Unit 4 Administration: Obtaining the Grant Flashcards
Personal representative
Generic term meaning executors or administrators.
Which grant of representation
- Left will which appoints executors and they are willing to act = executors obtain grant of probate.
- Left will but no persons willing to act = administrators obtain letters of administration with the will annexed.
- Deceased left no will or no valid will = Administrators obtain grant of (simple) letters of administration.
Number of PRs
2 administrators are usually required where one of the beneficiaries is an infant (‘a minority interest’) or only has a life interest.
1 executor can act alone.
Assets for which a grant is not required
(a) Assets which may pass to the PRs without a grant
- Administration of Estates (Small Payments) Act 1965
Permit payments to be made to persons appearing to be beneficially entitled to the assets.
Not available if the value of the asset exceeds £5,000 and the payments are made at the discretion of the institutions concerned.
If payment is refused, the PRs will have to obtain a grant before the asset can be collected.
E.g.
Money in the National Savings Bank and Trustee Savings Bank (but not in other bank accounts);
National Savings Certificates and Premium Bonds; and
Money in building societies and friendly societies. - Chattels
- Cash
Taking custody of any cash found in the deceased’s possession (ie found in the home).
(b) Assets not passing through the PRs’ hands
- Joint property
If joint tenants. - Insurance policies assigned or written in trust
- Pension benefits
Death in service benefits under a pension scheme are often payable to persons to be selected at the discretion of the pension fund trustees. Payments are made to the beneficiaries on production of the death certificate.
Assessment of the IHT position
If IHT is payable, some of it is likely to be due before the grant is obtained.
Before the PRs apply for the grant, they send the IHT account IHT400 (or IHT401 for a person domiciled outside the UK) and pay any IHT due before the grant to HMRC; HMRC emails a receipt (IHT421) to HMCTS and informs the PRs (or their solicitor) that this has been done. The grant will not be issued until HMCTS receives the receipt. Practitioners should allow an interval of 20 working days between the submission of IHT400 to HMRC and the application for the grant.
Where IHT is payable before the grant, it will be necessary to find ways of funding the IHT, given that it is not possible to gain access to most of the deceased’s assets without production of the grant.
Preparing the application for the grant - The application and fee
Applications by legal professionals for a grant of probate must be made online (apart from a few limited exceptions, eg where the application is to prove a copy of the will).
Applications for grants of letters of administration (with or without the will) are made by post but can be made online in certain circumstances.
Postal apps - PA1P form if will. PA1A if no will.
Fee paid with cheque.
Fee same for all apps:
- £273 where the estate exceeds £5,000.
- no fee is under 5k.
- Extra copies can be requested and cost £1.50 each.
Preparing the application for the grant - Additional documents
Necessary to send the deceased’s will and codicil, if any.
May need:
* Evidence of due execution and/or capacity
If no attestation clause or defective.
Evidence from witness or affidavit from doctor about capacity.
* Evidence as to knowledge and approval
If someone else signing. Witness statement etc.
* Evidence as to remote witnessing
* Evidence of plight and condition
If will been interfered with in some way since execution.
Affidavit or witness statement.
* Lost will
Copy or reconstruction.
IHT
PRs will prepare an IHT400 (IHT401 for a person domiciled outside the UK) and whichever of the supporting schedules are relevant.
Should be delivered within 12 months of the end of the month in which the death occurred.
PRs aim to deliver the account within six months of the end of the month of death to comply with IHT time limits for the payment of interest.
If the estate is excepted, PRs do not now submit any IHT form to HMRC.
HMRC has 60 days from the issue of the grant of representation to ask for additional information.
If not estate receives automatic clearance.
IHT - Excepted estates – conditions for deaths on or after 1 January 2022
(a) Category 1 – ‘small’ estates
Nil rate threshold or band (‘NRB’) is presently £325,000 but can be increased if the deceased’s spouse or civil partner predeceased without using all or part of their NRB.
Specified exempt transfers =
(a) s 18 (transfers between spouses (or civil partners));
(b) s 23 (gifts to charities);
(c) s 24 (gifts to political parties);
(d) s 24A (gifts to housing associations);
(e) s 27 (maintenance funds for historic buildings, etc); or
(f) s 28 (employee trusts).
