Wills WS4- Administration

Question 1

Who are the personal representatives?

Answer 1

They are the only people who are allowed to deal with the assets of the estate while it is being wound up and distributed.

They are the ‘executors’.

• Nobody else has the right to deal with the estate, not even a big beneficiary.
• Anyone who attempts to deal with the assets of the estate is not a PR will be held personally liable for any losses incurred by the estate.

Question 2

What are the two different types of personal representatives (Executors & Administrators) and how are they appointed?

Answer 2

There are two types of PRs:
1) Executors who are always appointed under a will. Must be a
- A valid will
- They are willing and able to act.

2) Administrators. Appointed by the court when:
- There is no valid will
- There is a valid will but there are no persons willing or able to act as executors.

Question 3

When might an executor not be willing or able to act under the will?

Answer 3

This may occur because:

• The will is valid but contains no provision for the appointment of executors
• The executors have died before taking the grant.
• The executor appointed was a spouse who subsequently separated from the testator
• The executor has renounced (doesn’t want to do it)

Question 4

What FORM does an executor in a valid will fill in for a grant of propate?

Answer 4

• They complete and sign Form PA1P
• They will take a grant of probate

Question 5

What kind of form do administrators fill in and what type of grant is available?

Answer 5

Form PA1A where there is no valid will
- If there is no will - they will take a grant of letters of administration

Form PA1P when there is a valid will.
- If there is a valid will - they will take a grant of letters of administration with will annexed.

Question 6

What must the wording of appointment of an executor of a will include?

Answer 6

1) Who the executor is, needs to be clear e.g. ‘my daughter Bella’, ‘my brother Gjuliano’ can’t be ‘one of my cousins’

2) Will has to make it clear that the person is being asked to perform all of the duties of an executor - needs to be express wording that the person is intended to be the executor.

Question 7

What if there is only one executor and that executor cannot act for any reason?

Answer 7

There are two options:

1) If there is a single executor who is refusing to act, then the person who would be first entitled to act as an administrator of the estate can make an application to the court for a citation under s112 of the Senior Courts Act 1981.

The citation procedure (NCPR r46) forces a reluctant or hesitant executor to decide whether or not accept executorship. A person interested in the estate (usually but not always a beneficiary) issues a court application which requires a reluctant PR to ‘enter an appearance’ that is to choose whether or not to act as executor.

If the PR does not enter an appearance, then they lose the right to administer the estate, which will then be taken over the next eligible person”

1) A co-executor if named in the will,
2) an administrator if not.

Question 8

How many executors should be appointed?

Answer 8

Minimum 1.

Probate only granted to max of 4.

Question 9

Can you give an example of how the Citation procedure works?

Answer 9

Susie was named as the sole executor of Desmond’s estate in Desmond’s will. However, Susie has lived in New Zealand for the past 10 years and is also currently unwell. She has not taken any action in winding up Desmond’s estate since Desmond died two years ago. Desmond left most of his property to his mother, Wilma, who is also the first person who would be entitled to act as administrator of his estate under the Non-Contentious Probate Rules (NCPR, but Wilma cannot receive her legacies until Susie starts acting as executor.

What action can Wilma take to receive her legacy?
Wilma can apply to the court for a citation under
s112 of the Senior Courts Act 1981 requiring Susie to ‘appear’; in other words, to state whether she is willing to act as executor. If Susie does not respond (‘fails to appear’) to the citation at all, her rights in respect of the executorship will completely cease (s 5 of the Administration of Estates Act 1925). Wilma can then apply to be appointed as an administrator of Desmond’s estate and move matters along.

Question 10

What if you have been appointed as an executor but you don’t want to act? Are you able to ‘renounce’.

Answer 10

There is no legal obligation for a an executor to act.

It is possible for the executor to refuse to act, however they must fill in form PA15
- Must do so asap
- Before ‘intermeddling’ with the estate, e.g. by calling any debts due, advertising for beneficiaries, arranging insurance for property - if they do this they are considered to have agreed and will not afterwards be able to renounce.

Once you renounce they are no longer an executor once the renunciation has taken effect.

Question 11

What is set out in Rule 22 of The Non-Contentious Probate Rules 1987 (NCPR)?

