contrary intention in the will)
91
How should unsecured debts be paid?
From property undisposed of by the will / the residue
92
In what situations can debt not be paid from the residue of an estate?
If the testator has stated that debts should not be paid from the residue:
- When there is property specifically given/ charged for the payment of debts
- When there is a pecuniary legacy fund
- Property specifically devised or bequeathed
93
What is the doctrine of marshalling?
If a specific beneficiaries legacy is used to pay off a debt, that beneficiary will be compensated for their loss from the residue
94
What is the meaning of a gift of property "free of mortgage"?
This means that the mortgage will not be paid off by the sale of the property but from the residue
95
What is an insolvent estate?
One that has insufficient assets to pay expenses, debts and liabilities in full. Beneficiaries of such an estate will receive nothing.
96
What is the priority order for an insolvent estate?
1. Funeral and administration expenses
2. Preferred debts - wages and salaries of the deceased's employees in the four months prior to death, up to a maximum of £800 each
3. Ordinary debts - including money owed to HMRC and the balance of preferred debts
4. Interest on preferred and ordinary debts
5. Deferred debts (loans from the deceased's spouse)
(Rank and abate proportionally)
97
What is the implication of the PRs paying a category of debt when there are higher ranking debts still left to pay?
This payment would be an implied warranty that there are sufficient assets to meet all the higher level debts. If there are not sufficient assets to do so, the PRs are personally liable.
98
When will a PR not be personally liable for paying off a lower level debt without have sufficient funds to pay off a higher level debt?
If they did not have NOTICE of the debt in the higher level category (as long as they made in inquiries and did not act with undue haste)
99
What is the exception to the rule that the PRs must not prefer one creditor over another in the same category?
If PR had no knowledge that the estate was insolvent
100
Can a beneficiary disclaim a gift and how must the disclaimer be made?
A beneficiary can disclaim a gift unless they have accepted any benefit from it. A disclaimer can be made orally or in writing. However, to be effective for IHT and Capital Gains Tax, the disclaimer must be in writing.
101
What happens to a gift which is disclaimed?
It falls into the residue, or if it is residue, it passes by the rules of intestacy
102
What is a variation and what are the tax implications?
The variation allows the beneficiary to choose where the gift will go. It must be in writing and made within 2 years of death, and not made for monetary consideration.
A partial variation is possible, but a partial disclaimer is not. A variation can be made even if the original beneficiary has accepted a benefit (a disclaimer cannot).
103
How are the various asset transferred to the beneficiaries?
Chattels - delivery to the recipient
Shares - stock transfer form
Land - An assent
104
Are beneficiaries entitled to income on the asset they receive?
Yes, they are entitled to income from the date of the T's death. But, they must also bear the costs of transfer.
105
What is the concept of abatement with wills?
Where there are insufficient funds to cover debts, creditors must accept a lower value in satisfaction of the debt.
Similarly, where there are insufficient funds or assets to pay legacies, the legacies abate in proportion
106
What are the options for PRs when paying a legacy to a minor?
- Hold the property until the child reaches 18
- Use the power of appropriation (with parents giving receipt)
- Appoint trustees to receive and hold the property until the minor turns 18
- Pay the legacy into court
107
What is a pecuniary legacy made "subject to tax"?
A legacy where the PRs hold back the tax and just pay the net legacy to the tenant (most gifts are deemed to be free of tax unless the will says so)
108
What must the PRs file is there has been an incorrect amount of inheritance tax initially paid?
They must file a corrective account
109
Once IHT is paid, what must the PRs obtain from HMRC?
A certificate of discharge. This is not required for an excepted estate.
110
When will an automatic discharge arise for the purposes of IHT?
35 days after a grant of representation
111
When may PRs receive remuneration for their work?
PRs may not charge for their services, but may receive payment in the following ways
- A legacy made to them as executor (conditional on them accepting office)
- An express charging clause in the will
- If the beneficiaries agree that PRs should be paid out of their legacy
- If authorised by the court for past, present, or future services
112
What 3 accounts are included in estate accounts?
- Income account
- Capital account
- Distribution account
If there is a life interest then income and capital must be kept separately. Income related to the period pre-death which is received after death is added to capital account and income received after death will be added to the income account
113
What is a commentary?
It accompanies the accounts and explains the value of the estates and any dispositions to the beneficiaries
114
What is the distribution account?
This is an account which shows how the beneficiaries entitlement will be met
115
How can the PRs be discharged?
The residuary beneficiary must endorse the estate accounts and formally discharge the PRs by agreeing to indemnify them against any claims and demands. If the beneficiaries refuse to endorse the accounts, the PRs can ask the court to approve them or pay the beneficiary's share into court.
116
When does an assent date from?
The date of death - so the beneficiary is entitled to any income from that point
117
What are the formalities for an assent?
It must be in writing, be signed by the PRs and name the beneficiary.
118
When is an assent required?
Both when the PRs want to vest property in the beneficiaries and when they want to vest it in themselves as trustees
119
What kind of right do beneficiary's under a will have?
A chose in action - a right to have the deceased's estate properly administered
120
What claims can beneficiaries bring under a will?
Same as those of beneficiaries under a trust - a person action against the PRs, a proprietary claim to recover estate property, and a personal against those who have wrongly received state assets
121
Who can bring a claim under 1975 act?
- Spouse or civil partner
- A former spouse or civil partner who has not remarried (unless there has been a clean break divorce)
- A child or a person treated as a child. Adult children are unlikely to be able to claim if able-bodied and independent.
- Any person who was being substantially maintained by the deceased
- Any person who was living with the deceased for the whole two year period prior to death.
122
What provision will be ordered under the 1975 Act in the case of spouses?
Such financial provision as would be reasonable in all the circumstances, whether or not this is required for their maintenance. Here the court must consider what would be awarded in a divorce
123
Does the 1975 act apply to former spouses?
Yes, the court may apply the same standard as to a current spouse as long as the deceased died within 12 months of the divorce and no final order has been made in divorce proceedings
124
What is the standard applied for applicants other than a spouse under the 1975 Act?
Such provision as required for their maintenance such that they can live decently and comfortably according to their situation.
125
What types of order will the court make under the 1975 Act?
The court has very wide discretion and can make the following orders:
- Payment of a lump sum
- The transfer of property
- Payment of income
- Settlement of property on trust
Orders can be made from the deceased's net estate or from their severable share of a joint tenancy