(b) Category 2 – ‘exempt’ estates
Spouse (or civil partner) or charity exemption.
(c) Category 3 – ‘non- domiciled’ estates
Where the deceased was never domiciled or treated as domiciled in the United Kingdom, and owned only limited assets in the United Kingdom.
(d) Procedure for excepted estates
PRs provide info on their applications for grant:
-declaration if excepted estate and whether claiming any unused portion of IHT NRB from spouse.
PRs of non-UK domiciliaries will have to provide more information.
Paying the IHT - date
General rule = 6 months after the end of the month in which the deceased died.
On non-instalment option property = must be paid before the grant.
If can do instalments but chose not to = must be paid before the grant or in 6 months after the end of the month in which the deceased died, if earlier.
On instalment option property = 1st instalment due within 6 months of the end of the month of death. Other 9 annual intervals.
Paying the IHT - funding
(a) Direct payment scheme
From deceased bank account to HMRC.
Check whether bank has signed up to scheme.
Not quick.
(b) Life assurance
LA company may agree to release funds direct to HMRC.
(c) Assets realisable without production of the grant
Max value of any one asset - 5k.
(d) Loans from beneficiaries
(e) Bank borrowing
Undertakings to pay money from PR or solicitor.
(f) National Savings and Government stock
(g) Heritage property in lieu of tax
(h) Obtaining a grant on credit
Exceptional cases.
HMRC allow.
Forms PA1P and PA1A and online applications
PA1P where valid will.
PA1A where no valid will.
All have info like applicant, deceased, IHT, settled land.
End with statement of truth.
Executors applying for a grant of probate
Form PA1P.
The original will and any codicils must be sent.
If only executor under 18 or lacks capacity someone must take grant on their behalf e.g. attorney/parent = a grant of letters of administration with will annexed.
Executors may renounce their right to take the grant. From PA15.
Probate granted to a max of 4.
It is possible to obtain a grant limited to part only of the estate - up to four executors can take the grant limited to the deceased’s writings and up to four for everything else.
Administrators applying for a grant of letters of administration with the will annexed
Valid will but no executor able and willing to act.
Entitlement in order of priority:
(a) the executor
(b) any person to whom the residuary, personal or real estate is given on trust
(c) any other residuary legatee or devisee (including one for life) or where the residue is not wholly disposed of by the will, any person entitled to share in the undisposed of residue
(d) the personal representative of any residuary legatee or devisee (but not one for life, or one holding in trust for any other person), or of any person entitled to share in any residue not disposed of by the will;
(e) any other legatee or devisee (including one for life or one holding in trust for any other person) or any creditor of the deceased
(f) the personal representative of any other legatee or devisee (but not one for life or one holding in trust for any other person) or of any creditor of the deceased.’
Beneficiary with vested interest preferred.
Minors cannot act as administrators with will annexed, nor can they apply for a grant.
Not more than 4.
2 needed where there is a life interest, or property passes to a minor.
Renounce on form PA16.
Administrators applying for a grant of (simple) letters of administration
Form PA1A without will.
Beneficiaries on intestacy take the grant:
(a) the surviving spouse or civil partner;
(b) the children of the deceased and the issue of any deceased child who died before the deceased;
(c) the father and mother of the deceased;
(d) brothers and sisters of the whole blood and the issue of any deceased brother or sister of the whole blood who died before the deceased;
(e) 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;
(f) grandparents;
(g) uncles and aunts of the whole blood and the issue of any deceased uncle or aunt of the whole blood who died before the deceased;
(h) uncles and aunts of the half blood and the issue of any deceased uncle or aunt of the half blood who died before the deceased.
(2) In default of any person having a beneficial interest in the estate, the Treasury Solicitor shall be entitled to a grant
(3) If all persons entitled to a grant under the foregoing provisions of this rule have been cleared off, a grant may be made to a creditor of the deceased or to any person who, notwithstanding that he has no immediate beneficial interest in the estate, may have a beneficial interest in the event of an accretion thereto.
Cannot be minors.
Max 4.
A minimum of two administrators is generally required where the intestacy creates minority interests through property being held for minors on the ‘statutory trusts’.