Answer 11

Contains a list of entitlement (if someone isn’t’ alive then you go to the next category)

1. Spouse - must be someone who entered into marriage or civil partnership. NOT COHABITEES

2. Children/their issue if the child predeceased the testator - Any children of the deceased, or if the deceased has left no living children, any living grand children

3. Parent - either surviving parent

4. Whole-blood brothers/sisters/their children if they die before the testator (e.g. deceased’s nieces and nephews)

5. Half-blood brothers/sisters (i.e., siblings who share only one parent with the deceased)/their children if they die before the testator.

6. Grandparents

7. Whole-blood uncles/aunts/their children if they die before the testator

8. Half-blood uncles/aunts/their children if they die before the testator.

9. Treasury Solicitor if he claims bona vacantia. Vacant goods, no person can be found to inherit the deceased’s estate (either under a will or intestacy) the Crown can claim the estate for itself.

Question 12

What is an administrator without a will?

Answer 12

This is an example of full intestacy where the deceased has left no will and no executor.

Or if the will is invalid, there is no testamentary capacity.

If this happens, then one or more administrators have to be appointed using Rule 22(1) of the NCPR.

Question 13

What if the first person on the list does not want to be the administrator? Clearing off.

Answer 13

• They can refuse administrator-ship and ‘renounce’ OR
• the person on the list has passed away.

Then the person must ‘clear off’. Unless the applicant is a spouse / civil partner, on applying for the grant, the applicant must ‘clear off’ i.e. explain why nobody in the higher category is able to apply (the must ‘clear off’ the higher ranking categories).

E.g., Barraq dies, is unmarried, has no children, his parents are dead, but is survived by two brothers. The brothers are number 4 in the order of priority. They will be entitled to the grant but will have to “clear off” all those in categories 1 – 3, by saying in their statement of truth that Barraq “died INTESTATE a bachelor without issue or parents”.

Question 14

How will an administrator with a valid will be appointed?

Answer 14

With Form NCPR Rule 20.

This provides that the grant should go to in this order:

1) To the executor

2) Any residuary legatee or devisee.
i.e. anyone entitled to the residue or someone in the will who is to hold the residue on trust for someone else
E.g. Arthur dies and leaves a will but fails to appoint administrators. If the will leaves the residue of his estate to ‘Brian and Claire to hold on trust for Debbie’ Brian and Claire are the ‘residuary legatees’.

3) The Personal representatives of any residue legatee or devisee if that person has died.
E.g. Gloria dies and appoints Honour as her executrix. Gloria’s will gives the residuary estate to Ian. If at the time of Gloria’s death, Honour and Ian have died:
- Ian is the residuary legatee or devisee
- He has however, died, therefore the personal representatives may take the grant

4) Any other legatee or devisee (e.g. specific legatees) or creditors

5) Any other legatee or devisee’s personal representatives if they are deceased.

If there is more than one person of equal rank and they both apply separately, the court will prefer an application from a beneficiary with a vested, as opposed a contingent interest.

Question 15

Does clearing off apply to the administrators?

Answer 15

Yes, unless the applicant is the executor, on applying for the grant, it will be necessary for the applicant to ‘clear off’ and explain in the statement of truth why nobody in a higher category is able to apply.

E.g. Brian and Claire are the residuary legatees. Executors are in a category above them, Brian and Claire will therefore have to ‘clear off’ the executors by stating ‘no executor was appointed in the will and we are the residuary legatees holding on trust named in the will’

Question 16

Can administrators renounce?

Answer 16

Yes they can.

However, unlike executors, they do not lose the right to renounce by intermeddling.

Question 17

Can minors act as administrators?

Answer 17

No. However his parents can apply for a grant ‘for his use and benefit for his behalf’.

Question 18

Can an executor apply if they lack capacity?

Answer 18

The executor cannot apply for a grant if he does not have capacity.

Question 19

Can an executor who is a minor at the time of death apply for a grant?

Answer 19

An executor in the will can be under 18 but if they are still a minor at the time of death, the minor will not be entitled to obtain a grant of probate.

However, if there are multiple executors, power can be reserved to the minor to take the grant on becoming 18 if the administration of the estate is not complete by then.

