Wills: Duty, Powers and Protection of PRs

Question 1

What are the duties of PRs?

Answer 1

• Duty to take reasonable steps to preserve deceased’s estate and realise on any investments which are not proper for them to retain
• Must pay off the estates debts from estate funds and distribute assets as set out in the will / intestacy rules

Under Trustee Act
- Duty to act reasonable care and skill, taking into account any specialist knowledge or experience
- fundamental duty to act in best interest of beneficiaries

Question 2

What is the liability of PRs for duty of care? Can they get relief?

Answer 2

Liability
- Can be excluded by will
- If not excluded PR’s may be liable to beneficiaries or creditors for losses arising from breach

Relief
Court has discretion to relieve PR if they Acted honestly and reasonably and ought fairly to be excused for the breach

Question 3

Are PRs liable for breach of another PR?

Answer 3

• PR not liable for breach of another PR unless they were negligent

Question 4

What are the powers of PRs?

Answer 4

• Power to Sell, Mortgage or Lease
• Power of Appropriate
• Power to accept receipts for a minor’s property
• Power to Insure
• Power to Delegate
• Power to Indemnify for Expenses
• Power to run deceased’s business (if given in will)
• Power to invest (standard investment criteria applies)
• Power to Maintain a Minor
• Power to Advance Capital

Question 5

When can a PR use appropriation? When can it be used in theri own favour?

Answer 5

Appropriation is the use of an assets to satisfy a legacy or interest in estate
- Only if beneficiary consents (unless will provides otherwise) and no specific beneficiary is effected

PR cannot make an appropriation in own favour to satisfy a pecuniary legacy unless asset used is cash or equivalent (government stocks or quoted shares)
- Unless permitted by will

Question 6

How can PRs get valid receipt from minor?

Answer 6

Can:
-pay into court
- hold themselves
- appoint trustee

Other Options (maybe - yes if in will)
- reciept by anyone with partental responciblity
- minor can give valid reciept if over 16

Question 7

What requirements are there for PRs to delegate powers? what is their liability?

Answer 7

• PR ca delegate functions to agents on terms they determine
• Must review arrangements with agents (unless covered in will)

Liability
- Only liable for act of agent if they failed to consider duty of care in appointing or reviewing agent

Question 8

When can PR use power to run deceased’s business?

Answer 8

Sole Trader
- Can only carry on if they do so to sell it as going concern
- Or if will gives them power to run it

Partnership or Company
- PA or Articles to be consulted

Question 9

What can PRs not invest in under power to invest?

Answer 9

Can invest estate property in anything except
- Land abroad
- An interest in land with someone else
- Can be further restricted by will

Investment must be
- Suitable for the trust
- Diversified

Question 10

How is the power of maintenance of minor used?

Answer 10

Where gift which includes income is held for minor
- Trustee may apply this for maintenance, education or benefit of minor
- Otherwise income is accumulated
- Accumulated income added to capital once they reach 18

Contingent Interest
- Income paid even after 18, until contingent interest is satisfied
- They then receive capital and accumulated income

Question 11

How can power of advancement be used by PR?

Answer 11

PRs have discretion to advance capital to beneficiary (minor or not) who has vested or contingent interest in capital
- May be for entire presumptive share of beneficiary
- Anyone with prior life interest in funds must consent
- If advance is made on contingent gift and contingency fails, beneficiary need not pay it back

Question 12

How is PRs power exercised if there are multiple?

Answer 12

General
- have joint and several authority to act of one binds the other

Land / shares
- if there are multiple PR’s all must join for transfer of land and shares

Question 13

How can PRs protect themselves against unknown beneficiaries?

Answer 13

Place advers in, requesting any beneficiary makes themselves known in min of 2 months:
- London Gazette
- Newspapers local to area in which estate land is
- Any other appropriate newspaper (trade journals where deceased ran business)

Land
- Should also conduct searches of land held for creditors; and
- bankruptcy declarations against testutor or beneficiaries

Question 14

How can PRs protect themselves against claims for financial provision

Answer 14

• should wait 6 months before distributing

Question 15

How can PRs protect themselves against future and contingent liabilities?

Answer 15

these include
- deceased acted as guarantor
- possible legal proceedings against estate

Protection options
- Estimate and set aside appropriate amount,
- Seek indemnity from beneficiaries
- Arrange insurance and distribute estate
- Apply to court for directions

Question 16

How can PRs protect themselves against claims of missing beneficiary’s or creditors?

Answer 16

If PR cannot find known beneficiary/creditor they can:
- Make payment owed into court and distribute the rest of the estate;
- Distribute everything with an indemnity from the beneficiaries;
- Seek Benjamin order (court order that missing beneficiary is presumed dead). Requires full enquiries at first and gives full protection to PRs; or
- Purchase insurance against risk of missing claimant (full enquiry may be required first).

Question 17

How can PRs protect themselves against claims unpaid inheritance tax after 12 months?

Answer 17

• HMRC will not pursue if it remains unpaid by recipients, if PRs have made full inquiries and obtained certificate of discharge