Wills, the Admin of Estates, Trusts, and Solicitors Accounts

Question 1

A woman instructs her solicitor to draft her will. The client’s conduct and instructions indicate to the solicitor that the client may not have testamentary capacity. The client’s niece is a beneficiary of the will.

Which of the following is the most appropriate course of action for the solicitor to take in regards to testamentary capacity?

a) Draft the will in accordance with her instructions, but ask the client to confirm that she has testamentary capacity.

b) Contact the client’s niece to advise her of the situation and ask her to confirm that her aunt has testamentary capacity.

c) Obtain the client’s permission to request confirmation of her testamentary capacity from her doctor.

d) Write to the client’s doctor to request confirmation of her testamentary capacity.

e) Ask the client’s niece to obtain a doctor’s confirmation of her aunt’s testamentary capacity.

Answer 1

c) Obtain the client’s permission to request confirmation of her testamentary capacity from her doctor.

Question 2

An elderly client goes to see a solicitor with his son. The son informs the solicitor that his father wishes to make a will and that he, the son, has already written the provisions of the will on a piece of paper which he hands to the solicitor. The son is the sole beneficiary and executor and the client’s two daughters are to receive nothing. The client’s son advises that he can represent his father at the meeting and his father would prefer to wait in the firm’s reception area.

What is the best course of action for the solicitor to take in order to confirm whether the instructions are those of the client?

a) The solicitor should explain that the client must confirm that the written instructions are correct. Having obtained confirmation, the solicitor may conduct the rest of the meeting with the client’s son as requested.

b) The solicitor should ask the son to wait outside. The solicitor should ask the client to confirm whether the instructions accurately reflect his wishes and take fresh instructions if they do not.

c) Ask to speak to the son privately to advise him that his father must also attend the meeting.

d) Decline the instructions unless the son takes independent legal advice as he is the main beneficiary of the will.

e) Immediately decline instructions as the solicitor cannot be certain that the client is making the will freely.

Answer 2

b) The solicitor should ask the son to wait outside. The solicitor should ask the client to confirm whether the instructions accurately reflect his wishes and take fresh instructions if they do not

Question 3

A solicitor takes instructions from a new client in relation to a will. The solicitor becomes concerned that there are circumstances which indicate undue influence in relation to the terms of the will.

Which of the following correctly states the effect if undue influence is demonstrated in relation to a will?

a) If undue influence can be proved, the relevant provisions are treated as though they had been deleted, although the will itself remains valid.

b) If undue influence can be proved, the will is revoked and the intestacy rules will always apply.

c) If undue influence can be proved, the will is invalid.

d) If undue influence is proved, the court will determine how the estate should be distributed.

e) If undue influence is proved, the family of the testator may determine how the estate should be distributed.

Answer 3

c) If undue influence can be proved, the will is invalid.

Question 4

A woman has three daughters. She wants to leave the residue of her estate to them equally. If one daughter predeceases the woman, she has instructed that the other two should divide that share between them.

Which of the following correctly states the wording which will achieve that result and avoid a partial intestacy?

a) A one-third share of the residue of my estate to each of my daughters.

b) The residue of my estate to be divided between my children equally.

c) The whole of my estate to my daughters in equal shares.

d) To my daughters in equal shares, if more than one my residuary estate.

e) To such of my daughters as shall survive me in equal shares, if more than one the residue of my estate.

Answer 4

e) To such of my daughters as shall survive me in equal shares, if more than one the residue of my estate.

Question 5

A man is giving instructions regarding his will. He gives his name as John Smith. In fact, his name is Trevor John Smith.

Which of the following correctly states the most appropriate advice for the solicitor to give in this situation?

a) Only one name can appear in the will. Including both names will invalidate the will.

b) If the will is in more than one name, a second grant will be required in order to deal with assets in both names.

c) The executors will need to include evidence that the testator is the same person as the person in the will with the application for the grant.

d) The solicitor should draft the will to include all aliases which are used by the testator.

e) The executors may include details of any aliases in the statement of truth.

Answer 5

d) The solicitor should draft the will to include all aliases which are used by the testator.

Question 6

A woman gave instructions for a will which was drafted by her solicitor. The day after the instructions were given, the woman suffered a stroke which caused speech and movement restrictions but not cognitive issues. The woman was able to indicate that she wished to execute the will, but the woman’s doctor warned that she would not be able to read it over or actually sign.

Which of the following is the most appropriate method of ensuring valid execution of the will?

a) It is not possible to execute the will in these circumstances.

b) The woman will need to make a will in the same terms through the Court of Protection as she is unable to confirm that the will accords with her instructions.

c) The will may be read to the testator but she will need to make her mark on the will.

d) A third party may sign the will but they will need to provide an affidavit of due execution, which should be presented with the will when applying for probate.

e) The will may be read to the testator and can be signed by a third party at her direction. The attestation clause should reflect the steps taken.