Question 20

Can an executor who is a former spouse apply for grant?

Answer 20

Where a spouse is appointed as an executor and the marriage subsequently ends, their appointment will fail unless there is a contrary intention evident from the will (s18A Will Act 1837)

Question 21

What assets do not pass through the hands of personal represenatives?

Answer 21

• Joint Property
• Life policies assigned or written in trust during the deceased lifetime

They are also not part of the ‘probate value’ of the estate and can be realised or transferred without a grant

Question 22

When is the IHT400 submitted? ‘Not excepted’ position.

Answer 22

If the estate is ‘not excepted, PRs must submit an IHT400 (if the deceased was domiciled in the UK) to HMRC and pay due before obtaining the grant.

If they are excepted - after Jan 2022
PR’s make declarations about the IHT value and the fact that it is excepted in the application for grant.

• IHT must be paid before the grant is obtained (except the PRs can elect to pay IHT on installment option property by 10 annual instalements)

Question 23

What forms should be sent to the HMCTS when applying for grant of probate?

Answer 23

1) A form PA1P or PA1A (or online application) completed the by the PRs explaining their right to take grant
2) Any wills and codicils
3) Additional evidence of validity of any will where necessary
4) Probate fee
5) Any renunciations of the right to act.

Question 24

Who has the best right to grant if the initial executor is unable to act (if they die for example)?

Answer 24

The beneficiaries usually have the best right to the grant under category (c).

Question 25

What is an example of an ‘installment option property’ for the payment of IHT purposes?

Answer 25

A house. IHT on installment option property can be paid 6 months’ after the end of the month of death.

This option accounts for HALF THE VALUE of the estate, therefore half the value of the IHT bill.

IHT on other property - chattles, bank account, small holdings of shares in quoted companies must be paid before grant because this property doesn’t attract the instalment option.

Question 26

What are the main duties of the personal representatives?

Answer 26

To
1) Obtain a grant of representation
2) Collect
3) Manage the assets of the estate to ascertain and pay the deceased’s debts and liabilities
4) Distribute the remaining cash and assets in accordance with the will or the intestacy

Question 27

On what form is an application for caveat and why is this done?

Answer 27

Application for a caveat is done where a beneficiary believes the executor named in the will lacks mental capacity to act or where the will is questioned.

Form PA8A.

The caveat lasts for 6 months but the duration can be extended.

An applicant for a grant may issue a ‘warning’ to the caveator, which requires the caveator to enter an appearance within 14 days setting out their interest. If the caveator fails to do so, the applicant for the grant can remove the caveat.

Question 28

When is a citation to take probate used?

Answer 28

Where an executor has lost his right to renounce probate by intermeddling in the estate (e.g. by selling the deceased chattles) but has not applied for a grant of probate.

If the executor does not do so (without good reason) the citor can apply to the court for an order allowing the executor to be passed over and grant of letters of administration with the will annexed to the issue to the person(s) entitled under NCPR 1987, r20.

Question 29

What is a citation to propound will?

Answer 29

A citation to propound a will (authenticate the will by obtaining a grant of probate) is used where a person becomes aware that there may be a will that would diminish their entitlement under an earlier will or under an intestacy.

That person can cite the executors named in the later will and any persons interested under that will to propound it. If the citees fail to enter an appearance or to proceed diligently to propound the will, the citor can apply to the court for an order for a grant as if the will were invalid.

Question 30

What is a citation to accept or refuse a grant?

Answer 30

A citation to accept or refuse a grant is the standard method of clearing off a person with a prior right to any type of grant who has not applied, and shows no intention of applying, for a grant. If the person cited does not take steps to take out the grant, a grant may be issued to
the citor.

Adam’s will appoints Bert his executor and Clare the residuary beneficiary. Bert takes no steps towards administering the estate or proving the will. Clare may cite Bert to act and, if Bert does nothing, Clare may apply by virtue of NCPR 1987, r 20 for a grant of letters of administration with will annexed.

Question 31

What is the preferable method if a person is unwilling to act as executor in the administration of an estate?

Answer 31

If a person is unwilling to act, and they don’t take any action to do so.

