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FLK 2: Wills and the Administration of Estates > Topic 5 - Administration > Flashcards

Topic 5 - Administration Flashcards

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1
Q

What is the legal process for managing the distribution of a deceased person’s estate called?

A

Administration

Administration involves paying debts, taxes, and making payments to beneficiaries.

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2
Q

Who are the individuals permitted by law to administer a deceased’s estate?

A

Personal representatives (PRs)

PRs can be either executors or administrators.

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3
Q

What is an executor?

A

A PR appointed by a person’s will

Executors derive authority from the will itself.

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4
Q

What is an administrator?

A

A PR appointed by operation of statute

Administrators derive authority from the grant of representation.

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5
Q

What is the grant of representation?

A

An order of the High Court confirming the authority of the PRs to act

It establishes the validity of the deceased’s will or intestacy.

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6
Q

What are the main elements of the administration topic?

A
  • The role of a PR, their powers, duties and liabilities
  • Grants of representation
  • Applying for a grant
  • Post-grant practice
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7
Q

What is the primary duty of a personal representative (PR)?

A

To administer the estate of a deceased

This includes collecting assets, paying debts, and distributing to beneficiaries.

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8
Q

What must a PR do according to Section 25 of the Administration of Estates Act 1925?

A

Collect and get in the real and personal estate of the deceased and administer it according to law

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9
Q

What is a fiduciary duty in the context of a PR?

A

A duty to act in the best interest of the estate and its beneficiaries

This includes performing duties with due diligence.

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10
Q

What is the duty of a PR regarding inheritance tax (IHT)?

A

To notify HMRC about the estate’s assets and pay any IHT due

This must be done before the grant of representation is obtained.

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11
Q

What document must PRs complete to report to HMRC?

A

Form IHT 400

This form is used for any estate that is not excepted.

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12
Q

What is the PR’s duty to provide an inventory and account?

A

To keep a list of assets and values and a record of steps taken in administration

This information is usually recorded in the ‘Estate Accounts’.

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13
Q

What happens if a PR does not maintain adequate records?

A

A beneficiary or creditor may apply to court for an order to produce an inventory and account.

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14
Q

What is the general duty of due diligence for PRs?

A

To carry out the administration within a reasonable time and within the scope of their powers.

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15
Q

How long should PRs aim to complete the administration after the date of death?

A

Within 12 months

This timeframe is specified under Section 44 of the Administration of Estates Act.

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16
Q

What role does a solicitor play in the administration of an estate?

A

They may provide advice, act as executor, or represent parties in contentious probate matters.

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17
Q

What happens if there is no executor willing or able to act?

A

A PR will be appointed under the Non-Contentious Probate Rules (NCPR) and will be referred to as an administrator.

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18
Q

When can a PR act without a grant?

A

Some assets may be administered without a grant

However, many institutions require sight of the grant before releasing funds.

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19
Q

What is the relationship between PRs and trustees?

A

A PR is not automatically a trustee but may also hold that role under certain conditions.

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20
Q

What statutory powers and duties apply to PRs?

A

Many of the statutory duties of a trustee apply equally to PRs

This includes the statutory duty of care.

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21
Q

What must PRs do to collect in the estate?

A
  • Identify and locate the deceased’s assets
  • Identify the deceased’s liabilities and creditors
  • Obtain control, possession, or legal ownership of the assets
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22
Q

What is the consequence of a breach of duty by a PR?

A

The PR is personally liable for loss caused by the breach.

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23
Q

What is the importance of the grant in relation to administrators?

A

Administrators have no authority to act until the grant is issued.

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24
Q

What should PRs record when transferring estate assets to trustees?

A

The date on which estate assets are transferred.