Answer 6

e) The will may be read to the testator and can be signed by a third party at her direction. The attestation clause should reflect the steps taken

Question 7

A solicitor is drafting a will for a client who wishes to appoint the firm as an executor.

Which of the following correctly states the most appropriate method for carrying out the client’s instructions?

a) The firm cannot be appointed as an executor as this is a conflict of interest.

b) The firm cannot be appointed as an executor but the will can be drafted to appoint at least two named partners, with power reserved to the remaining partners at the time the will was made in case those partners leave.

c) The firm may be appointed with power reserved to all the partners, with power given to the senior partner for the time being to nominate two partners to act.

d) The solicitor should draft the will to state that two of the partners of the firm or the firm which succeeds to or carries on its practice should be appointed as executors.

e) The solicitor should draft the will to appoint two named partners of the firm with power to substitute others in the event that the named partners leave the practice or retire.

Answer 7

d) The solicitor should draft the will to state that two of the partners of the firm or the firm which succeeds to or carries on its practice should be appointed as executors.

Question 8

A visually impaired woman wishes to make a will and gives instructions to her solicitor. There are no issues of capacity. She has asked that her friend sign the will on her behalf.

Which of the following correctly states what steps her solicitor should take to ensure that it will be admitted to probate?

a) The solicitor should provide an affidavit of due execution which should be kept with the will. The standard attestation clause should be used and the affidavit should be attached to the will.

b) The solicitor should provide an affidavit of due execution which should be registered at the Probate Registry along with a copy of the will. The standard attestation clause should be used.

c) The solicitor should use an attestation clause worded to indicate that the will was read over to the testator and signed at her direction.

d) The solicitor should ensure that the attendance note clearly states that the will was read over to the testator and signed at her direction. This should be attached to the will.

e) The solicitor should take a signed statement from the testator explaining the circumstances of the signature and keep a copy with the will.

Answer 8

c) The solicitor should use an attestation clause worded to indicate that the will was read over to the testator and signed at her direction.

Question 9

A man has died leaving a will. Probate has been granted and, after six months, an interim distribution is made. The solicitor then notices that the will contains a clerical error which is detrimental to a beneficiary and applies for rectification.

Which of the following correctly states the position with regard to the distribution?

a) The personal representatives would not be personally liable, although the beneficiary may be able to recover money or property from other beneficiaries if necessary.

b) The personal representatives would not be personally liable and the beneficiary would not be able to recover money or property from other beneficiaries.

c) The beneficiary would not be able to recover any of the property distributed before the rectification from either the beneficiaries or the personal representatives.

d) The beneficiary would have a claim against the personal representatives and the beneficiaries who have received property or money from the estate.

e) The distribution made by the personal representatives is voidable at the request of the beneficiary. The personal representatives are required to recover any distribution.

Answer 9

a) The personal representatives would not be personally liable, although the beneficiary may be able to recover money or property from other beneficiaries if necessary

Question 10

A woman has died leaving a will which appoints guardians for her two minor children. She had no legal relationship with the father of the children and had never granted parental responsibility to him. The children’s father wants to appoint alternative guardians.

Which of the following correctly states the position with regard to the father’s right to appoint alternative guardians?

a) The father is able to appoint guardians without an order of the court following the mother’s death.

b) The father is not able to appoint alternative guardians without an order of the court.

c) Provided the father survives the mother by 28 days, he has the right to appoint alternative guardians.

d) The court will need to make an order before the guardians can be confirmed.

e) The father may not apply to the court as he has no standing to do so.

Answer 10

b) The father is not able to appoint alternative guardians without an order of the court.

Question 11

A woman has recently died, leaving a will. A solicitor is instructed by the executrices, the woman’s daughters. They send you the original will which was drafted by another firm. The will has several handwritten alterations. Clause 1 contains a bequest of £1,000 that has been crossed out and ‘£1,500’ written above it. Clause 2 has been crossed out and can no longer be read at all. Finally, an additional beneficiary has been added to a series of gifts of £500 each in clause 3. The woman’s initials, those of the witnesses and the date of the will’s execution appear next to the addition to clause 3 only.

Which of these alterations are valid, if any?

a) None of them.

b) All of them.

c) Only the initialled alteration to clause 3.

d) The deleted bequest in clause 2 and the initialled bequest in clause 3.

e) The deleted bequest in clause 2 only.

Answer 11

d) The deleted bequest in clause 2 and the initialled bequest in clause 3.

Question 12

A man made a will in 2017. He drafted it himself using an app and did not take legal advice. His mother was the executrix and sole beneficiary. Six months after he made the will, the man got married. He and his wife have no children. The man has just died in a car crash and his wife has asked you to advise her.

Which of the following options correctly states the position regarding the will?

a) The will is valid as it is deemed to have been made in contemplation of the marriage.

b) The will is valid, as marriage does not revoke a will unless the terms of the will state that this is the case.

c) The will is invalid and the wife becomes a beneficiary and executrix automatically on marriage.

d) The will is invalid and the wife inherits the man’s estate.

e) The will is invalid in relation to the bequest to the man’s mother, but she remains his executrix.