It is preferable to apply to the court under s116 Senior Courts Act 1981 for an order passing over that person in favour of someone else.

For example, in Re Biggs [1966] 1 All ER 358,
an executor had intermeddled but then refused to have anything to do with the estate. The applicants obtained an order that he be passed over.

Question 32

When does a beneficiary of an un-administered estate have an equitable interest in the property?

Answer 32

Unlike beneficiaries of trusts, beneficiaries of an unadministered estate do not have an equitable interest in the deceased’s property until the PRs transfer or assent the property to them. Until that point, the legal and equitable interests are vested in the PRs.

Although, the beneficiaries of an unadministered estate do not have equitable interests, they do have the right to compel due administration of the estate. In the exercise of that right, the beneficiaries might want to see accounts or they may require information about the administration.

Question 33

What is the position regarding accounts and information and what must the Personal Representatives do?

Answer 33

Throughout administration:
- Throughout the administration, the PRs must keep accurate records of receipts and payments.
- Beneficiaries (or anyone else interested in the estate) can ask to inspect accounts.
- If the PR refuses to request for accounts, or if they are unclear or inaccurate, anyone interested can apply to the court for an order compelling the PR’s to provide an inventory and accounts (s25 Administration of Estates Act 1925).

End of administration:
- At the end of the administration, immediately prior to the final distribution of the estate, the PRs will prepare estate accounts showing all assets, income and payments made.
- The estate accounts are sent to the residuary beneficiaries who will be asked to sign a receipt approving the accounts and discharging the PRs from further liability.

The position for disclosure of documents or information (other than accounts) is similar to that for trusts. There is no automatic entitlement to disclosure of
the reasons for the PRs’ decisions and deliberations on a discretionary matter. However, if PRs refuse disclosure, the beneficiaries can apply to the court. Documents which a PR is not required to disclose under trust law principles may still be subject to disclosure in a subject access request under the Data Protection Act 1998, or as part of the disclosure requirements in court proceedings.

Question 34

Who can administration proceedings be brought against?

Answer 34

They can be brought by anyone interested in the estate, including beneficiaries, creditors and personal representatives. The proceedings fall into two categories

1) Applications limited to a particular issue. This type of application may be non-contentious for example, PRs may seek guidance from the court on the performance of a duty or the meaning of words used in a will.

2) Applications for a general administration order. These applications are less common.

Under a general administration order, the court supervises the PRS; they cannot exercise their powers without the court’s permission. Such an order is regarded as a last resort. Another option would be for the court to appoint a judicial trustee to act as a PR with another person or alone.

Question 35

What actions can a beneficiary bring against the personal representatives for breaching their duty?

Answer 35

Beneficiaries can sue PR’s directly for breach of duty.

PR’s are obliged to avoid placing themselves in a situation where there is a conflict between their duties and personal interest. They must account to the estate for any unauthorised profit (whether or not the estate has suffered a loss).

Where a PR purchases property from the estate, the transaction is voidable by the beneficiaries within a reasonable time. Profits may be authorised by a provision in the deceased’s will, a court order or the consent of all the beneficaries who must be 18 or more.

Question 36

What is a Devastavit?

Answer 36

**Beneficiaries may bring a devastavit claim where a PR has caused loss to the estate by a breach of duty. **

If the PR’s are found liable they will have to pay the beneficiaries out of their own resources.

Claims may be based on:
1) Mis-use of assets (e.g. PR takes assets for their own use)
2) Maladministration (e.g. distributing the estate other than in accordance with the will or intestacy rules, failing to collect and get the deceased’s real and personal estate, breaching any of their duties or acting outside of their powers)
3) Negligence (a PR carries their duties without taking the care which would be reasonable in the circumstance)

Question 37

What are the defences to a devastavit?

Answer 37

There are a number of defences to a claim for devastavit.

1) Section 61 Trustee Act 1925
The court has discretion to totally or partially relieve a PR of personal liability if they acted honestly and reasonable and out fairly to be excused for the devastavit and for omitting to obtain the directions of the court in the matter.

2) Exclusion clause in the will
The PRs may escape liability because the deceased’s will contains a clause modifying their duties or excluding liability

3) Acquiescence of beneficiaries
An adult beneficiary, who with full knowledge of the facts, consented to a PR’s breach of duty cannot succeed in a claim against the PR.

