Probate Overview

Question 1

What are the different types of property

Answer 1

1. joint
2. trust
3. inheritance policies held on trust
4. pension
5. nominiations

Question 2

What happens for joint property

Answer 2

Bank accounts, property or shares/investments held as joint tenancy. Passes automatically to survivor without reference to probate

Question 3

How can you identify a tenancy in common

Answer 3

Restriction on the land registry

Question 4

What happens to a beneficiary under a trust

Answer 4

Succession will be governed by the owner of the full interest, ie. life interested is not inhereted

Question 5

What about insurance policies

Answer 5

Ask whether they are held on trust, if so pass to trustees of trust

Question 6

What about pensions

Answer 6

Normally include trust mechanism

Question 7

What makes a will valid

Answer 7

1. Compliance with formal rules - signed in the presence of 2 x witnesses who see signature of testator + attestation clause (signing in presence)
2. Capacity
3. Knowledge and approval
4. Coercion
5. Mistake

Question 8

What happens if a beneficiary or spouse is a witness?

Answer 8

Gifts fail, will is valid

Question 9

What happens if a beneficiary dies first?

Answer 9

Gift fails, will is valid, unless it is to issue who have issue

Question 10

What happens if specific property has been sold/doesn’t exist

Answer 10

Gift fails, will is valid

Question 11

What happens on divorce?

Answer 11

Divorce has the effect as if spouse is pre-deceased

Question 12

Can a divorcee can be executors?

Answer 12

No - treated as if dead

Question 13

What is the executor dies?

Answer 13

Adult beneficiaries - take a grant of letters in administration with will annexed

Question 14

What if there is no executor and no will?

Answer 14

residual beneficiaries (adult) - grant of letters of administration. Child take when turn 18/marry

Question 15

If dies intestate, what does the spouse get if there are children?

Answer 15

1. The first 250k statutory legacy
2. personal chattels
3. half residue

Rest of residue to children. Automatic substitution of grandchildren to take parents share if parents dead

Question 16

If dies intestate, where does the estate go (spouse no children)

Answer 16

All to spouse

Question 17

What is inheritance tax paid on?

Answer 17

1. assets in estate
2. share in joint property
3. assets in trust in which had interest in possession eg. life interest (as if entire capital value is yours, payable by trustees of trust)
4. those gave away in last 7 years
5. assets given away but benefit retained
6. non-UK property if UK domiciled for IHT purposes

Question 18

Does the oath for executors take into account inheritance tax

Answer 18

No - just use figures for what’s part of estate for probate purposes

Question 19

What is exempt from IHT

Answer 19

1. gifts to charity
2. gifts to spouse
3. more than 7 years ago gifts
4. 325k tax free
5. remaining allowance can be transferred to spouse

Question 20

Can a beneficiary witness save the gift?

Answer 20

Yes if there are 2 other witnesses or a subsequent codicil

Question 21

If a property is mortgaged, does that pass if a specific gift?

Answer 21

Yes - subject to contrary intention. Stating ‘residue to pay of debts’ is not sufficient to show contrary intention

Question 22

Does an unborn child inherit if ‘to my children’

Answer 22

Yes - treated as if born at time of death

Question 23

When is IHT payable?

Answer 23

IHT is due 6 months after end of month of death, payable prior to grant of probate, but it can be paid directly from a bank account. A form can be sent when everything is relevant - including solution to problem.

Question 24

What to include in letter about inheritance

Answer 24

Make it clear that inheritance is net of liabilities and subject to valuations agreed with HMRC

Question 25

Does the oath for executors include that outside of the estate?

Answer 25

No - not joint property, and not lifetime gifts

Question 26

What if jointly held property isn't exclusive ownership ie. not spouse

Answer 26

Could be up to 15% discount as to ownership

Question 27

Passing on nil rate band to spouse

Answer 27

As long as nothing used of it, and all passes to spouse. If gifts - only a proportion would be passed

Question 28

What is the residence exemption?

Answer 28

150k per person, can be passed, person must own property in excess of the value of the exemption, directly inherited by children/grandchildren as long as no conditions (ie. grandchildren upon reaching a certain age); or estate worth more than 2m (50pin£)

Question 29

Tax on joint property

Answer 29

Tax on joint property is payable by the PRs on administration of the estate

Question 30

Instalment payments

Answer 30

10 instalments; first 6 months after end of death. Then annual. Interest at 2.75% after 6 months. Instalments stop on sale of property. Is a proportion of estate but EXCLUDING LIFETIME GIFTS

Question 31

What about Capital Gains for inheritance

Answer 31

Inherit at value at time of death

Question 32

Annual exemption for Capital Gains

Answer 32

£11,300

Question 33

How will CG be calculated

Answer 33

Will be added onto own tax system, 18% or 28% depending on amount of personal tax. Rate for residential property is 28%, executors have CGT exemption for the tax year of death and 2 years there after of 11,700

Question 34

Summary of process

Answer 34

``` Gather information Swear oath for administrators Pay tax as due (NB installment option) Get grant of representation Advert gazette - creditors Claims - 6 months from date of grant Then liquidate assets and distribute ```

Question 35

If will, no executor - how reflect in oath

Answer 35

Deal with deceased - letters of the will with will annexed.

Question 36

When need 2 executors

Answer 36

Life interests granted | One executor is a minor

Question 37

If no executor, who can apply for administration?

Answer 37

1. Beneficiary of residue, if not 2. Legatee Residuary legatee and devisee

Question 38

How to fill first option in oath (no tax)

Answer 38

1. IHT | 2. Actual estate

Question 39

How to fill in 3rd option in oath (no tax)

Answer 39

Excepted estate - ie less than 1m, ie can use short form for spouse exempt and not more than 650, or not more than 1m and no inheritance tax to pay

Question 40

How to fill in 2nd option in oath - tax

Answer 40

IHT400 - Gross estate and net estate | other form is IHT205

Question 41

What if witness to will is beneficiary

Answer 41

Can invalidate the gift

Question 42

What happens when you leave a property with a mortgage

Answer 42

General direction as to debts to be paid, does not affect specific gift of property subject to a charge