Answer 12

d) The will is invalid and the wife inherits the man’s estate.

Question 13

A man’s will makes a number of gifts to his family and friends. To his daughter he leaves a beach hut. To his son he leaves ‘my antique chair’. The beach hut was destroyed in a storm the year before the man’s death. The man owned several antique chairs.

Which of the following options is correct?

a) The gift to the daughter fails due to ademption. The son may select one of the chairs.

b) The gift to the daughter fails due to ademption. The gift to the son fails for uncertainty.

c) The gift to the daughter fails due to ademption. The executor may select a chair to give to the son.

d) The executor may compensate the daughter for the loss of the hut. The son may require the executor to select a chair for him, provided he is of full age.

e) The executor may compensate the daughter for the loss of the hut. The son may receive a cash sum instead of a chair if the other beneficiaries consent.

Answer 13

b) The gift to the daughter fails due to ademption. The gift to the son fails for uncertainty.

Question 14

A woman’s will leaves her estate to be divided equally between her children if they survive her by 30 days. Issue of predeceased beneficiaries inheriting under the will are to inherit per stirpes. The woman had three children, all of whom have predeceased her leaving issue. Her eldest son had four children, her second son had three and her youngest son had two. The woman has died. Her executor contacts you and advises you that her oldest grandchild, the son of her eldest child, wishes to know what share he will receive of the estate.

Which of the following correctly states his share under the terms of the will?

a) One-twelfth of the residuary estate.

b) One-ninth of the residuary estate.

c) One-third of the residuary estate.

d) One-ninth of the gross estate.

e) One-twelfth of the gross estate.

Answer 14

a) One-twelfth of the residuary estate.

Question 15

A woman has made a will which has been validly executed. The woman decides that she wishes to add a codicil to her will, adding further bequests.

Which of the following correctly states the formalities required to ensure that the codicil will take effect after her death?

a) The codicil should refer to the will and must be signed and dated by the testator.

b) The codicil is a stand-alone document which is read independently of the will. It must be executed in the same way as a will.

c) A codicil is an update to a will and does not need to be executed provided it is presented with the will when applying for probate.

d) The codicil must refer to the will and should be signed and dated in the presence of a witness.

e) The codicil must refer to the will it is intended to amend. It must be executed using the same formalities as for a will in order to be valid.

Answer 15

e) The codicil must refer to the will it is intended to amend. It must be executed using the same formalities as for a will in order to be valid. correct

Question 16

A man made a will leaving everything to ‘my wife’, without naming his spouse. He subsequently divorced his wife and remarried but did not update his will. He has just died.

Which of the following correctly states the position with regard to the man’s will?

a) As the will does not name the wife, it is taken to mean his wife at the time of his death. The will is valid.

b) The man’s divorce revoked the will and he is therefore intestate.

c) The man’s remarriage revoked the will and he is therefore intestate.

d) The will is invalid because the beneficiary is uncertain and the man is therefore intestate.

e) The will is valid but the gift to the man’s wife fails.

Answer 16

c) The man’s remarriage revoked the will and he is therefore intestate.

Question 17

A woman makes a will which includes a clause which leaves £5,000 ‘to be paid from my Brigshires Bank account’. The Brigshires Bank account was closed two years before the woman’s death but the will was not updated.

Which of the following correctly states the position with regard to the gift?

a) This is a demonstrative gift and may be paid from another source if the original account has been closed.

b) The gift fails as the source from which it must be taken is no longer available.

c) The legacy may be paid from another source if the balance in the account at the time it was closed is sufficient.

d) The legacy may be paid from another bank account, but not from any other source.

e) The gift fails as the source from which it is to be paid is uncertain.

Answer 17

a) This is a demonstrative gift and may be paid from another source if the original account has been closed.

Question 18

A woman has died leaving a valid will. The will contains a provision leaving ‘a Leica camera’ to the woman’s niece. The woman’s assets do not include a Leica camera.

Which of the following correctly states the position with regard to the validity of the gift?

a) The executors should purchase a Leica camera in order to make the gift to the woman’s niece.

b) The gift will adeem as the subject matter is not part of the estate.

c) The gift fails for uncertainty of subject matter.

d) The executors must give the beneficiary any camera included in the estate.

e) The executors should acquire consent from the other beneficiaries to purchase a Leica camera in order to make the gift.

Answer 18

a) The executors should purchase a Leica camera in order to make the gift to the woman’s niece

Question 19

A man has died leaving a home-made will. The will was validly executed but did not include a revocation clause. The man had previously made a will which has not been destroyed.

Which of the following correctly states the position with regard to the previous will?

a) As the man made a new will before his death, the old will was automatically revoked in its entirety.

b) The man’s new will did not revoke his old will as it did not contain a revocation clause.

c) The new will revokes the old will only if it disposes of the entire estate.

d) As the old will was not actually destroyed, it remains valid.

e) Without a revocation clause, the old will is still valid and the new will can never be admitted to probate.