4) Protection against unknown or missing claimants
Where the PRs have distributed the estate not knowing of the existence of a beneficiary, the PRs are personally liable if the omitted beneficiary later brings a claim. However, the PRs will be protected from liability if they placed advertisements and followed the procedures in s27 Trustees Act 1925. The omitted beneficiary would then be able to claim their entitlement from the beneficiaries who wrongly received the estate.

S27 does not protect PRs against personal liability to benefciairies who are known to have existed but cannot be found. The PRs should have obtained a Benjamin Order or insurance or an indemnity from the beneficiaries (but an indemnity will not help if the beneficiaries do not have the money).
- Does not protect PRs against personal liability to successful family provision claimants. To avoid personal liability, the PRs should wait at least 6 months from the date of the grant before distributing the estate.

Question 38

What is the time limit for a beneficiary to bring a claim?

Answer 38

The time limit for an unpaid or underpaid beneficiary to bring a claim to recover a share or interest in an estate is 12 years running from the date on which the right to receive the estate accrued. There is no time limit laid down in the Limitation Act 1980 to bring actions for fraudulent breaches of duty or where the PR has taken property from the estate for their own use.

Question 39

What remedies to the beneficiaries have if the PRs distributes assets to someone who is not entitled?

Answer 39

The beneficiary (or creditor) may be able to follow the assets into the hands of the recipient. The two potential remedies:

1) Beneficiary may bring a proprietary claim to the assets (or their traceable proceeds) from the recipient unless they are a bona fide purchaser of the assets for value without notice

Example: PRs misinterpret the provisions of a will. They wrongly give the deceased’s shares in Proman Ltd to Fred instead of the true beneficiary, Harry. Fred has sold the shares and bought an apartment with the proceeds.

Harry could bring a personal action against the PRs if they have been negligent.
Alternatively, he could claim Fred’s apartment in a proprietary claim using equitable
tracing principles.

2) The beneficiary can bring a personal claim for compensation against the recipient of assets wrongly paid by the PRs, provided that all remedies against the PRs have been exhausted.

Example:
In Ministry of Health v Simpson [1951] AC 251, Caleb Diplock left his residuary estate to such ‘charitable or benevolent’ objects as his executors might select. The executors
distributed over £200,000 among 139 charities. It transpired that the original gift in the will was void for uncertainty and the money should have passed on intestacy to Caleb’s next of kin. The next of kin recovered £15,000 from the PRs (thereby exhausting their remedies against them) and sought the balance from the charities.
The proprietary claim against some of the charities failed because they had spent the
money on improving their buildings and it was held that it would be inequitable to
enforce a proprietary claim against them. However, the personal claim for a refund from the charities succeeded.

The time limit for both claims is 12 years.

Question 40

Can PRs be removed?

Answer 40

Personal representatives are not forced to accept office, they can renounce their right to the grant. Once they have extracted the grant, the office is for life unless the court removes them.

The court has discretion to remove / substitute PRs under s50 Administration of Justice Act 1985

The court has a discretion to replace existing PRs with others or simply terminate an appointment without replacement. However, the court must ensure that there is at least one PR remaining.

The main factor guiding the exercise of the court’s discretion is the welfare of beneficiaries.

Question 41

What rights to creditors have?

Answer 41

As the PRs take on all the deceased’s debts and liabilities. Cause of action against the deceased continue against the deceased’s PRs.

Also, PRs must perform the deceased’s contracts. However, they are liable only to the extent of the deceased’s assets and the limitation period is 6 years.

PR’s may be personally liable to creditors for devastavit - for loss of assets caused by a breach of their duties. Personal liability means that the PRs would have to pay the creditor out of their own resources, e.g. executors paying a legacy before advertising for creditors so that there was insufficient left to pay for all the creditors, failure to collect and preserve the deceased’s estate, spending an excessive amount on the deceased’s funeral, paying the debts of an insolvent estate in the wrong order.

The procedure set out in s 27 Trustee Act 1925 should be followed to provide a defence against creditors of whose existence the PR was unaware at the time of distribution to the beneficiaries.