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25
What is the general duty of personal representatives (PRs) regarding administration?
To carry out the administration with due diligence and within a reasonable time ## Footnote The timeline for completion is typically within 12 months of the date of death, known as the 'executor's year'.
26
What must PRs do if the administration takes longer than 12 months?
Justify any delay ## Footnote A delay beyond 12 months does not automatically indicate a breach of duty.
27
What happens if additional assets are discovered after the administration is complete?
PRs have a duty to administer these assets ## Footnote They may also be personally liable if unknown creditors or beneficiaries come forward.
28
From what sources do PR powers derive?
Statute and Will/Codicil ## Footnote PR powers must always be exercised within the scope conferred by these sources.
29
What is the statutory duty of care imposed on PRs?
To exercise the same standard of care as trustees under the TA 2000 ## Footnote This duty applies particularly to professional PRs and those with special knowledge.
30
What are fiduciary duties of a PR?
PRs must not profit from their position or place themselves in a position of conflict ## Footnote This includes not purchasing estate assets without authorization.
31
What is the power of PRs to sell estate assets?
PRs have wide powers to sell, charge, or lease estate assets ## Footnote This is essential for repaying debts and managing the estate.
32
What is the power to appropriate according to s 41 AEA?
PRs can appropriate an asset in satisfaction of a beneficiary’s entitlement ## Footnote This requires beneficiary consent and must not prejudice any specific beneficiary.
33
What is the power of PRs to insure estate assets?
PRs can take out insurance to insure estate assets comprehensively ## Footnote Premiums can be paid from estate income or capital.
34
What is the duty of PRs regarding investment as per TA 2000?
PRs must preserve the estate and actively invest retained assets ## Footnote They must also review investments regularly.
35
Can professional PRs charge for their services?
Yes, provided they are not acting alone and co-PRs consent ## Footnote A lay PR needs express power in the will to charge for services.
36
What is the power to delegate according to s 11 TA 2000?
PRs can employ agents and delegate powers, except for certain key decisions ## Footnote PRs must provide a written policy statement to the agent.
37
What is the power to appoint trustees for gifts to minors?
PRs can appoint trustees to hold a legacy for a minor until they reach 18 ## Footnote This is necessary since minors cannot give valid receipts.
38
What happens if a testator was a shareholder in a company?
The company survives the testator's death, and the articles may contain provisions for this situation ## Footnote PRs have limited common law powers to manage the business.
39
Can a joint PR act alone?
Yes, for lawful powers to sell or transfer estate assets, a joint PR can act alone ## Footnote However, they cannot deal with stocks and shares registered in joint names.
40
What is a devastavit?
A claim of action against a PR for breach of their duties resulting in loss to the estate ## Footnote The claimant may seek to recover losses from the PR's personal assets.
41
What constitutes maladministration by a PR?
Incorrectly administering the estate, such as making wrong distributions ## Footnote It may also include paying legacies before debts.
42
What can lead to a PR being removed from their position?
A court order or administration action due to failure to carry out duties properly ## Footnote This can happen under s.50 Administration of Justice Act 1950.
43
What actions can lead to a breach of fiduciary duty by a PR?
Acting as both buyer and seller of estate assets without authorization Receiving unauthorized remuneration Self-dealing Removal as PR ## Footnote Breach of ‘no conflict’ duty even if a fair price is paid.
44
What can lead to the removal of a PR?
Court order under s.50 Administration of Justice Act 1950 Administration action by the court ## Footnote This can happen if the PR fails to carry out their duties properly.
45
What fiduciary duties are PRs subject to when acting in a trustee capacity?
They are subject to trustee duties and may be personally liable for losses due to a breach of trust ## Footnote This includes seeking protection from personal liability.
46
Name three methods PRs can use to protect themselves from personal liability.
* Seeking court directions * S 48 AJA 1985 application * S.27 Trustee Act 1925 notice ## Footnote Other methods include Benjamin Order, Presumption of Death Act, Insurance, Payments into court, Indemnity from beneficiary, and S.61 Trustee Act 1925.
47
What is a Benjamin Order?
An order allowing PRs to distribute the estate based on the assumption that missing beneficiaries have died ## Footnote It relieves PRs from personal liability if the assumption turns out to be incorrect.
48
What does the Presumption of Death Act 2013 allow PRs to do?
Apply for a court order declaring that a person presumed dead has died after seven years ## Footnote This simplifies matters regarding the deceased's property and affairs.
49
What is required for a grant of representation?
Confirmation of the authority of those named to administer the estate ## Footnote It is necessary for someone to administer the estate of a deceased person.
50
What are the three main types of grants of representation?
* Grant of probate * Grant of letters of administration (with will) * Grant of letters of administration ## Footnote Each type serves a specific purpose based on the existence and validity of a will.
51
What is the grant of probate?
Required for estates where the deceased left a valid will and at least one executor is willing to act ## Footnote It is issued in the names of the executors who apply.
52
What is a grant of letters of administration (with will)?
Appropriate when the deceased left a valid will but no executors are willing or able to act ## Footnote Administrators are appointed under the Non-Contentious Probate Rules 1987.
53
What is a grant of letters of administration?
Required when the deceased died without a valid will (intestate) ## Footnote Administrators are appointed under NCPR 22.
54
What assets can be dealt with without a grant?
* Assets under the Administration of Estates (Small Payments) Act 1965 * Personal household possessions * Cash ## Footnote Certain assets do not require a grant to administer.
55
What is the upper financial limit for assets under the Administration of Estates (Small Payments) Act 1965?
£5,000 per asset ## Footnote If the value exceeds this limit, a grant is needed.
56
What happens to property owned as joint tenants upon one owner's death?
It passes automatically to the survivor under the rules of survivorship ## Footnote This does not rely on the issuance of a grant.
57
What is a practical consideration for assets that do not require a grant?
They can release money to beneficiaries without waiting for grant completion ## Footnote This can help meet expenses, including inheritance tax.
58
What is the role of the PR in relation to cash found at the deceased's home?
A PR does not need a grant to take possession of cash found ## Footnote This allows for immediate access to funds.
59
What is the significance of exoneration by the court under s.61 Trustee Act 1925?
A PR may apply to be excused from personal liability for breach if they acted honestly and reasonably ## Footnote The order will not be made unless these conditions are met.
60
What is an exemption clause in a will?
Clauses that exclude or restrict liability for a PR's wrongdoing ## Footnote They can cover scenarios from innocent mistakes to gross negligence.

FLK 2: Wills and the Administration of Estates (10 decks)

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