Answer 19

c) The new will revokes the old will only if it disposes of the entire estate.

Question 20

A woman made a will leaving the residue of her estate to her son, who is also her sole executor. There is no substitutionary gift of residue. Her son was one of two witnesses to the will.

Which of the following correctly states the position with regard to the administration of the estate?

a) The estate will pass under the intestacy rules and may not be administered by the woman’s son.

b) The estate will pass under the will but the woman’s son will be required to appoint an alternative executor as he witnessed the will.

c) The residue will pass under the intestacy rules although the woman’s son may administer the estate.

d) The woman’s son may benefit from the will but may not act as executor and must apply for a grant of letters of administration with the will annexed.

e) The woman’s son may not benefit from the will or act as executor and the will is therefore invalid.

Answer 20

c) The residue will pass under the intestacy rules although the woman’s son may administer the estate.

Question 21

A man accidentally shreds his will in error and dies the following day.

Which of the following correctly states the position with regard to applying for a grant of representation?

a) A copy of the will may be admitted to probate provided that evidence which shows that the will was destroyed without intention to revoke can be obtained.

b) A grant of probate may be obtained if evidence is produced explaining the circumstances and stating the terms of the will. A copy may not be used to obtain a grant of probate.

c) If there is a copy of the will, an application may be made for a grant of letters of administration with the will annexed.

d) The application must be made for a grant of letters of administration as there is no valid will.

e) An application may be made to the Public Trustee to validate a copy of the will which may then be used to obtain a grant of probate.

Answer 21

a) A copy of the will may be admitted to probate provided that evidence which shows that the will was destroyed without intention to revoke can be obtained

Question 22

A woman has died leaving a valid will which makes a gift of the whole of the residue of the estate to a beneficiary who has predeceased the woman. The will does not contain a substitutionary clause.

Which of the following correctly states what will happen to the residue of the woman’s estate?

a) The residue of the estate will pass under the intestacy rules.

b) The residue of the estate will be held on trust for the issue of the testator, if any.

c) The will is invalid as it does not distribute the entire estate and the residue will pass under the intestacy rules.

d) The will may be rectified by the executors in order to include a substitutionary gift disposing of residue.

e) The will may be varied by the beneficiaries in order to include a substitutionary gift disposing of residue.

Answer 22

a) The residue of the estate will pass under the intestacy rules.

Question 23

A man has died leaving a valid will. He has included a provision which gives a beneficiary ‘my five best paintings’. The man has an extensive collection of paintings.

Which of the following correctly states the position with regard to the gift?

a) The executors have an implied power to select the five paintings and make the gift.

b) The beneficiary has an implied power to select the paintings that form the gift.

c) The gift fails for uncertainty and the paintings will form part of residue of the estate.

d) The gift can be made using the executors’ power of appropriation.

e) The executors should select five paintings from the collection and obtain a receipt.

Answer 23

c) The gift fails for uncertainty and the paintings will form part of residue of the estate

Question 24

A man died without a will two weeks ago. He was unmarried but has a child who is now 18. His child’s mother is now married and her husband adopted the child several years ago. The man had no further involvement with his child. The man’s mother is still alive and the man is also survived by his sister-in-law. He has no other relatives.

Who is entitled to the man’s estate under the intestacy rules?

a) His child.

b) His mother.

c) His mother and his sister—in-law.

d) The mother of the man’s child as life tenant of his estate, with the child as remainderman.

e) The estate goes to the Crown as the man has no legal descendants.

Answer 24

b) His mother.

Question 25

A woman has died without a valid will. She is survived by her husband, who had not been living with her for some years at the time of her death although they have never formally separated, and her two children aged 15 and 20.

Which of the following correctly states the most appropriate applicants for a grant of representation in this situation?

a) Only her adult child may apply for a grant of letters of administration as she was separated from her husband.

b) Her spouse and adult child may apply for a grant of letters of administration.

c) Both her children may apply for a grant of letters of administration jointly as one of them is over 18.

d) The woman’s husband and both children may apply for the grant of letters of administration.

e) As the woman was not divorced, only her husband may make an application for a grant of letters of administration.

Answer 25

b) Her spouse and adult child may apply for a grant of letters of administration

Question 26

A man has died intestate, leaving a spouse and minor children.

Which of the following correctly states how the statutory trusts will operate in this case?

a) The surviving spouse will have a life interest in his estate, with the children inheriting after her death.

b) The surviving spouse will have a life interest in half the estate, with the other half being held on trust for the children.

c) The surviving spouse is entitled to up to half the estate absolutely, although this is capped. They are also entitled to a life interest in the remaining half which passes to the children on their death.

d) The surviving spouse is entitled to a fixed sum and half of the rest of the estate. The other half is held on trust for the children.

e) The estate is held upon trust for the surviving spouse and the children and may be brought to an end and distributed in equal shares when the youngest child is 18.