Question 42

What are the similarities and differences between trustees and personal representatives?

Answer 42

Where a testator creates a trust in their will, it is common to appoint the same people to act as PRs and trustees.

Similarities:
Both are fiduciaries and the duties and powers contained in the TA 2000 apply to both.

Differences:
Trustees can retire
PRs cannot do so without obtaining a court order and the limitation periods are different

Question 43

What is a ‘transition from PRs to trustees’?

Answer 43

Where the same people are appointed in both capacities a transition occurs. In relation to real estate, PRs mark the transition by executing an assent to themselves as trustees.

As far as personality is concerned, the PRs become trustees when they have finished the administration of the estate by paying the debts and distributing the assets.

Question 44

What if the PR’s do not pay the beneficiaries quickly? When are they required to pay them?

Answer 44

S44 of the Administration of Estates Act 1925 provides that ‘a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death’

Thus, personal representatives have at least one year from the date of the deceased’s death before they can be called upon to distribute the estate - the so called ‘executor’s year’.

More complex estates can take longer.

Question 45

How many number of administrators are needed?

Answer 45

Where there is a life interest, or property passes to a minor (where the interest is vested or contingent) the court normally requires a minimum of 2 administrators to apply for the grant.

A question in the application asks whether there are any minor beneficiaries in which case 2 administrators will be required.

Question 46

What are administrators ‘with a valid will’?

Answer 46

This arises where there is a valid will, but the issue with appointing an executor.

This could be because
1) The will did not name an executor at all
2) Because somebody is named but the testator does not make it clear whether this person was to be an executor will not or cannot act e.g. they predeceased the testator, or do not have the mental capacity, or they were cited or failed to appear).
3) If named executor is a former spouse or civil partner of the deceased, then the appointment will automatically fail.

Question 47

Can daughter-in laws be entitled to the estate e.g. me?

Answer 47

No. Daughter in law’s are not included in the list.

Question 48

Who are administrators of the estate?

Answer 48

Administrators are appointed by the court to administer the estate if there are problems with the executor.

There are two types of administrators
1) Administrators without a will
2) Administrators with a will

Question 49

What is ‘reserving a power to the executor involved’?

Answer 49

Where an executor can avoid involvement with the administration of the estate. This means that the executor has to agree with their replacement that they have a ‘reserved power’ to replace them.

Executor to whom the power is reserved to, are on the substitute bench unless and until they are needed.

Question 50

Can you act as an executor without authority?

Executors son tort

Answer 50

Someone who doesn’t have authority starts acting as an executor. They call the testator’s debts, deals with the testator’s bank etc.

They essentially start ‘intermeddling’ with the estate and the person who does this is called an ‘executor de son tort’.

If they do this, executors de son tort will be held personally liable for the assets with which they have intermeddled, including paying loses, or any chargeable IHT.

They are not usually in the will and they cannot appoint themselves as an executor.

Question 51

Can someone with a mental illness be an executor of the will?

Answer 51

It is not impossible for a person suffering with a mental illness to be an executor, but the key question for the court is whether or not that person is able to make a decision about the management of the estate, using the guidelines in ss2 and 3 of the Mental Capacity Act.

Question 52

Who can be an executor?

Answer 52

There are very few limits to acting as an executor.

• A minor under the age of 18 can be an executor (but cannot apply for a grant of representation or probate) until they reach the age of 18.
• Someone insolvent (bankrupt)
• Person with mental capacity
• Someone with a criminal record
• Can be a company/public trustee/ trust corporation
• Solicitor/stock broker/ fund manager
• a beneficiary of the estate

Question 53

What happens if by the time the testator dies, every person named by the testator in the will as an executor has predeceased the testator, so there is no living person who can act as an executor?

Answer 53

Then the court will appoint an administrator, using the rules set out in the Administrators of the estate.

Question 54

When is there an exception that the executors need to be specifically named under the will?

Answer 54

Where the solicitor wishes a solicitor from a particular firm to act as their executor.

• The testator can nominate one of the partners from the firm to act as their executor. Because one can partner might die by the time they need to exercise the will.

You need to contain a clause which appoints ‘Annabelle Redman and the other partners of Clyde & Co’.