!!!! Wills and probate Flashcards
If someone dies intestate, leaving a spouse and minor children- how do the statutory trusts operate?
- Depending on the size of the estate, the surviving spouse is entitled to a fixed sum of £322k + interest, along with half of the rest of the estate
- the other half is held on trust for the children
If you are married with kids and you die intestate and your spouse dies 21 days later with a Will, how does the mans estate pass under intestacy laws
- Spouse didn’t survive them by required 28 days so it passes to the children under intestacy rules
What is the position regarding gifts made before death and in contemplation of death?
- Gifts made in contemplation of death where control of the asset is given are valid
what happens to the reversionary interest in a trust if the person who should receive it predeceases the life tenant?
- the reversionary interest in the trust vests in the reversionary beneficiary on the death of the life tenant. As the reversionary beneficiary has died before the interest is vested in him, it will lapse and cannot form part of his estate.
private limited company shares- is business relief available on them?
Yes at 100% as they are unlisted as long as you own them for at least 2 years
how many years do you have to live for a PET to be exempt?
7 years after the gift was made
if you live for 6 years after making a PET, how do you work out the value of the failed PET?
Gift value minus 2x£3k
gift uses the annual exemption of the year of the gift, as well as the previous year
How to work out the amount of nil-rate band used by gifts
- work out the value transferred (if they gave £80k it will be £80k)
- then take away any exemptions (so any gifts given before 7 years, and then £3k every year)
if you transfer your house into your child’s name and then continue to live there for over 7 years paying a nominal rent- what is the position with regard to IHT on your death?
The house remains part of the woman’s estate for inheritance tax purposes as continuing to live in the property made this a gift with a reservation of benefit
- on the death,the house remains part of the estate, and its market value at the time of death is included
A man dies on 6 January leaving an estate worth £5,000,000 to his children. His assets include the family home. The family home is still occupied by his children and there are no plans to sell it. A grant of representation is obtained on 15 March.
what are the payment dates for IHT on the assets of the estate?
Inheritance tax is payable by 31 July. Inheritance tax on the family home may be paid in up to ten annual instalments, plus interest, which are due annually on the same date
What are residence nil-rate bands, and when can they be used? and the amount they are worth
the IHT exemption for when you own a home included in your estate- and it is closely inherited- so given to a direct descendant or the spouse or civil partner of a direct descendant
- £175k each for husband and wife
Which of the following assets would be included in a taxable estate?
- house in sole name
- life assurance policy in trust for kids
- cash in a bank held jointly with wife
- cottage as joint tenants with brother
all except life assurance
The life assurance policy is written in trust and is not part of the deceased’s estate on his death. The assets held as beneficial joint tenants pass outside the estate, but are not exempt from inheritance tax.
what is quick succession relief?
IHT relief for where 2 deaths have occurred in a short period of time and the second estate includes the first
- death has to occur within previous 5 years
- 100% if less than one year
-80% between 1-2 years
etc
A man transferred assets into a discretionary trust five years before his death. The transfer was taxed at 0 per cent as the nil rate band was sufficient to cover it. He has several failed potentially exempt transfers in the seven-year period leading up to his death.
What is the position with regard to the inheritance tax on the transfer on the man’s death?
All transfers are reviewed in chronological order to determine the cumulative total. The lifetime chargeable transfer will be reassessed and will be taxed at the death rate, with taper relief for any tax payable.