Answer 26

d) The surviving spouse is entitled to a fixed sum and half of the rest of the estate. The other half is held on trust for the children

Question 27

A woman and her husband were involved in a car accident which killed the man at the time of the accident. The woman survived her husband but died after 21 days. Both their two children were unhurt. The woman left a will but her husband did not.

Which of the following correctly states the position with regard to the man’s estate?

a) The man’s estate passes to the children.

b) The man’s estate passes to his wife and children under the intestacy rules.

c) The man’s estate passes under his wife’s will as she survived him.

d) The man’s estate passes to his parents.

e) The man’s estate passes to his children but only after his wife’s estate is finalised.

Answer 27

a) The man’s estate passes to the children.

Question 28

A will contains a clause which states ‘one half each of the residue of my estate to each of my children’. Only one of the testator’s two children survives him and neither child has issue. There is no substitutionary gift of residue and the testator’s spouse has predeceased.

Which of the following correctly states the position with regard to the residue of the estate?

a) The residue will pass under the intestacy rules with the surviving child inheriting the whole of the estate.

b) Half of the residue will pass to the surviving child, half to the parents of the testator under the intestacy rules.

c) Half of the residue will pass to the surviving child, with the other half passing under the will of the child who has predeceased.

d) The whole of the residue will pass to the survivor of the two children under the will.

e) The testator’s surviving child will inherit the whole of the residue of the estate; one half under the will and the other under the intestacy rules.

Answer 28

e) The testator’s surviving child will inherit the whole of the residue of the estate; one half under the will and the other under the intestacy rules.

Question 29

A man and his wife have died in a car accident. The man was aged 45, his wife was 46. They have no children and left everything to each other in their wills. The man’s will made a substitutional gift to his niece if his wife did not survive him. The wife’s will made no substitutional gift if her husband did not survive her. Neither will contains a 28-day survivorship clause.

Which of the following correctly describes how the estates will be distributed?

a) The husband’s niece will inherit both estates under the substitutional provisions of the husband’s will.

b) The husband’s estate will pass to his wife, whose estate will pass under the intestacy rules.

c) The husband’s estate will pass to his niece, the wife’s under the intestacy rules.

d) Both estates will pass under the intestacy rules as neither spouse survives the other by 28 days.

e) The wife’s will is invalid and her estate passes to her husband on intestacy. His estate passes to his niece.

Answer 29

a) The husband’s niece will inherit both estates under the substitutional provisions of the husband’s will

Question 30

A woman made a will in which she left everything to her children. The woman owned various assets, including an interest in the marital home, which was held as joint tenants with her husband. The woman contributed 80 per cent of the purchase price of the house. The value of the woman’s assets, excluding the marital home, is £800,000. The marital home is valued at £700,000.

What is the value of the woman’s estate for probate purposes?

a) £1,500,000

b) £800,000

c) £1,150,000

d) £1,360,000

e) £940,000

Answer 30

b) £800,000

Question 31

A man with a terminal illness gives the keys to his car to his friend, saying ‘Here, I’ll never drive it again. Take it, it’s yours’. The man dies a few days later.

Which of the following correctly states the position with regard to the gift?

a) The friend has not provided consideration and is a volunteer. The gift is therefore not valid.

b) The gift is made in contemplation of death and control of the asset was given. The gift is therefore valid.

c) The gift is not valid as it is not in writing.

d) The gift will be valid if the man’s executors confirm that this is the case.

e) The gift will fail as it was not included in the man’s will.

Answer 31

b) The gift is made in contemplation of death and control of the asset was given. The gift is therefore valid

Question 32

A man gave his house to his children during his lifetime but continued to live there until his death. He paid a full market rent to his children.

Which of the following correctly states the position with regard to the house and his estate on his death for inheritance tax purposes?

a) The house continues to form part of the man’s estate for inheritance tax purposes.

b) The house continues to form part of the man’s estate, but its value at the date of death will be subject to a deduction for the rent paid.

c) The house continues to be part of the man’s estate but it is valued at the date of gift and will be subject to a deduction for the rent paid.

d) The house is not part of the man’s estate for inheritance tax purposes.

e) The house is not part of the man’s estate for inheritance tax purposes provided the amount of rent paid is equal to the value of the house over the period of occupation.

Answer 32

d) The house is not part of the man’s estate for inheritance tax purposes

Question 33

A man died leaving a will trust which provided an income to his widow as the life tenant, passing to his son on her death. The son predeceased his mother.

Which of the following correctly states what will happen to the reversionary interest in the trust?

a) The capital value of the trust will be treated as part of the estate of the deceased reversionary beneficiary.

b) The reversionary interest will pass under the will or intestacy of the deceased beneficiary.

c) The reversionary interest will vest when the life tenant dies and will pass under the will of the deceased beneficiary.

d) The reversionary interest will be held upon trust for the issue of the reversionary beneficiary.

e) The reversionary interest will lapse and will not form part of the estate of the deceased beneficiary.

