Administration - Obtaining the grant

Question 1

Different grants

Answer 1

3 different types of grants:
1) Grant of probate
2) Grant of letters of administration with the will annexed
3) Grant of (simple) letters of administration

Question 2

Different grants - Grant of probate

Answer 2

The deceased left a valid will which appoints executors one or more of whom is able and willing to act. The executors will obtain a grant of probate using form PA1P

Question 3

Different grants - Grant of letters of administration with the will annexed

Answer 3

The deceased left a valid will but there are no persons able or willing to act as executors. Administrators will obtain a grant of letters of administration with the will annexed using form PA1P. NCPR 20 determines who the administrators will be - usually the residuary beneficiary

Question 4

Different grants - Grant of (simple) letters of administration

Answer 4

The deceased left no will or no valid will. Administrators will obtain a grant of (simple) letters of administration using for PA1A. NCPR 22 determines who the administrators will be - usually the main beneficiaries on intestacy.

Question 5

Assets which may pass to the PRs without a grant

Answer 5

1) Assets which do not exceed £5,000
2) Chattels (all moveable property)
3) Cash
4) Joint property
5) Insurance policies
6) Pension benefits

Question 6

Form IHT400

Answer 6

No grant of representation can be issued until this is submitted. It is an inventory of the assets to which the deceased was beneficially entitled and of their liabilities.

Question 7

Excepted estates

Answer 7

An estate where an IHT400 form is not required when applying for a grant of representation. 3 types:
1) Low value estates - below £325,000
2) Exempt estates - gross value does not exceed £1 mill and there can be no liability to inheritance tax because of a spouse or a civil partner exemption or a charity exemption which brings the estate below the IHT nil rate band
3) The estate of a deceased who died on or after 6th April 2022

Question 8

Options for raising IHT before the grant

Answer 8

1) Direct payment scheme - asking the bank to release funds
2) Life assurance - asking the life assurance company to release funds
3) Assets realisable without production of the grant - administration of estates act
4) Loans from beneficiaries
5) Bank borrowing
6) National savings and government stock
7) Heritage property in lieu of tax

Question 9

Burden and Incidence of IHT

Answer 9

PRs are liable for the inheritance tax due on the chargeable transfer made on death

Question 10

Form PA1P - Definition

Answer 10

Used where the deceased left a valid will. It will lead to a grant of probate or a grant of letters of administration with the will annexed. The form identifies the applicants and the deceased. Must state whether an IHT400 or IHT421 was completed - value of deceased’s estate.

Question 11

Form PA1A - Definition

Answer 11

Used where the deceased did not leave a valid will and died intestate. The form identifies the applicants and the deceased. Must state whether an IHT400 or IHT421 was completed - value of deceased’s estate.

Question 12

Executors applying for a grant of probate - Who can apply for the grant

Answer 12

One executor may obtain a grant and act alone. A person appointed as an executor but who at the testator’s death lacks capacity to make decisions cannot apply. Where one of several executors is a minor the other(s) being adults probate can be granted to the adult executor with power reserved to the minor to take a grant at a later date

Question 13

Executors applying for a grant of probate - Renouncing the right to take the grant

Answer 13

Rights as executor cease and the administration of the estate proceeds as if the executor had never been appointed. Executors can renounce only if they have not intermeddled in the estate. Intermeddling = notifying deceased’s bank of the death.

Question 14

Administrators applying for a grant of letters of administration with the will annexed - Order of priority

Answer 14

NCPR 20:
1) The executor
2) Trustee
3) Any person entitled to biggest share in estate
4) PRs of these residuary beneficiary
5) A beneficiary who has a contingent interest
6) PRs of these beneficiaries who have contingent interests

Question 15

Administrators applying for a grant of letters of administration with the will annexed - What they need to state in the form

Answer 15

They will explain why nobody in higher ranked categories are taking the grant, why there is an intestacy and why they are entitled as beneficiaries on the intestacy

Question 16

Administrators applying for a grant of (simple) letters of administration - People who are entitled to a grant of administration

Answer 16

Where the deceased died wholly intestate the person(s) having a BENEFICIAL interest in the estate shall be entitled to a grant of administration in the following classes in order of priority:
1) Surviving spouse
2) Children of the deceased and the issue of any deceased child who died before the deceased
3) The father and mother of the deceased
4) Brothers and sisters of the whole blood and the issue of any deceased brother and sister who died before deceased
5) Brothers and sisters of the half blood and the issue of any deceased brother or sister of the half blood who died before the deceased
6) Grandparents
7) Uncles and aunts of whole blood
8) Uncles and aunts of half blood

Question 17

Caveats - Definition

Answer 17

If there is a dispute over the validity of the will or some other reason why family members wish to prevent the issue of a grant. If they have just cause they can lodge a caveat and once it has been entered no grant can be issued until the caveat is removed or ceases to be effective (they last for 6 months but can be extended)

Question 18

Citation - Definition

Answer 18

Potential beneficiaries will want the administration of the estate to proceed in a timely manner and may become frustrated if the pRs delay their application for the grant. Beneficiaries might apply for a citation which is a method of forcing a party with a right to the grant to act. Once cited the executor must proceed with an application for a grant of probate. If the executor does not do so the citor can apply to the court for an order allowing the executor to be passed over and a grant of letter of administration with will annexed.

Question 19

Capital gains tax

Answer 19

Taking the value since death as the acquisition value. From date of death to the date of the disposal

Question 20

Which assets can be dealt with without the grant of probate?

Answer 20

• house
• all moveable personal property (e.g a car)
• deposit accounts
• life policy is assigned by the person
• if it falls under 5k

Question 21

What to do if a beneficiary is under 18

Answer 21

Need 2 administrators or executors one of which needs to be their PR E.g their parent

Question 22

Which assets need IHT paying before the grant?

Answer 22

Anything which is not an installment property. An installment property is:
- Land
- A business or interest in a business
- Shares where the deceased had control of the Company immediately prior to death
- Unquoted shares which do not give control if it is sufficiently large

Question 23

Divorce and appointment of the former spouse as executor

Answer 23

Will fail so need administrators with will annexed

Question 24

What happens if PRs do not elect to pay installment property in installment?

Answer 24

It is payable before the grant

Question 25

what happens on divorce?

Answer 25

Divorce will not invalidate a will but the appointment of the ex-spouse as executor will fail. Additionally, any gifts to the divorced partner will also fail.

Question 26

What if a beneficiary is under 18?

Answer 26

If a beneficiary is under 18 then you need 2 administrators. One of them needs to be the 18 year olds PR (e.g mother or father)

Question 27

What if one of the executors dies?

Answer 27

This will change the grant from a grant of probate to a grant of letters of administration with the will annexed.

Question 28

What is an excepted estate (doesn’t need an IHT400)?

Answer 28

1) Low value estate - below £325,000
2) Not domiciled in the UK
3) Exempt -
- worth less than £3 mill and the deceased left everything to a spouse or to a charity
- or it is worth £650k or less and they are using all of the threshold from their spouse
- or after they deduct the spouse and charity exception it doesn’t exceed £325,000

Question 29

Paying IHT before the grant - formula

Answer 29

Need to add everything up to find the overall IHT. Then deduct any NRB and then the result times 0.4. Then off this sum they will have to pay IHT on the non installment stuff. Add the non- installment stuff together and then minus it with the overall IHT number