Answer 33

e) The reversionary interest will lapse and will not form part of the estate of the deceased beneficiary.

Question 34

A woman makes a gift of £500,000 to her daughter. This is the only lifetime gift that the woman makes before her death six years later. The woman has been divorced for many years and leaves her entire estate to her daughter.

Which of the following options correctly identifies the value of the failed potentially exempt transfer?

a) £494,000

b) £497,000

c) £500,000

d) £175,000

e) £169,000

Answer 34

a) £494,000

Question 35

A man holds 49 per cent of the shares in a private limited company for 25 years. All the company’s shares have equal voting rights. The man was originally a director of the company, but retired five years before his death. When the man dies, the shares form part of his estate.

Which of the following correctly states the position with regard to the availability of business relief on the shares?

a) Business property relief is not available as the man was not an officer or employee of the company in the two years prior to his death.

b) Business property relief is not available as the man does not have a controlling interest in the company.

c) Business property relief is available at 50 per cent as the man has held the shares for more than two years.

d) Business property relief is available at 100 per cent because the man has held the shares for more than five years.

e) Business property relief is available at 100 per cent as the shares are unlisted.

Answer 35

e) Business property relief is available at 100 per cent as the shares are unlisted.

Question 36

A woman owns four antique dining chairs. Individually, the chairs are worth £1,000, with a market value of £5,000 for a set of two. A set of three would be worth £15,000 and all four together, £28,000. She transfers one of the chairs to her husband and two to her son. She makes a will which leaves her chair to her son. The woman has died.

Which of the following correctly states the position with regard to the value of the chair bequeathed to her son for inheritance tax purposes?

a) The chair would be valued at £1,000.

b) The chair would be valued at £7,000 under the related property rules.

c) The chair would be valued at £2,500 under the related property rules.

d) The chair would be valued at £5,000 under the related property rules.

e) The chair would be valued using the ‘quarter up’ rule by adding one-quarter of the difference between the highest and lowest valuations under the related property rules.

Answer 36

c) The chair would be valued at £2,500 under the related property rules. Although the transfer of one of the chairs from wife to husband does not give rise to a charge to tax, it does not reduce the value of the chairs which are still valued as if they were part of a set. However, the rules do not extend to other family members.

Question 37

A man makes a series of lifetime gifts of £10,000 to his son in each of the eight years prior to his death.

Which of the following correctly states the amount of his nil rate band which will be used by the gifts?

a) £49,000

b) £46,000

c) £70,000

d) £53,000

e) £56,000

Answer 37

a) £49,000. The £10,000 given eight years ago is now exempt and falls away, although it does use the annual exemption for that year. Of the remaining seven gifts of £10,000, each will be able to use the annual exemption for the relevant year, so that only the net amount will be deducted from the nil rate band available for the estate.

Question 38

A woman transfers legal title to her home to her daughter eight years before her death. She continues to live in the house but pays her daughter a nominal rent.

Which of the following correctly states the position with regard to the house on the death of the woman?

a) The house was a potentially exempt transfer which is now exempt as the woman survived more than seven years after the gift was made.

b) The house was a potentially exempt transfer, but because a benefit was reserved, its value remains part of the woman’s estate. The value included in the estate is the value at the time of the gift.

c) The gift of the house is a lifetime chargeable transfer because benefit is reserved. No further inheritance tax will be payable on death as the woman survived more than seven years.

d) 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.

e) The gift of the house is a potentially exempt transfer, which has now become exempt. The value transferred is the freehold of the house, subject to the donor’s right to occupy the house. Any residual value remains part of the estate.

Answer 38

d) 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. correct

Question 39

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.

Which of the following correctly states the payment dates for inheritance tax on the assets of the estate?

a) Inheritance tax on the entire estate must be paid by 6 July. The inheritance tax on the house may be paid in instalments over a period of ten years, plus interest, payable on the same date.

b) Inheritance tax on the entire estate must be paid by 6 July. The inheritance tax on the house may be paid in interest-free instalments over a period of ten years, payable on the same date.

c) Inheritance tax is payable before the issue of a grant of representation and in any event by the following 6 January if this is sooner. The inheritance tax on the house may be paid in up to ten annual instalments, plus interest, due on the anniversary of the death.

d) 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.

e) Inheritance tax must be paid before a grant of representation may be issued, or by the end of the following 31 January if this is sooner. The inheritance tax on the house may be paid in up to ten annual instalments, plus interest, payable on the anniversary of the first payment.

Answer 39

d) 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.

Question 40

A woman dies leaving an estate worth over £1,000,000. Her civil partner died two years ago, leaving everything to the woman. The woman leaves everything to their son, including the family home. She had made no lifetime gifts.

Which of the following correctly states the position with regard to the nil rate band available for the estate?

a) The available nil rate band will include the woman’s nil rate band, plus any unused nil rate band from the woman’s civil partner’s estate, plus her own residence nil rate band and any residence nil rate band unused by her civil partner’s estate.

b) The available nil rate band will include the woman’s nil rate band, plus the residence nil rate band.

c) The available nil rate band will include the woman’s nil rate band and any unused nil rate band from her civil partner’s estate.

d) The available nil rate band will include the woman’s nil rate band and residence nil rate band, plus the nil rate band from her civil partner’s estate.

e) The available nil rate band will include the woman’s nil rate band and residence nil rate band, plus the residence nil rate band from her late civil partner’s estate.

Answer 40

a) The available nil rate band will include the woman’s nil rate band, plus any unused nil rate band from the woman’s civil partner’s estate, plus her own residence nil rate band and any residence nil rate band unused by her civil partner’s estate

Question 41

A man dies leaving a house, held in his sole name, a life assurance policy written in trust for his children, cash in a bank account held as beneficial joint tenants with his wife and a holiday cottage held as beneficial joint tenants with his brother.

Which of the following correctly states which of these assets would be included in his taxable estate?

a) All the assets listed.

b) All assets except the cottage.

c) All assets except the life assurance policy.

d) All assets except those held as beneficial joint tenants.

e) None of the assets listed.

Answer 41

c) All assets except the life assurance policy.

Question 42

A man dies, leaving the whole of his £1,000,000 estate to his brother. Two years later, his brother also dies, leaving everything to his daughter.

Which of the following correctly states the position with regard to the inheritance tax on the second estate?

a) The second estate will benefit from taper relief on any tax payable.

b) The second estate benefits from quick succession relief when calculating the inheritance tax.

c) The second estate will be valued for probate and inheritance tax purposes, but an exemption may be applied in relation to the assets from the first estate, reducing the value of the taxable estate.

d) The second estate benefits from a second nil rate band to take account of the close proximity of the deaths.

e) Relief is available for capital gains tax in this situation, with a tax free uplift on the value of the assets on death.

Answer 42

b) The second estate benefits from quick succession relief when calculating the inheritance tax.

Question 43

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.

Which of the following correctly states the position with regard to the inheritance tax on the transfer on the man’s death?

a) 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.

b) The nil rate band will be apportioned between the various gifts made over the previous seven years, taking into account any reliefs.

c) The gifts made over the previous seven years will be reviewed in order to calculate the cumulative total. Gifts made more than three years before death will be eligible for taper relief on their value.

d) Lifetime chargeable transfers made in the previous seven years will be revisited and will make use of the nil rate band in preference to the failed potentially exempt transfers.

e) All gifts made during the seven years prior to death will be reviewed and the cumulative total calculated. Annual exemptions will be applied first against the potentially exempt transfers.

Answer 43

a) 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.

Question 44

Five years before his death, a man set up a lifetime discretionary trust which includes him and his spouse in the class of beneficiaries.

Which of the following correctly states the position with regard to the trust fund on the man’s death?

a) The man has no interest in possession in the trust and no part of its value will be taken into account on his death.

b) The lifetime chargeable transfer made at the time the trust was set up will be recalculated at the full rate of inheritance tax. There are no other inheritance tax implications for the estate.

c) The gift into the trust fund will be included in the man’s taxable estate but not his estate for probate purposes.

d) The value of the trust fund is included in his estate for both probate and inheritance tax purposes.

e) While the value of the trust fund is included in the man’s estate, taper relief will apply to reduce the amount subject to inheritance tax.

Answer 44

c) The gift into the trust fund will be included in the man’s taxable estate but not his estate for probate purposes

Question 45

A woman makes a gift to her son on his marriage. She has made no other lifetime gifts.

Which of the following correctly states the exemptions and reliefs available to reduce the taxable amount of the gift for inheritance tax purposes?

a) Marriage exemption, annual exemption for the current and previous years. This is a potentially exempt transfer.

b) Marriage exemption, annual exemption for the current and previous years, small gifts exemption for the first £250. This is a potentially exempt transfer.

c) Marriage exemption, annual exemption for the current year only. This is a potentially exempt transfer.

d) Marriage exemption, annual exemption of the current and two previous years. Lifetime chargeable transfer but covered by the nil rate band.

e) Marriage exemption (either parent but not both), annual exemption of the current year only. Lifetime chargeable transfer but covered by the nil rate band.

Answer 45

a) Marriage exemption, annual exemption for the current and previous years. This is a potentially exempt transfer.

Question 46

A woman’s mother requires nursing care which she is unable to afford to pay. The woman pays for her mother’s care as she is in well-paid employment.

Which of the following correctly states the position of this series of gifts for inheritance tax purposes?

a) If the gifts are made as a series of gifts not exceeding £250 each, the small gifts exemption may be used.

b) The annual exemption may be used to cover part of the gift, but the remaining amounts will be potentially exempt transfers.

c) Payments made out of income are not regarded as a disposal for inheritance tax purposes, provided the payments do not exceed 10 per cent of gross income.

d) Payments made out of income for the care of a relative are not regarded as disposals for inheritance tax purposes.

e) The small gifts exemption can be combined with the annual exemption to reduce the amount that would be regarded as a disposal for inheritance tax purposes.

Answer 46

d) Payments made out of income for the care of a relative are not regarded as disposals for inheritance tax purposes.

Question 47

A man makes a will in which he gives 10 per cent of his net estate to charity.

Which of the following correctly states the inheritance tax effect of the gift?

a) The total inheritance tax payable is reduced by 10 per cent.

b) The rate of inheritance tax payable is reduced by 10 per cent.

c) The rate of inheritance tax payable on the net estate is reduced to 36 per cent.

d) The gift is exempt from inheritance tax. The remainder is taxed at 40 per cent.

e) The gift is payable out of the taxed estate.

Answer 47

c) The rate of inheritance tax payable on the net estate is reduced to 36 per cent.

Question 48

A woman has died and her executors are applying for a grant of probate. The woman has a number of assets, including a life interest in a trust, which she has held since 2000, which will now pass to the remaindermen.

Which of the following correctly states the position with regard to inheritance tax on the woman’s estate?

a) The capital of the life interest trust passes outside the woman’s will and is therefore not part of her taxable estate.

b) The value of the income of the trust throughout its life is taken into account when calculating the value of the woman’s taxable estate.

c) The value of the life interest in the trust is included in the assets of the estate for inheritance tax purposes.

d) The death of the life tenant gives rise to an exit charge in the trust for inheritance tax purposes. There is no charge to inheritance tax in the woman’s estate.

e) The death of the life tenant gives rise to an exit charge in the trust for inheritance tax purposes. This is apportioned between the trust and the woman’s estate.

Answer 48

c) The value of the life interest in the trust is included in the assets of the estate for inheritance tax purposes

Question 49

A man takes out a life assurance policy on his own life. The beneficiaries of the policy are his children.

Which of the following correctly states the inheritance tax position with regard to premiums paid on the policy?

a) The premiums on the policy are potentially exempt transfers but would be regarded as normal expenditure out of income.

b) The premiums would not be regarded as gifts in their own right for inheritance tax purposes.

c) Life assurance policies are not regarded as part of the deceased’s estate and the premiums are therefore exempt from inheritance tax.

d) Where a life assurance policy is taken out in favour of a third party, the value of the policy is a potentially exempt transfer not the premiums.

e) Where the policy is taken out in favour of a third party, the premiums would be regarded as a series of lifetime chargeable transfers, subject to the normal expenditure out of income exemption.

Answer 49

a) The premiums on the policy are potentially exempt transfers but would be regarded as normal expenditure out of income

Question 50

A woman transfers assets into a discretionary trust in favour of family members, including her husband who becomes a beneficiary on her death. The instrument of transfer describes the gift as ‘free of tax’.

Which of the following correctly states who will be responsible for paying the inheritance tax on the transfer into the trust?

a) The woman will be liable for the payment of tax on the face value of the gift.

b) The trustees will be liable for the tax on the gift which will be payable out of the trust fund.

c) The woman’s husband is a beneficiary, which is a reservation of benefit. The beneficiaries are therefore liable for the tax.

d) The woman will be liable for the payment of tax and the gift will be grossed up to reflect the loss to her estate.

e) The trust will be liable for the tax based on the value of the gift rather than the loss to the woman’s estate.

Answer 50

d) The woman will be liable for the payment of tax and the gift will be grossed up to reflect the loss to her estate.

Question 51

A man has died leaving a number of assets including a half share in a property held as tenants in common. The property is worth £500,000. The other half of the property is owned by the man’s niece.

Which of the following correctly states the value which will be included in the man’s taxable estate?

a) £500,000

b) £450,000

c) £250,000

d) £225,000

e) £275,000

Answer 51

d) £225,000

Question 52

A woman is administering the estate of a friend who died on 1 October. She pays £250 in valuation fees for a number of items of jewellery owned by the deceased, as well as the deceased’s credit card bill, a solicitor’s fee note for the sale of a holiday home by the deceased on 1 July and an electricity bill from the date of death to the date on which the house was sold.

Which of the following correctly states which of the above may be deducted when valuing the estate for inheritance tax purposes?

a) The credit card bill and the fee note.

b) All of the payments except the electricity bill as this relates to the period following the death.

c) All payments except the solicitor’s fee note as the asset is no longer part of the estate.

d) The fee note and the electricity bill.

e) The electricity bill and the valuation fee may be deducted from the valuation of the estate as they are expenses of the administration.

Answer 52

a) The credit card bill and the fee note

Question 53

A life interest trust was set up in January 2010 during the lifetime of the settlor. The life tenant has died. The income of the trust was worth £45,000 a year, while capital was worth £5,000,000. The life tenant was sent a cheque for £5,000 the day before their death for income payable to them.

Which of the following correctly states the value which should be taken into account when calculating the taxable estate of the life tenant?

a) £5,000,000

b) £5,005,000

c) £5,000

d) £45,000

e) £5,050,000

Answer 53

c) £5,000